The good news is a capital gains tax is on the table. The bad news is that its not enough.
The good news is a capital gains tax is on the table. The bad news is that it's not enough. Lester Black

Monday afternoon Democratic House members in Olympia announced their budget proposal for the next two years.

The plan pays for lots of stuff we need with slightly more progressive taxes than we've had. (You can read the whole thing right here if you want to die.) The good news is the House wants to implement a tax on profits from capital gains to help pay for education! The bad news is the proposal doesn't adequately fund our education and housing needs.

Deck the halls with the Seattle Symphony’s joyous Holiday Pops concerts!
Join conductor Stuart Chafetz and Broadway star N'Kenge for this dazzling program full of yuletide cheer.

The $52.6 billion budget increases funding for the state's mental health hospitals, education systems, health care programs, homelessness programs, and several other priorities. It also provides $24 million to "increase habitat, prey and other strategies to preserve southern resident killer whales," says House Majority Leader Pat Sullivan, so Christopher should be happy. It increases the state's "fire response capability," too, which will help when our world begins to burn again this summer.

In order to pay for all this, House Dems are proposing a capital gains tax, which they're now calling an "Extraordinary Profits Tax." (I'd probably just call it a "Millionaire's Tax" to avoid evoking the specter of a magician waving a magic wand whenever discussing revenue increases, but nobody calls me before they name these things.)

They're also suggesting a graduated Real Estate Excise Tax (which will tax sellers of McMansions at higher rates while lowering that rate for people selling houses under $500,000).

In addition to all that, they'll slightly increase the business-and-occupation tax for big businesses, which will pay into the state's workforce training programs.

Misha Werschkul, executive director for the Washington State Budget and Policy Center, called the new revenue proposals "a step in the right direction."

"The House has worked really hard to make sure they’re not accidentally impacting anyone who couldn't afford to do this," she said in reference to the capital gains tax. "They’ve included a lot of the exemptions, and they're making sure not to scoop up small business owners who just so happened to have a high capital gains one year."

Compared to Governor Inslee's proposed capital gains tax, the House would essentially tax richer people at a higher rate. Inslee's plan would have skimmed 9 percent of the profit on the sales of stocks and bonds over $25,000 for individuals, while the House would take nearly 10 percent off the sales of stocks and bonds over $100,000 for individuals. The House plan would affect nearly 14,000 households (or 0.4 percent of Washington's population) and raise $780 million, according to the Seattle Times, whereas Inslee's plan would have affected 42,000 wealthy Washingtonians and raised about $1 billion. Both proposals are pretty weak compared to California, which taxes capital gains at 13 percent—and that's on top of their state income tax.

Anyway, House Democrats say money from the capital gains tax will fund education, so if Republicans and conservative Democrats try to raise a stink about the revenue source, which they will, they'll have to come up with their own way of paying for badly needed education funds.

The problem is that the budget "still falls short of what our public schools need," according to education advocate Summer Stinson, president of Washington's Paramount Duty.

Right now, for instance, the budget only allocates a $69 million increase for special education for the next two years and $153 million over the next four years. That increase would only be enough to cover half of Seattle Public Schools' special education needs during the same period, let alone the funding needs of every district in the state.

"That’s completely inadequate, immoral, and arguably unconstitutional for our special education students," Stinson said.

According to the 2017-18 revenue and expenditure data from the Office of Superintendent of Public Instruction (OSPI), schools across Washington faced a $235 million deficit that year for special education funding alone.

Over the phone, Rep. Sullivan said the money's there for special education, it's just in a bunch of different places. If you add the $100 million for special ed money from McCleary, plus the money from the raise of the special ed levy cap (from 12 percent to 13.5 percent), plus the money from the raise of the cost multiplier for special education students from 0.9609 to 0.9925, then you can get to around $240 million to cover the deficit schools faced last year. He also argues that total spending on special education has increased from $660 million in 2013 to nearly $1.7 billion today, which he calls "extraordinary growth" in funding.

That's all well and good, but the issue is that costs for special education keep growing, too. Back in February, the OSPI estimated the current gap in funding for special education "to be between $308 million and $400 million per year," according King5, which is well above the money Dems have allocated in this budget.

Unfunded mandates—such as funding special education, providing health benefits to part time employees, providing transportation to school for homeless families, and paying for fucking librarians—force districts to turn to levies to make up the difference. Levies are getting harder to pass in some places due to "tax fatigue," and even then—thanks to provisions in the bad McCleary deal—the state won't let schools raise the money they need to cover services they're forced to provide.

With all that in mind, Stinson says she likes the revenue sources the House is looking at, and she likes that they're putting money into education, but she still argues there needs to be even more new revenue, "and more investment in our public schools, especially these crucial areas such as special education, health benefits, counselors, nurses, and librarians."

Housing advocates see the budget as a mixed bag, too. Christena Coutsoubos at the Housing Alliance praises House Dems for fully funding HB 1406 in the budget, which would allow communities to keep a larger portion of the sales tax they collect to use for affordable housing. But she's bummed about the amount of money allocated to the Housing Trust Fund and the Housing and Essential Needs Programs.

Advocates (including, kinda, Microsoft) were asking for at least a $200 million investment into the HTF, which helps cities build affordable housing statewide. They got $150 million. That $50 million difference could build "thousands of more units of housing, which would help get people off the streets," Coutsoubos said.

House Democrats also only added $12.7 million to the Housing and Essential Needs Program, which provides rent and utility assistance to people who are temporarily unable to work. Housing advocates say we need at least an increase of $69 million to cover the recent increases in rent and the larger numbers of people who need to access the program.

Rep. Sullivan said "we tried to go as high as we could on the HTF," but there basically wasn't enough money to go around after allocating funds to K-12 schools and mental health institutions. "I think the Senate comes out with their capital budget tomorrow. They might be a little higher than us, which would be great," he added.

Coutsoubos is also "still hopeful" for the Senate budget when it comes out.

Democrats could find more money in the budget, of course, if they asked for it. They could set the capital gains rate much higher if they wanted to, for instance, but Sullivan says they're worried about not getting enough votes for that in the Senate.

"We've had the votes in the House for the last several years, but it's been a struggle in the Senate," Sullivan said. "We're trying to thread the needle here and get something that can pass. If you go too high, you might lose everything. I'm nervous that [the Senate] isn't going to get there."

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Three Democratic senators, according to the Seattle Times, have expressed reservations about the capital gains tax, which is ridiculous.

They're clearly scared of Republicans and conservative Democrats in their districts yelling at them for trying to raise taxes during a time when revenues have increased. Though everyone knows this is a dumb argument due to the fact that mandatory spending levels have also increased, Republicans and conservative Democrats will continue to make it anyway. The chair of the Washington GOP is already all up in my inbox spreading the lie that the capital gains excise tax is really an income tax, which voters rejected at the ballot box so many years ago and blah blah blah. They'll be screaming about this until Gov. Inslee signs some weak-ass version of this already overly cautious budget. They always do that. That's what they do. That's their whole thing.

But fear of this idiotic criticism shouldn't motivate Democrats. Fear of what will happen if they don't fund necessary programs, however, should be a motivating factor. Democrats need to quit asking for what they think they can get, and start demanding what their constituents are saying they need.