SEATTLE — A conservative-backed effort to repeal Washington state’s historic carbon pricing program and tax on stock and bond sales leaves the budget in limbo, with billions of dollars at stake and just days to go in this year’s parliamentary session.
Lawmakers are scrambling to finalize a trio of statewide supplemental budgets that include new investments in everything from curbing the opioid crisis to electric ferries before the regular session ends March 7. But initiatives expected before the November vote could cumulatively remove more than $2.1 billion from the budget. it comes down to.
The initiatives to repeal the state’s historic Climate Commitment Act and the tax on stock and bond sales are part of a broader effort by conservatives to reverse some of the majority Democratic party’s biggest recent policy victories.
“While there are indeed many pet projects that would not be funded in the future, much of that money was one-time,” said Rep. Chris Corry, the top Republican on the House Appropriations Committee. “But the immediate result is that consumers will have more money in their paychecks, and that’s what they tell us they want.
Getting rid of the carbon pricing program could cut $1.3 billion from the budget, and ending taxes on stock and bond sales could cut another $833 million in fiscal year 2025 alone if the initiatives would take effect on June 6, according to agency estimates. of Financial Management. Those numbers would likely be smaller if they are not approved until November, an agency spokesperson said.
As a result, lawmakers have been working to finalize billions of dollars in budgets that run through the 2025 budget year, with caveats everywhere.
“You can’t cut billions of dollars from the state budget without really impacting people,” said Democratic Rep. Joe Fitzgibbon, House Majority Leader. “And that’s something we really want to make clear to the people of Washington this year.”
The last time Fitzgibbon said he remembered an initiative that had such a major impact on state transportation and operating budgets was about 25 years ago, when voters repealed the state’s motor vehicle tax, reducing it to 1,000 in the 1999-2001 period. $1 billion in state revenue was eliminated.
Dozens of programs funded through the carbon pricing program will have a delayed start date of January 1, 2025, and a provision that they will not go into effect if these funds disappear. In other sections, budgets assume less revenue from the program in 2024 to better prepare for its possible disappearance, or stipulate that unspent money generated by the program would go into an account where even use could be made of if voters were to repeal the program.
The capital gains tax is harder to adjust preemptively because most of the programs it funds are codified in state law, Fitzgibbon said. For example, money from tax funds like the Fair Start for Kids Act helps make child care and early learning more affordable — and if the law is repealed by voters, lawmakers should reconsider whether to keep it in place.
Some Republican lawmakers see the talk surrounding these initiatives as fear-mongering, explaining that this funding did not exist before the current biennial budget period and that the state would do without it. Both the carbon pricing program and the capital gains tax are relatively new, with funds first coming in 2023.
“We have enough money to fund government priorities that include a variety of projects – whether social programs, roads, ferries, bridges,” Corry said. ‘Yes, there is extra income in that, but there are costs involved, right? And when you think about it, the cost is an increase in the tax burden for Washington consumers.”
The 7% capital gains tax on sales of stocks, bonds and other luxury assets, with exemptions for the first $262,000, goes toward childcare and school construction. When it came into effect in 2021, it was expected to be paid by 7,000 people – less than 1 in 1,000 residents. It is known as a volatile source of income that is subject to change.
The year-old Climate Commitment Act, which aims to limit and reduce pollution while generating revenue for investments that address climate change, has raised $1.8 billion in 2023 through quarterly auctions that sell emissions allowances to companies under fall under the law.
If voter-approved initiatives pass in November, the impact will likely extend beyond specific funding areas.
Democratic Majority Leader Sen. Andy Billig gave the example of the Senate’s $14.6 billion transportation budget proposal, explaining that some of the things funded by the carbon pricing program will likely remain in place. because they are so important.
“What’s going to happen is we’re going to have to reprioritize everything in transportation,” he recently told reporters. “That’s why basically everything in the transportation budget, which is already a budget under a lot of pressure, will be at risk if the Climate Commitment Act fails.”
These initiatives are only two of six certified after a conservative group submitted hundreds of thousands of signatures in support of them. The Legislature will consider one on Tuesday and is expected to consider two others later this week, while the carbon pricing program and the capital gains tax, which would have the biggest impact on the state budget if repealed, are likely to go straight to voters .