Sen. John Braun wants the state to waive taxes on the first $100,000 of assessed property value, a so-called “homestead exemption” that would help low- to middle income taxpayers, especially in rural areas.
“This is actually one of the few areas where I was opposed to the business community,” Braun, a 20th District Republican from Centralia, told the Lewis County Republican Club late last month. Business owners worried that such a change would shift more of the tax burden onto them. But Braun said the state can’t afford such a waiver for businesses.
Unfortunately, the effort to make state taxes more progressive—enabling the owner of a $100,000 home to waive all state property taxes and give those with a $500,000 home a 20 percent reduction—isn’t going to happen.
“The challenge is you can do this statutorily, but you can’t do it just for residents,” Braun said. Such a move would require changing the constitution, which is no easy feat.
“It’s expensive to do,” Braun said. “It’s a big tax break. Now is absolutely the right time to do it. Our economy’s in good shape. We have extra revenues.”
The state budget has grown by 44 percent in the past six years, he said, with some of that directed at fully funding K-12 education as required by the state Supreme Court’s 2012 McCleary ruling.
At the start of the legislative session, the state had sufficient income to pay all its bills and have an extra $500 million over four years, but that wasn’t enough for the Democrats, Braun said.
Rather than accomplish goals within its fiscal means, the Democratic majority in the state Legislature approved what Braun described as nine additional taxes. Those will bring in $2.5 billion in additional tax dollars over the next two years, $7.5 billion within four years and $25 billion in a decade, Braun said.
“That is a ton of money,” he said. “Think about that — $25 billion. Spread that around the state and think of what kind of good things you could invest it in the private sector that would help us.”
Instead, the state will pocket that money.
“There are some good things that we do,” Braun said. “But we do not have a good record of spending all our money wisely.”
He highlighted two of the taxes.
“The way they got put in place is, frankly, disappointing and frustrating,” Braun said, “and I think will be unsustainable.”
One is a business and occupation tax on about 40 service-related industries, meaning the Legislature picked winners and losers. It also essentially held higher education hostage unless the tax was passed.
“If you really believe you need new money—and I don’t—then just say it like that,” Braun said. “Don’t pretend otherwise.”
Another change places a bigger burden of proof on taxpayers who want to challenge a tax assessment.
Without any prior discussion, on day 103 of a 105-day session, the Legislature slapped a B&O tax on large international banks such as Bank of America and Wells Fargo in the wee hours of a Saturday morning, essentially doubling the tax on banks.
“Nobody’s out there defending big banks; they can defend themselves,” Braun said. “Without talking to them, without talking to anybody, they doubled their B&O tax. And by the way, the banks don’t pay B&O tax; they pass it on to us.”
When the Senate Ways & Means Committee saw it, they questioned its legality, but nobody in the Attorney General’s office was working Saturday to review whether it violates the Commerce Clause in the U.S. Constitution.
“We’ll likely be sued,” Braun said, adding that the Democrat majority “passed it off the floor because they needed $300 million.”
Such actions are “wrong,” Braun said. The Legislature is supposed to deliberate and figure out answers rather than rush through partisan measures at the end of the session.
“The thing to remember is if it’s big banks this year, who will it be next year when they have to balance the budget?”
Braun said Seattle legislators refused to vote on the $53 billion budget until lawmakers lifted the local levy lid from $1.50 per $1,000 of assessed property value to $2.50, which means schools can raise an extra $1 billion locally.
Braun fought the move to lift the levy lid, noting that it would lead to tax inequity around the state, with larger districts receiving more money at less cost than smaller districts.
For example, Seattle taxpayers would pay 63 cents instead of 58 cents per $1,000—seeing less than a dime increase in their levies—but receive an extra $1,500 per student. The same is true in Mercer Island, Bellevue and the San Juan Islands.
“They’ll have a small tax increase to max out the money—they’ll have more money per child for their schools,” Braun said. “Everybody else in the state will have a dollar increase.”
Braun said it undoes fundamental reforms to K-12 education funding put into place after the McCleary decision. The lower levy lid was set to take effect Jan. 1.
“It’s a tax break for Seattle and it’s just wrong,” he said. “It is one more step to divide our state into the haves and the have-nots.”
He also said the governor and unions representing public employees negotiated collective bargaining agreements the Legislature passed without allowing for any discussion. Under new agreements, state public employees in each of the 39 counties on average earn more than workers in the private sector. He said state employees earn an average of $70,000. They also have good pensions and “the best health care in the state,” Braun said. In some cases it is available to employees who work as few as three hours a day. The agreements bumped 60 percent of employees up on their salary scales and provided raises of at least 3 percent and in some cases, workers will see double-digit pay increases over two years.
“We never even talked about it,” Braun said. “We never had a hearing that said ‘let’s break this down by step.’”
Perhaps some of that money could have been better spent on special education or fighting forest fires rather than raising the standard of living of public sector employees even higher, he said.
“The public sector union leaders said you will not oppose us on this to the majority, and they would not oppose them,” Braun said. “And that’s a bad thing for the state. I’m not saying it’s a bad thing because we shouldn’t support our public sector employees. I’m saying it’s bad because you spend that kind of money without really evaluating what’s best for everybody in the state, it’s going to lead to problems.”
The session wasn’t without its bright spots.
Braun, who campaigned in 2012 on business and tax issues, noted that Republicans worked with majority Democrats to improve mental health care and fund special education.
“We have not done a good job in our state, frankly in our country, on mental health issues,” Braun said. It behooves Republicans, especially those concerned with protecting Second Amendment rights, to focus on improving care for those who are mentally ill.
The Legislature put about $200 million over two years toward mental health efforts.
One goal is to move the state away from institutional care of folks at Western State and Eastern State toward a community-focused approach at a local level, Braun said. People can receive care close to their homes, doctors, families, and friends.
It takes time to approve local mental health treatment clinics, such as one in Centralia that took three years to open.
“We needed a plan that steps us into this over time and provides these around the state...and allows us to close down Western State and Eastern State,” Braun said.
He also noted that the University of Washington is establishing a 150-bed hospital at its northwest campus to train mental health workers.
Braun also said both parties worked together over the last four years to provide more money for special education. Ninety percent of special education students are at or above average capability, Braun said, and may just need extra help because of learning disabilities like dyslexia.
“I think it’s really important that we properly fund this,” Braun said. “We have not done this in the past.”
He also said the Legislature invested in forest fire prevention and suppression.
“This has been a long time coming,” he said. “It was a different atmosphere in the Legislature than in previous years. “That’s because the last few summers, Seattle was choked in by smoke and all of a sudden what they thought of as an Eastern Washington problem was now all of Washington.”
Braun said he hasn’t always supported lands commissioners when they asked for money for fire prevention, but last year the state Department of Natural Resources was ordered to build a long-range comprehensive plan for fire suppression.
Even more key is prevention.
“It’s more complicated than just ‘save the trees,’” Braun said. “There’s more awareness across the aisle that this involves things like preventative burns, like logging, and this can be a good thing for the health of the forests.”
He said the long-range planning will help over time.
“We can make a real difference for our children and their children, so they’re not living in an August filled with smoke,” Braun said.
Julie McDonald, a personal historian from Toledo, may be reached at email@example.com.