A House budget proposal that will cost you $4.2 billion over four years

We’re still going full-steam here at the Capitol. We’re back in committee reviewing House bills and voting on them on the floor. Just four more weeks left of session.

Last week, the House of Representatives and the Senate released their budget proposals, and it’s not pretty. In fact, it’s downright ugly for taxpayers. According to our budget lead, Sen. John Braun, this should have been the easiest budget to write given that we have nearly $5 billion in extra revenuethat we can use to fund our legislative priorities. He even called it “The Best Budget Situation of the 21st Century.” 

Unfortunately, the House used this situation as a springboard for a plan to ramp up state spending and raise taxes.Here are some of the specific takeaways from the House budget proposal that you should know about.

House Operating Budget: 

  • Increases state spending 19 percent — the largest increase since 1989.
  • Raises $4.2 billion in new taxes over four years, despite the billions in unexpected revenue we have at our disposal.
  • Imposes a 9.9 percent income tax on capital gains, which is volatile and likely to be struck down in court as unconstitutional.
  • Raises the cap on local levies, which will result in higher property taxes and the same inequity between property-poor and property-rich districts that was a key factor in the McCleary decision on funding education. We could end up back in court.
  • Includes a higher Real Estate Excise Tax (REET)
  • Raises the business and occupation tax on service businesses by 67 percent.
  • Imposes a 0.58 percent payroll tax.

Even though our economy has been booming, experts across the country caution that we are headed for another recession. And making the single biggest expansion in state spending in 30 years with an additional $4.2 billion burden on the taxpayers is not a wise way to strengthen our position in anticipation of a downturn. 

How does the Senate budget compare?

Senate Operating Budget:

  • Increases state spending 16.8 percent.
  • While it doesn’t include an income tax IN the budget, a separate but related bill proposes an unconstitutional income tax on capital gains. The bill is still very much alive in the legislative process.
  • Also increases the tax rate on insurance premium revenue, which will raise property and casualty insurance premiums.
  • Does NOT include a change to the local levy limit, which means it wouldn’t directly affect your property taxes.
  • Good news: It includes $400 million for mental-health, which is a step in the right direction, but it needs additional funding to address the public safety ramifications of mental illness and substance abuse.

What’s next? Each chamber will vote on their budget proposal. Then both chambers will negotiate a final budget that the Legislature will vote on and submit to the governor for approval. I will continue to update you on the budget process through this newsletter and on social media.

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