5
TAXES AND MORE TAXES
SESSION ADJOURNS LAWMAKERS’ RECORD-BREAKING BUDGET AND TAXING SPREE GIVE LITTLE RELIEF FOR BUILDERS
With one minute to spare, a record-breaking $52.4 billion budget was passed along party-lines by lawmakers. It is an $8 billion increase, or 17 percent, more than the current two-year budget cycle. This budget also completely exhausts a $5.6 billion (tax collection) windfall, and includes an additional $2.5 billion in new taxes.
DID WE MENTION TAXES?
The budget includes a graduated Real Estate Excise Tax (REET), giving Washington state the highest rate in the country for certain properties. We will also see massive B&O taxes (on services and large banks) as well as gas // JAN HIMEBAUGH and energy tax increases. GOVERNMENT The legislaAFFAIRS DIRECTOR ture also dismantled last year’s McCleary fix, the K12 education lawsuit that required the state to fund basic education to address local educational inequalities. Unfortunately, on the last day of session, lawmakers passed a “levy lid lift” bill that allows school districts to return to “pre-McCleary” days where they can use additional local property tax levies to fund education. The state should expect to find themselves back in a McCleary- type lawsuit once those levies are bargained
BIAW Government Affairs Director Jan Himebaugh (right of the Governor) and MBA of King and Snohomish Counties Executive Director Kat Sims (far right) attend the signing of SB 5334, Condo Liability Reform.
into teacher salaries, only this time it’ll be even more expensive. Also, tucked into the budget, is funding for an Environmental Justice Task Force. We will be working with the Governor’s office with regard to the mission and makeup of this committee to ensure the homebuilding industry is represented.
TWO SMALL CONSOLATIONS
What didn’t make the tax hike cut? The proposed capital gains tax. Ruled by the IRS and multiple courts as an income tax, unconstitutional in the state of Washington, lawmakers failed to pass it. However, millions of dollars have been allocated to the Department of Revenue for the implementation of new taxes, as well as to study ways to make Washington state’s tax code more “fair.” What also failed, was a proposal to increase the insurance premium tax which would have helped to fund wildfire suppression and prevention. This would have increased the cost
of purchasing all nonmedical related insurance–from auto to homeowners to general liability, and contractor bonds.
SOME BRIGHT SPOTS
Not all news is bad in Olympia. BIAW would like to thank Senators Jamie Pederson (D-Seattle) and Mike Padden (R-Spokane Valley) for their leadership on SB 5334, Condo Liability Reform, which passed the House and Senate unanimously. BIAW staff were in attendance when Governor Inslee signed the bill April 30. This bill will help revise overreaching condo warranty liability from the 90s and allow for new condo construction in Washington. It’s not a silver bullet to the housing crisis in our state, but it is another option for consumers seeking a path to affordable homeownership, by increasing supply and options for families of all sizes and incomes. Condo liability reform was a See ADJOURNS on page 13//
MAY ’19
VOL. 29, ISSUE 5
