Washington Business Fall 2018 | Legislative Review & Vote Record | Page 38

2018 legislative review
Budget & Taxation
Clay Hill: Tax & Fiscal Policy
In even-numbered years, the Legislature
writes a supplemental operating budget
to address unforeseen changes since
the passage of the biennial budget the
previous year. This year, the unforeseen
changes that needed to be dealt with
included a November 2017 ruling from
the Washington Supreme Court in the
ongoing McCleary case declaring that
an additional $950 million would be
needed in the 2017-19 budget to pay for
teacher salaries. Also unexpected was
the governor’s summer 2017 veto of a
reduced business and occupation tax
rate for manufacturers — part of a deal
agreed to by budget negotiators in 2017.
In addition, lawmakers looked for funding
to provide property tax relief. In February,
county treasurers mailed out the 2018
property tax bills, leading to complaints
from property owners unhappy with the
approximately $0.81 per $1,000 increase
in the state education levy. This was part
of the agreement that passed in June
2017 to satisfy the state’s obligation to
fully fund basic education (also known
as the McCleary fix). The reaction was
predictable given that the reduction of
locally enacted school levies that was
part of the McCleary “levy swap” does
not occur until 2019.
One unforeseen piece of good news came
in February. That’s when the Economic
and Revenue Forecast Council alerted
budget writers that revenue for the 2017-
19 biennium would be $1.2 billion larger
than forecast the previous June when
the budget was passed, and $2.3 billion
larger over the four-year outlook.
36 association of washington business
Clay Hill, AWB government affairs director for tax and fiscal policy, left, and attorney Brett Durbin
of Stoel Rives testify in support of House Bill 2777.
HB 2299
operating budget
Failed/AWB Opposed
AWB opposed House Bill 2299, the House’s
proposed supplemental budget, sponsored
by Rep. Timm Ormsby, D-Spokane, because
it contained an appropriation to fund
administration of a capital gains tax and
did not assume passage of legislation to
lower the business and occupation tax on
manufacturers.
SB 6032
operating budget
Passed/AWB Neutral
The supplemental budget that lawmakers
ultimately approved was a compromise
between House Democrats and Senate
Democrats that was revealed to the public
less than a day before final passage. It
was sponsored by Sen. Christine Rolfes,
D-Bainbridge Island. The budget funded
t he teacher sa la r ies required by t he
Supreme Court and did not assume passage
of any new or increased taxes — including
the capital gains tax favored by the House.
However, it assumed passage of Senate Bill
6614, which directed funds that would have
gone to the state’s rainy-day fund to be used
for spending. The bill passed 25-24 in the
Senate and 54-44 in the House.
AMD 697, SB 6032
operating budget – braun
striker
Failed/AWB Supported
This floor striking amendment offered by
Sen. John Braun, R-Centralia, would have
substituted entirely for the budget offered
by Senate Democrats. It assumed the fiscal
impact of passage of legislation lowering
the business and occupation tax rate on
manufacturing over a four-year phase in,
funded teacher compensation consistent
w it h t he Supreme Cour t ’s McClea r y
decision, and provided property tax relief.
The amendment failed 25-23.