2020 Legislative Session Expectations
(Interested in the 2019 Session Recap? Click Here)
In 2019, the Legislature adopted its biennial budget without approving significant new revenue. This means that although there were no cuts in major programs, and there were even some enhancements in some programs, new initiatives were largely not possible. The proposed carbon tax and capital gains tax were not approved and neither were major changes to the tax exemptions that could have increased revenue.
Given that the 2020 session is the second half of the biennium, it is unlikely that these revenues will be approved in the 2020 session either. And to a large extent, what may occur in the 2020 session how the Legislature responds to I-976. Although approved by the voters, the court case has resulted in an injunction until a judicial decision on constitutionality has been made. In the interim, most jurisdictions and the state are individually developing strategies for whether to continue to collect the full amount of pre-Initiative car tab fees or not. There does not appear to be momentum to use general fund money to support transportation, however.
Since the state of Washington tax structure remains the most regressive in the nation, the League and others are very intent upon adoption of the capital gains tax, in particular. It would raise additional revenue while making the system less regressive. But the Tax Structure Work Group will not produce a report in December 2020, so most people expect that no major changes (such as adoption of a capital gains tax) will be made this year. On the other hand, there is nearly as much revenue foregone through tax exemptions as is raised through taxes paid; so a bill that was introduced last year, HB 1703, might move ahead this year. While it would not increase revenue in the short term, it would make the exemptions more transparent and a specific part of the budget adoption process.
A number of bills have been pre-filed for this session that would add or remove tax exemptions, and these will be reported in the next Legislative newsletter.
Click on Bill # for detailed information. See UPDATES below.
Bills the League Supports
HB 1703 Increasing tax exemption transparency and accountability. The Department of Revenue report on all tax exemptions and their fiscal impact would be updated every 2 years instead of 4 years. Any tax exemption that has NO sunset and reduces revenues by over $50,000/year or $100,000/biennium would appear in the budget documents and have to be proactively reauthorized as part of the budget or it would sunset. If the Legislature has taken no action on reviewing and clarifying or adding a sunset on a tax exemption which the Joint Legislative Audit and Review Committee and Citizens Commission on Tax Preferences have recommended to be ended or clarified, and the tax exemption reduces revenues by over $50,000/year or $100,000/biennium, then the exemption would appear in the budget documents and require re-adoption in the budget or it would sunset.
2SHB 2117 / SB 5973 Providing a pathway to modernize and rebalance the Washington state tax structure so that it is equitable, adequate, stable, and transparent for the people of Washington state.
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