NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Tuesday, December 13th, 2016

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.

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