The Gristle

Fixing the Fix

Wednesday, March 27, 2019

FIXING THE FIX: Elected representatives took to their town halls last week to talk with voters about their achievements and challenges at the midpoint of a productive session of the state Legislature. Now comes the hard, slogging work as bills that survived on the floor of one chamber in our bicameral government are passed to the opposite chamber for discussion, adjustment, and possible approval. Lawmakers’ attention must also shift to the budget, and consideration of tax and spending measures during the remaining days of this year’s scheduled 105-day session.

Despite advances in responsive legislation and much for the governor to sign into law, Democrats failed in one of their key objectives this session—discovering a fix to the McCleary Fix to fund public schools.

In 2012, the state Supreme Court issued its McCleary decision, ordering the state to fully fund K-12 public schools as required by Article IX of the Washington Constitution. Years passed as a divided and paralyzed Legislature failed to provide a plan to fund schools. In 2017, a slim majority in both houses approved a funding plan, which immediately required a property tax adjustment in 2018, to pay for the basic education of children.

But basic education, as defined by state law, is not everything a school district offers. Special education, although mandated, isn’t part of basic education, and neither are programs like early childhood education. Local property tax levies are still required to fund these programs and other school operations. And there remain significant issues in fairness and equity that arose from the 2018 property tax adjustment that further shifted the tax burden to fund basic education from rural areas to the population centers of the Puget Sound region. Essentially, conservative Eastern Washington got a little break in their property taxes, while progressive Western Washington pays a little more.

An apparent solution might be to make it a little easier for rural areas like Eastern Washington to pass their property tax levies in future years with the same frequency that populous Western Washington communities readily pass theirs by a wide margin. That would lessen funding disparities between districts and unwind some program imbalances in communities where levies often fail, but likely involves easing the supermajority requirement on local property taxes.

The problem dates back to the Great Depression, when the state thought it was a good idea to require a supermajority of 60 percent to approve capital bonds through a property tax levy. The requirement gives outsized power to a minority of voters to thwart certain tax increases. But a return to a simple majority would require an amendment to the state constitution—itself a high threshold.

It appears two different strategies to tackle this issue have each failed this session. The more strongly supported of these, Senate Joint Resolution 8201, would amend the state constitution to lower the threshold of voter approval required for property tax levies from two-thirds (60 percent) to a simple majority. The measure failed because it did not garner the two-thirds majority vote in the Senate required to pass constitutional amendments.

This all points to a much larger structural problem with state revenues than is immediately obvious.

As the Washington State Economic and Revenue Forecast Council notes in their analysis of the 2019 state budget, “Our tax system—put in place in the 1930s, when rotary phones and manual typewriters were the norm—does not reflect the state’s modern, service-based economy.”

In essence, we do not tax services to the extent that we tax commodities, and services have grown to a much larger portion of the state’s economy.

“That is partly why our state and local tax systems no longer keep pace with the growth of our economy,” forecasters note. “Each year, as our tax revenues fall further behind, we face a growing structural imbalance in our state budget.

“Consider this: In the early 1990s, State General Fund revenue collections equaled nearly 7 percent of the overall economy (as measured by total personal income). But today, revenue collections as a share of the economy have declined steadily, to less than 5 percent.”

Washington is falling behind other states as well. During the mid-1990s, Washington ranked 11th nationwide in state and local taxes as a share of the economy. By 2013, the state’s ranking had fallen to 35th—well below the average for all states.

“A multitude of factors have been stripping the gears of the state’s tax and revenue system, the bulk of which was put in place 80 years ago, when the state economy looked much different than it does today,” forecasters commented. “Washington gets nearly half its revenue through retail sales taxes, primarily on goods. Besides making the state’s tax system the most regressive in the nation, our heavy reliance on a goods-based sales tax also helps explain why we continue falling behind in revenue collections.”

Unlike some states, Washington does not impose a sales tax on most services. Yet people today are spending a smaller share of their disposable income on goods and a greater share on services. In fact, over the past 40 years, services have more than doubled as a share of the total economy, while the bottom has collapsed in the collection of sales tax as a result of online shopping and changes in consumer preferences.

Additionally, since the mid-1930s, Washington has adopted more than 650 state and local tax exemptions, worth billions of dollars. Nearly a third of those were put in place during the past 15 years. Many others are outdated or no longer serve their original purpose.

“Saddled with a flawed and inefficient tax and revenue system, the state in recent years has too often relied on ‘one time’ money—such as through fund shifts or tapping reserves—to solve budget shortfalls. As a result, budget shortfalls reappear at the start of each biennium.”

The state could use an overhaul of its revenue system to create better equity and parity with states of similar size, and create better outcomes for taxpayers. But the task to do so in a maze of supermajority requirements is all but impossible.

Alan Doyle
Past Columns
A Change in Climate

April 24, 2019

The Raucous Caucus

April 17, 2019

Dragged

April 10, 2019

Edge City

April 3, 2019

Halfway Houses

March 20, 2019

New Directions

March 13, 2019

Fire and Ice

March 6, 2019

The Big Short

February 27, 2019

Marina Lacuna

February 20, 2019

New Bites at the Apple

February 13, 2019

Coal Folds

February 6, 2019

Refocusing the Narrative

January 29, 2019

Old Town, Old Story

January 23, 2019

Ranker Unanchored

January 16, 2019

‘Alternative Methods’

January 9, 2019

Top Stories, 2018

January 2, 2019

Et Tu, #MeToo

December 26, 2018

Turn That Corner

December 19, 2018

Events
Today
Skagit Valley Tulip Festival

10:00am|Skagit Valley

Bellingham Beer Week

12:00pm|Throughout Bellingham

Wild Things

9:30am|Stimpson Family Nature Reserve

Essence of Bellingham Photo Competition

10:00am

Student and Community Job Fair

10:00am|Whatcom Community College

Skagit Valley College Sustainability Fair

10:00am|Skagit Valley College

Parkinson's Dance Class

11:00am|Ballet Bellingham

English Country Dancing

1:30pm|Bellingham Senior Activity Center

Alt Reads

3:00pm|Everson Library

Kids for Peace Write Now

4:00pm|Village Books

Robin Hood, a Musical

7:00pm|Sedro-Woolley High School

Balkan Folk Dancers

7:00pm|Fairhaven Library

The Success Lie

7:00pm|Village Books

Eurydice

7:00pm|Squalicum High School,

Salish Sea Intertidal Life

7:00pm|Community Food Co-op

Unstable By Design

7:30pm|Sylvia Center for the Arts

Trove Web
Tomorrow
Skagit Valley Tulip Festival

10:00am|Skagit Valley

Bellingham Beer Week

12:00pm|Throughout Bellingham

Essence of Bellingham Photo Competition

10:00am

Robin Hood, a Musical

7:00pm|Sedro-Woolley High School

Eurydice

7:00pm|Squalicum High School,

Unstable By Design

7:30pm|Sylvia Center for the Arts

Wild Things

9:30am|Stimpson Family Nature Reserve

Spring Book Sale

10:00am|Deming Library

Chanticleer Authors Conference

12:00pm|Hotel Bellwether

Valley Writers

1:00pm|South Whatcom Library

SPA Talk with Bradley James Lockhart

2:30pm|St. Paul's Academy

Linuxfest Northwest

3:00pm|Settlemyer Hall

Peace Vigil

4:00pm|Downtown Bellingham

First Friday Art Walk

5:00pm|Historic Fairhaven

Poetry Party

5:00pm|Upper Skagit Library

Building Dreams Dinner and Auction

5:00pm|Maplehurst Farm

Raise the Roof Auction and Trashion Show

5:30pm|Depot Market Square

North Cascades Community Orchestra

7:30pm|Central Lutheran Church

The Coronation of Poppea

7:30pm|Performing Arts Center Mainstage

Skagit Community Band

7:30pm|Maple Hall, Anacortes-Westminster Presbyterian Church

Genre Legends, Hot Dogs

7:30pm|Upfront Theatre

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Saturday
Skagit Valley Tulip Festival

10:00am|Skagit Valley

Bellingham Beer Week

12:00pm|Throughout Bellingham

Essence of Bellingham Photo Competition

10:00am

Robin Hood, a Musical

7:00pm|Sedro-Woolley High School

Eurydice

7:00pm|Squalicum High School,

Unstable By Design

7:30pm|Sylvia Center for the Arts

Chanticleer Authors Conference

12:00pm|Hotel Bellwether

Linuxfest Northwest

3:00pm|Settlemyer Hall

Genre Legends, Hot Dogs

7:30pm|Upfront Theatre

Skagit Community Band

7:30pm|Maple Hall, Anacortes-Westminster Presbyterian Church

The Coronation of Poppea

7:30pm|Performing Arts Center Mainstage

Pancake Breakfast

8:00am|American Legion Post #154

Dealer Demo Day

9:00am|Fanatik Bike Co.

Everson Garden Club Plant Sale

9:00am|Everson Elementary School

Have a Heart Family Fun Run

9:00am|Edgewater Park

Anacortes Vintage by the Sea

9:00am|Anacortes Port Transit Event Center

NSEA Work Party

9:00am|Nooksack Salmon Enhancement Association

Independent Bookstore Day

9:00am|Village Books

Rise Against Hunger

9:00am| St. Luke's Community Health Education Center

Seedlings, Starts and Garden Goodies Swap and Giveaway

10:00am|Van Zandt Community Hall

Backyard Habitat Native Flora Fair

10:00am|Fairhaven Village Green

WoodFest

10:00am|Sedro-Woolley High School

Contemplative Brush and Japanese Washi Papers

10:00am|Blaine Harbor Center

Local Author/Illustrator Open House

10:00am|South Whatcom Library

Bellingham Farmers Market

10:00am|Depot Market Square

Sumas Writers Group

10:00am|Sumas Library

Dia de los niños/Dia de los libros

10:00am|Lynden Library

We Are Skookum Scavenger Hunt

10:00am|Downtown Bellingham

Dakota Art Store Anniversary Art Expo

10:00am|Dakota Art Store

Vaisakhi Festival

11:00am|Guru Nanak Gursikh Gurdwara

Tomato Growing Tips and Tricks

11:00am|Joe's Gardens

Getting Your Hand Dirty

11:00am|North Fork Library

The Greatest Sideshow in Sedro-Woolley

12:00pm|Hammer Heritage Square

Learn to Grow Fruit Trees

1:30pm|Cloud Mountain Farm Center

Little Farm Homegrown

2:00pm|Everson Library

Garage Wine Company Tasting

2:00pm|Seifert & Jones Wine Merchants

Sudden Valley Jazz Series

3:00pm|South Whatcom Library

Interwoven Lives

4:00pm|Village Books

FiberFest

4:00pm|Maple Hall

April Brews Day

6:30pm|Depot Market Square

Guemes Island gets lit

6:30pm

Contra Dance with Heliotrope

7:00pm|Fairhaven Library

Poetry Duo

7:00pm|Village Books

Swing Into Spring

7:00pm|Pioneer Pavilion Community Center

Bellingham Community Band's Appalachian Spring

7:00pm|Syre Center

Jennifer Scott, Rene Worst, and Bill Coon

7:30pm|Jansen Art Center

Skagit Valley Chorale's American Journeys

7:30pm|McIntyre Hall

Artrageous

7:30pm|Mount Baker Theatre

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