OLYMPIA — Democratic budget writers for the Washington House and Senate on Thursday afternoon announced that they had reached a tentative deal on a new two-year state operating budget.
The announcement, made in a news statement, didn’t release any details on the deal — and indicated some final work must still be done to complete it.
“We have reached a tentative budget agreement between the two chambers and look forward to finishing our work on a final budget by the end of the legislative session on Sunday,” reads the joint statement by Sen. Christine Rolfes of Bainbridge Island and Rep. Timm Ormsby of Spokane.
Lawmakers were still discussing proposals to raise the cap on how much money school districts could collect through local property-tax levies, according to House Majority Leader Pat Sullivan, D-Covington.
Budget writers anticipate releasing the budget on Saturday. As in past years, that would give little time for the public — or even lawmakers — to review the details.
Legislative staff were working quickly to ready the budget, according to Sullivan, with the hope of making it available for 24 hours or more before final votes.
That would be a marginal improvement over 2017’s final budget, which was made public less than 24 hours before being signed by Gov. Jay Inslee.
Democratic lawmakers, who have comfortable majorities this year in the state House and Senate, have faced hard decisions about how much money to raise through taxes — or what spending they should skip.
Without any new taxes, legislators are expected to have nearly $50.6 billion to fund the new budget. That amounts to a nearly 16% increase from the existing budget when Inslee first signed off on it in June 2017.
But Democratic leaders have said new revenue is necessary to adequately fund government. They cite the costs of Washington’s recent court-ordered K-12 schools funding plan and a mental-health system in need of overhaul.
Proposed budgets this year by House Democrats, Senate Democrats and Inslee each included a plan to change the state real-estate excise tax (REET), which is paid by those selling homes, from a flat 1.28% to a graduated rate.
The idea is that people with less-expensive homes would get a lower rate, and people with pricier homes would pay a higher share. Democrats have called it a way to raise new revenue while also making the tax system more progressive.
“I think that’s likely,” said Sullivan earlier in the week, when asked about the REET in a final deal. But, “I think we’re still working through the details on that as well.”
Sullivan said a final budget deal would wind up somewhere in between the Senate’s proposal of about $52 billion over two years and the House proposal of $52.6 billion.
GOP Rep. Drew Stokesbary, of Auburn, argued that recent growth in tax collections should translate into a legislative session that finishes on time and without new taxes.
“We could write a budget that funds all of our priorities without raising taxes,” said Stokesbary, the ranking Republican on the House Appropriations Committee.
Stokesbary called the change to the REET “poor tax policy” and said it might place a burden on sellers of multifamily housing units right as the state experiences a housing-affordability crisis.
House Democrats and Inslee also introduced different versions of a new tax on capital gains and increases in the business-and-occupation tax, as well as ending some tax breaks.
One of those business-and-occupation tax proposals was essentially offered up by Microsoft.
House Bill 2158 would among other things apply a surcharge to a handful of Washington’s biggest tech companies. That money would be used to make college and apprenticeships more affordable, according to Rep. Drew Hansen, D-Bainbridge Island, sponsor of the bill.
“It’s not every day that you have a revenue proposal presented to you gift-wrapped on a silver platter, with support from one of the state’s largest companies,” said Hansen.
A capital-gains proposal has always faced an uncertain fate in the Senate, where three of the chamber’s 28 Democrats late last year said they opposed the governor’s version.
Conservatives have argued that a capital-gains tax is unconstitutional, meaning it would almost immediately face a court challenge.
A bill to raise the cap on local levies that school districts can propose has been considered another key point in negotiations.
It comes after local school districts say they have struggled to adjust after the Legislature’s 2017 K-12 school funding plan, under which the state increased its share of funding for basic-education costs.
School districts say they need authority to raise local property-tax levies in order to be properly funded.
Sen. Reuven Carlyle, D-Seattle, said he didn’t want to vote on a state budget that raised taxes and still come home to face layoffs in Seattle Public Schools.
“At the end of the day,” said Carlyle, “I’m not going home with serious cuts to the district.”