PHOENIX – A state task force charged with solving Washington's K-12 education funding crisis failed to overcome its partisan divide, leaving state lawmakers with serious work to do.
The bipartisan
A 2012 state Supreme Court ruling mandated that the state fully fund its basic education system and have a plan in place to do so by the 2017-2018 school year.
But after some seven months of meetings, while Democrats and Republicans on the task force each created some recommendations, the members voted along party lines and didn't adopt anything.
The public finance implications of what happens next could be significant.
Not only could the state's tax system change, but the eventual overhaul could also completely change how school districts are able to finance themselves.
The court ruled that the practice of relying on voter-approved excess property levies to support basic education, used by many districts, was unconstitutional.
S&P Global Ratings said in a December report that the credit of those issuers could take a hit if they lose the flexibility to collect the levies, though their credit quality could get a boost if the state successfully increases state funding to allow the districts to rely less on local levies.
Sussan Corson, one of the analysts on that report, said that the bottom line from the credit perspective is that districts should be made whole, so that reductions in their levy authority don't come without a corresponding boost from the state.
The legislature will need to continue working on a solution, Corson said, even though they have already increased state funding in the years since the Supreme Court decision.
"They have been working on trying to address it for several years now," she said.
Corson's latest report also suggested that a permanent fix to Washington's education funding challenges could be a positive for the AA-plus rated state's credit as well.
A massive infusion of state money via new taxes is what Democrats on the task force called for, and also what Gov. Jay Inslee, a Democrat, proposed in his budget.
"Our kids are too important to say no to," Democrats on the task force said in their recommendation document. "Washington's seven million residents are counting on lawmakers to make the tough decisions that will ensure our schools are fully funded. The current challenge provides an excellent opportunity to make improvements to the country's most regressive tax system, which unfairly hurts working families and mom & pop businesses. Democrats will not support massive cuts to critical state services, shell games, or excessive account sweeps in an attempt to avoid the revenue discussion."
Washington does not have a state income tax, relying on a sales tax for the bulk of state government revenue.
"All revenue options must be on the table for discussion," the Democrats continued, including requiring out-of-state retailers to collect sales tax, property tax changes, loophole closures, excise taxes, and more.
Inslee praised the Democrats in a statement, while acknowledging that the proposal was unlikely to be exactly what the legislature ends up adopting.
"We have many weeks of discussion and negotiation ahead of us," said Inslee. "None of the plans being proposed is likely to be the one we pass, yet having serious, substantive proposals to spark that discussion is crucial."
In his Jan. 11 inaugural address, when he was sworn in for a second term, Inslee noted that the state has already added $4.6 billion for schools in the last couple of years but still has to finish the job.
"The journey to fully fund education in our state has been a lot like climbing a mountain, and we've been climbing together for a long, long time," said Inslee, pushing the metaphor home by acknowledging the presence of Seattle-born Jim Whittaker, the first American to summit Mount Everest.
The Republicans on the task force stopped short of proposing a blueprint for increasing education funding, instead putting forth a set of "guiding principles."
"Education is our paramount duty, we need to fund education first, before other priorities of government," the Republican document says. "The legislature should explore opportunities to dedicate existing law revenue growth to K-12."
Any revenue discussion should consider altering the "regressive" property tax levy structure, the GOP principles added.
Hugh Spitzer, a longtime bond lawyer who teaches law at the University of Washington, said that Republicans can't support additional taxes and are interested in a "levy swap" that would reduce the ability of local districts to levy taxes and give that taxing power to the state.
"That would give them the ability to claim that there was no tax increase," said Spitzer. "There was just a shift."
Spitzer said that both parties are jockeying for position, but that he ultimately believes there will be some kind of compromise. Neither party can realistically push their own agenda alone because of the state legislature's balance of power. While the 49-member Senate technically has 25 Democrats, Republicans maintain functional control because one Democrat caucuses with the GOP. The 98-member House of Representatives favors the Democrats 50-48.
"If the governor is tough enough and willing to put a line in the sand and stick with it, there's going to be an agreement or he will keep them in session all year," Spitzer said, referring to the governor's power to recall the legislature to extraordinary sessions.
"I think they will get this solved," he continued. "Both parties are really committed to action on this."
Spitzer added that transportation funding, an increasingly partisan issue nationally, has enjoyed fairly bipartisan consensus in the state and suggested that could serve as a good example for lawmakers on the education issue.
If lawmakers are going to get legislation done in the regular session, they will need to move with some speed. March 8 is the deadline for bills to pass in the chamber they were introduced in, and April 23 is the last day allowed for regular session under the state constitution.
