Lawmakers pass budget deal that speeds up teacher salary fix, cuts property taxes

OLYMPIA, Wash. — Washington lawmakers on Thursday approved a 2018 supplemental budget that will boost state spending on public school reforms to meet a court order and give taxpayers a one-time property tax cut.

The budget plan tweaks the $43.7 billion two-year budget approved in 2017, directing $774 million through 2019 to speed up the state’s plan to take on the full cost of paying K-12 teachers and staff.

The teacher salary changes are the last piece of a long-running state Supreme Court order on education known as McCleary. The $391 million tax cut is set to lower property taxes in 2019 from $2.70 per $1,000 in assessed value to $2.40.

No new taxes were implemented in the budget, which was helped by a shower of unexpected money. A February projection showed a strong economy will bring the state $1.3 billion more in taxes through 2021.

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“That windfall gave us the opportunity to take care of our Supreme Court obligation to fully fund K-12,” said state Rep. Timm Ormsby, a Democrat from Spokane, on the House floor Thursday, the last day of 2018 legislative session. Ormsby is the top budget writer for House Democrats.

He added “buying down” the property tax — which spiked in 2018 to pay for McCleary reforms — is one step toward making sure people aren’t “threatened to move out of their homes.”

The budget, which now heads to the desk of Gov. Jay Inslee, got wide support from Democrats who control the Legislature and some votes from minority Republicans. But many in the GOP objected to the budget for not saving enough money in case of an economic downturn and for not approving their bigger property tax cut plans that would have offered relief in 2018.

“This budget attempts to offer property tax relief, but is much too little, much too late,” said Rep. Bruce Chandler, R-Granger, in a written statement.

The budget deal also drew criticism for being introduced less than 48 hours before the 60-day legislative session ended late Thursday. Some lawmakers and open government advocates said the tight time line gave the public too little time to scrutinize it.

“I just didn’t have enough time to really know what’s going on with this budget,” said state Rep. Andrew Barkis, R-Olympia, on the House floor Thursday.

Both key pieces of the budget — the property tax cut and the teacher salary reforms — are a response to major changes the Legislature implemented in 2017 to meet McCleary.

The court had ruled it unconstitutional that the salaries of teachers and other school staff were being paid in part by local property tax levies.

In order to shift those payments onto the state, lawmakers in 2017 approved $7.3 billion in new state spending on K-12 schools through 2021. That money came from a hefty property-tax increase — roughly 81-cents per $1,000 in assessed property value in 2018.

At the same time, lawmakers ordered a cap on local property taxes. But that reduction doesn’t kick in until 2019, leading property taxes to spike for many around the state.

Lawmakers from both sides of the aisle pushed to ease the property-tax burden this year, especially after the unexpected influx of cash.

Republicans offered a plan to cut property taxes by 81 cents per $1,000 of assessed value. They also said the taxes effectively could be cut in 2018 through a voucher system.

Democrats countered with a smaller cut, saying more state dollars needed to be spent on education and other government programs. Democrats also said state and local officials told them a property tax cut in 2018 instead of 2019 would be too logistically complex.

Last fall, the Supreme Court also ruled that the Legislature’s plan for teacher salary reform was not fully implemented by a Sept. 2018 deadline.

In order to speed up that plan, the Democratic-led budget approved Thursday will use roughly $1 billion through the 2021 budget cycle to expedite the salary shift.

To help pay for the property-tax cut and education spending, Democrats used budget maneuvers to shield roughly $700 million from a constitutionally-protected account saved generally for economic downturns and natural disasters.

The so-called “rainy day” fund requires a 60-percent majority vote to use, meaning Democrats would have needed some GOP support to tap it.

Republicans accused Democrats of circumventing the constitution and throwing fiscal responsibility out the window. Democrats defended the move, saying they would have healthy budget reserves even with less money making its way into the rainy day account.

The fund will have about $1.7 billion at the end of the four-year budget cycle in 2021, according to Senate Democratic staff.

Outside of K-12 schools, the budget includes more than $170 million in new state spending by 2019 on the state’s troubled mental-health system. It also spends $18.5 million by 2019 — and a plan for more in later years — to reduce a waitlist to access the financial aid program for low-income students known as the State Need Grant.

Overall, the supplemental budget adds roughly $750 million in net spending to the current two-year budget.

Many Republicans objected, saying the spending will make it tough to avoid raising taxes or cutting government programs in the future.

“My problem is we giveth, then we got a downturn in our economy we’ve got to take away,” said state Sen. Maureen Walsh, a Walla Walla Republican, in a Thursday floor speech. “That’s not responsible budgeting.”

Sen. Christine Rolfes, D-Bainbridge Island, said on the floor Thursday that the budget was a success.

Rolfes said Democrats this year hoped to bring the state into compliance with McCleary, give a property-tax cut, invest in mental health, leave a budget with healthy reserves and pass a budget without an overtime special session.

Rolfes is the top budget writer for Senate Democrats.

“This Legislature didn’t accomplish everything we set out to do this year, but we did accomplish our budget goals,” Rolfes said.

KIRO