On Monday, Rep. Stokesbary proposed a supplemental operating budget that offers quite the contrast to the proposals from the chairs of the Ways & Means and Appropriations committees.

Rep. Stokesbary’s proposal would reduce revenues from funds subject to the outlook (NGFO) by $2.118 billion in 2021–23 and by $8.347 billion in 2023–25. That includes two major tax relief proposals: SB 5932, which would reduce the sales tax by 1% (-$5.496 billion over the outlook period), and HB 1858, which would reduce the business and occupation (B&O) tax on manufacturers and other industries (-$224 million over the outlook period).

It also includes permanent revenue shifts from the operating to the transportation budget: HB 1604, which would shift the revenue from sales taxes collected on the sale of motor vehicles from the general fund–state (GFS) to the transportation budget (-$3.037 billion over the outlook period), and HB 1249, which would transfer sales taxes paid by the Dept. of Transportation from the GFS to the transportation budget (-$1.709 billion over the outlook period).

By comparison, the House chair’s proposal would reduce revenues by $188 million in 2021–23 and by $195 million in 2023–25. The largest tax cut would be a three-day sales tax holiday, which would reduce revenues by $119.1 million in 2021–23. The Senate chair’s proposal would reduce revenues by $33.7 million in 2021–23 and by $176.3 million in 2023–25. The largest reductions (as proposed) would be a B&O tax deduction for credit card processing companies (-$75.0 million over the outlook period) and B&O tax credits for the motion picture program (-$49.5 million over the outlook period).

However, on Tuesday Senate Democrats introduced SB 5980. Under current law, there is a B&O tax credit (RCW 82.04.4451) of up to $35 a month generally or $70 a month for service businesses. SB 5980 would increase those maximum credits to $50.415 a month and $156.25 a month. Yesterday the Ways & Means Committee approved an amendment to the operating budget proposal that would add funding to implement SB 5980. The amendment also notes that the bill would reduce revenues by $20.6 million in 2021–23 and by $105.4 million in 2023–25.

Rep. Stokesbary’s proposal would spend much less than the other two. It would reduce policy level NGFO appropriations by $355 million in 2021–23. (It would not cut any programs; instead, NGFO policy level changes would decrease because the proposal would use $1.083 billion in federal relief funds in lieu of the NGFO.) Although overall 2021–23 NGFO appropriations (including savings from the lower expected cost of continuing current services) would be $1.511 billion lower than in the enacted biennial budget, 2021–23 appropriations in the proposal would still be 3.6% above 2019–21 spending (adjusted for inflation).

The proposal’s major NGFO spending items in 2021–23 include:

• $397 million for the family and medical leave insurance account
• $270.8 million for state and higher education employee compensation
• $259.2 million to increase certain DSHS service provider rates
• $103.1 million for wildfires
• $63.9 million for K–12 enrollment stabilization

The proposal would leave a large unrestricted NGFO ending balance of $2.111 billion at the end of 2023–25. Importantly, it would return the $1 billion that is currently in the Washington rescue plan transition account (the shadow reserve account created last year) to the budget stabilization account (BSA, or the rainy day fund).

We have more on the supplemental proposals here.