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Dear Friends and Neighbors,

Only 18 days remain of the 2017 legislative session, scheduled to end April 23. This is an important time as we work toward the most important goal of the session — passing a sustainable budget that will pay for state operations for the next two years.

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Rep. Terry Nealey serves as ranking Republican on the House Finance Committee, which addresses tax and revenue issues.

State's revenue situation is positive

Coming in to the legislative session, which began Jan. 9, the state already had nearly $3 billion in additional revenue without tax increases. The revenue forecast, presented March 16, boosted those anticipated revenues by $247 million in the current 2015-17 budget cycle and by $303 million in the 2017-19 budget cycle. These new numbers gave budget writers in the House and Senate additional certainty to plan for their competing budget proposals.

State Budget

Senate and House budget proposals unveiled

The Senate Majority Coalition Caucus (Republican majority) was the first to roll out its budget plan, doing so on March 21. Here are some highlights of that plan:

  • It appropriates $43 billion, an increase of about $5 billion (13 percent) over the current budget cycle.
  • $1.3 billion of that increase is directed toward K-12 education to help satisfy McCleary court ruling requirements (fully funding education).
  • It would implement statewide levy reform by replacing levies with a new flat tax assessment as a state portion of the property tax. Other than these changes, there would be no general tax increase.
  • It would leave the state's Rainy Day Fund intact with nearly $2 billion, and an ending fund reserve of about $138 million to deal with any unforeseen issues.

Senate Bill 5048 passed off the Senate floor late Thursday night, March 23, on a 25-24 vote.

On Monday, March 27, House Democrats released their state spending planHouse Bill 1067 was unveiled at a news conference on Monday, heard in the House Appropriation Committee that afternoon, and voted out of the committee Tuesday night. Republicans offered 20 amendments in committee, with seven being accepted. The proposal reached the House floor Thursday afternoon in the form of a striking amendment to Senate Bill 5048. It was voted out on a 50-48 party-line vote just after noon Thursday. We offered 41 amendments in an attempt to improve the legislation, but only six were accepted. You can find a few of the highlights that relate to school funding and preventing tax increases here.

Here are some notable items about this proposal:

  • It appropriates $45 billion, an increase of about $6.5 billion over the current budget cycle.
  • It would increase state spending by 34 percent for the 2019-21 budget cycle. In terms of dollars, that would boost spending from our current two-year operating budget of $38.2 billion up to more than $51.2 billion for the 2019-21 budget cycle. It would also mean our operating budget would increase by $20 billion over an eight-year period.
  • This budget would also increase K-12 education funding by about $1.3 billion.
  • It would rely on as much as $3 billion in new and additional taxes, including: a 20 percent increase on business and occupation taxes for service, retail, wholesale and manufacturing; an increase in the real estate excise tax; a 7 percent capital gains income tax; imposing a sales tax on bottled water, and; repealing the non-resident sales tax exemption.
  • It would spend down the state's Rainy Day Fund to $1.6 billion and leave only $12 million in ending fund reserves for any unforeseen issues.

As you can see, there are major differences in both budgets, most notably, the tax increase proposals and the enormous spending in the House Democrats' budget plan.

SeaTechTinyHomes
Students from Walla Walla's Southeast Area Technical Skills Center and the Tri-Tech Skills Center in the Tri-Cities brought the “tiny homes” they constructed to the state Capitol for display. More than 20 teams of high school and college students from around Washington are participating in the state's Workforce Training & Education Coordinating Board's “Showcase of Skills Homeless Shelter Project.”

Where we go from here

While I have some reservations about the Senate Republican proposal, I voted against the House Democrat plan. There are things to like and dislike in both proposals. It's my hope that negotiators from the four caucuses can sit down in earnest and work toward a compromise operating budget plan that can garner bipartisan support. Many people question whether that can be done in time for the Legislature to adjourn April 23. I believe we owe it to the people of Washington to finish on time.

I welcome your comments. Thank you for allowing me to serve and represent you!

Sincerely,


Terry Nealey

State Representative Terry Nealey
16th Legislative District
RepresentativeTerryNealey.com
404 John L. O'Brien Building | P.O. Box 40600 | Olympia, WA 98504-0600
terry.nealey@leg.wa.gov
360-786-7828 | Toll-free: (800) 562-6000