UPDATE: This proposal passed Oct. 20, 2012, and was voted No. 4 on Washington State PTA's "Top 5" list of priorities for the 2013 and 2014 state legislative sessions.
No. 4:Washington State PTA shall initiate and/or support legislation or policies that raise state revenue to adequately fund K-12 education and child-related programs. Revenue increases should be fair, equitable, and ample. Options could include, but are not limited to:
- Capital gains tax
- Income tax
- Closing of tax loopholes
WSPTA board: Do Pass
- Issue submitted by: Kristin King, Sacajawea PTA 6.15.310; Rita Green, Talonya Green, LaCretiah Claytor, Carlina Brown and Vallerie Fisher, all of Rainier Beach High School PTSA 6.15.490; Demian Godon and Zara Kublin, both of Ballard High PTSA 6.15.460; Nancy Bocek and Sheri Field both of Ingraham PTSA 6.15.475; Rosslyn Shea and Dora Taylor, both of Arbor Heights PTA 6.15.35; Carolyn Leith, Olympic View PTA 6.15.280; Cecelia McCormick, Madison Middle PTSA 6.15.425; Jennifer Boutell, Grant PTA 10.9.95; Susan Ryan, Washington-Hoyt PTSA 10.9.225; and John Cummings, Jane Addams PTSA 6.15.24
Submitter statement for adoption:
Washington schools are underfunded. There are ongoing shortfalls in allocations for transportation, maintenance, operating costs and supplies. State funds for special education, ELL programs and salaries don’t cover the cost of contracts. And over the past three years, more than $2.7 billion has been cut from K-12 education. This means school closures, overcrowding, neglected buildings, and the loss of services.
But that's six years away. Six years is a long time to wait in the life of a child, especially since our kids have already been waiting three years. The legislature came up with a plan to redefine and fully fund basic education in 2009. At the time, revenue shortfall was estimated between $3 billion and $4 billion annually. It is difficult to see how that much money can simply be shifted from other programs without hurting the children served by those programs.
Many are pinning hopes for revenue on an economic recovery; but there is a deeper problem that a recovery won't fix. Personal income is growing, but revenue collection is not keeping up. We rely heavily on sales tax on products, and we don't collect sales tax on services or on the growing phenomenon of internet sales.
Our children are counting on us to come through for them. They are our hope and the future of our world, and they deserve the very best.
Con argumentsNone identified by the WSPTA board or legislative committee.
- Those opposed to tax increases generally prefer cuts to services and reduction of longterm financial commitments.
- Some propose relying on new revenue generated from a recovering economy; but forecasts show a flat outlook
Context and timeliness
Last winter, in its McCleary ruling, the supreme court ruled the state is not meeting its legal obligations and said it would monitor legislative action to make sure K-12 education was amply funded. The state is looking at shifting about $3 billion more annually into K-12 education, possibly more depending on what happens with compensation legislation. (Salary allocations don’t cover contracts at the local level. The state is reviewing its allocation schedule.)
The state is emerging is from its recession but revenue increases are nowhere near the level needed.
The state held on to the infrastructure that supports children, but it’s stretched and needs investment. At the same time that the state is looking at mandatory shifts into K-12, demand is up for services that keep kids healthy and safe. Forty percent of Washington families struggle to afford food, health care, housing and child care.
This proposal looks to address the health and safety needs of children as well as education costs, from early learning, through K-12. It also looks to address options for new revenue. Washington’s heavy reliance on the sales tax is twice the national norm and is regressive, that is middle and lower income earners pay proportionately more. Simply increasing the sales tax hits some citizens a lot harder. Personal income is up in Washington – just not up for everyone.
YEARS OF DISINVESTMENT: Substantial cuts, more than $10 billion, have already been made to state services over the past 3 years. Fewer children are receiving health, child care and other services; home-care hours have been cut for vulnerable seniors and the disabled.
State cuts over past 3 years:
- $2.7 billion from K-12 education
- $2 billion from employee compensation (including K-12)
- $1.7 billion from health care
- $1.3 billion from higher education
- $733 million from other human services
- $705 million in other cuts
- $560 million from long-term care, developmentally disabled, and mental health
- $455 million from criminal justice
- 263 million from natural resources
- 29.4 million from early learning (Source: Governor’s 2012 Supplemental Budget Proposal Highlights)
- 8 percent are in deep poverty (less than 50 percent federal poverty level)
- 10 percent in poverty (50 to 99 percent federal poverty level)
- 21 percent near poverty (100 to 199 percent federal poverty level) (Source: American Community Survey, 2010)
WHAT DOES ALL THIS MEAN?
More children and their families are struggling at the same time our state is cutting services and is unable to give all kids access to a basic education that will prepare them for today’s economy.
Consider: Washington ranks 41st in bachelor degrees awarded and 42nd in graduate degrees awarded, per 1000 20-24 year-olds-olds. (Source: 2007-08 data; Economic Opportunity Institute) At the same time, our job market relies heavily on college graduates. Our state is importing qualified workers rather than graduating its own children.
Washington’s heavy reliance on the sales tax – twice the national norm – doesn’t help things. People are spending more on services, mostly not taxed, and buying more over the internet, mostly tax free. Since 1979, the growth in personal income in Washington has shot up at a rate that far outpaces growth in sales tax revenue.
If Washington’s budget had grown at the same rate as personal income over the past decade, the 2011-13 budget would be $13 billion higher – more than enough to cover basic education and other children’s needs.
- Source: Washington’s tax code guarantees future revenue shortfalls, http://www.eoionline.org/tax_reform/fact_sheets/WashingtonStateBudget101-Jan12.pdf
In a similar timeframe (1998 to 2009), Washington’s rank in K-12 spending , when measured per personal income, fell from 34th to 45th. (Source: U.S. Census). Washington simply has failed to invest in its children.
When costs exceed revenue, actions that the state may take include:
- Spending reserves
- Reducing expenditures
- Increasing revenues
- Borrowing money
- Some combination of the above
The state has already spent reserves and reduced expenditures. It borrows money to cover capital costs.
Washington’s tax structure is unlike that in much of the nation. Major tax sources include:
- Sales tax – 49 percent of state revenue
- Property tax – 12 percent of state revenue
- Business and Occupation (B&O) tax – 22 percent of state revenue
The components of the state’s tax structure are much different than the national norm.
- Washington raises less revenue, per capita, than the national average
- Washington relies twice as much on the sales tax ($2,061 per capita, versus $992)
- Washington is one of only seven states that does not impose a personal or corporate income tax
- Washington’s “business tax,” the B&O, taxes gross receipts rather than profit or income
Source: Citizen’s Guide to the Budget
MIDDLE CLASS HIT HARD: This results in a regressive tax structure – that is, middle and lower- class families pay more as a percentage of their income than wealthy families. Washington’s super majority (the 60 percent in the middle to poor range) pay more than the national average, when measured as a percentage of income. Washington’s wealthiest 5 percent fall well under the national average.
- Capital gains tax: – A 5 percent excise tax with exemptions of $10,000 for singles and $20,000 for couples would generate about $700 million. With these exemption levels, the vast majority of the tax would be paid by the highest income individuals with large investment portfolios, while most middle and low income people would be exempt. Most states tax capital-gains income through a state income tax. (Source: Economic Opportunity Institute; 2012 figures)
- Income tax: A 5 percent tax on income over $1 million would generate about $1.29 billion annually. (Source: EOI; 2008 figures)
- Tax breaks: We can review to see which are more important than children’s education and the services that protect their well-being. Savings from ending individual tax breaks can range from around $10 million to well over $100 million. Generally these are used to encourage business, and ending them has proven to be difficult. It took two sessions to end a tax break for large out-of-state banks. Backers had hoped to save $25 million; in the end they directed an additional $14.5 million into the general funds … and added several new exemptions to the books. Still, when added up, potential savings run into the hundreds of millions.
Why is it a PTA issue?Washington State PTA advocates for the well-being and education of all children. We oppose budgets that hurt children’s programs and we advocate for revenue when necessary.
This position aligns with WSPTA resolutions:
- 18.5 FUNDING FOR BASIC EDUCATION
- 18.11 COMMON SCHOOL CONSTRUCTION FUNDING
- 18.18 HIGH SCHOOL GRADUATION, COLLEGE PREPARATION AND ACCESS
- 18.22 CHILDREN WITH SPECIAL NEEDS
- 18.28 INCREASING REVENUE TO SUPPORT OUR LEGISLATIVE PRINCIPLES
It also aligns with WSPTA’s Legislative Principle on Budget and Revenue:
- The WSPTA shall identify and initiate education and action on public policy affecting tax policies that are fair, equitable, and provide stable, adequate revenues for public education and for programs that benefit children and youth, including supporting passage of state budget bills containing adequate levels of funding for child-related programs, and opposing budget policies, deficit reduction efforts, and other legislative proposals that negatively impact funding for child-related programs.
In addition to the sponsors of this issue, there are coalitions engaged on revenue needs. Organizations working on revenue issues include the Economic Opportunity Institute, Our Economic Future, and the Washington State Budget and Policy Center. Other potential partners include the League of Education Voters and the League of Women Voters.
(Did you know Washington State PTA led an initiative for a state income tax in the 1930s? It passed with 70 percent of the vote, but was overturned as unconstitutional. See Washington State Taxation.)
Estimates for fully funding the basic education finance bill of 2009 were an additional $3 billion or more.
The state is emerging is from its recession but revenue increases are nowhere near the level needed. According to a July 25, 2012, Associated Press article:
- “A forecast released last week said state revenue will grow by about 3.5 percent per year for the two-year cycle beginning in July 2013. But many of those gains will be consumed by other growth in state government, such as the resumption of cost-of-living adjustments for teachers, medical care cost increases and general growth in reliance on state services. ... Gov. Chris Gregoire’s budget director estimated that political leaders will face a relatively flat budget, maybe a $100 million surplus to a $100 million shortfall.”
- McCleary ruling
- Fact sheet on the Washington State Budget
- Citizen’s Guide to the Budget
- 2012 State of Washington Children
- Citizen’s Guide to Washington State K-12 Finance
- Legislative Evaluation and Accountability Program (LEAP)(LEAP is an independent government committee that compiles budget and fiscal transparency reports, including K-12 spending)
- NEW: Washington State Taxation, a historical review.