Washington House Minority Leader J.T. Wilcox and Rep. Drew Stokesbary, lead budget writer for House Republicans, talked to members of the media about House Democrats’ $52.6 billion 2019-21 Proposed Operating Budget Wednesday.
The proposed budget, released Monday, is 19.3 percent larger than the 2017-19 package that passed.
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Wilcox views that spending increase as “unsustainable.”
“The thing that worries me the most is, right at the end of the economic cycle, we’re going up by 20 percent,” Wilcox said. “And you know what the bow wave does…When you start accelerating your budget by 20 percent, it doesn’t pull back to 10 percent the next year. Twenty percent becomes the benchmark.”
The increase relies, in-part, on changes to state taxes — including the introduction of a capital gains tax and a graduation of the state’s real estate excise tax.
Such an increase isn’t necessary, Stokesbary said, because revenue is up by $8.5 billion from two years ago. He said that, even after maintenance costs are taken care of, there’s a “$2.8 billion” budget surplus.
“There’s really no need to raise taxes, unless you just want to raise taxes for the sake of raising taxes,” Stokesbary said.
Especially, he said, in light of a recent Wall Street Journal article. In the article — assuming this is the one he’s referring to — a third of surveyed economists responded that they expect a downturn to begin in 2021. Stokesbary also pointed out that the yield curve recently inverted, an occurrence that often precedes recession.
At the budget unveiling on Monday, however, House Majority leader Rep. Pat Sullivan insisted that a budget surplus does not exist.
“Don’t be fooled by those that will say that we have $4.5 billion, or any number above that, to spend on new items,” Sullivan said. “That is simply not true. The fact is that that revenue that’s anticipated to come in next year has already been consumed by education and other maintenance-level increases.”
When asked about the difference in the caucuses’ positions concerning revenue, representatives reinforced their positions.
Rep. Sullivan said $4.5 billion is the bow wave — additional costs and savings that occur in the future when a budget item isn’t fully implemented — on K-12 education, a commitment the Legislature made.
He also said there’s bipartisan support for the “needs” of the state, like funding behavioral health and increasing funding for special education, that the budget addresses.
“We had bipartisan conversations at the start of session, that we needed to make…improvements in this year, and that’s what we do. We focus on the needs,” Sullivan said.
Stokesbary said that, even after accounting for that K-12 education funding, the $2.8 billion surplus still exists over four years, if no policy changes are made.
With that disagreement in the interpretation of facts aside, Stokesbary made a separate case against the House Dems’ proposed capital gains tax.
“Most smart attorneys would say [a capital gains tax] is unconstitutional under existing Supreme Court precedent,” Stokesbary said. “The only way to make it constitutional is to convince the court to reverse their precedent. And, even if they do that, the capital gains tax is 7.5 times more volatile than the sales tax, which is the state’s…most volatile source of revenue.”
Stokesbary said there are other ideas, beyond tax increases, to create “additional capacity,” and that he thinks one will appear in the Senate’s budget, which will be released later today.
The representatives discussed other parts of the budget on Wednesday, as well. A video of the press availability in its entirety is available via TVW.