by John Stafford
The Washington State legislature is in the middle of its 2021 session, a 105-day session that convened on Jan. 11 and will end on April 25. This year's session is being conducted via Zoom and will generate three budgets — an operating budget, a transportation budget, and a capital budget. These budgets are two-year documents. They will be created this year (2021) and then again in 2023. In addition to the budgets, more than 1,000 bills are being introduced and debated for potential passage. There are a series of cutoff dates for bills, and we have just passed the Mar. 9 deadline for bills (other than revenue bills) to pass their chamber of origin in order to remain alive.
It is important to note that Washington State is one of just 15 states where the Democrats have a trifecta — control of the governorship and both chambers of the state legislature. This has enormous implications for the type of legislation likely to pass this session, and it also means that Democrats should pursue a bold agenda to take full advantage of their majorities.
The purpose of this article is to provide an update on progress thus far in the 2021 Washington State legislative session. It is not a comprehensive review of all bills but rather a review of key legislation.
It is useful to consider that our era is defined by six concurrent crises: the recession, the pandemic, homelessness, our regressive tax structure, demands for racial justice, and climate change. Bills are advancing that seek to address each of these crises, and this will serve as the organizing scheme for this article. We will start with a review of the three State budgets and then discuss progress on bills in each of the crisis areas. The final section will provide overall commentary.
The operating budget is the primary State budget, and it covers the daily operating expenses of State government (K—12 education funding, financing for higher education, human services, the courts, etc.). For the last biennium (2019—2021), the operating budget was roughly $52 billion. Early in the legislative session, multiple operating budgets are created (from the governor and from different parties in different chambers). Then a negotiating process begins, which typically does not conclude until the end of the session.
Two issues of context are key in understanding the debate over the operating budget. First, the State's projected revenue is down $3.3 billion over three years, relative to pre-pandemic forecasts, which creates the need for additional revenue. Second, the State's budget outlook is directly impacted by legislative action at the federal level — the just-passed $1.9 trillion stimulus bill will have a significant, positive effect on the State's budget.
Gov. Jay Inslee proposed a $57.6 billion budget with $1.3 billion in new taxes. This is in contrast with the House Republican budget, written by Rep. Drew Stokesbary, which calls for just $55 billion in spending and does not contain new sources of taxation.
The Stokesbary proposal uses money from the State's rainy day fund to deal with the revenue shortfall.
"If this isn't a rainy day, I don't know what is," Stokesbary argued.
Democratic budget proposals rely on new taxation instead of the use of the rainy day fund to balance the operating budget. The background narrative, of course, is that Republicans want to avoid new taxation and propose the use of the rainy day fund; Democrats want a new source of taxation and do not propose using the rainy day fund. The manner in which this is resolved will be one of the most momentous decisions of this session.
There are several major transportation budget proposals under consideration: Sen. Rebecca Saldana's $14.3 billion, 12-year plan, Sen. Steve Hobbs' $18—19 billion, 16-year proposal, Sen. Curtis King's $10 billion, 8-year plan, and Rep. Jake Fey's $26 billion, 16-year package.
The transportation budget will allocate funding for a number of major projects, including the Interstate 5 Columbia River Bridge Replacement Project between Washington and Oregon, a new Highway 2 Trestle in Everett, investment in the state routes 167 and 509 Puget Sound Gateway, repair of the West Seattle Bridge, and fish culvert improvements to support salmon runs. It will also fund transit, numerous smaller projects and road maintenance. The main point of contention between the budgets revolves around whether the emphasis should be on building new roads versus maintaining existing roads versus investing in transit. Whether the transportation budget emphasizes new roads or transit has huge implications for carbon emissions, and thus climate activists strongly favor the Fey House Democratic transportation budget, which emphasizes transit investment.
The capital budget is used to finance K—12 school construction, general government facilities, and a variety of other needs. Inslee proposed a $6.2 billion, two-year capital budget, and negotiations are proceeding on this proposal.
The legislature has crafted bills to address the economic hardships that have emerged from the recession. These include the following:
The legislature has put forth a number of bills to address the health risks associated with the pandemic. It is also taking measures to protect the K—12 education system from downsides associated with the pandemic. Key bills are discussed below. It is important to note that the State can (and does) provide guidance on the reopening of schools, but the ultimate decision on whether to do so resides with local school boards.
As noted previously, Washington State has the most regressive tax system in the country, with its lowest 20% earners paying 17.8% of their income in state and local taxes while its highest income earners pay just 3.0%. The reason for this shameful situation is that Washington State is one of just seven states without an income tax or a capital gains tax, which are progressive, and thus relies heavily on the sales tax, which is regressive. Several capital gains tax proposals have been introduced in the state legislature in recent years but none have passed.
This year, Sen. June Robinson proposed a capital gains tax bill (SB 5096) that would raise over $500 million per year for the State. It would levy a 7% tax on capital gains in excess of $250,000, with exemptions for a number of asset classes (e.g., personal homes, retirement accounts, etc.). This bill passed the Senate on a 25—24 vote on Mar. 6. This is one of the most exciting events of this session. If the bill passes the House, it will be a milestone in addressing the problem of regressivity in the State's tax code.
There is also a bill to extend the Working Families Tax Credit (HB 1297, which has passed the House) that provides tax relief to lower income individuals and families (it is similar in intent to the Federal Earned Income Tax Credit).
In addition, there has been a wealth tax proposal (HB 1406/SB 5426) to tax billionaires a rate of 1% on the value of their assets above $1 billion. This bill was introduced by Rep. Noel Frame.
There are major ongoing affordable housing and homelessness crises, and proposals are being introduced in Olympia to address them. These include the following:
The massive protests this past summer in the aftermath of the killing of George Floyd have led to demands for legislative changes in the nature of policing in our society. In response, legislators have introduced a large number of proposals dealing with police reform. The following is a partial list:
I will note two things: the number of bills being introduced in Olympia on police reform is impressive and will certainly lead to important reform. That being said, one wonders whether enough is being done to address the underlying inequities in our society (in education, housing, health care, employment, taxation, etc.) that drive the huge socioeconomic inequities that are the ultimate cause of many of the challenges with respect to racial justice.
Washington has tried to pass a carbon tax several times in the past decade, to no avail. In this session, there are two major bills to place a price on carbon. The first is Washington Strong (HB 1513/SB 5373), which is a "green bond" measure. Essentially, carbon emissions are taxed, and then bonds are sold to investors that promise these future carbon tax revenues to investors in return for an upfront lump sum payment — a form of securitization. This enables a large influx of upfront funding for climate change projects. In short, the financing mechanism is in sync with the nature of the problem. The second proposal is a "cap-and-invest" program (SB 5126), whereby permits to emit carbon pollution are auctioned off, and the allowable pollution limits are reduced over time.
Another observation is important here: On the one hand, it is great that there is focus on a much-needed carbon tax, as evidenced by the fact that there are two credible bills. That being said, it is unfortunate that the environmental community is divided over which approach is best. This inner-circle bickering decreases the chance of anything passing.
Several other key climate change bills are still alive, including the following:
There are also areas of disappointment:
Washington State should be a national leader in climate change legislation — we have abundant hydropower, which means that becoming carbon free is much less expensive here than in other states; we are part of a group of western polities (the province of British Columbia, Washington, Oregon, California, and Hawaii) that are relatively active in addressing climate change; and we have an educated and (at least in many parts of the state) progressive citizenry willing to engage this challenge. Washington State has made reasonable progress on climate change, but much, much more needs to be done.
The Growth Management Act (GMA) is a framework to manage growth and sprawl within the state. Some analysts refer to it as a sort of statewide zoning framework that addresses where growth should best occur and how this growth can best be managed. The State is required to update its Growth Management Act (GMA) every eight years, and 2021 is part of this cycle. A number of important bills are being considered, including a bill to include climate change factors in the GMA (HB 1099, which passed the House), a bill to incorporate housing and shelter needs into the GMA (HB 1220, which passed the House), and a bill dealing with the timing of implementation dates for components of the GMA (SB 5042).
This is a critical legislative area, especially given that there are linkages between the management of growth, density, affordable housing, homelessness, transit, and climate change.
In addition to legislation associated with the aforementioned six crises, there are several other important areas of legislative focus. The first is health care, where there is a bill to establish a commission to study the possibility of universal, single payer health care (SB 5399, which passed the Senate). The second is allowing the use of ranked-choice voting in local elections statewide (HB 1156). The third is a proposal to pursue a State Bank (SB 5188, which passed the Senate). Fourth is proposed legislation to deal with the issue of consumer data privacy rights (SB 5062, which passed the Senate). Finally, a bill (HB 1372) was passed in the House on Monday, March 8 to replace the statue of Marcus Whitman with a statue of Nisqually tribal member and tribal fishing rights leader Billy Frank, Jr. in the U.S. National Statuary Hall.
It is a fascinating year for the state legislature — a momentous session reflecting the fact that our society is facing a number of concurrent crises: recession, pandemic, taxation, homelessness, racial justice, and climate change. Given that there are significant Democratic majorities in both legislative chambers as well as a Democratic governor, there is the possibility for major progressive structural change in each of these areas.
It is far too early to provide any overall assessment of the session. It is clear that there will be a number of important bills passed to make progress against the crises noted above. However, it is less clear what will happen with respect to the major, structural legislation that, if passed, will represent a sea-change in how the State operates. This legislation includes a new source of progressive taxation (e.g., the capital gains tax), a price on carbon (e.g., Washington Strong), a transit-oriented transportation budget, and major improvements to the Growth Management Act, amongst others. For the session to be a success, legislative breakthroughs are needed in each of these areas.
John Stafford is a high school history teacher. He is active with the Democratic Party in South Seattle and with several climate change organizations. He recently completed a run for the State Legislature. He writes periodic articles on politics and policy for the South Seattle Emerald.
Featured image is attributed to cmh2315fl under a Creative Commons 2.0 license (CC BY-NC 2.0).
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