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Dear Friends and Neighbors,

We have received notice that the Legislature could reconvene in session this Thursday, July 20, the final day of the third legislative session, to complete business on two items: a permanent fix on the state Supreme Court Hirst decision regarding water rights for individual property owners and a capital construction budget.

Water wellWhy a permanent Hirst fix is important

The Hirst decision, handed down last October by the state Supreme Court, means landowners with undeveloped properties may never be able to dig a well on their property unless they can prove not a single drop of water would be removed from instream flows. Without water, counties will not issue building permits, there is no development, and these lands become worthless or significantly lose their market value. The decision could also affect all other property owners whose property taxes may increase once the county reassesses those parcels devalued because they have no water.

A Republican-sponsored measure, Senate Bill 5239, to permanently roll back the Hirst decision passed the Senate four times. But the House has yet to act on it. Instead, majority Democrats in the House have proposed only an 18-month window for wells to be dug, with the Hirst provisions becoming effective after that.

Negotiations have continued, but Republican lawmakers have been firm they would not provide the votes (two-thirds of each chamber needed) to pass the bond bill that would fund the $4.2 billion capital construction budget unless Democrats agree to a permanent Hirst fix. Why? Because if the bond bill is passed first, there will NEVER be a permanent Hirst fix — and EVERY property owner in the state will suffer the consequences.

I am hopeful we can have a permanent Hirst fix AND a capital budget — and vote on both. My Republican colleague, Rep. Jim Walsh, tells why this is important and how we can have both in this video. You can also read more about the importance of a permanent Hirst fix in this article by Reps. John Koster and Jacquelin Maycumber.

State BudgetState budget and education funding legislation enacted

On June 30, the Legislature passed and sent to the governor three major bills: House Bill 2242 – McCleary solution, Senate Bill 5883 – 2017-19 operating budget and Senate Bill 5977 – Revenue enhancements. Here are the highlights of those measures:

Legislature fully funds K-12 education

In McCleary vs. the state of Washington, the state Supreme Court said Washington must stop relying on local school district property tax levies to pay teachers, school administrators and classified staff.  House Bill 2242 does that through a method of levy reform.

The bill increases the statewide property tax by about 81 cents per $1,000 in assessed property value in 2018. However, in 2019 many property owners across the state will see their property taxes go down. The new law will cap the levies at either $1.50 per $1,000 in assessed value or $2,500 per student, whichever is lower. Levy equalization assistance is provided to property poor districts that can’t reach $1,500 per pupil at a levy of $1.50 per $1,000 assessed value.

This new plan will pump about $7.3 billion of additional state money into public schools over the next four years. This is on top of the additional $4.6 billion directed to K-12 education in the past four years. K-12 education now represents more than 50 percent of the operating budget for the first time since the early 1980s.

K-12 EducationSpending

Teacher salary begins at $40,000, plus a 10 percent increase for Certified Instructional Staff after five years. There’s a maximum salary of $90,000 and a district-wide average salary of about $64,000 per teacher. Districts with home values that exceed the statewide average will get an extra 6 percent, 12 percent or 18 percent, depending on the cost of local real estate, allowing school employees to live in the districts where they work. You can read more about the McCleary solution here.

State operating budgetNew budget keeps state operating for two more years

I share the disappointment that it took a full 105-day session and three special sessions before a 2017-19 state operating budget (Senate Bill 5883) was passed just hours before the end of the fiscal cycle. There were significant challenges to reach agreement on McCleary education funding, provide for the state’s most essential needs and protect taxpayers. The final budget agreement appropriates $43.7 billion for state operations, including:

  • $22 billion for K-12 education;
  • $14 billion for the Department of Social and Health Services and other human services;
  • $3.9 billion for other agencies and programs.

Appropriations are expected to grow to $49.8 billion in the 2019-21 operating budget. That rate of growth concerns me, because in eight years, that’s almost a $19 billion increase in the budget. Still, I supported this budget because it addresses our McCleary obligations, and takes care of our students, teachers and schools. It also invests in much-needed reforms for our mental health and foster care systems.

Rep. Terry Nealey, Dayton, speaks in committee.How Republicans sought to protect taxpayers, increase manufacturing jobs

Before the 2017 session began, Gov. Jay Inslee set the stage with a budget proposal that called for $5.3 billion in new and increase taxes, including a business and occupation tax increase on service businesses, a new carbon tax, and a capital gains tax. House Democrats followed with a plan to increase taxes by $8 billion over the next four years.

My Republican colleagues and I fought hard and were successful in preventing such large increases. In the end, however, we realized some additional revenue would be needed to address the final McCleary solution.

The levy reform discussed earlier provides an additional $1.6 billion from the state property tax increase. The final compromise revenue package (Senate Bill 5977) includes $426 million in new tax revenue, including extending Internet tax collection, modifying streamlined sales tax payments, and repealing sales and use tax exemptions for bottled water and self-produced fuel.

Republicans also negotiated an important section in the revenue bill to reduce the business and occupation tax rate for more than 10,000 manufacturing firms across our state, giving them the same rate as Boeing and other aerospace companies. This would not only attract more jobs — the World Trade Organization has targeted Boeing as receiving an unfair trade advantage over European competitors because Boeing has a lower rate. This legislation would have removed that target. Unfortunately, 23 House Democrats urged Gov. Inslee to veto this section of the bill — and he did — even though Democrats and Republicans had earlier agreed to it.

Following the veto, I joined with Republican Reps. Norma Smith and Brandon Vick to issue this statement declaring our disappointment.

District offices operating in Walla Walla and Pasco

It’s my hope we can complete the final portion of the 2017 sessions this Thursday. However, my work continues. I represent you throughout the year. If you have questions, comments or suggestions about state government and/or legislation, please contact our 16th District offices in Walla Walla or Pasco. I share these offices with my seatmates, Sen. Maureen Walsh and Rep. Bill Jenkin.

Here are the locations: 26 E. Main St., Suite 8, Walla Walla, 99362 – Phone (509) 526-6284; 1110 Osprey Pointe Blvd., Pasco, 99301 – Phone: (509) 545-2210.

Thank you for the honor of allowing me to serve you!


Terry Nealey

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