The Capitol Record

Gov. Gregoire proposes taxes to pay for $1 billion in education funding

In her final budget plan, Gov. Chris Gregoire proposed making a $1 billion down payment on basic education by raising the wholesale tax on gas and diesel to pay for transporting kids to school, and extending two other taxes that are set to expire in June.

One extends a beer tax of 50 cents per gallon, and the other is a business tax paid by professionals like doctors, lawyers and accountants. Combined, the two taxes would raise $636 million. The wholesale gas tax would raise an additional $367 million. At a press conference Tuesday, Gregoire called on oil companies to pay the wholesale tax “without passing it on to consumers.”

Washington’s Supreme Court has ordered the state to increase funding for basic education, a cost Gregoire’s office pegged around $3.4 billion in new K-12 spending over the next six years.

“We need revenue if we’re going to meet our constitutional and moral responsibility to fund education,” Gregoire said.

The money from the taxes would pay for reduced class sizes in kindergarten through second grade, expand full-day kindergarten and provide professional development for teachers.

Gregoire’s proposal moves school buses into the transportation budget and phases in the gas tax over the next six years, starting with a 1.9 percent increase in July and eventually rising to 4.6 percent.

Gregoire’s budget also aims to close a $900 million shortfall for the 2013-15 budget cycle through a combination of cuts and revenue, including:

  • Suspending Initiative 732, which requires an annual cost-of-living pay increase for teachers. The move will save $360 million. At the same time, Gregoire proposed restoring cuts to teacher pay.
  • Repealing a fuel use tax exemption that Gregoire said primarily benefits oil refiners, raising $63 million.
  • Extending a hospital inpatient fee created two years ago, called the Hospital Safety Net Assessment. It’s expected to raise $276 million.
  • Enacting a new soda, candy and gum tax worth $125 million. It would fund pay increases for home health care workers, a mandate that voters approved and a court affirmed. Gregoire said there’s a direct “nexus” between a junk food tax and health care workers, and she called on the healthcare union to support the tax.

Gov.-elect Jay Inslee has said he will not raise taxes. Gregoire’s proposed budget may serve as blueprint for Inslee, or he may opt to find other solutions to the $900 million budget shortfall.

Gregoire said she believes the budget respects Inslee’s no-tax pledge. “He never said he wouldn’t do taxes on transportation. He never said he wouldn’t continue current taxes,” Gregoire said.

“I believe everything we’ve proposed, and from what I heard on the campaign trail, is in keeping with Gov.-elect Inslee,” Gregoire said.

Watch the full press conference below. Here’s the link for Gregoire’s proposed budget.

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