- Associated Press - Thursday, January 8, 2015

OLYMPIA, Wash. (AP) - Leaders of Washington state’s Legislature are going to spend the next several months debating whether to raise taxes, or create new ones, in order to answer the Supreme Court’s demand to put more money into public schools.

The tax debate was prominent and somewhat heated on Thursday at The Associated Press legislative forum, a gathering of caucus leaders and budget writers in preparation for Monday’s launch of the 2015 legislative session.

When Gov. Jay Inslee presented his budget plan last month, he proposed several ways to get more money into the state budget, including a new 7 percent capital gains tax on the sale of stocks, bonds and other assets. The new tax would bring in a projected $800 million a year, starting in 2016.

Democratic leaders in the Legislature say tax increases are not a choice this year; they are a necessity.

In addition to the Supreme Court’s 2012 McCleary decision on school budgets, the Legislature also is feeling financial pressures on mental health services, prison facilities, state employee contracts and some big transportation projects.

But it is expected to take billions to finish adding enough dollars to the state education budget by 2018. Last fall, the Supreme Court said lawmakers are not making enough progress and held the Legislature in contempt.

Republicans argue the state could continue to offer a similar level of services and make progress on the school lawsuit without a tax increase, as long as lawmakers agree to put off action on the voter-approved class-size initiative that was approved in November.

The Democratic chairman of the House Appropriations Committee said his Republican colleagues are underestimating how much money the state will need to spend without making any policy changes.

“I don’t see a reasonable outcome that doesn’t involve additional revenue,” said Rep. Ross Hunter, D-Medina.

The chairman of the Senate Ways and Means Committee does not agree. Sen. Andy Hill, R-Redmond, said the state can meet its minimum obligations without raising taxes. He acknowledged, however, that the bare minimum is not what the Legislature is likely to do this year.

Hill said lawmakers shouldn’t begin their discussion about the budget with a debate on new taxes. Taxes should be the last resort, not the first, he said.

Democrats expressed interest in the capital gains tax, saying it would help make Washington’s tax system less regressive.

Hill did not agree.

“When we talk about having a very regressive tax code, that’s code for we want an income tax,” Hill said. Voters defeated an income tax proposal in November 2010.

Any tax increase that passes the Legislature will go straight to the ballot, according to the ranking Republican on the House Appropriations Committee, Rep. Bruce Chandler, R-Granger.

“If we don’t put it on the ballot, the voters will,” Chandler said, referring to the number of times state initiatives have focused on repealing taxes passed by the Legislature.

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