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Friends and Neighbors,
The cherry blossoms are close to blooming on the Capitol Campus, which can only mean one thing: We are in the homestretch of the legislative session. In fact, after today, state lawmakers will have 30 days left to complete their work.
A lot of decisions still need to be made in this short time, including state budgets. Majority party Democrats in the Senate released their two-year operating and capital budgets this week. They will release their transportation budget on Wednesday. House Democrats will share their state spending plans early next week. Each chamber will need to pass their respective versions and then come together to reconcile differences.
The process for the operating budget has been, and continues to be, partisan — which is unfortunate. The inputs for the transportation and capital budgets are more bipartisan and collaborative. I've been directly involved with the development of the transportation budget in the past in my previous role as ranking member of the House Transportation Committee. You can learn more about the state budgets below, including definitions from and links to fiscal.wa.gov:
- The operating budget pays for the day-to-day operations of state agencies, colleges and universities, and public schools (including federal funds and dedicated funds).
- The transportation budget pays for transportation activities, such as designing, maintaining and improving roads, public transit, ferries, and more.
- The capital budget pays for acquiring and maintaining state buildings, public schools, higher education facilities, public lands, parks, and other assets.
Revenue forecast
The discussions relating to the operating budget will be guided by the revenue forecast released by the Economic and Revenue Forecast Council on Monday. I am a member of this council which provides a report on state tax collections. At the council's meeting this week, it was revealed that compared to the November forecast, state revenues increased by $194 million for the current 2021-23 budget cycle, but decreased by $483 million for upcoming 2023-25 budget cycle. It also decreased by $541 million for the 2025-27 budget cycle. But, these “lower numbers” are in relation to numbers projected by the November forecast — which was an increase of more than this drop. And, it still shows revenues higher than those for this biennium. You can learn more in the slides below.
What does all this mean? In short, state tax collections remain strong but aren't growing as fast compared to previous revenue forecasts. The good news is: We have plenty of money to fund our state's priorities. However, there continues to be economic uncertainty. Moving forward, state lawmakers should pass an operating budget that is responsible and sustainable. The Legislature should also remember that inflation remains high and many families and individuals are struggling with their personal budgets.
At the end of the council meeting on Monday, a reporter asked: “Could I ask if any Republican on the call would like to comment on today's numbers and how you see that impacting the budget?” You can watch my answer in this YouTube video.
I was also quoted in this story from NW News Network: “It's a question of spending – are we going to continue to ratchet up spending or are we going to stay on more of a consistent trajectory and maybe give taxpayers a little bit of relief?” said Rep. Ed Orcutt (R-Kalama).
Capital gains tax
In a 7-2 opinion released this morning, the Washington State Supreme Court reversed a lower court decision and ruled the new state capital gains tax was a constitutional excise tax. As you may recall, this policy was a priority for the majority party two years ago. I voted against this bill in the 2021 legislative session.
I am disappointed in this ruling and fear this new tax will reach even more Washingtonians in the future. As the ranking member of the House Finance Committee, I sent out a statement today that said: “I am concerned about the court's ruling on this tax as it contradicts the precedent and interpretation of every state and the U.S. government that regard this as an income tax. And, the ruling appears to disregard the actual language of the statutes outlining what is actually taxed.”
Here are a few stories on this issue:
- WA Supreme Court rules capital gains tax is constitutional | Crosscut
- Washington Supreme Court upholds capital gains tax | AP/The Columbian
Recent Zoom/virtual town hall meeting
I want to thank everyone who attended our 20th District Zoom/virtual town hall meeting on Monday night. We had 80 people join our event online. I appreciate having the opportunity to share updates on the legislative session and answer questions. I consider both an important part of my job.
I had a thoughtful constituent from La Center follow up with me after the event to say it was “excellent” but that “one hour is not enough time to really field all the questions.” I appreciate this feedback and we will keep it in mind for future events.
In closing, just a reminder that there are several ways for you to be involved in the legislative process. I encourage you to weigh in on the decisions being made in the Legislature over the next month.
Sincerely,
Ed Orcutt
