(The Center Square) — Washington Gov. Jay Inslee wants to pay for his $57.6 billion budget with taxes on capital gains and health insurers while diving into the state’s $1.8 billion rainy day fund.
According to state revenue forecasts, Washington will be short $152 million by the end of the 2019-2021 budget cycle.
Inslee's budget proposal on Thursday shows he intends to pay for the shortfall with Washington's cash reserves, but the state expects revenue to fall $3.3 billion below projections past 2023, not accounting for future federal stimulus.
Taxes
To address that fiscal downturn, Inslee is looking to pass a 9% tax on earnings from selling stocks, bonds, and other assets above $25,000 for individuals and $50,000 for couples filing jointly.
The tax would be effective in 2022 and raise an estimated $3.5 billion over the next four years. According to estimates from the governor's office, the tax would pick the pockets of just 2% of Washington households.
Homes, farms, forestry, and 401(k) accounts would all be exempt from the tax.
State lawmakers have floated the idea of a capital gains tax to no avail for years. Opponents of the idea say it comes too close to a personal income tax which is banned under the state constitution.
Inslee's proposed tax on health insurers would charge Medicaid-led care groups, limited health services contractors, and third-party administrators per patient.
The health insurer tax would take effect in March 2022 and bring in an estimated $343 million by 2025. That money would go towards data software, community partnerships, and emergency management planning for health departments.
Economy
Inslee's proposals also make a point of helping struggling businesses, out-of-work Washingtonians, and protecting critical social services.
To that end, Inslee is seeking to raise the minimum for weekly jobless benefits from $201 per week to $270 per week and lower unemployment insurance tax increases on employers.
The governor's budget also calls on the legislature to approve $100 million more in small business grants.
“My focus is on helping our state recover from the health and economic impacts of the pandemic,” Inslee said. “I also want to continue to make investments in all the programs that people need to help them through these times. This is not the time for budget cuts — this is a time for investing in Washington.”
For working parents struggling with family duties, the governor wants $191 million to pay for childcare vouchers for low-income families to use next spring if the pandemic lets up.
In response to the state's homelessness crisis, the governor is proposing $400 million for affordable housing and $31 million for Washington's Food Assistance Program.
Education
As Washington schools see falling attendance rates during the pandemic, Inslee wants $400 million for hiring more elementary school counselors to help assess student learning gaps.
The American School Counselor Association recommends one counselor for every 250 students regardless of grade. Washington has never passed a law requiring school districts to provide student counseling.
The Washington Office of Public Instruction reports that schools are budgeted for one counselor for every 811 elementary students, one for 355 middle-school students, and one for 236 high school students in 2019.
A bill introduced by Washington Senators Mark Mullet and Bob Hasegawa in 2020 would bring the state closer to the recommended ratio by setting minimum time allotments for counselors and students.
Other items
Among the other items in Inslee's budget include $724 million for removing culverts blocking migrating fish per a federal injunction.
The governor's budget also devotes $150 million to the state’s Public Works Assistance Program providing low or no-interest loans for local governments to repair bridges, roads, and sewer systems.
Looking Ahead
Before 2020 is over, the governor will decide whether to extend Washington's eviction moratorium or let it expire on December 31. The federal eviction ban moratorium ends that same day.
Inslee is expected to speak more on his budget in the weeks before January 11 when state lawmakers reconvene for their virtual 2021 legislative session.
