Dear Friends and Neighbors,
I hope you all had a safe and happy 4th of July! My dad's birthday is on the 3rd, so that always makes the 4th an even bigger celebration on the farm.
While I wish it was interim so I could spend even more time on the farm and in district, I wanted to update you on where we currently stand 179 days after the start of the 2017 legislative session. We remain in a third special session because, quite frankly, compromise is a difficult business. While we were able to pass the 2017-19 operating budget last Friday, there are other issues in which a compromise solution has been more difficult to reach. Most legislators hold fast on the issues they campaigned on and are hesitant to budge for a variety of reasons. While compromise is necessary in politics, especially when you have a split Legislature, I also know getting there is easier said than done. That's why I haven't and won't be taking shots at the other side while this process continues.
That said, I share your frustration with our constant need for special sessions. Since joining the Legislature in 2011, I've been through seven regular sessions and 14 special sessions. While our persistent bipartisan failure is incredibly disappointing, I've never given up, and I'm not giving up now. Those who criticize us for not finishing our work in a timely manner are right to do so. There is immense space for improvement.
My goals regarding the 2017-19 operating budget were consistent. I wanted to see us create and pass a budget that solved McCleary, while equalizing property tax rates across the state so rural areas would no longer be paying higher rates than the wealthiest parts of the state. To me, the greatest inequity in our entire tax code has been the existence of local levy rates in struggling small towns that have been 300-500 percent higher than rates in central Puget Sound. I also wanted to see a budget that shifted school funding so students in poorer and rural areas would have the same opportunities for success as students living in wealthier areas.
While the 2017-19 operating budget achieves all of these goals and more, there is a phase-in year in 2018 that complicates things just a bit. Due to current maintenance and operation levy rates remaining in effect through next year, every district in the state will see increased property taxes before a new school levy cap is enacted in 2019 — set at $1.50 per $1,000 of assessed valuation. When you consider local levies in the 2nd District are in the $3 to $5 per $1,000 of assessed valuation range, the result of the cap will be a net decrease in property taxes after the 2018 phase-in year. All in all, our district will be a “net-winner,” meaning most taxpayers will see a net reduction in their property taxes, while our local schools will experience an increase in funding.
Here is the breakdown of how the policy change will affect taxpayers in each school district in the 2nd:
|School District||CY 2018||CY 2019||CY 2020||CY 2021|
Let's use the Carbonado School District (CSD) as an example in the above chart. Note the average taxpayer in the CSD will see a property tax increase of $160 in the phase-in year of 2018. However, they will then see property tax reductions of $570, $540 and $520 in subsequent years due to the implementation of this new policy as compared to current law.
In terms of the increase in funding school districts in the 2nd will see as a result of this policy change, take a look at the chart below:
|School District||SY 2017-18||SY 2018-19||SY 2019-20||SY 2020-21|
As you can see, all but one of our school districts will be receiving more money each school year under this new policy as compared to the previous policy. While the Carbonado School District (CSD) is an outlier, CSD will still be getting what it would've gotten under the previous policy. In sum, no district will see a cut in their funding, while the majority of school districts will see a big increase in funding.
Looking big picture, 53 percent of the operating budget will now be allocated for K-12 education. That's something we haven't seen since the early 1980s. I've always believed in the importance of complying with our state constitution, which clearly states it's our paramount duty to amply fund education. It's unquestionably clear we've succeeded in doing that by boosting K-12 education spending to these levels. I also believe we've succeeded in avoiding McCleary 2.0 down the road, which is critical.
What does a budget negotiation actually look like?
Understandably, there's a lot of confusion about what a budget negotiation looks like, so I wanted to provide you with a clear picture.
I started taking part in negotiations in 2013 with then-Rep. Gary Alexander, and have been involved with them every year since. The first thing you need to know is there is a tremendous difference in impact between negotiators for the majority, who actually write and pass budgets, and negotiators for the minority, who try to make a difference on the margin. While it can be frustrating being on the minority negotiating team, the minority can still have a big impact by getting its priorities incorporated into either of the majority budgets early.
As a general rule of thumb, Democratic budget proposals will start sky-high and have something that appeals to each one of their important interest groups. Republican budget proposals, in contrast, generally start low — partly because that fits with conservative philosophy, and also because starting low is necessary in order to have a chance of meeting at a reasonable figure in the end. Meanwhile, behind the scenes, experienced budget writers set the stage for later negotiating positions.
The last couple of years have been somewhat unique because Democrats have called for bringing in progressive revenue to the state through a capital gains tax, higher B&O taxes combined with more exclusions, and ending featured tax incentives. However, I've always thought not bringing these taxes to the floor for a vote has weakened their position. While calls for tax increases may appeal to base voters at first, it also may turn them off when it's clear they're not going to take risky votes on them. While it's true neither side passes all budget bills ahead of time, the failure to fund major parts of a $40+ billion budget reveals a credibility problem.
Over the past few years, my major purpose has been to be involved enough so I could effectively communicate our budget priorities to the caucus and then to you, the public. However, I was less involved with the budget this year than in past years and really didn't have a part in negotiations until the final two days. When I got involved, I was struck by the very different tone I saw. Because there is a great deal of strategy involved with budget negotiations, it is tempting to try to assign motives to every word and move of the opposite side. The major players this year seemed to do a good job of avoiding paranoia. Sen. John Braun, R-Centralia, and Rep. Timm Ormsby, D-Spokane, were deeply committed to getting the best deal for their side, but both kept their egos in check to an unusual extent for prominent politicians. I didn't see any personal animosity. Instead, I saw a strong desire to understand each other's point of view and accommodate it. Sen. Joe Fain, R-Auburn, was also a part of the later Senate negotiation team. He is a skilled practitioner of the Art of the Possible, the most timeless rule of politics.
Most people picture negotiations as a group of sweaty, red-faced politicians staring at each other across a table late at night until someone uncorks an inspiring speech that either intimidates the other side into capitulation or stuns them with deep intellectual brilliance. Sometimes that happens, but in general, all major moves are made after an exchange of paper offers and surprisingly careful staff analysis of their potential impacts. Although much is made of all the potential mistakes that could be caused by negotiating as the clock ticks closer and closer to midnight, the reality is it's rare to be blindsided by any truly authentic new ideas. Almost every idea has been explored at some point in previous months.
When it comes to what is said in public, there are a lot of press and communication games. Some of the briefings are genuine, some are strategic, some are meant to cause mischief, and still others are merely cries for attention. You'll know who the serious budget writers are because they're usually the ones who say the least. There is a constant temptation to be the one who gets quoted in the newspaper. Most resist that urge, but some can't.
One of the things I like the least about the negotiating process are the calculated attempts of some to make it harder to reach agreement. This reveals itself in the form of demonizing the other side or demonizing some issue that will be part of a later negotiation. I've always thought it would be counter-productive to demonize individual aspects of a solution I might end up voting in favor of, so I've tried my best to stay silent. Others feel differently about that approach.
In the end, negotiators reached a deal on what is perhaps the most conflicting operating budget I have seen in my time in the Legislature. Many Republicans, including myself, were deeply committed to property tax reform that would create flat rates across the state and provide relief to most of our poorest communities. In the end, property tax reform was adopted, although the outcome will be better in some areas than in others.
It was also critical to address the neglect of schools that led to the McCleary decision and the crippling local levy tax rates that resulted in rural kids getting far less educational resources than those in wealthier communities. The Legislature has been consumed by this issue since my second year as a state representative. As I talked about in the first section of this update, I believe we did our duty to prioritize K-12 education funding in the budget.
On the flip side, there are elements of the budget we don't like at all. Although we didn't create new taxes, we didn't want to see the extension of sales tax on bottled water or an additional burden placed on taxpayers by applying sales tax across a broader range of internet transactions.
Additionally, what makes me and many others most uncomfortable is the growth rate of the budget — around 6.5 percent per year. That's not as high as the crazy rates before the great recession, but it's also not sustainable in the long run. Adjusting for the movement of property tax from the local level to the state level means our growth will be around 5 percent per year. If we see a significant economic downturn anytime soon, our failure to be more fiscally responsible could come back to haunt us.
I learned a great deal having been in the Legislature when we were facing a serious budget crisis. I know advocates for more social spending are sincere and will do their best to create beneficial programs for our communities. However, when the inevitable crash comes, as it does about every decade, it never hurts the politicians, the bureaucrats or the advocates. Instead, it hurts the people who need help the most.
We all need to become advocates for a sustainable growth rate. That probably means going from five percent to three percent long-term, which is something we can and should be able to do. It's critical we make fiscal responsibility a top priority going forward.
Please continue contacting me with your questions and comments on the issues before us in the House. Your feedback is important to me.
It's an honor to serve as your state representative.