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Dear Friends and Neighbors,
The legislative session did not end well. The operating budget was rushed through, with a significant increase in taxes. I voted “no” on this budget.
In this email update, I provide an overview of the three budgets the Legislature passed, the tax increases passed onto Washingtonians, my small business bill signed by the governor and a reminder to stay in touch during the interim.
Operating budget
The operating budget increases spending by 18 percent or $8 billion more than the last budget. Spending has increased by 70 percent ($22 billion) since 2013. It is simply unsustainable, and fiscally irresponsible. I am concerned that with any type of economic downturn, we will be faced with very difficult financial choices in the future. We could have easily passed a budget that funded all of our state priorities without raising any new taxes.
New and increased taxes
Business and occupation (B&O) taxes – A B&O tax surcharge on our service industries was passed to fund an expansion of higher education in the budget. It will impact up to 90,000 employers, such as doctors, dentists, veterinarians and thousands more. This tax is illogical. We are going to hit our businesses with a regressive tax to strengthen our state's workforce? If we are taxing businesses and cutting into their bottom line, hiring, investing and creating jobs becomes that much more difficult. I would add, if higher education was a priority for the majority party, they should have cut tuition.
Real estate excise tax (REET) – The more than doubling of the REET, from 1.28 percent to 3 percent, will constrict the supply of new housing. It will burden renters through increased costs and will impact our low-income renters the most.
Local property taxes – Senate Bill 5313 authorizes nearly a billion dollars in additional local property taxes for schools. This comes just after the Legislature has responded to the McCleary ruling by deliberately shifting much of school funding to the state level. It recreates the inequities that led to the lawsuit. We could be facing a McCleary 2.0 in the future, due to this bill. The Legislature broke faith with taxpayers after promising a property tax reduction.
Hazardous substance tax – The tax will now be $1.09 per barrel on refined petroleum products, or an increase of 39 cents a barrel – an estimated $361 million tax every four years on the refinery industry – hitting our refineries in Whatcom County. This threatens the 2,100 workers who work at our refineries and it could mean higher gas prices hitting consumers, small businesses and family farms. I have supported the current rate for cleanup projects, but this increase is excessive.
Payroll tax – House Bill 1087 will generate more than $1 billion in annual payroll tax payments to a state Long-Term Care Trust Fund beginning in 2022. This passed on a party-line vote.
Process lacked transparency and accountability
Some may be critical of me pointing fingers, but it is important to know the details of the last few days. Lawmakers were voting on “title only” or ghost bills – policy bills that contain no language – just a title and a short description. The 808-page operating budget was not made available to the public until approximately 2:30 p.m. on Saturday, and we passed it on Sunday night. Can you read 808 pages in a day? We were voting on important bills, many related to tax increases on Washingtonians, in the dark hours of the night.
You, the taxpayers, have a right to know what the Legislature is voting on and should have ample time to testify or provide input. For more read: Olympia's culture of secrecy reveals itself — again (Crosscut).
Bringing tax dollars back to Whatcom County
An important aspect of being a state legislator is advocating for local construction projects. The state's capital budget contains those bricks and mortar type projects for our K-12 schools, colleges, local governments and community projects where funding may be difficult to come by. It also focuses on stewardship projects protecting our farmlands, waterways and environment. It's your tax dollars coming home.
The Legislature passed a strong, bipartisan capital budget before adjourning. The spending plan includes funding:
- to extend utilities to East Blaine;
- to mitigate erosion on private property along Fishtrap Creek;
- for new bleachers at Sumas Event Complex, and a playground and water park;
- for the Birch Bay Vogt Community Library;
- for the Ferndale Wastewater Treatment Plant;
- for the California Creek Estuary Park Development
- for the Lummi Nation Community Park;
- for two fish barrier removal projects; and
- several environmental cleanup projects in Bellingham.
Transportation budget
We were able to obtain some much needed funding in the transportation budget as well – also a strong, bipartisan budget. There is $9.4 million for the Orchard Street Connector in Bellingham and $1 million for a grade separation project in Blaine, which will help relieve congestion at Peace Portal and Bell roads. Other projects include:
There is continued funding for Whatcom County projects already underway, including:
- State Route 539/Guide Meridian;
- I-5 North Bound on ramp at Bakerview Rd.; and
- Thornton Rd. overpass.
It is worth noting that the capital and transportation budgets were funded under existing revenue and bonding capacity. No new taxes were needed to fund these projects.
Governor signs bill to extend B&O tax filing dates
House Bill 1059 was brought to me by a mental health counselor in our district. This legislation would extend the business and occupation (B&O) tax filing deadline for annual filers to April 15. These taxpayers are often self-employed and rely on other businesses to send them their 1099s in a timely manner. Currently, the annual filing deadline is Jan. 31. However, due to federal deadlines, many taxpayers do not receive their 1099s until February or March. It is estimated this will help an estimated 126,000 taxpayers.
Keep it touch
I am excited to be back in Whatcom County. Please feel free to contact me during the interim. I am interested in ideas you may have for legislation, projects your organization or agency may be working on, and I am available to speak to groups and provide legislative updates. You can also contact me if you need assistance dealing with a state agency or issue.
It is an honor to represent the great people of Whatcom County. I look forward to seeing you this interim.
Sincerely,
Luanne Van Werven
