Several fiscal bills have been introduced today: Reserves, tax relief, long-term care

By: Emily Makings
12:46 pm
January 11, 2022

First, HB 1875 (Stokesbary) would transfer $1.0 billion from the Washington rescue plan transition account back to the budget stabilization account (BSA, or the rainy day fund). The enacted 2021–23 budget had needlessly transferred $1.0 billion from the BSA to the new Washington rescue plan transition account. This shadow reserve account is not subject to any constitutional restrictions. We have written that transferring the BSA money in this way set a bad precedent. By returning the money to the BSA, it would be more likely to be available for future rainy days. (Gov. Inslee’s 2022 supplemental budget proposal would transfer $600 million from the general fund–state to the BSA and leave the $1.0 billion in the Washington rescue plan transition account.)

Second, SB 5769 (L. Wilson) would add a $250,000 homestead exemption to the property tax, eliminate the business and occupation tax for manufacturers, repeal the capital gains tax, and repeal the state’s long-term care program.

Third, HB 1913 (Stokesbary) would also repeal the long-term care program. The bill would create a Washington long-term care reinsurance program instead. Long-term care insurance issuers would pay an annual reinsurance assessment; reinsurance payments (up to $200 million a year) would then be made to insurers to help stabilize long-term care rates and increase participation in the market.

Finally, HB 1898 (Orcutt) would re-base the state property tax in CY 2023 by reducing the highest levy for the regular state property tax by $1.099 billion and for the additional state property tax by $920.0 million. According to the bill, after making property tax changes to help address the McCleary decision on school funding, “property values across the state have continually increased at a much faster pace than anticipated, resulting in an estimated property tax revenue collection in tax years 2018 through 2022 that is more than $2,000,000,000 more than was intended to be collected in the McCleary fix.”

Indeed, as I’ve written, the trajectory of state property tax growth has increased dramatically since 2017 (see the updated chart below).

Previous posts on other tax and long-term care bills that have been introduced this year are here and here.

Categories: Budget , Health , Tax Policy.