OLYMPIA — Gov. Jay Inslee said Tuesday that he is concerned about the “lack of substantive progress” in budget negotiations as lawmakers near the end of an overtime session, and he specifically called out a measure put forth by Senate Republicans that he says will take money away from education.
Inslee lambasted a bill passed out of a Senate fiscal committee last week that would lower estate tax rates and phase in raising the value of estates to be taxed from $2 million to the federal level of $5 million.
That bill, a response to a court ruling that found some married couples could avoid the estate tax if they used a certain trust, makes a similar fix that a measure that already passed the House does to avoid refunds to those who already paid the tax. However, by lowering the
rates and cutting the estates affected by the tax from the current 300 to about 90 over five years, the measure reduces tax revenue to an account dedicated to education-related spending.
“Unfortunately, the Senate’s priority is to multimillion-dollar estates rather than meeting our obligation to Washington students,” Inslee said.
Senate Majority Leader Rodney Tom disputed that the additional revenue would be for education. He said both sides have essentially agreed to put $1 billion more toward education in response to a Supreme Court ruling, and that the additional dollars in dispute would be for other government functions.
“This is not about revenue for education,” Tom said. “This is about revenue for bureaucrats — for non-educational expenses.”
Senate Republican Leader Mark Schoesler riffed on that message, deeming the cash “bucks for bureaucrats.”
Schoesler said the estate tax changes made by the Senate are important in helping people plan their estates in the years to come and putting Washington on par with national tax laws.
Asked why the issue was being inserted into budget negotiations late into the process, Schoesler likened it to Lucy pulling the football away before Charlie Brown can kick it, suggesting that Democrats won’t allow the estate tax change in future years, so now is the time to make it happen.
Lawmakers are in the midst of a 30-day special session that began May 13 and is set to end June 11. They face a $1.2 billion budget shortfall for the two-year cycle that ends in the middle of 2015. That doesn’t include an additional approximate $1 billion that lawmakers are seeking in response to a court-ordered requirement that the state spend more on its basic education system.
Inslee said if expected revenue from the estate tax is further reduced, it makes lawmakers’ jobs all that much harder. Inslee’s office said that the Senate bill would cost the state $500 million over the next 10 years.
“The Senate majority wants to knock another hole in the ship and take on more water,” Inslee said.
Budget negotiations have been taking place for weeks between the Democratic-controlled House and the Senate, which is controlled by a coalition of 23 Republicans and two Democrats.
The original House and Senate budgets were about $1 billion apart, with House Democrats seeking new revenue by extending taxes and eliminating tax breaks, and the Senate majority looking to balance the budget without new taxes by relying on cuts to social programs and fund transfers.
House Democrats have scheduled a public hearing on a bill addressing narrowing or eliminating tax exemptions, but the bill is currently a title-only measure, meaning that the substance of it has not been released publicly. House and Democratic budget leaders scheduled a press conference for today to unveil a new budget proposal.
Inslee said that to come to a budget agreement soon and avoid another special session, “both sides are going to have to make hard decisions.”
“I hope there will be some rapid movement in the next few days because we certainly need that to move forward as a state,” he said.
If lawmakers are unable to reach a deal by next Tuesday, Inslee said that another special session would start the next day.
AP writer Mike Baker contributed to this report.
