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Senators clash on property tax relief and Rainy Day funding

The Senate passed an amendment this afternoon to SB 6614, a bill related to school funding. The amendment changes the timeline for property tax relief and adds $935 million into the Education Legacy Trust Account.

The previous version of the bill that passed out committee provided tax relief in 2018 at a rate of $2.35 per thousand dollars of assessed value before bumping the property tax up to $2.70 for 2019-2021. Instead, with the added amendment, the bill would now provide property tax relief in 2019, and would take $935 million in state revenue, and put it into the education account.

During debate on the floor, Republicans argued that with an expected $2.3 billion in additional tax revenue coming into the state, now is the time to save money by putting surplus revenue into Washington’s “Rainy Day Fund.” They argued that following the Great Recession, Washingtonians voted to require the legislature to transfer funds to the Rainy Day Fund in times of “extraordinary revenue growth.” According to Senator Braun, under current law and constitutional restrictions, $700 million of that revenue should be headed to the Rainy Day Fund. Republicans say the amendment is a way to circumvent that initiative.

“After the Great Recession exposed Olympia’s failure to capture and protect unanticipated revenue, the voters approved critically important safeguards against overspending in good economic times,” said Senator Braun in a press release. “This proposal from the Senate majority creates a constitutional crisis by rejecting the overwhelming demand from 67 percent of voters for fiscal responsibility and accountability. It sets an incredibly dangerous precedent for future state budget decisions.”

Republicans also questioned how many votes would be necessary to pass the newly amended bill. To utilize the Rainy Day Fund, a super majority vote is required. But Senator Rolfes, the amendment’s sponsor, stated that the bill doesn’t take money out of the Rainy Day Fund. It just allocates the collected property tax revenue to the Education Legacy Trust Account and the general fund and therefore does not require a 60 percent vote for passage.

Democrats also said that it was necessary to provide property tax relief in 2019 rather than 2018, because people have already begun paying their property taxes this year. They said it said that it would be difficult, confusing, and expensive for the Office of the State Treasurer to provide tax relief in 2018.

However, in a statement released prior to floor debate on the issue began, State Treasurer Duane Davidson said,

“We’re extremely concerned with today’s proposals to divert $700 million from being deposited in the Rainy Day Fund. Choosing to not save today when we’re experiencing extraordinary revenue growth guarantees that our budget problems will be much greater when the next recession hits.”

Republicans offered several amendments to the bill including an amendment to reduce property taxes to $1.89 per thousand dollars of assessed value and a voucher program to reduce taxes, but none were successful.

Action on the bill as a whole was deferred after questions were brought up about the number of votes required for final passage of the bill. Thursday is the last day of the regular 2018 session.

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