McCleary funding, capital budget still the focus for state Legislature

OLYMPIA — An unfinished capital budget, more education funding to satisfy the Supreme Court’s McCleary decision and a tussle over water rights — all left over from the 2017 term — will face state legislators when they return for business today.

Sen. Kevin Van de Wege, D-Sequim; Rep. Steve Tharinger, D-Sequim; and Rep. Mike Chapman, D-Port Angeles will be in the thick of discussions to resolve all these issues. The three legislators represent the 24th District, which covers Clallam and Jefferson counties and part of Grays Harbor County.

Democrats will have one thing in their favor this year: They now hold majorities in both the Senate and House.

Democrats won back control of the state Senate in November with Democrat Manka Dhingra’s electoral victory in the 45th legislative district covering Kirkland and Woodinville.

Capital budget logjam

An impasse in the state Legislature over the $4 billion capital construction budget and water rights at the end of the last term turned into massive delays for state-funded projects across the state.

Members of the state House and Senate went home in July following the adjournment of their third overtime legislative session without passage of the state’s capital budget or, Republicans argued, a permanent fix for concerns over water rights.

In October 2016, the Supreme Court decided in the Hirst ruling that Whatcom County failed to protect water resources by allowing new wells to reduce flow in streams for fish and other uses. The court said counties must ensure water is available before they issue building permits in certain areas.

Inslee floated a proposal which would allow property owners impacted by the Hirst ruling to obtain building permits for 24 months. It would also create a legislative task force to work on long-term solutions, which the Republicans rejected.

SB-6091, sponsored by Van De Wege, would allow property owners to drill new wells and withdraw enough water for typical household use while their communities develop and adopt plans to permanently govern usage.

There’s no deal or guarantee the capital budget will be approved if the bill passes, but Van De Wege said he thinks it will happen. The bill is scheduled for a hearing today and “we’ll try to get it done ASAP,” he added in a phone interview.

Tharinger, who chairs the House Capital Budget Committee, said representatives are working to a companion bill for SB-6091 in that chamber.

Both bills will likely need some tweaking, he said, but he was looking forward to a vote before the end of the week. The capital budget and the bonds to finance it would follow.

Washington state, said Tharinger, is just “hemorrhaging money” because the capital budget was put off. Some federal financing was missed and the state has incurred fines for putting of the construction of additional mental health facilities.

Education funding

Legislators thought they had satisfied the Supreme Court’s McCleary education funding requirements when they closed out the last session in overtime around July 4. Their property tax plan would raise taxes in some district while decreasing them in others, producing $7 billion more for education.

But the court ruled in November that while lawmakers have made progress in a multi-year effort to fully fund basic education, they are not on track to meet a court-imposed deadline and will remain in contempt of court.

The court said the Legislature needs to come up with roughly $1 billion more to meet the McCleary mandate.

Capital gains tax

While Democrats in the state Legislature have supported enacting a capital gains tax to fund public education in the past, they don’t appear to see support for one now.

At a conference, Senate Majority Leader Sharon Nelson, D-Maury Island, said that while “everything will be on the table,” she doesn’t see much momentum behind passing a capital gains tax assessed on profits derived from the sale of property or other assets this session.

Governor Jay Inslee has voiced support for a capital gains tax, although some members of the Legislature have been wary of it. Many taxpayers, particularly seniors, are expected to oppose it. The state constitution also prohibits taxes on income, which might include capital gains taxes.

State Republicans have been largely opposed to past proposals from Democrats to enact a capital gains tax, a stance which hasn’t seemed to change.

“I don’t see any support for a capital gains tax in my caucus because it is an income tax,” Senate Minority Leader Mark Schoesler, R-Ritzville, said.

Carbon tax for education

As part of a 2018 supplemental budget he proposed in December, Inslee wants lawmakers to approve a tax on carbon pollution that would help meet the McCleary obligation.

The carbon tax would cover some of the reserves that would pay for immediate education needs, mainly teacher compensation, that Inslee says are needed for to abide by the McCleary decision.

Inslee is expected to provide more details on the plan in his State of the State address at noon Tuesday.

The proposal is opposed by Hillary Franz, commissioner of the Department of Natural Resources, who told the PDN last week that she would rather see carbon taxes used to support economic growth.

Many Democrats felt forced to vote for the property tax in the last session, said Van De Wege.

The state senator sees some desire to replace the property tax but said he knows finding new revenues to replace it plus the additional $1 billion required for McCleary is unlikely.

Fish pens

New legislation would address the escape of non-native fish populations into the waters of Puget Sound and Strait of Juan de Fuca, such as the Atlantic salmon net pen collapse that occurred last August.

Chapman, Rep. Kristine Lytton, D-Anacortes and others filed HB-2418, which would maintain current lease contracts while creating a process to shut down pen farms that don’t meet requirements for keeping native fish populations safe.

The proposal seeks to eliminate escapes completely by implementing an immediate moratorium on new or extensions of leases for net pens, to last at least two years.

“None of us want to have Atlantic salmon farmed in our waters, but immediately pulling the rug out from under businesses who have contracts is going to result in immediate litigation and at a huge cost to taxpayers. Instead of picking winners and losers, this bill lets businesses determine their best course of action while the state keeps our waters protected,” said Chapman.

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Assistant Managing Editor Mark Swanson can be reached at 360-452-2345, ext. 55450, or [email protected].

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