The Washington State Budget & Policy Center, a progressive think-tank focused on shaping responsible fiscal policies in the state, has a big item on its agenda for the upcoming legislative session that most lawmakers ostensibly agree with: fund Washington’s schools.
And they’ve got suggestions on how to get that done.
The Budget & Policy Center wants to reform Washington’s tax code with changes its analysts hope will capture roughly $5 billion in new revenue each year for schools statewide.
That money would account for the minimum $3.5 billion that the center believes lawmakers need to find to cover the costs that districts pay through local bonds and levies and an additional $1.5 billion to further invest in the school system.
The extra cash could mean class-size reductions, improvements in teacher pay and new staff, said Andy Nicholas, the associate director of fiscal policy with the center.
In January 2012, the Washington State Supreme Court found that the state was not putting enough money into the school system to fund “basic education,” which state law defines broadly as the ability to write effectively, communicate, meet reading comprehension standards and apply concepts from different disciplines, among other things.
The decision came as a result of a court case filed in 2007 by the Network for Excellence in Washington Schools on behalf of two families with four children attending local schools called McCleary vs. Washington. Judges found that the state wasn’t adequately funding transportation, staff salaries and benefits.
Lawmakers have, so far, failed to meet the standards set forth in McCleary. In 2014, the court found the state in contempt and began charging a fine of $100,000 per day. That fine still stands.
That $5 billion figure is controversial, however. Lawmakers still need to figure out the amount that will be needed to bridge the gap between what the state currently provides for schools and what is needed to fund basic education and staff salaries.
A compensation analysis presented to the state Education Funding Task Force on Nov. 15 showed a roughly $1.5 billion gap between money coming from the state for salaries and the amount paid to teachers, administrators and classified staff during the 2014–15 school year. On average, districts supplement employees by $14,651 per full-time equivalent position, a determination based on the number of hours an employee works.
Though the Budget & Policy Center does not have an official dollar amount, its analysts believe that a $5 billion influx into the educational system is a good start to cover the basics that are the state’s responsibility and address other concerns. They even think they know how to pay for it.
The solution involves getting the extra money without putting pressure on Washington’s low-income residents. Already, the bottom 20 percent pay seven times as much of their income in taxes as the top 1 percent.
“Washington state has the most regressive tax system in the nation,” said Kelli Smith, a policy analyst with the center.
The modifications target property owners and Washington’s richest citizens by eliminating the 1 percent cap on property tax growth in the state and establishing a 10.7 percent tax on certain levels of capital gains.
The team sought to eliminate certain corporate loopholes, but stopped short of suggesting an income tax which would not be politically feasible, Nicholas said.
“We wanted something that lawmakers would feel comfortable meaningfully taking a step forward to address the system,” he said.
An income tax would not immediately address the problems facing Washington’s schools, which are funded primarily by property tax revenues and local levies, an inequitable situation that leaves schools in rural and low-income areas with populations unable to tax themselves with worse facilities and education for their students.
Under the plan, the 1-percent cap on property taxes would be eliminated and a rebate program established to help property owners and renters making less than $75,000 per year make up the difference in taxes, capping it at 5 percent. Property taxes, the plan assumes, make up 15 percent of the cost of rent.
Corporate loopholes, such as one providing $43 million each biennium to the oil industry or the $100 million in sales tax breaks to people trading in luxury vehicles, could be eliminated, bringing in hundreds of millions of dollars. There are almost 700 tax breaks built into Washington’s system, Smith said.
The last main plank of the plan involves capital gains, or the profits made off of stock market investments. At present, Washington does not have a capital-gains tax, unlike its nearest neighbors to the south: California’s sits at 13.3 percent and Oregon clocks in at 9.9 percent.
It would kick in only on stock sales after the first $50,000 in profit for a married couple and $25,000 for a single investor, which would impact the top 2 percent of Washingtonians, Smith said.
Lawmakers have pondered a capital gains tax before, but that was only 7 percent and died in Congress in 2015.
Rep. June Robinson (D-Everett) didn’t have a lot of faith that this proposal would make it any further.
Americans may have voted for a “change” candidate in Donald Trump, as did folks in the southern and eastern portions of Washington, but Washingtonians did not elect a “change” legislature. The overwhelming majority of legislators were sent back to the statehouse, meaning the people who defeated the 7 percent capital-gains tax are still there.
“The voters had an opportunity to send a clear message to Olympia, and that message was, ‘Meh,’” said Nate Gibbs-Bowling, who teaches AP Government and Human Geography at Lincoln High School in Tacoma. Gibbs-Bowling, the 2016 Washington State Teacher of the Year, has described the drastic problems that the funding shortfalls created in schools not wealthy enough to pass levies.
Unlike Massachusetts — or even California, which has its own tax issues — Washington doesn’t have a mechanism to prioritize state dollars to low-income schools over high-income ones, baking inequity into the education formula.
However, many lawmakers on both sides of the aisle ran on education-friendly platforms, so it will be up to voters to hold them to their word, Robinson said.
“Get in our faces and stay in our faces, because we need to be constantly hearing your dreams,” Robinson said.