OLYMPIA, Wash. — Washington lawmakers revealed details of a negotiated two-year $52.4 billion state budget that includes an increase in business and occupation taxes on large banks but nixes a capital gains tax that majority Democrats originally sought.
The details were released Friday evening, a day after Senate Democrats already started passing some of the revenue bills tied to the budget, including a change to the real estate excise tax that say will bring in about $600 million dollars over the next four years. The budget assumes more than $830 million in new revenue over the next two years, with increased spending on K-12 and higher education as well as behavioral health.
Raising the business and occupation tax rate on institutions with $1 billion in global net profits from 1.5% to 3% is estimated to bring in about $338 million over the next four years. There are other changes to business and occupation taxes with increases for travel agents and tour operators, as well as for professional services. Additionally, an excise tax would be added to vapor products. Lawmakers said specifics on the vape tax are still being worked out, but the document released by Senate Democrats show a 37% tax on the selling price for vapor products, which currently are not taxed.
The full budget has still not been released, with lawmakers saying some final details are being worked out as it’s being printed ahead of public release, expected Saturday. The House is expected to vote on several revenue bills late into the evening. The 105-day-legislative session is scheduled to end Sunday.
The fact that these measures are getting late night votes angered open government advocates, who have for years criticized lawmakers for working when people aren’t watching and not giving people time to review details on key legislation.
“The more we save to the end, the later we go at night, which nobody wants to do,” said Senate Majority Leader Andy Billig, D-Spokane.
Billig said he’d like to explore ways for the Legislature to make the process more efficient, possibly by shaving off time earlier in the session for policy committees and moving the revenue forecast up to earlier in the year.
Jason Mercier, director of the Center for Government Reform of the conservative Washington Policy Center, said the late-night vote showed lawmakers’ disregard for transparency.
“This is not the way to govern and must change,” he said in an email.
The Senate and House had each previously passed their own underlying budget plans earlier this year but funding bills had been on hold as both chambers worked to negotiate a final plan.
The Senate had originally been seeking more than $500 million in new revenue to fund an underlying $52.2 billion budget, while the House had sought $1.4 billion in new revenue for their $52.8 billion proposal. The final plan meets somewhere in the middle.
Sen. Christine Rolfes, the chief budget writer in the Senate, noted that while the original Senate plan had a stand-alone capital gains tax plan that would pay for various tax cuts, their underlying budget didn’t include it. The Democrat said ultimately, there were a variety of other reasons that led to its exclusion, but that support in the Senate was harder to get for such a tax.
The real estate excise tax, which was in both the Senate and House original plans, was one of three tax bills passed by the Senate Thursday night.
Currently, all property sellers pay a flat 1.28% rate. Under the bill passed by the Senate Thursday night, the rate is reduced to 1.1% for homes that sell for $500,000 or less.
A new graduated rate applies for homes that sell between $500,000 and $1.5 million, with the new lower rate applying to the first $500,000, and the 1.28% rate applying to the portion that is greater than $500,000 up to $1.5 million. The rate increases to 2.75% for the portion of sales valued between $1.5 million and $3 million, and it rises to 3% for homes where the portion of the selling price is more than $3 million.
Another measure changes the way petroleum companies are taxed in the state. Instead of being taxed based on market price, the companies would be taxed based on the volume of hazardous substances processed. The Senate also passed a plan to amend the current sales tax break for residents who live in states that don’t have a sales tax, like Oregon. Under the measure, non-residents would be able to request sales tax refunds of more than $25 and would be limited to one refund per year.
House Majority Leader Pat Sullivan said Friday that while he knows there is criticism about late night votes and a lag in transparency in the frantic final days of session, lawmakers are working quickly to avoid having to go into special session.
“Either we get done on time —and we do it the best we can, making sure people have the information as quickly as possible — or we’re criticized for not getting done on time,” he said.