Republican budget proposal cuts programs, uses rainy-day fund

Released the same day Senate panel approves capitol gains tax

By Patric Haerle

WNPA News Service

OLYMPIA — House Republicans have released their proposed state budget, saying it shows how a Republican-controlled Legislature could craft a spending plan without raising taxes.

The same day — Tuesday — the Senate Ways and Means Committee approved a capital gains tax on the sale of high-profit stocks and bonds over Republican objections. The bill now heads to the Rules Committee, the last stop before a potential vote by the full Senate.

“If House Republicans were in charge, we would debate budgets in the Legislature much differently, and you’re seeing that with this proposal before us,” said Rep. Drew Stokesbary, R-Auburn, on Tuesday. He is the budget lead for House Republicans.

But Republicans are not in charge; Democrats hold a firm majority in the House and Senate. Stokesbary acknowledged part of this budget plan’s purpose is to contrast governing style with the majority.

“I was sent down here by my constituents to make better laws, not just to make better suggestions,” Stokesbary said. “So I will continue to implore my colleagues across the aisle to take a closer look at some of these ideas we’ve come up with.”

Republicans said they produced a budget earlier than usual, and included money to cover contingencies.

“This framework is the starting point, and we’re unveiling to the public in the middle of February. It gives us several months to continue to make refinements, and importantly there is a $750 million ending fund balance at the end of fiscal year ’25,” Stokesbary said. “So if we overlook something that is important … we can buy it back.”

House Majority Leader Rep. Pat Sullivan, D-Covington, would rather wait for March’s revenue forecast.

“If there are significant changes in the forecast, it has a significant impact on how we budget,” Sullivan explained.

Among the new expenditures Republicans are pushing for are $200 million per year dedicated for towns and cities to fight homelessness as long as they clean up encampments and ban injection sites; increased investments in community-based mental health treatments; a tax rebate for working families; a $300 stipend for parents of children on reduced lunches and a sales tax exemption on items deemed as necessities, like prepared food, breast pumps and diapers.

The biggest difference between Democrat and Republican budgets is not how they plan to spend money, but how they plan to raise it. The Republican plan adds $6.6 billion in new spending, yet doesn’t raise taxes — it even cuts them in several places. It does this through $6 billion in reductions and aggressive use of the rainy-day fund for one-time funding.

That approach is a non-starter for Democrats.

“I am focused on a budget that reflects the March economic and revenue forecast, not one that relies on one-time money for permanent tax cuts and hurts struggling families and communities of color,” said Rep. Timm Ormsby, D-Spokane. Ormsby is the chair of the House Appropriations Committee, which writes the House version of the state operating budget.

The Democrats’ proposed revenue centerpiece is the capital gains tax on selling such assets as stocks and bonds, which has passed a Senate committee.

The original measure would have imposed a 9 percent capital gains tax on earnings from the sale of stocks, bonds and other assets above $25,000 for individuals and $50,000 for those who file jointly. The new version lowers the tax rate to 7 percent and increases the threshold to individuals and couples who make in excess of $250,000 on sales of stocks and bonds.

Retirement accounts, all property and home sales, farms and forestry would be exempt from the tax.

The measure would take effect Jan. 1, 2022, and would be expected to bring in about $550 million a year.

The capital gains tax — which is certain to face a court challenge if passed — has stalled in the Democratic-controlled Legislature in previous years.

Stokesbary said he felt his plan was proof that new taxes are not the answer.

“We can fund all of the services that people depend on. We can fund many new programs that the state has failed to prioritize over the last decade, and we can do so in a way that doesn’t raise taxes on anyone,” Stokesbary said. “Which implies that if the Legislature still raises taxes anyway it’s by choice and not by necessity.”

Among the largest sources of extra money are $1.8 billion from the reallocation of funds and $1.3 billion in savings from cuts to state agencies, and from maintaining reductions already made, including money saved from vacancies that were not filled during the pandemic.

The approximately $3 billion left in reductions comes from the elimination of several programs Republicans deemed ineffective.

Among the programs Republicans would end is the bonus paid to National Board Certified Teachers.

Stokesbary said he didn’t believe the payments improved student outcomes or identified the best teachers. Additionally the plan also would eliminate the ability of state colleges to grant tuition waivers.

Stokesbary said he believes waivers too often go to students who don’t need them or to students who come from out of state. This is another problem point for Democrats.

“What we see during recessions are more people going back to school, and I think as a result of the pandemic you’re going to see that,” Sullivan said.

“Those waivers that colleges use are for veterans and other people who otherwise wouldn’t be able to attend college. So, I think focusing in that area doesn’t make any sense.”

Republicans also proposed merging two existing pension plans to avoid paying for unfunded liabilities estimated to cost hundreds of millions each year.

While some elements of the Republican plan will receive a hard no from the Democrats, that doesn’t mean pieces of it won’t be considered.

“Obviously we want to seek input from the Republicans. It just makes sense,” Sullivan said.

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The Associated Press contributed to this story.

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