Senate Dems Release Their McCleary Plan – Gets State One-Fiftieth of the Way There

By Erik Smith, February 26, 2014, Washington State Wire

Senate Democrats have an idea they say ought to make the Supreme Court very happy – a four-year plan for spending on K-12 education that shows precisely where they would put their money, and when.


The hitch? They don’t know where the money is coming from. In round numbers, they’re looking at a $5-billion-or-so boost in education spending by 2018. But when it comes to finding that money, they’re proposing a meager $100 million in new revenue, by eliminating a few business tax breaks – evergreen proposals that have been sounded time and again and never go away.


You have to start somewhere, they say.


The Legislature is under an order from the Supreme Court to come up with a plan by April 30 to implement its McCleary decision of 2012 – a ruling that the state isn’t doing enough to fund basic education. With its decision the court has essentially assumed that bills passed by the Legislature in 2009 and 2010 offer an expansive new definition of basic education, and that the state is required to provide full funding. “If you read the actual court order, it says that we have to have a plan for implementing the program, and they didn’t say we have to fully fund it this year,” says state Sen. David Frockt, D-Seattle. “I don’t that any of us are expecting that in a short session we are going to come up with a full financing plan. That has been the bugaboo of this endeavor for the last couple of years – the financing is really the difficult question.”


So think of it as good enough for government work.


Provides Timetable for Spending


Where the Senate Democrats’ plan goes in-depth is on the spending side. It provides a detailed plan for the specific phase-in dates of the programs outlined by House Bill 2261 in 2009 and HB 2776 in 2010. Some of the work already has begun; other elements would be launched in the 2015-16 school year and be completed by 2017-18. All-day kindergarten would be rolled out statewide; class sizes in grades K-3 would be reduced to 17 students.


School districts would have to comply with new instructional requirements by 2015-16 – 1,000 hours of instruction for grades K-8, 1,080 hours for grades 9-12, and increased credit requirements for high school graduation – from 20 to 24 – would be imposed at the same time. Also to be phased in would be additional state spending requirements for school overhead costs, administrative and counselor staffing, bilingual programs and other state mandates.


The biggest new initiative is on salaries – the state would provide additional money for salaries according to a salary allocation schedule, the goal being to reduce reliance on local levies. Teachers who don’t get a pay bump would get a cost-of-living increase. That effort isn’t mandated by the court, but it might be considered an important element in meeting the court’s directive to provide a greater share of school funding from stable state sources, rather than school levies.


That Taxing Problem


But where’s the money going to come from? That’s the $5 billion question – and it should be noted that the figure is about as vague as they come; there are plenty of guesses, and while the $5 billion figure is routinely cited by Democrats at the statehouse, Republicans traditionally argue that student outcomes are more important than the dollar figures. The Senate Democrats’ plan doesn’t make much headway there. It goes about one-fiftieth of the distance.


It cites four tax breaks that might be eliminated – familiar to all who have watched the debate during the “war on loopholes” that has raged since the onset of the late recession. The Democrats suggest that the state might eliminate a sales tax exemption on bottled water – an idea that was enacted by the 2010 Legislature and was repealed by Washington voters with Initiative 1107 later that year.


The other three ideas are what might be old favorites – they have been proposed year after year, in various forms, and have figured in the stalled proposals from Gov. Jay Inslee over the last two sessions to end tax breaks. Democrats would make it far more difficult for Oregon and Montana residents to qualify for an out-of-state sales tax exemption when shopping in Washington – instead of flashing a driver’s license at the cash register, they would have to apply for refunds from the Department of Revenue, and only big purchases would qualify.


They also would eliminate a “use tax” exemption for “extracted fuel” that is produced and immediately consumed at oil refineries – a tax break that is more a matter of definition, as only one other state considers refinery gases to be potentially taxable – and that state, Alabama, like Washington, provides an exemption. They also would eliminate a preferential tax rate for resellers of prescription drugs who build warehouses in Washington.


The Senate Democrats say they would like to see those tax breaks wiped out during the current legislative session. With just 15 days left to go, that might be a tough sell. Says Senate Democratic Leader Sharon Nelson, D-Maury Island, “I think this is a large enough issue that if we have to stay past March 13, it is because we have an obligation to our children.”


The Thought That Counts


State Sen. Bruce Dammeier, R-Puyallup.

State Sen. Bruce Dammeier, R-Puyallup.

State Sen. Bruce Dammeier, R-Puyallup, says the Democratic implementation timetable offers a few good ideas – though the tax plan certainly has its weaknesses, and any thought of passing a brand-new tax bill in the current legislative session is a non-starter. “Sixteen days before the end of the session seems a little late to offer anything that can get meaningful consideration. The fact that they have tried now the same tax exemptions that have been brought out every year, and which the Legislature clearly doesn’t have an appetite to close, or to repeal, is kind of frustrating.


“The fact that they are opening compensation up I think is a constructive addition – I think that is certainly something that we need to resolve, and we need to do it certainly before 2018, ideally in the next couple of years, so the fact that they are bringing that up I think is important.”


Dammeier says ideas will be emerging soon from the Majority Coalition Caucus – though it is a little soon to tell how lawmakers will ultimately respond to the Supreme Court’s demand. “I’m glad they are putting something on the table,” he says. “It’s a little late and it’s a little complex for the short session, but it is nice to have something out there.”


One thing worth noting: The Senate Democrats aren’t ready to climb aboard yet on the idea of the “levy swap,” which would essentially require the state to pick up some responsibilities that currently are picked up by local school levies, and increase the state property tax levy accordingly. All depends on how the program would be implemented, but in round numbers, it might get the state $1 billion toward the goal. One potential hitch: Property taxes would go up in property-rich areas like the urban Puget Sound area, and down in property-poor districts in smaller towns and rural areas. Gov. Inslee opposed the idea during the 2012 campaign after Republican candidate Rob McKenna came out in favor. Little has been heard of the idea since. “I think it is premature to get into that directly today,” Frockt said. “That is obviously a controversial subject, but I think in the long run we are going to have to have something in levy obligation reform, and it is going to require coordination and cooperation with both parties to get it done. So with this package, we are hoping to get some engagement from the other side. Let’s engage in this and see if we can put together a plan by the April 30 deadline.”


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