Go Jay Inslee! Governor proposes $3.9 billion in new revenue for our K‑12 public schools

Declar­ing that we have a duty to fol­low our Con­sti­tu­tion and pro­vide a qual­i­ty edu­ca­tion to every child in our state, Gov­er­nor Inslee today unveiled a bold plan to ful­ly fund our state’s K‑12 pub­lic schools and end the McCleary litigation.

“We face an oppor­tu­ni­ty — and an oblig­a­tion — in this upcom­ing ses­sion to not just put more mon­ey into the sys­tem we already have, but to invest in the kind of edu­ca­tion sys­tem all our chil­dren deserve,” Inslee said in a statement.

Inslee’s plan calls for the levy­ing of a cap­i­tal gains tax and a pol­lu­tion tax as well as the clos­ing of tax breaks not in the pub­lic inter­est. The busi­ness and occu­pa­tion tax would also be increased, but not on very small busi­ness­es. This would raise $3.9 bil­lion in new rev­enue to invest in the state’s K‑12 pub­lic schools.

Every school dis­trict in the state would receive a sig­nif­i­cant boost in fund­ing — sig­nif­i­cant enough to allow for reduc­tions in prop­er­ty tax­es. In fact, the gov­er­nor’s office esti­mates that 75% of house­holds would receive a prop­er­ty tax cut.

In a post on Medi­um, the Gov­er­nor offered these specifics:

Increas­ing the busi­ness and occu­pa­tion tax rate for a broad range of per­son­al and pro­fes­sion­al ser­vices from 1.5 to 2.5 per­cent, gen­er­at­ing near­ly $2.3 bil­lion in the next two years. Wash­ing­ton, in gen­er­al, does not tax ser­vices to the extent it tax­es goods. How­ev­er, con­sumers today spend a small­er share of their dis­pos­able income on goods and a larg­er share on ser­vices such as those pro­vid­ed by accoun­tants, archi­tects, attor­neys, con­sul­tants and real estate agents. To make sure very small busi­ness­es aren’t impact­ed, the governor’s plan more than dou­bles the B&O tax fil­ing thresh­old to $100,000, pro­vid­ing an addi­tion­al 38,000 busi­ness­es some tax [sav­ings].

Impos­ing a new tax on car­bon pol­lu­tion asso­ci­at­ed with the pro­duc­tion and con­sump­tion of fos­sil fuels that would gen­er­ate about $1.9 bil­lion in the next bien­ni­um. Half the rev­enue would be rein­vest­ed in clean ener­gy and trans­porta­tion projects to low­er con­sumer fuel bills and cut green­house gas emis­sions. Addi­tion­al funds would sup­port projects to build water infra­struc­ture and improve for­est health. Funds are also used to off­set tax­es to busi­ness­es and low-income house­holds. The remain­ing rev­enue would go to the state’s edu­ca­tion needs.

Impos­ing a 7.9 per­cent cap­i­tal gains tax on the sale of stocks, bonds and oth­er assets to increase the share of state tax­es paid by a small frac­tion of the state’s wealth­i­est tax­pay­ers. It would apply only to the cap­i­tal gains earn­ings above $25,000 for indi­vid­u­als and $50,000 for joint fil­ers. Retire­ment accounts, gains on the sale of res­i­den­tial real prop­er­ty and cer­tain live­stock and agri­cul­tur­al land would be exempt. The tax would gen­er­ate $821 mil­lion in fis­cal year 2019.

Clos­ing or chang­ing five tax exemp­tions to raise about $300 mil­lion, includ­ing elim­i­nat­ing the sales tax exemp­tion for bot­tled water, lim­it­ing the sales tax exemp­tion for vehi­cle trade-ins and con­vert­ing the non­res­i­dent sales tax exemp­tion to a refund program.

The gov­er­nor will also pro­pose more than $1 bil­lion in his cap­i­tal bud­get for school construction.

Gov­er­nor Inslee is show­ing tremen­dous courage and lead­er­ship today by propos­ing a com­pelling, well-thought out plan for fund­ing our schools that requires the wealthy to increase their invest­ment in our commonwealth.

For years, the Leg­is­la­ture has pro­cras­ti­nat­ed and punt­ed on rev­enue reform, leav­ing us chained to a bro­ken, regres­sive tax code that isn’t gen­er­at­ing the fund­ing nec­es­sary to com­ply with Arti­cle IX of our Con­sti­tu­tion, which says:

It is the para­mount duty of the state to make ample pro­vi­sion for the edu­ca­tion of all chil­dren resid­ing with­in its bor­ders, with­out dis­tinc­tion or pref­er­ence on account of race, col­or, caste, or sex.

This plan would begin to address both the inequity in our tax code and the chron­ic, unjust under­fund­ing of our pub­lic schools.

Our research shows that strong majori­ties of Wash­ing­to­ni­ans back Gov­er­nor Inslee’s rev­enue ideas. Last June, work­ing with Pub­lic Pol­i­cy Polling, we sur­veyed 679 like­ly vot­ers and asked respon­dents if they believed our schools are under­fund­ed and that we need to raise rev­enue to ful­ly them. Our poll, which was in the field from June 14th-15th, has a mar­gin of error of +/- 3.8% at the 95% con­fi­dence level.

63% of the like­ly vot­ers who respond­ed to the sur­vey agreed that Washington’s schools need more fund­ing. Impres­sive­ly, 65% sup­port a cap­i­tal gains tax on the wealthy to make this hap­pen, with 46% say­ing they “strong­ly sup­port the idea”.

The spe­cif­ic lan­guage of the school under­fund­ing ques­tion was as follows:

Do you strong­ly agree, some­what agree, some­what dis­agree or strong­ly dis­agree with the fol­low­ing state­ment: Washington’s pub­lic schools are under­fund­ed, and we need to raise state rev­enue to ful­ly fund them?

These were the answers:

• Agree: 63%
  • 45% “strong­ly agree” that we need more rev­enue for schools
  • 18% “some­what agree” that we need more rev­enue for schools
• Dis­agree: 32%
  • 18% “some­what dis­agree” that we need more rev­enue for schools
  • 14% “strong­ly dis­agree” that we need more rev­enue for schools
• 6% answered “not sure” 

The spe­cif­ic lan­guage of our cap­i­tal gains tax ques­tion was as follows:

Do you strong­ly sup­port, some­what sup­port, some­what oppose or strong­ly oppose tax­ing the cap­i­tal gains of wealthy indi­vid­u­als to help pay for pub­lic schools, col­leges and universities?”

These were the answers:

• Sup­port: 65%
  • 46% “strong­ly sup­port” a cap­i­tal gains tax
  • 19% “some­what sup­port” a cap­i­tal gains tax
• Oppose: 33%
  • 9% “some­what oppose” a cap­i­tal gains tax
  • 24% “strong­ly oppose” a cap­i­tal gains tax
• 2% answered “not sure” 

We began ask­ing a cap­i­tal gains tax ques­tion in our statewide polls after Gov­er­nor Inslee first pro­posed levy­ing one two years ago as part of his 2015 budget.

House Democ­rats respond­ed to Gov­er­nor Inslee’s idea by get­ting to work on specifics, but obstruc­tion­ist Sen­ate Repub­li­cans refused to play ball and a cap­i­tal gains tax did not make it into the 2015–2017 bien­ni­al budget.

How­ev­er, Gov­er­nor Inslee’s pro­pos­al did res­onate with the peo­ple of Wash­ing­ton, who our research shows have become increas­ing­ly sup­port­ive of the idea.

In 2015, when we first asked the cap­i­tal gains tax ques­tion, we found 55% of respon­dents in favor, with 43% strong­ly sup­port­ive. Those num­bers increased this year to 65% sup­port­ive over­all, with 46% strong­ly supportive.

Respon­dents to our sur­veys have also expressed sup­port for rais­ing rev­enue to fund pub­lic schools by going after big polluters.

For the past two years, we’ve asked this ques­tion in our statewide polls:

Do you strong­ly sup­port, some­what sup­port, some­what oppose or strong­ly oppose imple­ment­ing a cap-and-trade sys­tem, where pol­luters would be charged a fee to reduce car­bon diox­ide emis­sions and fund pub­lic schools and trans­porta­tion projects?

Sup­port for this idea also increased since we first asked about it. In 2015, 37% said they strong­ly sup­port­ed this idea and that fig­ure remain unchanged this year. How­ev­er, the per­cent­age of those some­what sup­port­ive increased from 18% to 22%, for a total of 59% of respon­dents sup­port­ive this year.

Total oppo­si­tion clocks in at just 36%.

In this plan, Gov­er­nor Inslee is propos­ing pol­lu­tion penal­ties instead of a cap and trade sys­tem. But the basic con­cept of going after big pol­luters and using the rev­enue to invest in our schools and in trans­porta­tion projects is the same.

The Gov­er­nor is offer­ing a cli­mate pro­tec­tion action plan and a school fund­ing pro­pos­al in the same pack­age. That’s real­ly, real­ly smart.

Gov­er­nor Inslee’s deci­sion two years ago to put ver­sions of these same ideas on the table is pay­ing off. Wash­ing­to­ni­ans have become more enthu­si­as­tic about levy­ing a cap­i­tal gains tax and impos­ing pol­lu­tion penal­ties. The Gov­er­nor is wise to rein­tro­duce these ideas and insist the Leg­is­la­ture seri­ous­ly con­sid­er them.

Hos­tile Repub­li­cans will undoubt­ed­ly have very unkind things to say about this plan and Gov­er­nor Inslee’s forth­com­ing bud­get. They will be eager to denounce the Gov­er­nor’s strat­e­gy. But they will not be offer­ing an alter­na­tive plan of their own, because they are not inter­est­ed in ful­ly fund­ing our K‑12 schools.

Heck, Michael Baum­gart­ner has intro­duced a res­o­lu­tion to repeal those intro­duc­to­ry words of Arti­cle IX. To him and his fel­low extrem­ists in that cau­cus, fol­low­ing the plan of gov­ern­ment our founders gave us is just too hard… so he’s propos­ing we just do away with the part that says it’s our para­mount duty to amply pro­vide for the edu­ca­tion of our youth. That’s not lead­er­ship; it’s appalling cowardice.

Gov­er­nor Inslee is show­ing us today what real lead­er­ship is. And we can’t thank him enough. Way to go, Gov­er­nor! We’ll be show­ing up in Olympia next year to help you and Super­in­ten­dent-elect Chris Reyk­dal fight for our stu­dents and teachers.