McKenna takes stage with wife Marilyn on primary election night.

OLYMPIA, Aug. 10.—More money for education seems to be emerging as the central political issue in this state, not just for lawmakers but for the last men standing in this year’s gubernatorial race, Attorney General Rob McKenna and former Congressman Jay Inslee. Already you can hear the rumblings of a tax increase next year to cover the cost of a recent Supreme Court decision, which held the state isn’t doing enough for K-12 schools. At a time when the state is strapped for cash, the McCleary decision will cost $1 billion when lawmakers write a budget next session, and it will balloon to $3.6 billion by the time lawmakers write a budget in 2017.

Says House Deputy Majority Leader Larry Springer, D-Kirkland, “It is not something you can solve in the next legislative session alone.”

Inslee shakes hands at a Saturday rally sponsored by the Thurston County Democratic Party.

So what is that solution? Taxes say many, including Democratic Gov. Christine Gregoire, and a new legislative task force appears to be setting the stage for a big increase. But both gubernatorial candidates are saying they can do it without one. The billion-dollar question is whether they can make their plans work – and whether voters can trust them to follow through.

Inslee’s Democrats “have no plan except to raise your taxes – that is their plan,” Republican McKenna declared Tuesday in a primary-night speech that seemed to herald a new direction for his campaign. For the first time delivering a direct challenge to the other side, McKenna said you can’t trust vague promises from the Democrats. “I produced a specific roadmap that will truly put education funding first so that we can meet the Supreme Court mandate while protecting programs for the most vulnerable, without raising taxes. You’ll notice my opponent hasn’t offered a plan. He stands with those who stand for tax increases.”

Nitty Gritty Details

McKenna releases his school-funding plan last week, flanked by former Senate Majority Leader and budget-writer Dan McDonald.

Actually, both candidates have come up with plans. It’s just that McKenna uses numbers. McKenna last week presented detailed spreadsheets and specific proposals for what gets funded and what doesn’t. He puts education within a larger context of government reform. He would put the lid on other areas of state government spending, and as the economy and tax revenue rebound in the years ahead, he would direct the bulk of the growth to K-12 and higher ed. You can do it all without a tax increase, he insists. But it will mean saying no to state employee unions and other special interest groups, and the state won’t be able to keep covering runaway health care costs for workers and Medicaid recipients.

McKenna says his plan will provide $1.7 billion for education the first two years, both higher ed and K-12. That ought to be enough to satisfy the Supreme Court, which said in its McCleary ruling earlier this year that the state isn’t fulfilling its constitutional mandate to fully fund basic education. The court basically said the Legislature needed to pay the full cost of a bill expanding state support for basic education – a measure passed in 2009 when lawmakers had no clue how to pay for it.

Under McKenna’s plan, over time, education’s share of the budget would increase from 54 to 58 percent within eight years – though it wouldn’t reach the two-thirds share it enjoyed in the ‘80s.

The real problem, McKenna says, is that during the 28 years since the last Republican governor left office, traditional Democratic interest groups have held sway at the statehouse – public employee unions, the social-service lobby. “The other party claims to be the party of education, but the numbers don’t lie – they have been taking your money and putting it in other parts of state government instead of education,” he said. “And that is why the state Supreme Court, after 28 years of Democratic control of the budget-making process in the governor’s office, said enough, enough – enough of not meeting the paramount duty of the state.”

Back of Envelope Feel

Inslee cultivates the youth vote.

Inslee’s plan, meanwhile, is rather sketchier. His education policy paper, posted on his website, outlines noble goals just as McKenna’s does, and many of Inslee’s go well beyond the basic-ed bill – new technology for schools, elimination of opportunity and achievement gaps, and guaranteed access for all students to post-secondary education. But when it comes to paying for everything, it gets a little fuzzy. There’s no price-tag. To raise money it says the state ought to close unproductive tax loopholes, but it doesn’t name them, and it says the state ought to promote the creation of new jobs.

Inslee’s no-tax pledge doesn’t appear in the policy paper – it came during a June 12 debate in Spokane. A reporter for the Northwest Cable News Channel called him on it election night: “Is it just a matter of realizing you couldn’t get elected if you promise to raise taxes, or can you really improve the education system without additional resources?”

Inslee replied, “Well, we intend to provide the additional resources to education. It has to be done in a fiscally prudent way, principally by getting people back to work. Look, the reason our state is in such difficult fiscal condition, the reason we have lost money for education, is because of this downturn in employment, and that is why I am focusing like a laser beam on a plan to do industrial and technological development in our state to get people back to work, to create that fiscal support for education. We have other ideas as well to reduce medical costs, and to adopt lean management systems and efficiency, and to close a couple of corporate tax loopholes. …But I want to make sure that people understand this – this is no walk in the park. This is not going to happen overnight.”

Indeed, a job-creation program that produces anywhere close to a billion dollars in tax revenue during its first two years might be counted as one of the greatest accomplishments of all time.

Dems are Doubters

Gov. Christine Gregoire.

Many in Inslee’s own party are skeptics. Gov. Gregoire, who is not running for re-election, said during a visit to Prosser last week there’s no way to pay for McCleary with current tax revenues. “I have listened to both gubernatorial candidates, and they’re both dead wrong,” she said.

And on Monday, Gregoire’s budget office produced a four-year budget outlook that incorporated tax-revenue projections and all the spending plans on the books. It predicts revenue will increase $1.5 billion during the 2013-15 budget period. But if the state did everything required by current law, it would need $2.5 billion. So it winds up $1 billion in the hole before it lifts a finger for K-12 education.

Certainly there are ways to shave that problem down. Lawmakers might tap the state rainy-day fund for a half-billion dollars. They might forego a few items, things like the never-implemented state family leave program and the oft-suspended cost-of-living increases for teachers and community college staffers that are mandated by Initiative 732. But the easiest decisions get lawmakers somewhere close to even, and then there’s still a billion dollars to raise.

Can anyone cover the cost of McCleary without a tax increase? “I think the outlook is just a snapshot right now, so stuff can change,” says Marty Brown, director of the Office of Financial Management. “But I think, just looking at it, it would be very difficult.”

Setting the State Up

That’s just what you expect ‘em to say, McKenna says. “The same old people and interest groups are declaring another huge deficit and demanding tax increases before they will adequately fund our public schools and restore funding for our colleges and universities,” he says. “They are demanding tax increases instead of taking the steps necessary to rein in a massive structural deficit, a deficit that is now effectively built into the state budget.”

The McKenna campaign isn’t quibbling with OFM’s figures, but says they represent business as usual – the idea that no massive changes will take place. For instance, the state might demand more flexibility in redesigning existing Medicaid programs, in return for expansion of Medicaid under the Affordable Care Act. It could shunt more workers to health savings accounts, reducing health benefits costs to the state. Considerable restructuring might be done to current state programs to put the state on a sustainable path, McKenna maintains – and while Inslee could do the same, he asks which team do you really think is going to do it? “He answers to the special interests that have been running Olympia for the last 28 years. Just ask yourself, will he stand up to the special interests when it is needed to change state government?”

McKenna recalls promises from Democratic campaigns – “Now is not the time to be raising taxes or talking about raising taxes,” Gregoire said in 2008, two years before she talked about raising taxes, or Inslee’s comment during the current campaign, “I’m not talking about raising an income tax for the state of Washington.” It’s the same parsing of language, same present tense, he says. Those with long memories might add Mike Lowry’s famous 1992 campaign promise that taxes would be a last resort. He was working on his tax proposal before inauguration day. For Team Inslee’s part, spokeswoman Jaime Smith says “the real challenge should be to Rob McKenna to stop making multi-billion spending promises that he won’t be able to keep.”

Legislature the Wild Card

The Joint Education Funding Task Force holds its first meeting last week at Highline Community College.

Thing is, it’s not entirely the governor’s call. That’s where the Legislature’s new education funding task force comes in – eight legislators, three gubernatorial appointees. The panel, created by this year’s Legislature, held its first meeting a week ago at Highline Community College. While there was no direct talk of a tax increase, members seemed to be dancing in that direction as they asked staff to provide information about the state’s current tax structure. It is widely assumed that the panel will forward some sort of a tax-increase proposal to the Legislature. That is underscored by the fact that the enabling legislation requires the panel to recommend cuts to other state programs if it doesn’t. Democrats now hold the majority in the House and Senate, and the key thing is that next year’s Legislature could forward a tax referendum to the ballot without the governor’s approval. Only a simple majority vote would be required.

With an election on, the Legislature’s Democratic leaders aren’t ready to talk publicly about taxes. But Springer acknowledges it isn’t going to be easy finding the money for McCleary.  “It is a tough problem and we are going to work hard at it,” he said. “We are not going to solve this funding problem in a year or two or three. I think what is really critical, and I’m confident we will do it, is that we simply make progress that is steady and that we don’t allow ourselves to slip back. The worst thing I think is that we might make progress in year one or two and then in year three you sit on your hands. That would be that. So we cannot lose momentum.”

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