Inslee proposes tapping reserves, carbon tax in budget plan

Governor Jay Inslee of Washington. (Photo by Karen Ducey/Getty Images)

OLYMPIA, Wash. — Gov. Jay Inslee on Thursday proposed tapping the state’s reserves to comply with a final timeline required for Washington state to come into compliance with a state Supreme Court mandate on education funding, and he wants a new tax on carbon emissions from fossil fuels to ultimately backfill that withdrawal

The governor announced the proposal during the unveiling of his supplemental budget proposal, which makes tweaks to the current $43.7 billion, two-year state budget that was adopted earlier this year. Inslee’s plan proposes spending $950 million to fully implement the state’s salary allocation for teachers and staff starting with the September 2018 school year.

“It’s the final step to completion of this constitutional obligation,” Inslee said. “Our teachers and students are depending on us to deliver this this year.”

His plan relies on the passage of a carbon tax he says will be introduced next month that would restore that money back to the reserves; the tax would be used in later years for environmental projects, Inslee’s budget office said.

The tax is expected to put about $1.5 billion back into reserves, though the rate and other details about its scope won’t be known until a bill is presented.

The state has been in contempt of court since 2014 for lack of progress on satisfying a 2012 ruling — known as the McCleary ruling — that found that K-12 school funding was not adequate. Washington’s Constitution states that it is the Legislature’s “paramount duty” to fully fund the education system.

The budget proposal comes a month after the high court ruled that while a plan passed by the Legislature this past year was in compliance with their order, the timeframe for full funding was not, and that the state will remain in contempt of court.

The court has retained jurisdiction in the long-running case, and gave lawmakers another legislative session to get the work done, ordering them to present a report by April 9 detailing the state’s progress.

The biggest piece of the court order that the Legislature had to wrestle with was figuring out how much the state must provide for teacher salaries. School districts currently pay a big chunk of those salaries with local property-tax levies.

The plan that was ultimately signed into law relies largely on an increase to the statewide property tax that starts next year. The court took issue with the fact that under the plan, the salary component isn’t fully funded until September 2019. It notes that the state would need about another $1 billion to fully pay for the salary portion of the plan.

While some lawmakers have said they’ll seek a way to try and lower those property tax rates in the coming session, Inslee’s plan does not.

The governor’s budget director, David Schumacher, said that decision was made “because we think paying for the final step of McCleary is a higher priority than cutting property taxes.”

The new proposal also includes putting more money toward the state’s mental health system and toward efforts to battle opioid addiction in the state.

Lawmakers return to the Capitol next month, when the House and Senate will each present their own supplemental budget proposals during the 60-day legislative session that is scheduled to end mid-March.