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Dear Friends and Neighbors,
After spending many late nights on the House floor, the Legislature passed the operating budget and adjourned on time at the end of April. It was the first time in almost a decade that the Legislature ended on time in a budget-writing year.
While there is always more work to be done, we made headway in addressing a variety of issues facing communities across Washington. Read below to find out more about what we accomplished this session.
Working to balance our state's tax code
Washington’s current tax structure benefits the rich because the tax code relies on sales, property, and business taxes while exempting the wealthiest people and corporations. That means when the Legislature invests in communities and essential services, the burden falls heavily on low-income families and the middle class, not the wealthy.
Going in to this session, we knew we would need to find solutions to increase revenue, as new investments in education, health care, behavioral health care, housing, etc., would not have been possible without new revenue. That’s why Democrats proposed multiple measures to help rebalance our state’s tax code. Having the wealthiest in our state chip in, just like the rest of us, will allow our state to invest in thriving communities without putting that burden on middle or working class families.
 While I’m disappointed a capital gains proposal did not move forward this session, I will work to ensure it is a continued part of the revenue discussions here in Olympia. However, even if a capital gains measure had been successful this session, it would not have been enough on its own to fix the problems within our tax code.
Tax Structure Work Group
While some of the measures passed this session will help lessen the tax burden on low-income families and the middle class, the work to truly rebalance and modernize our state’s tax code will continue. Fortunately, provisions of House Bill 2117, which I sponsored and would reauthorize and expand the bipartisan Tax Structure Work Group, were modified and included in the final budget.
Washington state’s current tax structure relies primarily on sales tax, property tax, and other excise taxes. Those taxes affect households at the lowest end of the income spectrum, which pay seven times more of their income to taxes compared to the wealthiest households in the state. New businesses, entrepreneurs, small businesses, and low-margin businesses with high capital costs are also penalized by the current tax structure, as the business and occupation tax (B&O) is assessed on gross receipts, not net, and does not allow a deduction for the cost of doing business.
In 2018, the Tax Structure Work Group began facilitating public discussions to garner feedback about the state’s current tax structure and how it affects small business owners, workers, and families. The reauthorization of the Work Group will allow that work to continue, and sets up a timeline for engaging the public, providing feedback to the Legislature, and formulating policy proposals to modernize and rebalance the state tax code. We can now get started on finding a pathway to modernize and rebalance the Washington state tax structure so that it is equitable, adequate, stable, and transparent!
Funding our Thriving Communities
While the larger discussion on restructuring our tax code is ongoing, we took steps to increase revenue to meet the immediate funding needs for the programs and services on which Washingtonians rely. This session, Democrats voted to modify tax preferences, increase taxes on big oil and big banks, and reform the real estate excise tax (REET), while extending property tax relief to more senior citizens and veterans.
Part of rebalancing our state’s tax code includes addressing the preferential treatment that allows massive corporations to not invest equitably for the things our state needs. Oil companies with refineries in Washington and big banks received billions in tax cuts from the Trump federal tax cuts. At the same time, Washington families are still struggling to afford basic necessities and are carrying the burden of funding schools and essential state services. We passed legislation to modify the hazardous substance tax (HST) and to increase the B&O rate for the largest financial institutions, asking big oil and big banks in our state to contribute to essential services and programs all Washington families need.
Democrats also passed legislation to restructure REET, incorporating parts of House Bill 1921, which I sponsored. The proposed rate changes would mean about 80 percent of home and property sales would see a tax cut on the sale, while about 18 percent of sellers would see no rate change at all. Only those selling properties for over $1.5 million would pay more. With this reform, we are actually lowering the tax rate for a majority of Washingtonians, while still increasing funding for basic education, special education, high-quality pre-kindergarten, and more.
In addition, we passed bipartisan legislation to modernize the property tax exemption, valuation freezes, and deferral programs for our seniors age 61 years or older, and extended the same exemption to veterans who have 80 percent disability.
 Workforce Education Investment
We also created a new business and occupation tax rate on professional services, paid by tech firms, lawyers, accountants, and other high-income professionals – and supported by some in that community – to help finance the first-in-the-nation Workforce Education Investment. The program is a huge accomplishment, and will fund significant investments in financial aid and workforce education for Washington students.
Washington state has one of the most robust economies in the nation, but the jobs and benefits are mostly going to newcomers. This historic higher education investment expands the Washington College Grant (formerly the State Need Grant), allowing for students from Washington families making up to $50K/year to receive free public college tuition. It also allocates over $100 million to invest in services that connect students with degrees, certificates, and apprenticeships, leading to high-demand jobs like nursing, engineering, and computer science.
Protecting Southern Resident orcas
One of the top issues you reached out about this session is what we are doing to protect our Southern Resident orcas. In fact, a whole package of bills to protect endangered killer whales and the waters they call home was passed this session. The successful legislation include bills to protect our waterways from oil spills (HB 1578), protect critical habitat for salmon and other forage fish orcas feed on to survive (HB 1579), reduce noise and disturbance from vessels (SB 5577), reduce exposure to toxic pollutants (SB 5135), and require state boating education to include information on safe whale watching (SB 5918).
Not only did we pass a package of bills that will benefit our orca populations, but the budgets also included major funding to remove fish-barriers on state roads, a key step in helping our struggling populations of salmon and orcas.
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Expanding and improving behavioral health care
The behavioral health needs of our state have only continued to grow. We’ve made some progress on integrating our behavioral and physical health care systems, but our behavioral health capacity and workforce continue to lag behind the demand.
The 2019-21 budgets not only invest in the immediate needs of increasing and improving treatment capacity and community-based services, but the investments we made also serve as a foundation for the future of our state’s behavioral health system.
The capital budget included a record of more than $300 million in funding for behavioral health facilities, including:
- $120 million in Behavioral Health Capacity grants for community mental health facilities;
- $35 million from the Housing Trust Fund for supportive housing with wrap-around services for the chronically mentally ill;
- $33.7 million to plan and design a behavioral health teaching facility run by the University of Washington;
- $64.4 million for patient safety and other necessary upgrades at Western and Eastern State Hospitals; and
- $55 million to increase and improve capacity at Western State Hospital and new state-run community settings.
In addition to the capital budget, the operating budget includes funding to reform and improve the state behavioral health system, including:
- $47 million to expand community behavioral health beds and services;
- $92 million to ensure the stability of state hospitals and the safety of patients and staff; and
- $74 million to comply with the Trueblood court ruling.
Addressing housing and homelessness
Every community has felt the impact as affordable housing continues to be out of reach for many and homelessness has surpassed a crisis level across Washington. On any given day, over 140,000 people in Washington are homeless or unstably housed. This issue is pervasive, and I was glad to see a particular focus on taking significant steps to address the housing crisis this session. In fact, multiple bills that will help protect some of our most vulnerable families at risk of housing insecurity passed the Legislature.
More notice before rent increases
Under current law, landlords are only required to give thirty days’ notice to increase rent. And most landlords require twenty days of notice when a tenant is moving out. This leaves tenants with only ten days to decide whether a rent increase is affordable or whether they need to move. On top of that, many landlords and rental management companies are putting provisions in the fine print that the rent can increase even in the middle of a lease. House Bill 1440 protects renters by requiring property owners to give a minimum of 60 days written notice to tenants before increasing their rent. When every dollar counts in a family’s budget, this newly signed law will ensure that renters have more time to either find new housing or rearrange their finances.
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Extending eviction notice from 3 to 14 days
Evictions are a leading cause of homelessness. Senate Bill 5600, which was signed into law earlier this month, extends the current 3-day eviction notice period to pay or vacate to 14 days. The notice given to tenants will feature information about civil legal aid and the resources available to them. In addition, the new law requires the Attorney General to provide information about the 14-day notice on its website in 10 languages commonly used in the state. Giving renters both the information needed to avoid homelessness and more time to access those resources is a big win for Washington families.
Investing in affordable housing projects
Providing a person with stable housing is not only the right thing to do, it is also cost-effective. Local governments are struggling to afford the costs associated with increases in homelessness, and are often only able to put band-aids on the problem. House Bill 1406 allows counties or cities that opt in to the program to use a portion of the state sales tax for affordable housing or to back bonds dedicated to affordable housing. Such bonds would come at no cost to homeowners, renters, property owners, or developers—an all-around win. I’m particularly pleased this bill was recently signed into law, as it includes similar provisions to my legislation, House Bill 1921, which would have used additional funding from moving to a graduated real estate excise tax for local affordable housing investments.
While there is no doubt that more must be done to ensure all Washingtonians are housed, these new laws are significant steps in the long path to eradicating homelessness.
A note on special education funding
While the new funding the Legislature has continually put into public schools is a positive step for our state’s students, what we’ve called success is really just funding basic education. Even after meeting our obligations under the McCleary lawsuit, we have more work to do to correct decades of underfunding public education, particularly when it comes to the perpetually underfunded special education programs. This session saw the Legislature invest an additional $294 million over four years for special education funding, but it is still not enough to meet the needs in our state.
The McClearly lawsuit was based on a decade’s old formula for basic education funding. And we’ve seen that even after meeting our obligations under the lawsuit and “fully funding” public education, our school districts are still struggling. To ensure we have enough funding to guarantee a high-quality basic education for all Washington students, I believe we need to go back to the beginning and review the formula for basic education funding. Just as we need to find a tax structure that will naturally grow to meet our state’s needs, we also need to find a formula for public school funding that is flexible and grows to meet the need of our 1.1 million students.
Thank you for reaching out this session!
 Thank you to everyone who reached out this session! My office received over 17,000 emails from constituents of the 36th LD, not to mention the more than 30,000 non-constituent emails. I’ve been able to respond to more than 14,000 of your emails, but if you haven’t received an answer yet, please feel free to reach out again.
Sincerely,
 Rep. Noel Frame
P.S. Summer Community Coffees
Once a week, you are invited to join my Legislative Assistant, Natalia, to chat about state and local issues that matter to you. Your messages and conversations will be passed along directly to me, and will help to inform policy priorities and my understanding of what really matters to my friends and neighbors in the district. We will rotate Community Coffee days to take place at a different local business each week.
Come out to the next Summer Community Coffee!
Thursday, June 20 • 3:30 - 5:30pm
Bauhaus (Ballard) 2001 NW Market St
Stay tuned for more dates, times and locations!
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