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Dear Friends and Neighbors,

The Legislature’s current special session is scheduled to end July 20. Two weeks ago, a partial government shutdown was averted when the lawmakers approved a new two-year operating budget. Although it is frustrating that it came down to the final hours of this fiscal year to complete the work, negotiators created a solid plan for education funding that will benefit our students for generations to come.

The education funding proposal, House Bill 2242, specifically addressed the costliest, and arguably the most difficult, remaining piece of the state’s Supreme Court’s 2012 McCleary decision. The justices ruled that the state was not adequately funding K-12 education. Since that time, the Legislature has added more than $4.6 billion in funding. A critical part of the court’s decision was that the state must end local school districts overreliance on local levies to fund basic education. That means shifting responsibility for funding teacher and staff salaries from local school districts to the state.

After a long and contentious journey, the Legislature produced the most anticipated and fought-over education policy reform our state has seen in decades. After an all-night marathon of negotiations, House Bill 2242 was approved in the House and Senate and delivered to the governor June 30. I was glad to include my “yes” vote on this bill. I voted in support of this bill for our students and to address the state Supreme Court’s ruling. Here are some highlights of the reforms.

The McCleary solution

Moving forward, school districts will see a big increase in funding. In total, the Legislature added $7.3 billion in education funding over the next four years. This policy shift is historic. It includes $500 million in additional funding for high-poverty schools and learning assistance programs. Career and technical education programs (CTE) will also see a boost in funding for materials, supplies and operating costs and smaller CTE class sizes. For the first time since the late 1980’s, K-12 education will account for more than 50 percent of the state’s operating budget.

In addition, the plan fully funds the state’s program of basic education, including salaries for K-12 teachers and staff. State-funded compensation was increased by $6 billion. First-year teachers will see a bump in salary to $40,000 per year. This will help ensure our school districts can recruit and retain high-quality teachers.

Other highlights include:

All school employees will participate in a statewide school employee health benefit program which will help lower costs;

Funding for paraeducator professional learning;

Increased funding for guidance counselors and parent involvement counselors; and

The state’s cap on special education services was raised from 12.7 percent of a district’s full-time enrollment to 13.5 percent.

Local and statewide property taxes

The statewide property tax will be increased to a flat rate of $2.70 per $1,000 assessed value. The plan keeps local property tax levies in place, but caps them at a lower level. The state’s property tax is earmarked for schools, including teacher and staff compensation. Any local levies may only be used for enrichment programs.

Because the local levies are not capped in 2018, property owners will initially see a bump in their property taxes. However a year later, the cap on local levies will be set at $1.50 per $1,000 per assessed property valuation, or $2,500 per student, whichever is lower. That means by 2019, in areas of the state where the property tax base is lower, owners will see a net property tax decrease. Rates in districts with larger property tax bases will see an increase.

In many property-poor or rural parts of the state, property tax bills will be reduced. Many homeowners in our district will see a property tax decrease starting in 2019. Additional details will be given in my next email update, including more specifics on the property tax changes for residents in our district.

We need to ‘fund education first’

Given the priority education has in our state constitution, it should be funded first in our state’s operating budget. That means, before making any other appropriations, the Legislature should pass a separate K-12 education budget with existing revenues. This simple concept was first introduced by House Republicans in 2006. If this common-sense policy had been approved, the long delay to amply fund education – and three special legislative sessions – could have been avoided. Stay tuned, I will have more on this topic in the future email updates as we head into the 2018 legislative session.

The state operating budget, Senate Bill 5883

Washington has three state budgets; operating, transportation and capital. The operating budget covers the day-to-day expenses of all state agencies. It is important for all Washingtonians that we have a strong, balanced and sustainable operating budget. Although I appreciate the efforts of the negotiators who worked long days, weekends and evenings to put this plan together, there are several reasons I voted “no.” The most important, is that it increases spending by 27% over the next four years and relies on a number of large tax increases.

Despite nearly $3 billion in natural revenue growth in the last two years, this budget is not sustainable. It spends money by relying on new taxes, one-time revenue sources and other budget gimmicks. This proves once again, state government is not willing to live within its means. It’s economics 101: you shouldn’t spend more money than you have. Families need to live within budgets and so should government.

Taxes on bottled water and digital sales

More reasons for my “no” vote include the new taxes on bottled water, and digital sales. The Legislature has been trying to tax bottled water for years. Voters have repeatedly said “no.” Initiative 1107, approved by voters in November 2010, eliminated state and local sales tax on bottled water. Clearly, this is something the people don’t want.

The new budget requires online retailers based out of state to collect and remit sales tax from Washington residents. This presents some unique difficulties. Adapting and applying sales tax laws to digital products is a bit of a legal gray area. It’s possible states levying these taxes may be in violation of federal law.

Helping the manufacturing industry, Senate Bill 5977

The manufacturing industry in our state has experienced a sharp decline in recent years. As part of the budget negotiations, Republicans sought a tax cut to help bolster manufacturers. This targeted tax reduction policy would have helped manufacturers create many family-wage jobs.

The governor’s office was included in the negotiations that produced compromise between Republicans and Democrats. The result of their conversations was Senate Bill 5977, which would have lowered the business and occupation (B&O) tax rate for the more than 10,000 manufacturing firms across our state, giving them the same rate as Boeing and other aerospace companies.

The bill passed with strong bipartisan support, 33-16 in the Senate and 88-10 in the House. However, several days after the deal was reached, the governor choose to wield his authority to veto the section of the bill that was a key element of the compromise. It was extremely disappointing to see the tax reduction for manufacturers cut out of the bill. We need to bring new manufacturing jobs to our state. This reduced tax rate would’ve provided the incentive to do just that, but that option has now been removed.

Approving the state’s capital budget and a solution for Hirst

With end of the current special session quickly approaching and the operating budget decided, we still have some unfinished business. The Legislature needs to approve the $4.2 billion capital budget. The capital budget invests in our communities by helping to build schools, mental health facilities and other infrastructure across the state. It’s important the state’s capital budget is approved before the Legislature adjourns.

We also need a legislative solution for one of the most important property rights issues to face our state in decades, the state Supreme Court’s Hirst decision. Any part of the state with homes that rely on permit-exempt wells is potentially impacted by the courts decision. We need a permanent legislative fix that clarifies state law and defends the rights of property owners.

During the regular session, various legislators in Olympia produced bills that, in different ways, would address the problems caused by the Hirst decision. It’s important lawmakers approve a capital budget and a solution for Hirst. There is no reason we cannot do both before the Legislature adjourns, July 20.

Please feel free to reach out to me with your comments, questions and feedback. You’ll find my contact information below.

Thank you for allowing me to represent you in Olympia.

Sincerely,


Vicki Kraft

State Representative Vicki Kraft
17th Legislative District
RepresentativeVickiKraft.com
418 John L. O'Brien Building | P.O. Box 40600 | Olympia, WA 98504-0600
vicki.kraft@leg.wa.gov
360-786-7994 | Toll-free: (800) 562-6000