Governor, State Superintendent of Public Instruction call for tax increases.
Governor Jay Inslee last week proposed to spend an additional $600 million on K-12 education over the next three years by ending a number of tax breaks that are currently in effect. The targeted tax exemptions include a use-tax break on waste fuels from refineries; sales taxes on bottled water; a sales-tax break for out of state shoppers; a tax break on used-car trade-ins worth over $10,000; a sales-tax break for janitorial services; and a preferential business tax rate for resellers of prescription drugs.
Last year, a proposal that would also have ended selected tax preferences passed the House by 52 to 40 with no Republican votes. HB 2034 would have repealed the bottled water sales-tax break, eliminated the preferential business and occupation (B&O) tax rate for travel agents and tour operators, eliminated the preferential B&O tax rate for resellers of prescription drugs, ended the high technology sales- and use-tax deferral program, and narrowed the use-tax exemption for extracted fuels. The bill received no action in the Senate and was returned to the House at the end of the 2013 session. It is currently in the House Finance Committee.
State Superintendent of Public Instruction Randy Dorn recently unveiled a bill that calls for increases in state sales and property taxes to direct more money to schools. His bill would raise the sales-tax by one percentage point to 7.5%, beginning July 1, 2018, and the portion of the state property tax that funds basic education would be raised to $3.60 per thousand dollars of valuation, the maximum allowed by law.
Dorn’s bill would also prohibit using local levies for basic education costs, such as student transportation, materials, supplies and operating costs, or for the salaries of school and district staff. Local levies could still be used for supplemental programs, such as compensating staff for extracurricular activities like coaching.
According to the Superintendent’s office, the bill could increase funding for basic education by $7.5 billion in the 2019-21 budget cycle, on top of current funding levels. Inslee’s proposal would add $200 million to the education budget this year, spending $130 million on school district administration and $74 million on a 1.3 percent pay increase for teachers and other school employees. The state pay raise would be in addition to pay raises provided by local tax levies.
The legislature increased education spending sharply in the most recent budget cycle. The bi-partisan budget that passed last year put an additional $1.0 billion into education without tax increases, and both Democratic and Republican leaders said it is doubtful that the increase proposed by the Governor could pass this year.
House Majority leader Rep. Pat Sullivan (D- Covington) said it’s too early to say whether Inslee’s $200 million proposal is realistic this year. Senate Ways and Means Chairman Andy Hill (R- Redmond) said that more funding for schools is needed, but he questioned whether it needs to be done this year in the short 60-day session. While both the Governor and Superintendent Dorn propose ambitious tax and spending proposals, their enactment during the current short session appears unlikely.