Senate Democrats propose $59.2 billion state budget

Funding for health care, education and efforts to curb houselessness are promised in a $59.2 billion state budget proposal from state Senate Democrats unveiled March 25.

“This is an ambitious set of priorities that will guide a sustainable recovery. It is a budget that meets the moment,” said Christine Rolfes, D-Brainbridge Island, the chair of the Senate Ways & Means Committee.

The Democrat-led 2021-23 budget increases spending from 2019-21 by about 12%, not counting federal relief. The state Economic and Revenue Forecast Council assumes there will be an upswing in revenue in the next two years, but a more optimistic economy has not stopped the momentum of a controversial capital gains tax.

The 7% tax on capital gains of more than $250,000, which passed the Senate and is on its way to the House, would generate an estimated $357 million between 2021-23 to fund the Fair Start for Kids Act. Republicans are opposed to the tax, which they say is unconstitutional and unnecessary.

“The Democrats have chosen to hitch their budget to a revenue source that is even less reliable – a capital-gains income tax which has a 50-50 chance of being found constitutional,” said Sen. Lynda Wilson, R-Vancouver.

While other proposed tax collections were scrapped, including an increase on healthcare premiums and a tax on sugary drinks, the Senate majority assumes that taxes on carbon and the Low Carbon Fuel Standard will both pass the legislature. The cap-and-trade tax, also known as Senate Bill 5126, is estimated to bring in over $500 million by 2023.

The plan would also take about $1.8 billion from the state’s rainy day fund, which Republicans had planned to use for COVID-19 efforts. In addressing houselessness, about $850 million in federal money to support affordable housing is included, with $495 million toward rental assistance. Another $201 million would fund foreclosure prevention.

The Office of Independent Investigations — also known as House Bill 1267 — would get $26 million from this budget, a measure to hire a panel of independent experts to evaluate findings from police investigations. The proposal includes $12 million for other police reform legislation passed this session.

More than $1 billion in one-time federal funding would go toward vaccination efforts and other pandemic health responses, especially with funds set aside to safely reopen schools. The proposal dedicates another $150 million of state money to public health services.

The budget differs from the Senate Republicans, whose $55.5 billion proposal this February focused more on tax relief. Still, both sides prioritized funding for the Working Families Tax Credit and small business relief.

The Democrats suggested $500 million in unemployment insurance tax cuts for small businesses, and Republicans expected to spend $33 million specifically for small employers.

Each budget also includes more money toward wildfire services and expanded behavioral health.

“Our state budgets always spend a lot of money, but this money is being used to stabilize our economy, to stabilize

our healthcare, to stabilize our schools,” Rolfes said.

Other programs funded by this proposal include:

*$300 million for additional Immigrant Relief Fund payments to individuals

*$200 million in federal money for expanded Paid Family Leave for individuals forced out of work during the pandemic.

*$170 million in combined funding for crisis response, additional beds in community-based settings and increased Medicaid reimbursement.

*$100 million to reduce rates on the Washington Health Benefit Exchange.

*$59 million in federal dollars for mental health and substance abuse grants.

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