Can the legislature vote on a budget that it has not yet seen?
In their live update on Tuesday on social media, five Washington Policy Center (WPC) specialists gave citizens another glimpse into what is and is not going on in the final days of the 105-day regular session of the Washington State Legislature.
At the top of the list is the frustrating fact that Democratic leaders have not yet released the details of the two-year operating budget to the citizens who will settle the bill or to most of the members of the legislature who will vote on the budget next year a few days. WPC specialists also covered the three proposed forms of carbon tax and discussed the long-term care bill, to which all citizens will contribute through a new payroll tax.
Jason Mercier is the director of the Center for Government Reform at WPC. Mercier reported that there may be a rift in the collaboration between moderate Democrats and progressives. Moderate Senate Democrats were not calling for an "emergency clause" on capital gains tax. The law was passed with a narrow 25-24 majority in the Senate.
The House saw it differently and passed a completely different version of the capital gains tax. They contained language that reflected an emergency clause that would forbid giving the people a referendum. However, several amendments need to be dealt with now. A referendum would be forced.
"We keep hearing from supporters how popular this tax is," said Mercier. "Well, they can prove it by actually putting it on the ballot for voters to think about."
Washington Policy Center staff discuss the ups and downs of the Olympia legislative process as the legislature enters the last five days of its regular session. Artwork John Ley
The WPC has public records from Democratic lawmakers stating that they are not doing this because they want a capital gains tax. They want to see if the state Supreme Court will overturn their ruling that Mercier says income is property. In that case, they can levy a broad tiered income tax without any constitutional amendment.
"What is actually proposed is an amendment that will prohibit the attorney general from making that argument," he said. "The only reason to vote against this amendment is that your aim is, in fact, to impose a broad-based income tax on the state."
Another change would make the bill effective only if the Internal Revenue Service certifies that the tax is an excise duty. The state constitution forbids tiered income tax, so progressives call it an excise tax, among other obvious attempts at playing word games.
Mercier mentioned that the budget won't be released until Saturday. Rumor has it that it is 1,000 pages. The $ 59 billion spending document will be released less than 24 hours before the end of the session.
When asked by Chris Cargill, director of Eastern Washington at the WPC, whether any of the lawmakers will have the opportunity to read the bill before the vote, Mercier reminded him of the famous quote from US House spokeswoman Nancy Pelosi: " You will have to say goodbye to the budget to see what's in there. "
Obviously, people don't stand a chance to weigh up, and Mercier pointed out that lawmakers don't know the details of their vote. This is far from good governance. Mercier called it a terrible process and far from transparent.
Paul Guppy is the Vice President for Research at the WPC. He focused on the fact that House and Senate Democrats have not yet released details of their operating budget.
Every two years the legislature expressly plans a longer session of 105 days instead of the normal 90 days. The reason they have 105 days is to give them more time to work on drawing up the state's two-year operating budget.
"It's incredibly complicated, it's $ 40 billion to $ 50 billion," said Guppy. Instead, they will introduce the budget within 24 or 48 hours right at the end of the session. "
"What's the point of having a longer session when the public doesn't have more time to see what the legislature is putting into the budget, and most importantly, so that the legislature can see for themselves what's in the budget," Guppy asked .
Carbon taxes
Governor Jay Inslee has tried for the first eight years of his tenure to get lawmakers to pass its green agenda. An original deal at that meeting combined a carbon tax, cap and commercial invoice, and standard low-carbon fuel invoice.
These pieces were tied together to provide a transportation package with the necessary “revenue” for taxpayers. Todd Myers is the director of the environmental center for WPC. He shared the cap and the commercial invoice is projected to cost about 18 cents per gallon in 2023, rising to about 25 cents per gallon by the end of the decade. The Senate's transportation bill has a separate gas tax of about 10 cents and the house has a gas tax of 18 cents.
"There is actually a line in the cap and in the trade law that says the money would not be used for shipping finance from cap and trade if a low-carbon fuel standard (LCFS) were not passed by 2027," noted Myers. He believes this means the sponsor, Rep. Joe Fitzgibbon (Democrat, 34th Ward), does not believe the LCFS will pass this session.
The link between cap and trade and the transportation budget has been removed, which was one of the requirements of some senators who voted in favor. Mercier believes that the cap and commercial invoice may not be met and the standard for low carbon fuels may not be further developed.
However, Mercier noted that anything can happen in the five remaining days of the regular session, including Governor Inslee calling lawmakers back in an emergency session. At this point everything could be put back on the table.
New income tax on long-term care insurance
In 2019 the legislature passed a law according to which the state will grant citizens a “benefit” from long-term care insurance. It is paid with a new wage tax. At this meeting, the legislators changed an “opt-out” clause and how long citizens must use it.
"There is a bill in place that would make changes to the 2019 Long-Term Services and Support Trust," said Elizabeth Hovde, a policy analyst for the WPC helping the state save on booming Medicaid costs. "
The original law created a trust. "Everyone in the state, all workers, are charged 58 cents for every $ 100 they make regardless of income," she said. Anyone who deposits will receive a lifetime benefit of $ 36,500 or $ 100 per day.
There are important caveats, however. You only get the benefit if you live in Washington. If you move out of the state, the benefit is non-transferable. "It's not a viable benefit," said Hovde.
Legislation is now being passed on to the governor's desk. This limits the amount of time you can deregister from payroll tax, which comes into effect on January 1, 2022. Legislation only allows people to opt out if they purchase separate long-term care insurance and inform the state by November 1.
"The sad thing about changing the opt-out to buy a plan by November 1 is that a lot of people won't even know what is happening," she said. "You will see it on your check in January and it will be too late to do anything."
"They purposely kept people in the dark," she said. “I think they need trust to be solvent. and without a lot of people depositing it won't be. "
"What this is is a direct entitlement model that is imposed on all of us whether we ask for it or not," said Guppy. "I think it's kind of an insult."
WPC analysis shows that long-term care of $ 36,000 or $ 100 per day is not a benefit. "Anyone who has helped an elderly parent or an elderly relative knows that this type of funding just won't cut it," he said.
Guppy believes this is by design. "As soon as the claim is made, the Democrats will come back and say that it is underfunded. We need a better benefit, we need to raise the tax, we need more money for it."
The original proposal was HB 1087 in 2019. According to the state's financial management office (OFM), the new wage tax levied by HB 1087 would deduct more than $ 1 billion from workers' paychecks each year, the WPC reported. The main sponsor was the SEIU.
The WPC said, “It is estimated that the state will save an average of only $ 65 million a year over the next three decades. But even these savings are overrated after considering the cost of the new LTSS program. OFM estimates the state will need to hire 130 new full-time employees and will spend more than $ 22 million per year on running the new program. Workers pay $ 1 billion in new taxes every year to save the state a meager $ 43 million. "
"We keep hearing how regressive our tax system is, how unfair it is," said Guppy. "One side says we need an income tax, we need a wealth tax because of all the regressive taxes." Yet the same people created another regressive tax that is right on our payroll that takes the pay home with us. So
"There is a frustrating hypocrisy in your arguments," he said. "A new wage tax comes in January."
Hovde pointed out that when the $ 36,500 is gone, which is going to happen very quickly, people will turn to Medicaid plans again. "They were Medicaid before, they'll be back on Medicaid. And now their paychecks are being reduced. So it's not even the favor it turns out to be. This is a tax break."
Cargill brought up another of those startling “perks” that lawmakers have enacted on paid family leave. “About a year and a half ago when I remember people seeing their paychecks go down because of the other paid family vacation tax. I remember people telling me back then why I didn't know about it? Why didn't I hear about it? My check went down. "
Hovde suggested that employers now let their employees know about this upcoming payroll tax and let them know that if they take out private long-term care insurance before November 1, they can opt out.
A special session?
By the end of the update, Cargill was wondering how on earth can lawmakers get all of these things done by Sunday. There are huge bills outstanding – the budget, the income tax, the three carbon tax bills. This could mean that the legislature comes back for a special session.
"As we know, at a special session, when the governor calls you, everything is back on the table," said Mercier. “That could be good for the emergency powers (draft law) because maybe we can have this debate again. But it is very unlikely that they will do all of this by Sunday. "
Cargill responded by asking how would they justify a special session if they had more money in budget than ever before. "Are you really going to go to the people in Washington and say, you know what, we need a special meeting to collect taxes?" he asked.
Guppy reminded her that lawmakers expect $ 3.2 billion more in revenue (not to mention all of the federal COVID funds). "If they just focused on people's business, they could do it in that longer session of 105 days."
"Their base is concentrated in Seattle and they are trying to get into it," he said. “But they are also facing opposition from the rest of the state. Tackling unpopular ideas is the sign of why they are up to speed on these complicated issues, the budget goodbye, and why they believe they need a special session to get more time. "