Blog

New brief: Should Washington Be in the Long-Term Care Insurance Business?

Key dates for Washington’s long-term care insurance program—and its accompanying payroll tax—are fast approaching. Beginning Jan. 1, 2022, a payroll tax of 0.58% will be levied on every employee’s wages. The tax is expected to generate revenues of more than $1 billion a year. Long-term services and supports trust (LTSST) benefits will then be available […]

The cost of Washington’s new child care bill will bow wave, but capital gains tax revenues aren’t needed to fund it

The Seattle Times has a story today about the Fair Start for Kids Act, which the Legislature passed this year, and a new national report that gives Washington high marks for early childhood policies—and other general income policies (including paid family leave and a high state minimum wage). According to the Times, regarding the Fair […]

State Supreme Court: Financial institutions tax is constitutional

Today the state Supreme Court held that an additional business and occupation (B&O) tax on certain financial institutions is constitutional. The additional tax was imposed in 2019. As we wrote that year, it was one of many tax increases enacted even as the state’s revenues were experiencing strong growth. SHB 2167 (now codified as RCW […]

Seattle’s tax revenues decreased by 7.5% in 2020, but taxes and other revenues are expected to rebound in 2021

According to the Seattle City Budget Office last week, the city’s revenue forecast has improved since the city budget was adopted last year. That is the case even before factoring in federal relief funds or revenues from the new payroll expense tax. The city’s 2021 budget was based on revenue forecasts from last November. Since […]

“Awash with money”

Earlier this month, Jason Mercier of the Washington Policy Center posted a March 26 memo from Rep. Chopp that set out the Legislature’s options for a capital gains tax. For each of the options, Rep. Chopp listed among the cons that legislators could be “attacked for raising taxes while state is ‘awash with money.’” Indeed, […]

State tax revenue since the pre-Great Recession peak has grown by more in Washington than in any other state

According to the Urban Institute’s Tax Policy Center, state tax revenue in Washington grew by 13.9% from the fourth quarter of 2019 to the fourth quarter of 2020. That was the fourth highest growth in the country, and well above the average growth in the U.S. of 6.0%. Comparing the pandemic period of April–December 2020 […]

Trajectory of state property tax growth has dramatically changed

Washington’s three top tax sources are the sales tax, business and occupation (B&O) tax, and property tax. In fiscal year 2020, of total state tax collections, the retail sales tax accounted for 42.3%, the B&O tax 17.3%, and the state property tax 13.3%. The chart shows the growth in revenues from FY 2000 from each […]

With the June revenue forecast, the rainy day fund balance will increase (but by less than it would if capital gains tax collections were not directed to a dedicated account)

Constitutionally required deposits to Washington’s rainy day fund (the budget stabilization account, or BSA) are based on “general state revenues.” General state revenues (GSR) are defined in Art. VIII, sec. 1 of the state constitution. Essentially, they are funds deposited in the general fund–state (with some exceptions). Under Art. VII, sec. 12, 1% of GSR […]

The capital gains tax and funding for school construction

The capital gains tax bill (ESSB 5096) specifies that the first $500 million of tax collections each year will be deposited in the education legacy trust account (ELTA) and any remainder each year will be deposited in the common school construction account (CSCA). (The amount deposited in the ELTA will be adjusted by inflation each […]

How high will the long-term care payroll tax need to be to maintain solvency?

Geekwire ran an item earlier this week about the state’s impending payroll tax to fund long-term care (LTC) benefits. The program was enacted in 2019, the tax will begin to be collected Jan. 1, 2022, and benefits will be available beginning Jan. 1, 2025. We wrote about the program in a 2019 policy brief. The […]