Primer for the 2015 Washington State Legislative Session

by John Stafford

The 2015 Washington State Legislative Session promises to be one of the most contentious and momentous in recent state history. The following is a brief summary of ten of the most critical issues (not ranked by importance) that will be addressed in Olympia over the next several months.

1. Comply with the Supreme Court's McCleary decision. This decision calls for a dramatic increase in funding for K-12 education (several billion dollars per biennium). This funding will address the fact that despite being a high income state, Washington's per pupil spending on public education is below the national average. This is the preeminent issue of the session, and predictably, there is strong partisan disagreement on how to fund McCleary (discussed below).
2. Determine what to do about I-1351. This initiative, which passed narrowly in November, calls for increased education funding to lower K-12 class sizes. The problem is that this spending is above and beyond the McCleary spending, and there is no clear funding source. Thus, many analysts believe the initiative will either be suspended, or only partially funded.
3. Maintain state funding levels for higher education. During and after the Great Recession, due to budget constraints, Washington State reduced its financial support for higher education substantially. This led to substantial tuition increases, making higher education much less affordable. This trend was finally averted in the last legislative session, and continuing to provide the necessary funding to halt tuition increases will be a priority for this session as well.
4. Improve the mental health care system. Washington's mental health practices have been found by the courts to be in violation of state law. There are a number of problems, including the practice of psychiatric boarding, where patients are kept in hospital emergency rooms for extended periods, instead of being placed in psychiatric treatment facilities. This reflects the underfunding of mental health care in the state. A number of changes will be made in this area.
5. Adequately compensate public sector workers. Due to the constricted budgets during and after the Great Recession, state workers and public school teachers have foregone cost-of-living salary increases for years (since 2008 for state workers). It is not feasible to maintain a quality workforce without reasonable compensation levels.
6. Pass a transportation budget. In the 2014 legislative session, the House passed a supplemental transportation budget, but it was not passed by the Republican-controlled Senate, which wanted additional spending reforms prior to increasing the gas tax. There will again be partisan debate over spending levels, funding sources and spending reforms.
7. Address carbon emissions. Governor Inslee has proposed a cap and trade system for carbon emissions in Washington. Effectively, this will place a tax on the top roughly 130 carbon polluters in the state. This program, coupled with Inslee's other carbon proposals, would make Washington State one of the nation's leaders in legislation to address climate change.
8. Create regulation to govern drone regulation in Washington State. The State Legislature passed drone legislation in 2014, but it was vetoed by Governor Inslee, who temporarily banned the purchase of drones by government agencies and established a task force to propose regulatory guidelines. This complex topic will be revisited in the upcoming session.
9. Increase taxes. As noted in my previous column (September 2, 2014), Washington State's tax level has declined precipitously in recent decades. Between 1995 and 2011, Washington State fell from 11th to 37th place in the nation in state and local taxes as a percentage of personal income. One wonders how many times in the history of the nation a state has dropped this far this fast. The fact that Washington State has become a low-taxed state relative to its income is, of course, the primary underlying driver of the many funding problems described above. This decline in taxation levels, the critical funding needs mentioned above, and the improving economy combine to make this is an obvious time for a tax increase.
10. Make the state's tax system less regressive. In addition to being a low tax state relative to its income, Washington State also has the most regressive tax structure in the country. This is due to the lack of an income tax and a capital gains tax (both of which exist in almost every state), which leads to an overreliance on the regressive sales tax. In addition, the state business tax system is based on sales instead of profits (an extremely uncommon approach), and contains numerous exemptions — attributes which make the business tax system regressive as well. Our regressive tax system is especially concerning in an era of increasing income inequalities.

Addressing these ten challenges alone will represent a Herculean challenge for the upcoming Legislature (and there are, of course, a multitude of other topics to deal with as well). It is essential to realize that there is an opportunity to address these topics in a synergistic manner — that is, to combine solutions to discrete challenges into a collective whole that simultaneously achieves multiple objectives. Governor Inslee's budget proposal (which in my view, although imperfect, should be commended), does just that. He places a tax on carbon, introduces a capital gains tax, provides tax relief for low-income families (via a state extension of the federal Earned-Income-Tax-Credit), closes several corporate tax exemptions, aggressively funds McCleary, expands mental health capacity, and provides modest pay increases for public sector workers. Inslee refers to his proposal as a "twofor" (providing two benefits for the price of one), but I see it as a "fourfor", in that it simultaneously pursues restructuring in four critical areas: increased taxation, a less regressive tax structure, funding for key initiatives, and carbon reduction.

Unfortunately, the Republican response to the massive challenges of this session has thus far been uninspiring. Initially, a number of Republican legislators criticized the McCleary decision on the grounds that it represented unwarranted judicial interference in legislative affairs. Next, a Republican proposal to fund McCleary using the so-called "education first" approach was introduced. This calls for first creating a budget that funds education, and then developing a second budget that deals with all other spending requirements. In practice, this means funding education first, and then cutting social programs via the pared down second budget as the primary means of paying for it. As such, this is a cynical attempt to position the party as proponents of education by appropriating the mantra "education first" (albeit while criticizing the judicial writ to increase educational funding in the first place), and then seeking to cut social services to finance it. Perhaps this scheme can be deemed the Republican "threefor." The philosophical differences inherent to the Inslee proposal and the initial Republican proposition could not be more stark.

Several obvious themes emerge from this discussion. First, this is a legislative session of uncommon importance. Not only are the specific policy challenges immense, but their solutions can be combined in an integrated, compelling manner. Second, given the dramatic philosophic differences between Democrats and Republicans on how to finance McCleary (as well as other issues), the session will likely be even more acrimonious than usual. Third, this amalgamation of issues will likely not be solved during the regular session, and will likely then lead to several special sessions. In sum, this will be a long, complicated, fascinating, controversial and historic legislative session. I encourage readers to follow it closely.

John Stafford is a substitute teacher for Seattle Public Schools and a former management consultant in corporate strategy. He recently completed a run for State Senate in the 37th District. He is writing a monthly article on public policy for the South Seattle Emerald.