The Senate Majority Coalition Caucus’ budget proposal passed through the Senate Tuesday morning, and GOP leaders shared some of their criticisms of the Democratic proposal at their regular press conference that day.
The two budget proposals on the table are vastly different from each other and reflect not just a party divide, but a city versus rural divide. Republicans’ budget would draw revenue from a levy swap that would increase the property tax rate in property-rich districts (mostly cities) and decrease that rate in property-poor districts. Democrats’ seek revenue for their budget through a capital gains tax and by making changes to the business and occupation tax code. Last week Democrats criticized Republicans’ approach because they said raising property taxes would unfairly hit city residents without regard to income.
Rep. Matt Manweller, R-Ellensburg, responded to that criticism at their regular Tuesday press conference by arguing the Republican approach was built on a progressive system.
“This is a group of legislators who’ve been demanding, since the initial McCleary litigation, that we need a more progressive tax system in Washington and they got exactly what they asked for and now they’re complaining about it,” he said. “‘Progressive,’ by their definition, is the wealthier you are, the more you pay. Well, they live in a wealthy area and the wealthy people who own very expensive houses are going to pay a little bit more. This is the tax system they asked for for a decade.”
Asked about whether this tax could unfairly hit poorer folks living in richer districts, Rep. Drew Stokesbary, R-Auburn, said that while some may be hit with a bigger tax than they could afford, the system would largely be fair.
“Over 90 percent of the variation in home price, by school district can be explained by family median income in that district. So, of course you can always find some outlier,” he said at the conference. “But over 90 percent of the variation can be explained by income and income is a really good measure of ability to pay.”
He went on to argue that the high property values in Seattle are due to municipal policy choices.
“So it’s really not that unfair and I don’t think that Seattle’s poor housing choices – housing policy choices – should drive tax policy for the rest of the state,” he said. “I don’t think the decision that the Seattle politicians make should then drive tax consequences for the rest of the state.”
Republicans also argued the Democrats’ proposal suggests overspending and overtaxing. Democrats have argued that their capital gains tax would impact only about 50,000 residents in the state, and that they would provide B&O tax exemptions to small businesses. But Manweller challenged their proposed tax increases, saying it would have a broader impact than Democrats say.
“You’re creating this mythical tax exemption to justify a massive tax increase on the back end. So you can find this one little piece of ripe fruit on a rotten tree but at the end of the day what you have is a plan that increases taxes by $7.8 billion on a state that is just coming out of a recession,” he said.
Democrats have criticized the Republican budget proposal because it makes cuts to social service programs and it takes agreed-upon collective bargaining contracts off the table and replaces it with a flat $1,000 raise for state employees.
“Taxpayers cannot afford that type of growth of government,” Manweller said at the conference, referring to the Democrats’ proposal. Democrats “can fully fund McCleary within a few hundred million dollars within revenue growth, so all of those taxes — $7.8 billion — which they’re going to tell you is for the kids: that $7.8 billion goes to pay for the growth of government outside of education.”
At the end of the conference, Manweller closed with apparent optimism on a potential compromise.
“Despite the occasional rancor each and every year we have gotten a step closer to meeting McCleary and we’ve done it right on time,” he said. “So yeah, politics is sometimes messy, but we have incrementally solved the problem that the voters sent us here to solve.”