TVW Update

Budget leaders discuss compromise options with capital gains tax off the table

Gov. Jay Inslee and legislative budget leaders on Friday said they are getting closer to a budget deal that will avert a government shutdown.

“There is no reason — zero — why we can’t have a budget done in one week,” Inslee said.

State government would be forced into a partial shutdown if a two-year operating budget is not adopted by June 30.

Democrats are no longer calling for a capital gains tax, which Inslee said is because the state is on track to collect about $700 million more in new revenue than expected.

Inslee said he believes closing tax breaks worth between $300 to $350 million will give “both sides big policy wins and produce a responsible, sustainable budget.” The governor pointed to a tax break for extracted fuel as an example of an exemption that should be closed, although he said he doesn’t plan to dictate a list of tax breaks to lawmakers.

House Majority Leader Pat Sullivan said Democrats took the capital gains tax off the table “contingent on the Senate agreeing to a package of tax loopholes that would allow us to make investments that we need to make.”

Democrats are moving to the middle by reducing spending in “critical areas,” Sullivan said, such as mental health and early learning.  “That’s what compromise is all about and we’re willing to do that,” he said.

Lead Republican budget writer Sen. Andy Hill said closing tax exemptions is an option. “We always said we should be looking at exemptions, some are old and not needed anymore,” he said.

Negotiations should be able to move forward quickly, he said.

“We’re looking forward to working over the weekend to close the gaps and get a final agreement,” Hill said.

TVW taped press conferences with Inslee, Democratic and Republican leaders. Find all three videos here.

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