Hello Friends and Neighbors,

My report a week ago outlined how it’s “raining money” in Olympia, between the March 17 state revenue forecast and money from the American Rescue Act approved March 11. So why would my Senate Democrat colleagues need to drain the state rainy-day fund AND bank on the passage of an unconstitutional income-tax bill to balance their new budget proposal? Good questions. Please keep reading for more about the Senate majority’s spending plan.

Inquiring minds want to know!
I’d asked for your opinion about a state income tax and two other issues before the Legislature. My survey received hundreds of responses, but it would be great to have thousands. I promise it won’t take more than a few minutes to fill out, so if you haven’t participated already, please click here and tell me what you’re thinking.

Another round of small-business grants starts Monday
Although it took longer than I’d hoped to get to this point, the state Department of Commerce is about to start accepting applications for the next round of “Working Washington” small-business grants. These are aimed at brick-and-mortar businesses and are funded by the pandemic-relief bill we approved in mid-February, (the “early” action bill 😉) which allocates money our state received from the December 2020 federal stimulus package.

My Democratic colleagues had allocated only $120 million for these grants, but accepted my recommendation to double that before the bill passed. The details are in this Commerce news release; visit commercegrants.com for a link to the application portal and more information. The portal will open Monday and close at 5 p.m. April 9. That’s less than two weeks away, so if you operate a small business, don’t wait to see if you’re eligible!

Proposed budget is good… bad… and totally ugly
No matter which party is leading the Senate or House, we typically see operating-budget proposals emerge soon after the year’s first revenue forecast. That’s because the new revenue figures are used to put the finishing touches on the budget proposal before it’s made public.

Over the past two days we got our first look at what the Senate Democrats want in a new state budget for 2021-23. There are several good things, starting with appropriations that look mighty familiar because yes… they are in my budget…

The good!

• $400 million for increasing access to broadband – a need that has become more obvious during the pandemic (the Democrats have it in their proposed capital budget; we have it in the Senate Republican operating budget put forth seven weeks ago)
• $125 million to address health issues in our state-managed forests, with a focus on reducing the risk of catastrophic wildfires (same as the Republican budget)
• $800 million toward eliminating an unfunded liability in one of the state-run pension plans for teachers (this will eventually save taxpayers money, but not nearly as much as a pension merger Republicans proposed, which would save $2 billion) of taxpayer money
• More behavioral health bed space at the community level (similar to our proposal)
• Major support for services to people with developmentally disabilities and for long-term care (mirroring nearly exactly what Republicans proposed)

The bad?
One thing is the sheer increase in spending. At $59.5 billion, this would be a 13% jump from the current budget. Our Senate Republican budget came in $4 billion less, and represented just a 6% increase. That’s far more reasonable, especially during a pandemic. Worse, however, is how the Democrat budget proposal empties the state rainy-day fund. The Republican budget I’d put on the table would also draw from the fund, but remember, that was before this month’s good financial news. There’s zero need to raid the rainy-day fund now – unless the majority has a spending problem, which its budget seems to be confirming.

Also, the Senate Democratic budget misses opportunities to encourage job growth by eliminating the business tax on Washington’s manufacturing sector, and help homeowners by creating a $250,000 “homestead” property-tax exemption. The idea of dedicating the tax revenue from vehicle sales to transportation needs was also ignored. We could do all three and still have a balanced budget.

And now… the totally ugly
“Ugly” describes the two big new taxes wrapped into the Democratic budget. The first is the “cap-and-tax” bill, SB 5126, that would let government bring in more money by auctioning off permits to emit carbon – with the bidders being big corporate interests. This policy will be expensive for the average Washington resident, because it’s expected to quickly drive up the cost of fuel by another 20 cents per gallon (and more after that). At the same time, there’s question about whether it will do much of anything to drive down carbon emissions.

The second is SB 5096 – the state income-tax bill that I expect will finish its move through the House of Representatives in the next couple of weeks. It was surprising to see the Senate Democrats hitch their budget to a tax proposal that is not only unnecessary, considering the amount of revenue already available, but also unconstitutional. We already know from other states that a tax on income from capital gains is a highly volatile source of revenue – and common sense tells us any tax that has a 50-50 chance of being found constitutional is an even less reliable source of revenue. It’s simply not good policy.

The Ways and Means committee had a public hearing on the majority’s operating budget yesterday afternoon. We’ll be spending much of today working on other bills, and return to the budget Monday for voting on proposed amendments, then a vote on the final version. The House Democrats unveiled their operating-budget proposal Friday.

Lessons from the pandemic that still need attention
The end of the regular session is less than a month away, and two of the issues that were on my to-do list still need to be resolved.

One is budget-related – it has to do with the revenue that comes in between legislative sessions, when we, as keepers of the public purse, aren’t in a position to allocate it.

The question of who controls these “unanticipated receipts” (UAR) hadn’t been a serious concern. Even though many millions of dollars might be involved, that money typically had strings attached – like federal dollars being passed through to specific state agencies. Then 2020 happened, and billions of dollars in unanticipated federal CARES Act money was received by our state after the Legislature adjourned. I’ve probably mentioned before how frustrating it was to see the governor dole this money out without proper legislative input, partly because he would not call a special legislative session. That probably explains why only 8% of CARES Act dollars went toward supporting the family employers that were crushed by the governor’s economic restrictions.

Neither of the UAR bills introduced in the Senate – my SB 5316 and my Democratic counterpart’s SB 5162 – are past the public-hearing stage. I know there’s bipartisan interest in resolving this, but the clock is ticking.

The second issue involves the governor’s emergency powers, which have been on full display for the past year. None of the related bills introduced in the House or the Senate have moved forward. My SB 5039 would seem to be the least threatening of the group, because it pertains not to the emergency powers themselves but to expanding legislative oversight of the emergency proclamations made by the governor using those powers. SB 5039 has bipartisan sponsorship but still didn’t even rate a public hearing by the State Government committee.

Clearly, the pandemic will outlast this legislative session. Republicans believe the legislative branch of government, being co-equal with the executive and judicial branches, needs to assert itself more when it comes to the proclamations that control our constituents’ lives and livelihoods. Do my Democratic colleagues really want to go back home to their districts knowing they once again will have absolutely no say over the governor’s ability to prohibit specific activities? I’m sure they’ve been hearing the same complaints as me. Something needs to change, before we adjourn April 25.