Assessing the Budget Debate in Olympia

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This post was written by Ellicott Dandy, OneAmerica Economic & Environmental Justice Advocacy Manager

This week, the Washington State House of Representatives proposed a state budget that makes bold strides toward a more equitable state tax system.

Right now, Washington State has the most upside-down tax structure in the country, demanding more from its poorest residents – as a share of their incomes – than from its wealthiest. Our friends at the Washington State Budget and Policy Center found that people of color, including immigrants and refugees, are more likely than white communities to be among the most taxed.

Earlier this week, the State House proposed a number of new taxes and changes to existing ones that would lessen the existing tax burden on Washingtonians with low and moderate incomes, and ask the wealthy to pay their fair share.

Where the money comes from…

House Democrats propose closing a loophole on capital gains. It would require Washington’s wealthiest residents pay a 7% excise tax on unearned income. Importantly, less than 2% of all Washington State residents (and only the wealthiest) would be subject to this tax but it would supply one third of new state revenue. Washington State is one of the last states to close this tax loophole, and the 7% rate is lower than both California’s and New York’s. Legislators also propose closing a few other corporate tax breaks, including the big oil loophole, the bottled water exemption, and the sales tax break for non-residents.

Changes to state property tax rates are also in the mix: folks with homes worth less than $250,000 will see a reduction in their state property tax bills, while those with homes worth more than $1 million will see a modest increase. Anyone in the middle (homeowners whose property is worth more than $250,000 but less than $1 million) will see no change. We expect renters to benefit as well, since landlords typically pass on property taxes to tenants. This progressive change would deliver relief to those with low and moderate incomes, particularly in rural areas.

Finally, changes to the Business and Occupations tax would relieve overburdened small businesses and increase tax requirements of larger businesses. This means that small shops and restaurants owned by immigrant entrepreneurs – which collectively earned more than $1.2 billion in 2014 alone – can put more resources into employee salaries and benefits and company growth. Washington State is proudly home to some of the world’s most profitable businesses, and we think they can contribute some of their wealth to the greater good.

As many Washington state residents are aware, the legislature is required to spend more on public education in order to satisfy its paramount duty under the state constitution. Last week, the State Senate proposed their own budget that would do so in large part by cutting funding to critical human services, housing programs, and other forms of public assistance that families depend on.

Where the money goes…

On the spending side, House Democrats have proposed a budget that invests in communities by putting families first. OneAmerica believes that when we invest in women, people of color, and people with lower incomes, everyone thrives. Study after study shows that small public investments in programs like food assistance and other social services pay big dividends in the long term by lifting people out of poverty and generating economic activity.

This year, we asked the legislature to increase funding for the Washington New Americans program, a partnership between OneAmerica and Washington State that provides free naturalization services to eligible legal permanent residents across the state (click here to join us at Citizenship Day on April 8th!).

Veteran volunteers and new citizens who got their citizenship through the program came to Olympia to ask legislators to increase program funding to $1 million per year so that we can meet growing demand for citizenship services. Budget writers in both the House and the Senate heard their calls and made the investment of $2 million for the two-year budget. The ink is not yet dry and budget negotiations will be an arduous process, but for now, we can be cautiously optimistic and deeply grateful for the major investment in citizenship!

Our Dual Language Learning bill has brought together lawmakers from opposite sides of the aisle in support of expanding access to and fully funding dual language immersion programs to improve outcomes for all students. While the bill is still working its way through the Senate, both chambers included some funding for dual language programming. The House proposed a total of $2.3 million for these programs in the two-year budget. In this effort, the personal stories of community members and educators who came to Olympia have made all the difference.

What’s next?

The House budget honors the economic contributions of immigrant workers, property owners, and entrepreneurs by more fairly distributing the burden of paying for public goods and services. The spending bill passed out of the House Appropriations Committee late Tuesday night and will likely head to the House Floor for a vote of the full chamber soon.

Contact your legislators to encourage their support for this budget!

The tax package will likely receive a hearing in the House Finance Committee soon and then head to the House floor for a vote of the full chamber.

OneAmerica is committed to economic justice: this means investing in communities that have historically been excluded from economic progress. We believe that the ways in which our state government raises money and the programs and services it funds play an important role in determining economic outcomes for immigrant and refugee communities across Washington.  We believe in creating a tax system that is less regressive and more equitable for all Washingtonians. And we believe that small, immigrant-owned businesses that create jobs and form the backbone of local economies are a critical element of building communities in which everyone can succeed.

Encourage your legislators to support this progressive revenue!

Budget writers still have a long road of negotiations ahead of them, and while legislative session is slated to wrap up on April 23rd, Olympia insiders forecast multiple special sessions as lawmakers work to find common ground.

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