Budget Deal Reached in Olympia Pays for Renter Relief, Mental Health, Student Loan Program


OLYMPIA — Washington's Democratic lawmakers Wednesday announced a $64.1 billion state budget deal that pumps new dollars into government programs and funds a new transportation package, raises for state workers, rental assistance and the start of a new student loan program.

Flush with higher-than-expected tax collections, Democratic budget writers spread billions of dollars around government without raising new taxes.

Nor did they do much to lower taxes, despite Republicans in the minority calling for tax relief. Even several of the Democrats' tax-relief proposals — a temporary sales tax holiday, and free admission to state parks and the Washington State Fair — didn't make it into the final budget.

In remarks Wednesday, Democratic lawmakers touted increased funding of $351 million for long-term care facilities, $45 million for rental assistance to prevent evictions and more dollars for the state's mental health system.

The deal represents "our collective values" as state residents chart a path out of the COVID-19 pandemic, said Rep. Nicole Macri, D-Seattle.

"And to make meaningful investments in families and small businesses who we know have been hit hardest in these challenging economic times," Macri added in the meeting where the deal was announced.

The supplement budget adds billions to the two-year $59 billion state operating budget approved last year. Washington's operating budget funds a host of government programs, from prisons, schools, parks and public lands, to foster care and mental health services.

Perhaps the biggest move was a one-time transfer of $2 billion outside the budget — along with a smaller, ongoing amount planned in the years to come — to fund a new 16-year transportation package. Lawmakers Wednesday announced a final deal on that package, as well.

The final supplemental budget deal spends $261 million on raises to state workers, which for most workers will amount to a 3.25% raise in the fiscal year that starts July 1, and $236 million to account for inflation for K-12 worker salaries, school supplies, materials and operating costs.

The deal announced Wednesday also uses the remaining federal coronavirus aid, putting $345 million toward stabilizing school districts wrestling with enrollment declines. It also puts $215 million in federal dollars to help the hospitality and convention industries, the arts sector and small businesses.

The agreement directs $200 million toward grants to help communities disproportionately impacted by criminal laws and penalties for illegal drug sales and possession. That money would be used for economic development, legal aid, violence prevention and re-entry services, according to budget documents.

It also spends $150 million to design a state student loan program. Details for that program, which was proposed in House Bill 1736, must still be figured out before implementing it, said Sen. Christine Rolfes, D-Bainbridge Island.

An additional $350 million is directed to shore up the state's Paid Family Leave program, which has been so popular that it has run low on funds.

Even with tax dollars pouring in, Democrats have resisted calls from Republicans — who are in the minority in the House and Senate — for broad tax cuts like reductions in taxes on property or retail sales.

Since the start of the legislative session in January, Democratic lawmakers have talked up a brief holiday from the sales tax, and funding for free admission to state parks and the Washington State Fair. But they ditched those proposals, which they said were too logistically difficult to enact.

At the start of the legislative session, Democrats also talked of possibly expanding a tax exemption for low-income families, a concept supported by some Republicans. A law long on the books but never funded, lawmakers last year finally appropriated dollars to get it going. But an expansion also didn't appear to have made it into the budget deal.

"We didn't get tax relief, any substantial, meaningful, actual tax relief," said Sen. Lynda Wilson, R-Vancouver and ranking Republican on the Senate Ways & Means Committee, in the meeting where the deal was announced.

The new budget does provide $13 million in relief for small businesses from the Business & Occupation tax. That's enough to provide cuts for roughly 125,000 small business owners, or about 70% of businesses in the state, according to Rolfes, the chief Senate Democratic budget writer.

Starting Jan. 1, businesses making less than $125,000 won't have to pay the Business & Occupation tax, Rolfes said. For businesses making more than that, and up to $250,000 annually, the existing tax burden is cut in half, she said.

On environment and conservation issues, the budget agreement provides $83 million for salmon recovery projects. And it gives onetime funding to install an additional 150 electric-vehicle charging stations around Washington state. Other funding will be used to build solar projects that serve low-income communities.

Lawmakers have less than 48 hours to read the new budget and transportation-funding deals before an expected vote sometime on Thursday, the last scheduled day of the legislative session.