Leaders of Vancouver’s early-childhood programs gathered Wednesday to warn voters that a Washington ballot initiative would undermine a system that already fails to reach children in need.
If passed, Initiative 2109 would repeal Washington’s capital gains tax. Lawmakers in 2021 approved the tax on some of the state’s wealthiest citizens to provide additional funding for early-childhood education.
An estimate last November found the tax had collected $890 million in its first year. The tax is expected to collect as much as $6 billion for education through 2029. Educators said the funding is critical to support early-learning programs, which have particularly struggled since the onset of the COVID-19 pandemic.
“Would you believe there are 4,000 children we can’t provide services to because of funding?” said Rekah Strong, CEO of Educational Opportunities for Children and Families, a local provider of early-learning and child care programs. “Families are having to make a decision between rent and child care. That should not be the case.”
Strong and several other education leaders, lawmakers and small business owners gathered Wednesday afternoon at the organization’s headquarters in Vancouver to urge voters to preserve the tax by voting against Initiative 2109. The event was among several such rallies held simultaneously across the state in Burien, Yakima and Spokane.
“(Repealing the tax) would gut funding from a vital program for our communities,” said Rep. Monica Stonier, D-Vancouver. “It won’t do anything to help 99.8 percent of families. It will just shift more tax pressure onto Vancouver’s middle- and lower-class families.”
What the tax funds
The capital gains tax collects 7 percent on the sale or exchange of long-term capital assets, such as stocks, bonds and business interests — meaning it largely affects the state’s wealthiest taxpayers. It doesn’t apply to real estate sales and only covers gains above $262,000.
A report earlier this year estimated the first year of collections came from 3,895 Washingtonians.
Democrats presented the tax as a way to lessen the load on Washington’s lower- and middle-income residents, who pay a disproportionate amount in state taxes, primarily due to sale taxes.
The law directs the first $500 million collected each year to a fund supporting schools and early-childhood education providers. The remainder goes toward the state’s common school construction account.
Clark County’s two largest school districts, Evergreen and Vancouver, for example, have each been forced to make millions of dollars in budget reductions in response to state budget deficits and the loss of federal pandemic-era relief money. For educators and early-learning providers in Clark County, the capital gains proceeds aren’t a cure-all but nonetheless provide a boost for an education system buckling under the weight of increased student needs post-pandemic.
A 2023 study of Educational Opportunities for Children and Families’ programs found just 42 percent of eligible Clark County children are receiving critical early-learning services. Strong said that losing the tax would drive that number down even more.
“We’re already trying to keep our necks above water,” Strong said. “Fifty percent of my staff are people of color. There are direct impacts on the most marginalized individuals, and the little bit we have to uplift and support them will be taken away.”
Gov. Jay Inslee said in a panel discussion with Vancouver Public Schools staff earlier this year that preserving the capital gains tax is the most important education issue in Washington this year.
“The most important thing in my book is to preserve what we have. We won’t have that if the capital gains tax disappears,” Inslee said in February. “The first order of business is to not dig the hole deeper.”
Behind the measure
Conservative interest groups mounted a legal challenge to the capital gains tax after its 2021 passage. They contended capital gains should classify as income. The state Supreme Court voted 7-2 to uphold the tax; collections began that year.
Hedge fund-sponsored political action group Let’s Go Washington proposed Initiative 2109 and collected hundreds of thousands of signatures to get it on the ballot.
Washington Republicans label the tax as “unnecessary” and a “major step toward a new state income tax.” They also contend that repealing the tax would not diminish funding for schools because state revenue is not projected to decrease in the coming years.
Stonier said Wednesday she didn’t think the claim was true.
“(The state GOP) tends to say there’s plenty of money when they focus on one issue, but they haven’t been able to show us a budget that accommodates that cost across the board,” she said.
Amanda Hammond, an advocate for the Save the Children Action Network, is a mother of two who lost her husband in 2021 to COVID-19 complications. The tragedy forced her to find child care for her kids so she could work.
“For many Washington families, child care feels like a luxury they cannot afford. This isn’t just a burden on parents, it hinders our state potential,” Hammond said. “Washington aspires to be a thriving state with a bright future. That future starts with our children.”
