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UPDATE – Inslee’s tax plan pays for education add-on of $1.2 billion by hitting businesses, beer and bottled-water drinkers, car buyers

Post by Jordan Schrader / The News Tribune on March 28, 2013 at 11:00 am |
March 29, 2013 10:42 am
Gov. Jay Inslee
Gov. Jay Inslee

By Jordan Schrader and Brad Shannon:

A budget plan Gov. Jay Inslee unveiled today would add $1.2 billion to Washington’s two-year spending on basic education to meet a court order demanding more funding for schools. (Details here.)

School districts would finally receive full funding for busing costs. Half of kindergartners would be in school for full days. Poorer districts would get more money to hire more kindergarten and first-grade teachers. Newer teachers would receive stipends.

A big chunk of new money – $466 million – would cover school materials, supplies and costs such as utilities. But Initiative 732 would be suspended again, canceling inflation-based pay raises  for public school employees, which are worth about $300 million.

Inslee calls for finding the new money in the coffers of a vast swath of businesses and in the wallets of beer and bottled-water drinkers, out-of-state shoppers and auto buyers who trade in their old cars.

Overall, the Democratic governor is calling for $1.4 billion in new revenue – what would legally be considered tax increases. Inslee pledged to avoid new taxes during his campaign for governor, but repeatedly said he would target tax exemptions. He will argue he has kept his word, even though he is proposing to extend two tax increases that are set to expire June 30: one on beer, the other on businesses from accountants to lawyers.

Those were passed in 2010 as a recession battered Washington’s budget, and were supposed to be temporary. But Inslee defended his call to make them permanent to deal with an “educational emergency” that he compared to the economic emergency that sparked the taxes in the first place.

Inslee would also extend the beer tax to small breweries that had been exempted.

Inslee would also raise business tax rates on some 40 industries that get special treatment – with the notable exceptions of aerospace and federal clean up of radioactive waste – giving these breaks a 25 percent haircut.

Inslee’s package requires legislative approval and is likely to receive favorable treatment in the Democrat-controlled House, whose leaders have said they cannot see how to close a $1.2 billion budget shortfall and invest in school improvements without finding new revenue. But the Republican-dominated Majority Coalition Caucus that controls the Senate remains opposed to tax increases, and Senate Republican Caucus leader Linda Evans Parlette of Wenatchee said Wednesday her caucus plans to put out a budget as soon as next week that does not rely on new revenues.

Tim Eyman, the professional initiative sponsor, got another measure passed last November to require a two-thirds supermajority to approve tax increases in the Legislature, but the State Supreme Court has struck down that rule as unconstitutional. But even with a 50 percent plus one majority vote needed in each chamber, Eyman warned this week that any new taxes or closure of tax loopholes will be subject to a nonbinding, statewide advisory vote in November – a requirement of his  tax-limiting initiatives that was not struck down by the court.

UPDATED 1:15 p.m.

 

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