Establishing Fair Revenue
Promote a balanced, fair, adequate, and flexible tax structure as well as the establishment of a public bank.
Issue Team Chair: Cynthia Stewart, firstname.lastname@example.org
Big Steps Toward Greater Balance in Taxation
HUGE thanks to all who helped get the capital gains tax over the edge in a very tense end of session action by both House and Senate. It passed the Senate in a nail-biting 25-24 vote. There will undoubtedly be a lawsuit to determine constitutionality of this bill but the sponsors are confident it will be upheld. The final bill dedicates the funds generated by the capital gains tax to public education—the first $500 million to the Education Legacy Trust Account and any additional funds generated to capital funding for schools.
Combined with the working families tax exemption, which passed earlier in the session by a much larger margin, the capital gains tax will help to shift the balance in Washington’s upside down tax structure toward greater equity. These bills are considered historic because they have been attempted for so long and finally passed.
Bills the League Supported That Passed
HB 1080 Concerning the capital budget. This is the governor’s proposed capital budget. It makes historic investments in housing. This bill was amended and passed by both chambers as the legislature’s final capital budget. It has been delivered to the governor for signature.
HB 1297 Concerning working families tax exemption. If approved, this bill would remit payments to families who qualify by eligibility for the federal income tax category of earned income tax credit. Combined with a new progressive tax, this would help to move Washington State’s tax structure toward greater equity. This bill has been sent to the governor for signature.
HB 1332 Concerning property tax deferral during the COVID-19 pandemic, would suspend interest and penalties on nonpayment of property tax during the Coronavirus Disease 2019 (COVID-19) state of emergency and for months thereafter defer April 2021 property tax payments, and establish a COVID-19 property tax deferral loan account from which cities and counties may apply for loans. This bill has been signed by the governor.
SB 5096: Capital gains tax, concerning an excise tax on gains from the sale or exchange of certain capital assets. This bill passed both House and Senate and has been sent to the governor for signature.
SB 5220: Concerning the taxation of salmon recovery grants, would support grants related to salmon recovery by redefining how they are taxed. This bill passed and has been signed by the governor.
SB 5237: Expanding accessible, affordable child care and early childhood development programs, would establish a new account for child care and early learning, increase eligibility and reduce co-payments in the working connections child care program, expand eligibility in the early childhood education and assistance program, and more. This bill passed both chambers with a conference committee report and has been sent to the governor for signature.
HB 1095: Concerning the taxation of governmental financial assistance programs would exempt grants associated with a federal emergency from B&O and other taxes. This bill passed as a substitute bill on the floor of the House of Representatives with a 98-0 vote. It has passed the Senate on a vote of 49-0. It was signed by the governor.
Bills the League Supported That Missed a Cutoff
HB 1002 Relating to providing a business and occupation tax exemption for qualifying grants related to COVID-19 would exempt income from federal COVID relief grants from the state Business and Occupation tax. Although co-sponsored by 33 representatives, this bill never had a public hearing.
HB 1025/SB 5006: Relating to local parks funding options, would give local jurisdictions the option of levying a 1/10 of 1% sales tax if approved by the voters to support park development commensurate with population increases and address the revenue shortfalls these jurisdictions have experienced because of the COVID pandemic. Both bills died at the cut-off for moving out of the fiscal committees.
HB 1093/SB 5091 Making 2019-2021 fiscal biennium second supplemental operating appropriations. This is the governor’s proposed supplemental budget. This bill was not converted into a legislative proposal and never proceeded through the legislative process after its first public hearing.
HB 1094/SB 5092 Making 2021-2023 fiscal biennium operating appropriations. This is the governor’s proposed budget for the new biennium. This bill was not converted into a legislative proposal and never proceeded through the legislative process after its first public hearing.
HB 1362 Modifying the annual regular property tax revenue growth limit, would rescind the current limit on total property tax that can be collected (except for that on new development) of one percent per year and instead link the cap on property tax growth to the CPI. This is badly needed by state and local governments because the property tax, one of the primary revenue sources of government at all levels, has not kept up with cost inflation. This bill did not move through the process after its first public hearing.
HB 1406/5426 Improving the equity of Washington state's tax code by creating the Washington state wealth tax and taxing extraordinary financial intangible assets. This bill would apply a one percent tax on intangible assets exceeding $1 billion (only approximately 100 people in Washington State would be affected). This bill did not pass its house of origin. It was considered one of several intended to further balance the tax code and may progress next year.
HB 1460 Closing the digital divide by establishing excise taxes on telecommunications services to fund the expansion of the universal service programs in Washington. This bill did not pass the house of origin.
HB 1465 Making the estate tax more progressive by exempting small estates, reducing estate taxes on medium estates, increasing the estate tax on larger estates, and addressing equity in home ownership and homelessness. This bill did not progress after its initial public hearing.
HB 1496 Creating a more progressive tax system in Washington by enacting an excise tax on sales and extraordinary profits of high valued assets. This capital gains tax would help to support the proposed Fair Start for Kids bill. This was the House version of the capital gains tax , which was ultimately passed as SB 5096. This bill did not progress.
SB 5138 Eliminating a business and occupation tax deduction for financial institutions to fund affordable housing. Gains to the state treasury as a result of this elimination would be deposited into the Housing Trust Fund. This bill did not progress after its initial public hearing.
SB 5188: Concerning the creation of the Washington state public bank. This bill would establish a public financial cooperative (it was renamed from its previous title of public bank) that would provide opportunities for state, local, and tribal government entities to competitively finance a broad array of public infrastructure and economic development projects, including housing, at competitive rates with low administrative costs and fill gaps that the current banking system cannot or will not fill.
SB 5216: Concerning additional transparency and accountability for tax preferences, would require itemizing and accounting of tax preferences, thereby providing greater transparency. This bill was referred to the Senate Ways and Means Committee but did not have a public hearing. This bill did not pass from the committee by the cut-off.
HB 1035: Providing local governments with options to grant rent relief and preserve affordable housing in their communities. This bill would provide a property tax exemption for development of qualifying affordable housing units. It puts a number of conditions on the qualifications. This bill had a public hearing on Feb. 8 in the House Finance Committee and executive session on Feb. 18 but no action was taken. It was not passed out of committee by the cut-off so has died for this year.