Schmudget Blog


Final Budget Makes Progress on Community Investments – for Now

Posted by Kelli Smith at Jul 21, 2017 06:20 PM |
Filed under: State Budget, State Revenue

Washington state lawmakers have enacted a two-year budget that makes some strong community investments now, with plans for more of the same in the future. There are definitely some things in this budget to like: the historic paid family and medical leave program that will support families; the approval of collective bargaining agreements for the front-line workers who keep the state running smoothly; and investments in K-12 schools that will put much-needed resources into classrooms. And even though lawmakers failed to make significant progress in some areas of the budget, they did avoid making the draconian, harmful cuts that the Senate Republicans proposed earlier this year.

But because the budget relies on a short-sighted revenue plan and an assortment of one-time actions, like temporary fund shifts and tapping the state rainy day fund, these heightened   investments aren’t guaranteed to survive in the long term. Lawmakers must enact stronger revenue reforms in order to maintain the necessary investments in our state and our communities when they meet again in two, four, or ten years to write future budgets.

The changes to funding levels in the enacted 2017-19 state budget, broken down by the value areas in the Budget & Policy Center’s Progress Index framework, are detailed in the chart and sections that follow.

[Click on graphic to enlarge.] 

Final_budget_change_from_maintenance


COMMUNITY DEVELOPMENT & TRUST

To create thriving communities, Washingtonians should be able to count on having safe neighborhoods, beautiful public spaces to enjoy, and a state government that represents residents fairly and efficiently. The state budget accomplishes these goals by supporting Washington’s essential state workers, investing in our public spaces, and ensuring equal access to public institutions. Lawmakers increased funding in this area by $730 million, an increase of 12.1 percent. The budget: 

  • Values essential public workers. The final budget agreement ensures that the thousands of essential front-line workers in Washington, such as public health nurses, law enforcement officers, and long-term care providers, will be compensated according to the bargaining process established in our state. Lawmakers also maintained health insurance coverage for most public employees, including nurses at state hospitals, social service and public safety workers, and home care workers. It’s crucial that front-line workers have stable jobs that can support them and their families. The fact that lawmakers honored a fair and transparent process for compensating state workers also fosters trust in state government. Funding these agreements was a good move on lawmakers’ part.
  • Increases access to legal aid for Washingtonians with low incomes. The budget includes funding for 15 new civil legal aid attorneys over the next two years. This funding will increase access to legal help for low-income people to deal with issues such as job or housing discrimination claims or consumer finance protection. 

ECONOMIC SECURITY

All Washingtonians should have the opportunity to meet their basic needs, to have good jobs that support their families, and to have the chance to get ahead financially. These are the building blocks of thriving communities. When it comes to economic security, this budget made some historic progress. But it also included some disappointing cuts. Overall, the legislature cut investments by $5 million in this area, a decrease of 0.5 percent from current spending levels. The budget: 

  • Creates a historic paid family and medical leave program. This legislative session, Washington became the fifth state in the nation to pass paid family and medical leave, a significant step forward for workers and families across the state. The new program will make it possible for workers to take leave to welcome a new child, or to take care of themselves or a family member with a serious medical condition, without losing all of their income while they’re on leave. Countless Washingtonians will benefit from this historic and forward-thinking move. 
  • Helps families with low incomes make ends meet. Policymakers made improvements to WorkFirst, Washington’s assistance and job training program for families striving to move out of poverty, by partially restoring the program’s cash grant – which was cut by 15 percent in 2011 – with a 2.5 percent increase. That’s an additional $15 a month for a family receiving the maximum grant. Lawmakers also doubled the time – from 12 to 24 months – that parents can receive benefits while they’re getting post-secondary education. These are important advances for strengthening the program. However, the budget also called for cutting $36.2 million from WorkFirst and using it for other areas of the budget.
  • Expands options for child care for families with low incomes. The budget includes small increases for child care providers who serve kids in Working Connections Child Care (WCCC) – Washington’s child care subsidy program for families with low incomes. And it honors the collective bargaining agreement for in-home family child care providers, which will help more providers – many of whom are small business owners – keep their doors open and provide care to children across the state. The budget likewise doubles the amount of time at least one parent in the family receiving WorkFirst can stay home with their young children – from the age of 1 year to 2 years. But based on lawmakers’ expectation that this WorkFirst change will mean more parents stay home longer and fewer children need child care, the budget assumes a certain amount of savings. As a result, they cut nearly $15 million from WCCC. Even if these savings are realized, it would be better to reinvest those dollars in WCCC to strengthen it and ensure high-quality care for more families.
  • Postpones progress on addressing intergenerational poverty. The budget included a provision to create a new initiative to address intergenerational poverty, but the governor vetoed the provision because of a technical concern. He directed the Department of Social and Health Services to form a work group to come up with a plan to advance the initiative nonetheless.
  • Invests in collection of better data on children and families facing food insecurity in Washington state. The budget includes a provision requiring four state agencies to start reporting data on Washingtonians participating in federal nutrition assistance programs. This data will provide important information for policymakers to make more-informed decisions and to develop targeted policies to address hunger and food insecurity throughout the state.

HEALTHY PEOPLE & ENVIRONMENT

Washingtonians value access to clean air and water, as well as programs that support their health and wellbeing. The state budget supports these values by investing in environmental protection measures, broad access to health care services, and improvements to the quality of life of all Washingtonians, especially children and seniors. The proposal would increase funding in this area by $729 million, a 7 percent boost. The budget:

  • Invests in important behavioral health and senior services. The budget funds 96 new beds in walk-in centers for individuals in mental health crisis and provides targeted funding to address safety and capacity issues at Western State Hospital. Lawmakers also made crucial investments to strengthen long-term care services for seniors, including wage increases for home care workers and modest increases in reimbursement rates for long-term care providers. However, in the final enacted budget, legislators passed up some important investments that had been proposed in the House’s budget earlier in the session, such as larger increases to Medicaid reimbursement rates for behavioral health. 
  • Moves forward on a smart, big-picture health reform project. Lawmakers moved forward on the Medicaid Transformation Project, an important state-federal partnership that will bring in $1.5 billion in federal funding to improve health care delivery and lower costs for Medicaid. It will also offer cost-effective support for family caregivers and help individuals find housing and employment. 
  • Rejects a major, ill-conceived cut to family planning services. In their original budget proposal this session, the Senate Republicans had proposed a cut to certain family planning services in Washington state by 10 percent. In the final budget deal, lawmakers wisely avoided that proposed cut, opting instead to preserve access to health care for the women and men who rely on these important services. 
  • Establishes a unified Department of Children, Youth, and Families (DCYF). The DCYF will serve as a central agency to improve a broad array of outcomes for Washington’s children, from ensuring they have a safe family environment in their homes to providing them with high-quality early education. The creation of the new department – grounded in prevention, early learning, principles of racial equity, and accountability to child outcomes – is an important step toward improving the lives of Washington’s children and families. 
  • Makes incremental but inadequate progress on public health investments. The budget provides $12 million for foundational public health services, such as preventing the spread of communicable diseases, which are provided by the state Department of Health and county public health agencies. But this amount falls short of what’s needed to meaningfully address health inequities among Washingtonians and to modernize our state’s public health technology and equipment.
  • Changes the way adults on Medicaid access dental services. Instead of going to the dentist and having their fees paid through Medicaid, patients will now be required to use a managed care plan for their dental services. Because lawmakers anticipate that this switch will result in fewer dental-related emergency room visits for Medicaid patients, the final budget assumes $16 million in savings. But given the untested nature of this change, there is reason to doubt that those savings will be achieved. And if they aren’t, that will result in cuts to the program that will restrict access to dental care for people with low incomes. 
  • Maintains and improves some efforts to keep our air and water clean and free of pollution.  But this is done with the help of more than $20 million in unsustainable transfers to a separate account originally devoted to mitigating the spread of toxic chemicals. Additional funding was allocated to implement a new rule requiring oil refineries, power plants, and other industries to curb carbon dioxide emissions responsible for global warming and other forms of air pollution.

EDUCATION 

Funding education – particularly funding K-12 schools and compensating the educators and staff that keep schools running – was the main focus of this year’s legislative session. On that front, lawmakers made significant strides toward meeting their obligation to the Supreme Court per the McCleary decision. But it remains to be seen whether the court will accept their effort as satisfactory. Overall, lawmakers invested an additional $1.8 billion in education, from early learning to higher education, an increase of 7.6 percent from current spending levels. The budget: 

  • Increased funding for K-12 schools. Through this budget, lawmakers invested an additional $1.8 billion in state resources for K-12 schools as follows:
    • Teacher and staff compensation. The majority of new state K-12 spending will go toward increasing the amount of money the state distributes to compensate teachers and staff, as well as reforming the way our state divvies up those resources. The funding plan also includes a major change to how health insurance is provided for teachers and school employees. Essentially, school employees will now bargain their health care at the state level through a statewide coalition of school unions rather than bargaining at the local level. This change will need to be closely monitored as it is rolled out to ensure that health insurance coverage is not compromised. 
    • Enhancements based on the number of students in particular education programs. Under the current school funding model, additional resources are distributed to school districts based on the educational programs kids in the district need. This budget increases the resources districts will receive based on the number of students in certain programs, such as the learning assistance program, transitional bilingual program, or special education program – and it targets some of these resources to schools with high levels of student poverty. Lawmakers also included funding to expand dual-language learning opportunities in early learning programs and K-12 schools. This is a move in the right direction toward using evidence-based strategies to close the opportunity gap for children who are English-language learners, and it is an important acknowledgement of the benefits of bilingualism in schools.
    • Local levy reform. Finally, the plan restricts how much money school districts can raise through local levies, and what activities those levies can fund. Beginning in the 2019-20 school year, local levies may only be used to pay for certain “enrichment” activities – such as extracurricular activities. One possible consequence of this change is that, in some districts, it may make it difficult for schools to continue to deliver the same level of education to kids in particular programs considered basic education, such as special education. That’s because some districts are currently funding these programs with local levy dollars at levels above what the new state allocation will be. So it remains to be seen whether districts will be able to provide the same level of service under the new funding scheme.
  • Invests in early learning to prepare Washington’s kids for lifelong success. Legislators smartly expanded the Early Childhood Education and Assistance Program (ECEAP) – our state’s preschool program serving families with low incomes – by adding 1,800 new slots and protecting the quality of the program by increasing the rate ECEAP providers are reimbursed. But the budget falls short in some areas. It reduces funding for Early Achievers, which provides professional development for early learning professionals so they can provide the highest-quality care. Lawmakers also pushed out the date by which the state commits to serving all ECEAP-eligible kids – part of the landmark 2015 Early Start Act – from the 2020-21 academic year to the 2022-23 year. To advance the wellbeing of Washington’s kids and families, lawmakers should have kept the promises they made to provide ECEAP to all eligible kids by 2020.
  • Boosts financial aid for college students with low incomes. Lawmakers invested an additional $50 million in the State Need Grant, the chronically underfunded state financial aid program for students whose families make less than 70 percent of the median family income in our state. Estimates show that this increase will serve another 875 students per year, which will make a small dent in the program’s waitlist. 

REVENUE

To make smart, long-term investments in the most critical areas of the budget, lawmakers must enact revenue that is not only equitable, but that is also sustainable over the long term. Lawmakers did not do that with this budget. They decided instead to fund critical investments now with revenue that is unlikely to sustain investments in the future, and they covered the remainder with budget gimmicks. Overall, the revenue plan increases state general fund resources over the next biennium by a little over $2 billion. Lawmakers: 

  • Increased the state property tax and reduced local levies. It’s commendable that lawmakers provided new revenue to fund schools and other priorities, but the new property tax revenues they rely on are likely to diminish again once the damaging 1 percent property tax growth limit is allowed to go back into effect after 2022. 
  • Relied too much on accounting tricks to balance the budget. The other major tactic lawmakers used to balance the budget – a bevy of fund transfers and accounting tricks – will likewise put Washington’s future on shaky ground. To make the budget pencil out, they included gimmicks, like drawing down nearly $1 billion from the state rainy day fund. Funds originally devoted to cleaning up toxic sites, helping local governments improve roads and other physical infrastructure, and helping workers with children find and keep a job were also raided to support other investments. Lawmakers also relied on resources from federal funds that have not yet been secured – and that may be at risk given the massive cuts being proposed in the federal budget. A budget built on these kinds of temporary fixes isn’t built to last in the long term. Some of lawmakers’ laudable progress on community investments will be at risk in the future if they don’t take meaningful steps to reform the state’s flawed tax code. 

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

Revenue Package Not Built to Last Over the Long Term

Posted by Kelli Smith at Jul 12, 2017 03:00 PM |
By Kelli Smith, policy analyst, and Andy Nicholas, associate director of fiscal policy
 
In a legislative session where the central question was how to come up with the billions of additional dollars required to fund schools now and in the future, lawmakers settled for a short-term revenue solution that will not sustain our schools and communities in the long run. While it’s good that there’s at least some new revenue to support our schools, much more needs to be done to fund our schools and strengthen our state economy well into the future. Lawmakers should have included more equitable and sustainable property tax reforms in the revenue package, and they should have removed more unnecessary and wasteful tax breaks.

 

Property Taxes

The property tax reforms that were passed by the legislature and signed into law by Governor Inslee are far from perfect, but they will generate much-needed new revenue for schools – at least in the short term. Under the enacted plan, beginning in January 2018, the state property tax will increase by about 80 cents to $2.70 per $1,000 of assessed value. This will generate about $1.6 billion in new revenue for the current 2017-19 budget cycle and about $2.5 billion in the following cycle.

This increase in the state property tax will be accompanied by a shift in how local school district property taxes are applied. Beginning in 2019, the new maximum local levy for a school district will be the lesser of one of the two following amounts: the amount raised by a tax of $1.50 per $1,000 assessed value or $2,500 per student in the district.

In many areas of the state, this change will result in significantly lower local school district levies compared to those currently in place. Those reductions will offset the overall increase in state property tax revenue. However, the full impact of this on state and local property tax resources that will be available to fund schools isn’t clear yet, because an official estimate of this local property tax reduction has yet to be released.

Although the property tax reforms will infuse some new investments in Washington’s schools, there are significant drawbacks to this plan. Thousands of lower- and middle-income households living in areas of the state with high property values will see a significant spike in their property tax bills. Even though many families living in areas of the state with low property values will see an overall reduction in their property taxes, there’s nevertheless good reason to think the plan will, on balance, make Washington’s tax code more inequitable. That’s a concern, considering Washington state already has the most upside-down tax code in the nation, with low- and middle-income households paying up to seven times more in state and local taxes as a share of their incomes than those at the top of the income scale.

Furthermore, because lawmakers failed to eliminate a damaging law that restricts property tax revenue growth to a maximum of 1 percent per year, the plan will not provide a sustainable stream of resources for schools past 2022. Since it first went into effect 15 years ago, the law has continuously starved communities of the resources they need to adequately support schools, public safety, and other core investments that serve all Washingtonians. Under the new plan, the law will be suspended for the next four years.

Lawmakers must work to permanently eliminate this cap. If they don’t, all the funding progress achieved this year will quickly evaporate once the 1 percent cap goes back into effect in 2023. And, because the costs of heating classrooms, operating police and fire departments, and providing health care services outpace the arbitrary 1 percent growth limit on property tax revenues, lawmakers will, once again, find themselves dealing with a funding crisis of their own making.

Tax Breaks

Lawmakers did wisely agree to close a few tax breaks. But when it comes to tax breaks, it was still one step forward, two steps back. Because this package also creates or extends 13 new loopholes (although the governor subsequently, and wisely, vetoed two of them).

An unnecessary sales tax break on bottled water was mostly eliminated; only people who don’t have access to potable water will still be able to claim it going forward. And a costly loophole was closed that allowed oil refineries to claim a sales tax break that was originally intended just for sawmills. Eliminating these breaks is a good move. It means more resources will be available for investments that benefit all of our communities.

Lawmakers also took sensible steps toward creating a more level playing field for small brick-and-mortar businesses located in our state. They closed off a large sales tax and business and occupation (B&O) tax break that has allowed businesses like eBay and Overstock.com to avoid collecting sales taxes from customers located in Washington state. Going forward, large internet retailers will now face strong incentive to begin charging sales taxes on purchases made by Washingtonians. If they choose not to do so, they will be required to provide detailed customer data to the State Department of Revenue, so it can collect the delinquent taxes directly from those customers. In states that have adopted similar laws, many companies have chosen to collect sales taxes rather than risk upsetting their customers by supplying their personal information to state revenue agencies.

By creating or extending more than a dozen new tax breaks, however, the legislature took major steps backward when it comes to cleaning up our loophole-ridden tax code. Our state already has nearly 700 tax breaks on the books. It does not need any new tax giveaways.

Governor Inslee wisely vetoed two of the most egregious new tax breaks. He refused to enact a wasteful B&O tax break for manufacturers that would have converted $39 million per year in revenues that currently support schools and other community investments into tax benefits for corporate shareholders and consumers that mostly live elsewhere. 

The governor also took a step to strengthen our state’s environment by vetoing a sales tax exemption on a coal-fired electricity-generating plant owned by a Canadian company (TransAlta) that is currently scheduled to shut down in 2025. The exemption would have applied to materials and equipment used to convert the coal plant to burn a different type of dirty fossil fuel, natural gas. Given the very real dangers that global warming and air pollution pose to the health of our communities, lawmakers should not be subsidizing any form of energy based on fossil fuels and should instead focus on transitioning to cleaner, more reliable energy sources.

Missed Opportunities

In its revenue plan, the legislature missed some major opportunities to ensure the long-term economic strength of our state and to clean up the tax code. They should have eliminated the wasteful tax break on capital gains, which would have raised significant new resources for schools. But disappointingly, the tax break for those who profit from high-end financial assets remains on the books in this budget.

They also should have ensured their property tax plan took steps to improve the equity of our tax code and the long-term sustainability of our budget. In particular, they should have paired their property tax increases with safeguard rebates to offset the costs of higher taxes for middle- and lower-income homeowners and renters. And to dependably and amply fund schools for the foreseeable future, they should have eliminated the damaging 1 percent levy growth cap.

The bottom line is that the legislature’s work does not end here. There’s still a lot more to do to clean up the tax code and provide the kind of resources that make world-class schools and thriving communities possible.

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

Governor’s Veto of Unnecessary, Short-Sighted Tax Giveaway Is the Right Move for Washington’s Future

Posted by Melinda Young-Flynn at Jul 07, 2017 05:10 PM |
Statement by Executive Director Misha Werschkul
 
The Washington State Budget & Policy Center applauds Governor Jay Inslee for vetoing part 2 of Senate Bill 5977, which would have reduced the business and occupation (B&O) tax rate applied to manufacturers that do business in Washington state. As we previously noted, this tax giveaway that was snuck into the budget at the eleventh hour without any transparency or accountability measures would have been a bad deal for our state.

 

Once fully implemented, this giveaway would have eliminated $39 million per year in funding that could have otherwise supported schools and other key investments that form the foundation of thriving communities and a strong state economy.

It is unacceptable that this bill didn't include any of the standard transparency and accountability provisions applied to other recently enacted tax breaks – such as applying ways to evaluate its efficacy or including an expiration date.

While some will argue not adding this new tax break to Washington’s tax code will hurt jobs, there is no reason to believe that reducing the B&O tax rate for manufacturers will have a perceptible impact on the strength of the state economy and job market.

Now is the time to clean up our state’s tax code, not add new tax breaks to the books. The governor has made a fiscally responsible decision at a time when our state has to be prepared to shoulder the costs of devastating potential cuts from the federal level and when investments in our communities should be the top priority. The rejection of this bad policy will ensure our state is better set up to be a great place to go to school, to work, and to build a business.

Three Reasons Why a New Tax Break for Manufacturers Is Bad for Washington State

Posted by Andy Nicholas at Jul 03, 2017 06:50 PM |
Filed under: State Budget, Tax Break

In the final hours of intense, behind-the-scenes negotiations over the recently enacted 2017-19 state budget, lawmakers in Washington state snuck in a major new tax break for manufacturers. This new tax break, which is one of 13 new or extended tax breaks included in Senate Bill 5977, would reduce the business and occupation (B&O) tax rate applied to Washington state-based manufacturers from the current rate of 0.484 percent to 0.2904 percent over the next four years. 

This Senate tax break bill is one of several bills that still need to be signed by Governor Inslee in order to become law. It is bad policy and it should not be enacted. Here are three reasons why:

  1. Once fully implemented, the new break will eliminate $39 million per year in funding that would otherwise support schools, health care, and other investments that form the foundation of a strong state economy. Structuring this tax break to gradually phase in allowed lawmakers to balance the state budget over the next four years. But after 2022, the mounting costs of this tax break will make it ever more difficult to balance the budget and adequately fund schools and other priorities.
  2. It includes no accountability to the public. It’s unacceptable that lawmakers neglected to apply any of the standard transparency and accountability provisions applied to other recently enacted tax breaks to this tax break – such as identifying a specific public purpose or goal, designating metrics to assess its success or failure in achieving those goals, or setting an expiration date.
  3. It will largely benefit shareholders and out-of-state consumers. The new tax break might allow manufacturers to very modestly reduce the prices of the goods they sell, but that would mostly benefit consumers in other states and countries where those goods are primarily sold. Manufacturers could also use the tax savings to pad their profits for the benefit of their own shareholders. Either way, that means millions of dollars in resources that would otherwise be used to support communities throughout Washington state will be diverted to other states and countries.

Last-Minute, Makeshift Budget Misses Opportunity to Fix Upside-Down Tax Code

Posted by Kelli Smith at Jun 30, 2017 01:05 PM |
Filed under: State Budget, State Revenue
Statement by Executive Director Misha Werschkul:
 
Legislative leaders have agreed to a spending plan to fund state services for the next two years – and as such, they may avoid a state shutdown – but they have left a lot of important work undone. Notably, lawmakers have passed up an historic opportunity to address our state’s broken tax code, and instead have relied too much on unsustainable fund transfers and budget gimmicks that will threaten the economic strength of the state in the future. The budget deal includes some investments in critical programs, but it falls short of meaningfully strengthening many of the state’s most important long-term investments.
 

Instead of creating a budget that enacts much-needed revenue reform, lawmakers have cobbled together a budget that makes progress toward fulfilling a mandate from the state Supreme Court to strengthen our K-12 schools. But the final budget agreement does this by relying too heavily on irresponsible accounting tricks, like drawing down the state rainy day fund and shifting funds between accounts, that will leave the state on shaky ground in future years. 

Lawmakers propose to raise new resources for schools with a small increase in the state property tax. But it is disappointing that no actions were taken to offset higher property tax bills for lower- and middle-income homeowners and renters who, under our current tax code, pay up to seven times more in state and local taxes as a share of their incomes than the richest Washingtonians. In addition to the property tax changes, lawmakers agreed to eliminate wasteful tax breaks – including the bottled water sales tax exemption and a sales tax break for oil refineries – and close off legal loopholes that allow out-of-state businesses to avoid paying sales taxes and business taxes. But they also added or extended 13 other tax breaks that will take money out of communities in favor of special interests and leave fewer resources for future investments. Now is the time to clean up the tax code to clear out wasteful tax breaks, not add more.

Central to legislators’ budget negotiations was compliance with the state Supreme Court’s order to fund public schools by the end of this legislative session. The school funding plan included in the final budget deal overhauls the state’s teacher pay system and will invest an additional $7.3 billion in public schools over the next four years. It remains to be seen whether the compromise will be sufficient to satisfy the court’s order to amply fund public education. 

It appears that severe cuts to many important priorities that improve the lives of Washingtonians with low incomes may have been largely avoided. If so, that’s a good start. However, the deal doesn’t do enough to strengthen many of the programs that allow people with middle and low incomes to thrive – and in particular many people of color who, because of systemic racism, are denied equal access to opportunity. Unless state lawmakers take significant steps toward reforming our tax code to enact equitable and sustainable revenue sources, meaningful improvements to community investments will continue to be difficult. 

If lawmakers can get the budget signed by the governor in time, they may narrowly avoid a state government shutdown; but either way, the result is a makeshift budget that doesn’t address the unsustainability, inequity, and inadequacy of our tax code. Especially with the threat of huge federal cuts on the horizon, state lawmakers must ensure the budget protects the wellbeing of Washingtonians. 

In 2018, lawmakers will have another chance to lift up Washington’s communities and build a brighter future for our kids. To do that, they’ll need to get serious about cleaning up our tax code to raise state resources in an equitable and sustainable way.  

Stay tuned for more-detailed analysis from the Budget & Policy Center after our full review of the budget. 


*************
Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.
*************

 

State Revenue Forecast Doesn’t Change the Facts: Washington State Needs Equitable New Revenue

Posted by Kelli Smith at Jun 20, 2017 01:45 PM |
Filed under: State Budget, State Revenue
Statement from the Washington State Budget & Policy Center:
 
The updated state revenue forecast, which projects a small increase in the amount of tax resources available to fund schools and other priorities in the coming years, should signal to lawmakers that it’s time to get to work on cleaning up the state’s flawed tax code. Failing to do so would make it impossible for lawmakers to amply fund schools without forcing harmful cuts to health care, higher education, and other investments that promote a strong state economy and thriving communities.
 

Lawmakers in Olympia have until June 30 – just 10 more days – to finalize the state budget before state agencies are forced to begin shutdown procedures. A state government shutdown would put thousands of Washingtonians at risk of losing access to child care, public health resources, and job supports, and it could cause interruptions to business, environmental protection, and utility services. That’s not even to mention the loss of income for state workers during the shutdown.

With the latest revenue forecast, lawmakers now have all the information they need to come to an agreement on a budget that invests in strong communities. The Washington State Economic and Revenue Forecast Council’s final revenue forecast for the fiscal year (which ends on June 30) projects state tax revenues will increase over the next two years by just $80 million (less than 0.2 percent of the current budget) relative to the previous forecast – a mere blip on the state budget radar. 

In the past few years, lawmakers in Washington state have passively relied on revenue growth from the shaky economic recovery in order to make sluggish progress toward fully funding schools, per the state Supreme Court’s McCleary mandate. This approach has been both inadequate – the legislature is currently being held in contempt for failing to fully fund schools – and irresponsible, since most or all of the revenue growth will vanish when the next recession strikes. Today’s inconsequential revenue projection doesn’t change that.

As we wrote after the last revenue forecast in March, when adjusted for economic growth, state revenues have actually declined since 2001 and have remained nearly flat since the end of the last recession. This means Washington state is still funding many programs and agencies at levels far below what is necessary to serve our communities. Negligible growth in revenues is not enough to maintain current obligations, let alone enough to provide for stronger investments that help our state thrive. 

Lawmakers must take this opportunity to enact smart, long-term reforms by raising new revenue from equitable, sustainable, and adequate sources. They can start by closing wasteful tax breaks for corporations and by eliminating the tax break on high-end capital gains. Doing so would improve the wellbeing of our state and its people for generations to come, and begin to turn our upside-down tax code right-side up.

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

State and Federal Proposals to Cut Funding for Women’s Health Would Decrease Family Economic Security

By Misha Werschkul, executive director
 
Building economic security for Washington's women is an essential component of creating a thriving economy in our state. Nearly 500,000 women and more than 20 percent of Black, Hispanic, and Native American women live in poverty in Washington. Many factors contribute to high poverty rates among women, and especially among women of color – including the gender wage gap, a disproportionately high percentage of women working low-wage jobs, and the lack of universal paid leave programs and child care supports. Access to health care– including high-quality pre- and post-natal care – and the ability to choose when and under what circumstances to start a family are also critical ingredients of family economic security.
 

Investments in the wellbeing of women are critical to any serious strategy to address inequality or reduce poverty. And investing in the full spectrum of women’s health services in particular is an important step toward strengthening the economic security of women and families.

The good news is Washington state has made significant progress in expanding health care access for women and in reducing unintended pregnancies. Under the Affordable Care Act, the number of uninsured women in Washington state has dropped to historic lows. And as the KIDS COUNT Data Center shows, Washington’s teen birth rate has fallen from 25 teen births per thousand in 2011 to 18 teen births per thousand in 2015. King County has the second lowest teen pregnancy rate in the country. Expanding health care and reducing unintended pregnancies is good for women and families, and it’s also cost effective for states.

However, this progress is being threatened. Recent federal and state proposals would pay for tax cuts for the wealthy at the expense of investments that support women and communities. In the next few weeks, we anticipate the release of the 2018 federal budget and a compromise 2017-2019 state budget, not to mention the U.S. Senate’s health care bill. Elected leaders must ensure legislation invests in programs that help promote economic security for women and families. 

Federal Threats

Washington’s women face a multitude of threats from federal proposals, ranging from the repeal the Affordable Care Act to President Trump’s 2018 budget proposal to the possibility of new regulations affecting birth control from his administration. Especially when combined with deep cuts to federal programs that disproportionately serve women and children – like housing and energy assistance, job training, and hunger relief – these cuts to women’s heath are a recipe for increased economic insecurity. Federal proposals include:

  • Cutting Medicaid – Federal proposals to eliminate the Affordable Care Act’s Medicaid expansion and make deep cuts to Medicaid would jeopardize health care for nearly one million women in Washington state (see graph below). In fact, women make up a majority of Medicaid beneficiaries and therefore face a disproportionate burden of proposed cuts to the program. Medicaid is a key support for women on multiple fronts: Working women who don’t have employer-sponsored coverage are able to get health insurance coverage through the Medicaid expansion; women of reproductive age rely on Medicaid for family-planning and maternity care services (importantly, Medicaid provides health care for nearly half of all pregnant women nationwide); and older women and women with disabilities are the primary users of Medicaid long-term services and supports. In addition, Medicaid serves women of all races and ethnicities in Washington. 

[Click on graphic to enlarge.]

Women girls medicaid enrollment

 

  • Defunding Planned Parenthood – Congressional Republicans have put forward multiple proposals to ban Planned Parenthood from receiving federal and state funds through the Medicaid program and to allow states to exclude them from the Title X family-planning program. These funds are currently used to provide family-planning and a wide range of critical health care services like cancer screenings to more than 98,000 low-income women and men at 32 health care centers in Washington state. Several of Washington’s Planned Parenthood clinics are the only clinic in their county that offers the full range of contraceptive health services, including longer-acting methods like intrauterine devices that are the most effective at preventing pregnancy. Defunding Planned Parenthood would jeopardize health care for thousands of low-income women in Washington state and increase economic insecurity as a result of unplanned pregnancies. 
  • Reducing coverage for newborn and maternity care and birth control – The Affordable Care Act repeal legislation from House Republicans removes the requirement for publicly funded health insurance to cover the full range of health care services, including newborn and maternity care. In addition, the Trump administration is considering rule-making that would remove the requirement for insurers to provide copay-free birth control. Both of these changes would mean that women who have health insurance coverage would have to pay more money out of pocket to get their health care needs met.

State Threats

Washington state legislators are continuing to negotiate the 2017-2019 biennial state budget in order to avoid a state government shutdown on July 1, 2017. This year, budget writers have an opportunity to clean up the tax code to make historic investments in ensuring every child in Washington has access to quality public education. However, the Senate Republicans’ approach is largely to protect tax breaks for wealthy special interests and fund investments in schools at the expense of other important priorities like child care and job training for low-income parents. 

The State Senate's proposals would also reduce state family-planning funding. On top of cuts being proposed at the federal level, state Senate Republicans propose a 10 percent reduction to state funds that provide family-planning services, which would result in reduced access to women’s health services.

Especially with federal threats looming, Washington state leaders should be doing everything possible to protect women and build on the progress that has been made in our state. 

Economic security and women’s health are fundamentally intertwined. If we want to have an economy that works for everyone, we simply can’t ignore women’s health. As federal and state policymakers develop new budget proposals, they must focus on advancing economic security by investing in the full spectrum of women’s health services. 

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

 
Document Actions
HIGHLIGHTS

Sign Up for #BudgetMatters17!

Our Budget Matters Seattle Policy Summit is on December 6. Find out more and sign up now!  (And a big thank you to all those who made our first-ever Spokane Budget Matters Policy Summit in October a big hit.)

Our Policy Priorities

Washington state should be a place where all our residents have strong communities, great schools, and the chance for a bright future. Our 2017-2019 Legislative Agenda outlines the priorities we are working to advance to build a better Washington.

Testimonies in Olympia

To advance our legislative priorities, the Budget & Policy Center team was in the state capitol throughout session testifying on a wide range of bills. Watch our testimonies on TVW:
Misha TVW