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Dear Friends and Neighbors,

In the dark of night this past weekend, legislators from the majority party increased taxes on Washingtonians to the tune of about $2 billion over the next four years. This happened with little to no citizen input and at a time when state revenue collections are at an all-time high.

As a reminder, the March 2019 revenue forecast of $50.555 billion is nearly $9 BILLION more than it was just two years ago in March 2017 when the revenue forecast was $41.597 billion. Democrat lawmakers did not need to raise taxes on families and employers throughout the state, and certainly should not have done so in the dead of night with the public and media absent.

Taxes passed this weekend
In my time as a state legislator, I don't remember there ever being such a slew of tax bills passed by the state House. One after another all weekend. Her are a few of them:

  • Business and Occupation (B&O) tax surcharge (HB 2158) – A 20% increase on B&O taxes for certain services and expected to generate about $945 million over the next four years.
  • Progressive Real Estate Excise Tax (REET) (SB 5998) – This bill creates graduated tax rate – the higher the cost of the home, the higher the REET percentage. It's currently at 1.28% but could go as high as 3%, depending on the price of the home. This is expected to generate about $598 million over the next four years.
  • Increased taxes on banks (HB 2167) – Banks with a net income of $1 billion or more in a calendar year are required to pay an extra 1.2% in B&O taxes. This is on top of the B&O rate increase mentioned previously. Expected to generate about $339 million over the next four years.
  • Turning the nonresident sales tax exemption into a remittance/refund program (SB 5997) – Oregonians will no longer be exempt from the state sales tax, much to the chagrin of small businesses in border counties who see residents from Oregon cross the border for this express purpose. Instead, Oregonians would submit a refund request to the state. They can do it once per year. Do you see them honestly doing this? Me neither. Expected to generate about $113 million over four years.
  • MTCA (petroleum) tax increase (SB 5993) – This changes the hazardous substance wholesale taxation formula for petroleum products from a percentage one to a per-barrel one. This will raise the price of gas, undoubtedly. Expected to generate $361 million over four years.

While I'm glad that the majority party Democrats shelved their plans for a state income tax on capital gains, that proposal is still alive. I'm sure we'll be dealing with it again next year as the reasoning behind tax increases has completely shifted from trying to make the case and explain the need, to simply obeying the new ideology emanating from Seattle liberal politics. It's sad. And it doesn't bode well for the future. What happens when the economy takes a dip? They've created so many new programs and “new ideas” for spending your hard-earned money that if the economy doesn't continue at a record pace, it will require drastic broken promises or even more tax increases.

As Winston Churchill famously said:

“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

The budget
The Democrat two-year budget is about $52.4 billion. This represents an $8 billion increase – or 18% – over current spending levels. This is completely unsustainable and unnecessary. The party of “can't say no to anyone” is setting us up for some hard times down the road if the state economy lags.

I'm also very disturbed by the $750,000 left in the budget to “study” the removal of the Snake River Dams. I wrote about this in a previous email update. I join Congressman Newhouse and Congresswoman McMorris-Rodgers in standing firmly against this proposal. I'm looking to potentially organize a community town hall on this topic sometime in the next few months as I believe this attack on our communities and local economies needs a coordinated response. Stay tuned.

Other bad bills we stopped…

  • HB 1110 would create a new low carbon fuel standard program and add to the price of gas and goods.
  • HB 1491 would restrict scheduling options for employees and employers, which would hurt various industries.
  • HB 1515 would force many individual contractors to work as employees, as opposed to being their own boss.
  • HB 2156 would create a new capital gains income tax.
  • SB 5323 would restrict single-use plastic carryout bags by retail establishments.
  • SB 5395 would require every school to provide comprehensive sex education.

Good bills we sponsored…but died…

  • HB 1021 would create an account in which private contributions could be made to offset the extra security costs incurred when the governor's travel is not related to state business (like a presidential campaign).
  • HB 1035 would provide every public school with funding to employ a full-time school resource officer.
  • HB 1052 would give elected representatives more oversight in the rule-making process.
  • HB 1235 would make it a crime to show harmful materials to a minor.
  • HB 1504 would enhance our state DUI laws.
  • HB 1588 would prevent local governments from imposing an income tax on an individual or household income.
  • HB 1606 would designate CERB as the agency to appropriate loans/grants to local governments for broadband.
  • HB 1635 would require libraries to adopt Internet safety policies to address minor access to harmful material.
  • HB 2021 would lower car tabs by reforming the motor vehicle excise tax formula.
  • HB 2149 would improve our state budgeting process through zero-based budget reviews. 
  • HB 2150 would implement the periodic review of state spending programs. 
  • HB 2151 would enable state lawmakers to request “dynamic” fiscal notes.
  • HB 2152 would extend the period through which a state budget must be balanced from four years to six years.

Thank you for staying involved in your state government and reading my email updates throughout this legislative session. While we were able to adjourn on time (huge surprise), I don't think anybody feels good with how the last weekend played out.

Thank you for allowing me to serve you in the state House. As always, feel free to contact me with your questions or concerns.

Sincerely,


Joe Schmick

State Representative Joe Schmick
9th Legislative District
RepresentativeJoeSchmick.com
426B Legislative Building | P.O. Box 40600 | Olympia, WA 98504-0600
joe.schmick@leg.wa.gov
360-786-7844 | Toll-free: (800) 562-6000