The House Democratic Caucus unveiled its proposed 2021-23 state operating budget Friday – proposing to spend $58 billion in state funds over the next two years, as well as billions in federal relief dollars.

Funds would be allocated for pandemic response, economic recovery, education, child care, and a wide variety of other priorities. Federal aid aside, the proposal would be be an increase from the state’s current two-year, $53.7 billion budget.

It has been a roller coaster of a year for communities across the state. This budget reflects the sacrifices so many have made and reinforces our values. No matter your background or how much you earn, we will be there for you and help the hardest hit by this pandemic recover,” said Rep. Timm Ormsby, chair of the Appropriations Committee.

Senate Democrats released a slightly larger budget yesterday, proposing to spend about $59 billion.

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In the House proposal, about $1.85 billion federal aid would be directed to the Elementary and Secondary School Emergency Relief Fund for reopening K-12 schools.

Other large line items in the proposal include:

• $1.185 billion for COVID-19 vaccines, contact tracing and testing.
• $1.07 billion for rental assistance. Democrats say they intend to pay the back rent accrued during the governor’s eviction moratorium.
• $600 million for unemployment insurance tax rate relief and $250 million in small business grants.
• $415 million for a temporary rate increase to long-term care and providers for individuals with developmental disabilities.
• $400 million in child care grants and supporting providers for language access and navigators.
• $340 million for immigrant relief funds, which would provide unemployment assistance to undocumented immigrants.
• $204.7 million to expand the Paid Family and Medical Leave program via House Bill 1073.
• $166.6 million in mortgage assistance through the ARPA Homeowner Assistance Fund.
• $140.8 million in food assistance programs.

The budget proposal is being unveiled amid a much rosier economic picture than prior revenue forecasts indicated. The most recent revenue forecast projected a $3.3 billion increase for the current biennium and a $5.2 billion increase over the next four years.

Just like the Senate, the House budget includes a bill to enact a statewide capital gains tax. That bill, which passed the Senate in 25-24 vote and is now in the House Finance Committee, sets aside $350 million per year for expanding access to child care.

While a recent Oxfam America report ranks Washington State as having the best safety net in the country for workers during the COVID-19 pandemic, the state’s score was lowered due to a shortage of childcare options for essential workers.

Responding to the Democratic proposal Friday afternoon, Rep. Drew Stokesbary, ranking Republican on the House Appropriations Committee criticized the proposal for including the capital gains tax.

While families across our state faced enormous financial stress and uncertainty this past year, state tax collections grew by more than 10 percent. But while state revenues are strong, unemployment remains high and the state has not yet recovered roughly 200,000 of its pandemic-related job losses. I’m stunned the majority party would continue to push a job-crushing capital gains tax at a time when we continue to face high unemployment. Our economic recovery will depend on private investors and entrepreneurs betting on Washington’s ingenuity and hard work. However convenient of a political target they may be, taxing investments and innovators is a surefire way to hamper the state’s recovery,” said Stokesbary.

SB 5096 would tax capital gains at a 7% rate and would apply to profits that exceed $250,000 per year. The bill exempts retirement accounts and real estate sales from the tax.

Appropriations Committee Vice Chair, Rep. Mia Gregerson, said the House proposal reflects a change of course for budget writing in Washington State:

For too long the most vulnerable people have been left with inadequate resources and lack of opportunity. The ‘Washington Recovery Budget’ represents the end of austerity budgets and the harmful idea that people should pick themselves up and work harder just to survive.”

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