Legislative Session Wrap-up: Taxes and the budget -- how they affect you

Becker headerTaxes

How taxes passed this year affect you

It's been a long legislative session this year, but it wrapped up on April 28. We saw many terrible bills, many of which proposed new or higher taxes that would make your life more expensive.
The good news is that not all of the taxes that were proposed passed. We were able to stop several taxes that would have made gasoline and home heating fuel more expensive without having any measurable impact on our environment, such as a low carbon fuel standard tax. In fact, combined, proposed taxes could have resulted in an increase of about 40 cents per gallon! We also put a stop to an income tax on capital gains.
The bad news is that other taxes managed to get through -- taxes that will add up to nearly $2.5 billion over two years, $7.6 billion over four years and a little more than $25 billion over 10 years. (See table above.)
  • The payroll tax will take 0.58 percent out of everyone's paycheck.
  • The property tax allows your local school levy to increase 67 percent.
  • The B&O tax on services affects over 40 different occupations. (see below)
  • The graduated real estate excise tax will make apartment rents more expensive during an affordable housing crisis.
  • The bank tax was steamrolled through the Legislature at the last minute without proper consideration.
  • The Model Toxic Control Act tax diverts a large portion of its revenue to the state general fund, where it can be spent for any purpose, even if it has nothing to do with hazardous substance cleanup.
  • The removal of the exemption on sales tax for residents from states that don't have a sales tax, such as Oregon, will hurt border economies such as Vancouver's.

Some of the occupations that will see a 20 percent increase

in their business and occupation tax

Newspapers, aircraft manufacturers, dentists, doctors, consultants, lawyers, broadcasters, mail-order businesses, mortgage brokers, unions, lending institutions, architects, cell-phone carriers, outpatient health-service providers, insurance agents, accountants and more. And that additional expense will be passed along to the consumer in the form of higher prices.

 

Bob & Ann

REET: Raising taxes on housing when we're in an affordable housing crisis

Even before session started, I was very vocal about how providing affordable housing was one of our top priorities. One look around our cities will tell you just how hard it is for people to stay in their homes. Rents are too high, property taxes are too high, and efforts to place people are undermined by mental illness and substance abuse.
One of the taxes passed this year that makes the least sense is the graduated real estate excise tax or REET. REET is paid by the seller when a home or property is sold. This year, the Legislature increased the REET paid on properties that sell for $1.5 million and over from 1.28 percent to 2.75 percent. We already had the third highest REET in the country at 1.28 percent!
And while you might not be sympathetic to sellers who are in that price range, you should be aware that many of those properties are multi-family properties such as apartment buildings.
If a buyer has to pay more to compensate for the seller's higher taxes, that cost will be passed along to you, the consumer, in the form of higher rents. This is unconscionable when the average price of a one-bedroom apartment in Seattle is over $2,000 per month. And that's not a mortgage -- there's no ownership involved.
How long can our renters afford for prices to rise? I don't think they can afford it now. And the new real estate excise tax only makes things worse for regular people who can't afford to buy a home.

Read more about the 2019-21 budgets:


Achievements and disappointments

So many things happened this session that are worth noting, but I wanted to highlight a few of the accomplishments and disappointments. 

Let's talk about the good stuff first.

Our district received the following funds in the 2019-21 capital budget:

  • Orting City Hall and Policy Station = $600,000
  • Orting pedestrian evacuation crossing = $103,000
  • Yelm business support = $200,000
  • Eatonville water treatment project = $1,400,000
  • Restoration of the Eatonville Tofu House = $15,000
  • Nisqually new full service park = $2,994,000
mission

Youth mental-health:

I am happy to report that I was able to get my plan to develop a telemedicine youth mental-health program included in the operating budget. The University of Washington, together with Children's Hospital in Seattle, will develop a training program for all middle and high school faculty and staff that will prepare them to identify students who are struggling with mental illness, suicidal thoughts, and potentially violent actions. It creates a pilot program where this training will be implemented at one school on each side of the mountains. Students who are identified as "at risk" can receive telemedicine visits at school with mental-health providers at UW or Children's Hospital. The budget provides $1 million for this program. If it has the same success as a similar program in Texas, I hope to expand it statewide. 

income tax

Stopping the first step toward a state income tax:

This year, we saw a bill proposed that would impose an income tax on capital gains. Supporters did so knowing that this would be a graduated income tax on Washingtonians -- a tax that is unconstitutional. Why? To get the camel's nose under the tent. They believe that if they can slip an income tax on capital gains by the Legislature, it will lead to a court challenge before the Washington State Supreme Court. They hope that this Supreme Court will overturn decades of constitutional law and allow a full-blown income tax on Washingtonians, despite voters having defeated an income tax nine times. They try to argue that a capital gains tax is an excise tax, but this is simply not true. Capital gains is taxed as income, and when asked, the IRS and every state that has a capital gains tax says it is an income tax. Don't be fooled by semantics. The lack of an income tax is one of the key factors that draws employers to our state and one reason why our economy is booming. I'm sure we'll see another income tax proposal next year. 

Unfortunately, there were also several things that happened this session that I found disappointing.

seniors

No property tax relief for our seniors, veterans and disabled persons:

One disappointment was watching my bill die that provided property tax relief for seniors, veterans and disabled persons. It is becoming increasingly difficult for people to stay in their homes with the skyrocketing property values and huge property tax increases. I wanted to make it easier for people to keep their homes by lowering taxes. A different bill that provides some property tax relief for seniors did pass, but it only affects those in King County. None of the seniors in our district will get this relief.

daffodil 2

Youth visitors to the Senate snubbed: 

I was so pleased to meet some very accomplished youth this year when they visited the Senate. As I do every year, I sponsored the Senate resolution honoring the Washington state dairy industry and the dairy ambassadors. Sen. Zeiger sponsored a resolution honoring the Daffodil Festival court and Sen. Warnick sponsored a resolution honoring her constituent Miss India Worldwide. Unfortunately, these amazing young people were shown disrespect during their visit. The other caucus refused to welcome them into their caucus room and the lieutenant governor and majority floor leader would not allow them to speak at the rostrum, denying them a courtesy that has been a tradition since before I was in the Senate.

I was insulted on behalf of these young people and promise you our caucus will always welcome our honored guests. When we gain back the majority, we will restore the tradition of giving our youth the opportunity to speak to the Senate from the rostrum. And we will make sure the Senate as a whole treats them with the respect they deserve.


Watch my wrap-up of the 2019 Legislative Session

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