Inslee proposes sustainable, responsible, fair budget to "reinvest in Washington"

December 18, 2014

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Gov. Jay Inslee declared today “it is time to reinvest in Washington” and proposed his 2015–17 budget that makes a bold commitment to education and protects important services hit hard by budget cuts during the recession.

The governor’s budget also cuts current programs and adds new revenue to put Washington on a more sustainable and responsible fiscal path. His revenue plan calls for, among  a number of items, revenue from a charge on carbon polluters and a capital gains tax that will increase the share of state revenue paid by the wealthiest Washingtonians. Less than 1 percent of state residents would be subject to the capital gains tax.

“This budget will accomplish these four things: stronger schools, healthier kids, cleaner air and a fairer tax system,” Inslee said.

The budget announcement capped a series of major policy rollouts by the governor this week. He has unveiled the details of his education plan, a 12-year, $12 billion transportation improvement plan and a market-based carbon pollution reduction program.

The governor’s $39 billion, two-year budget includes a new $2.3 billion education plan with the largest-ever state investment in early learning, and follows through on the state’s commitment to fully and sustainably fund the Legislature’s commitment to basic education — and does so a year ahead of schedule. His plan also:

  • Reduces kindergarten-through-third grade class sizes to 17 and implements full-day kindergarten statewide.
  • Includes funding to promote student success, raise high school graduation rates and improve educator training and mentoring efforts.
  • Maintains higher education access and affordability by freezing in-state undergraduate tuition rates, boosting funds for financial aid and adding money for math and science programs.

As recently as 2007, public schools accounted for less than 39 percent of state spending. Under the governor’s budget, public schools’ share of state spending would increase to 47 percent.

The governor said he looks forward to talking to lawmakers about his proposal and encouraged others to present plans for a fair, sustainable and responsible budget.

“It is said a budget is the ultimate policy statement,” the governor said at a morning press conference. “But this is the start of a conversation — and I want to stress that I am open to any ideas others may have.”

Inslee’s budget makes investments in a number of other vital areas. For example, the budget includes funding to:

  • Increase mental health treatment capacity by adding 145 beds to prevent boarding of psychiatric patients and another 35 beds to shrink wait times for those in jail awaiting evaluation and restoration services.
  • Hire more than 100 child protective and child welfare services workers to more rapidly conduct investigations of abuse and neglect, and to ensure foster children are safe and foster parents are supported.
  • Add staff and capital investments to enhance operations at State Parks and catch up on a backlog of maintenance work.
  • Prevent and respond to oil spills along rail lines and reduce toxics in our waters.
  • Provide modest raises for state employees, the first general wage increase since 2008.

Given the size of the state’s budget shortfall, reductions were necessary. The budget includes $211 million in General Fund spending cuts and, by maximizing federal funds and shifting General Fund costs to other fund sources, saves an additional $212 million.

The budget relies on $450 million from reserves and employs tax and revenue changes that will raise a total of about $1.4 billion over two years.

Washington’s tax system is recognized as the most unfair in the nation. Low- and middle-income households pay a much larger share of their income in taxes than do the wealthy. 

Under the governor’s proposal, the state would apply a 7 percent tax to capital gains earnings above $25,000 for individuals and $50,000 for couples. Less than 1 percent of the state’s taxpayers have annual capital gains earnings above those thresholds. Exemptions would be provided to remove any capital gains tax on retirement accounts, homes, farms and forestry. Earned income from salaries and wages are not capital gains and would not be taxed at all.

“This is a fair way to raise needed revenue,” Inslee said. “It avoids an additional burden on the vast majority of Washington taxpayers. This is not intended to show a lack of respect for those who would pay. We honor success in Washington, but we also always strive for fairness.”

In addition to that move to make our tax system fairer, in 2016, 450,000 Washingtonians would start getting a check from the Working Family Tax Credit, funded by the Carbon Pollution Accountability Act under legislation proposed by Inslee.

The governor’s revenue plan also proposes raising the state cigarette tax and taxing e-cigarettes and vapor products. He is once again calling on the Legislature to close outdated tax loopholes worth about $282 million in the next biennium. The budget also includes $380 million in new revenue that will be generated by the governor’s market-based carbon pollution reduction plan when it begins in 2016.

The governor today also proposed a $3.8 billion capital budget for state construction projects, grant and loan programs for local governments, and to build and improve K-12 schools and higher education facilities.

Inslee’s budget will be considered by the state Legislature when it convenes Jan. 12, 2015, in Olympia.

Details of the budget proposal can be found here.

Media Contact 

David Postman
Governor Inslee’s Communications Office
360.902.4136