“Levy swap” proposals surface

The Seattle Times has a story about three legislative proposals to reduce reliance on local school property tax levies that emerged on Wednesday:

State lawmakers Wednesday put forth three competing proposals to address part of a court mandate for K-12 education that would reduce schools’ reliance on local tax levies.

The three tax-levy proposals introduced Wednesday … differ, ranging from a new capital-gains tax, to a levy swap between local and state property taxes, and a plan to do more research and determine a way forward next year.

Introduced by Sen. Bruce Dammeier, R-Puyallup, the GOP plan would use a state task force’s recommendations on teacher compensation to set salary levels. It would lower local property-tax levies going to schools while raising the state’s property-tax share devoted to schools by the same dollar amount.

Democratic senators proposed a version of a tax on capital gains that would raise $1.7 billion through 2019 for K-12 basic education. That money would go toward a plan sponsored by Sen. Christine Rolfes, D-Bainbridge Island, to increase teacher compensation — which, like the GOP proposal, comes from task-force recommendations. Those proposals combined would allow for a plan sponsored by Sen. Jim Hargrove, D-Hoquiam, to lower local property-tax levies for most districts.

A third proposal came Wednesday from House Democrats in the form of House Bill 2239, which would create a council to recommend to lawmakers how to implement teacher compensation and funding reforms. The council would issue a report to lawmakers and the governor by Dec. 1, studying how the state’s 295 school districts now use local bargaining agreements and levies to fund teachers.

The proposal, from Rep. Ross Hunter, D-Medina, sets 2016 and 2017 deadlines for lawmakers to implement changes to the levy system and teacher compensation.

On his blog, Rep. Hunter describes how a property tax levy swap might work.

 

February 11–March 10 state revenue collections were $16.7 million greater than forecast

This afternoon the Economic and Revenue Forecast Council issued its monthly Economic and Revenue Update. Here are the key bullets on revenue from the summary:

  • Major General Fund-State revenue collections for the February 11 – March 10, 2015 collection period were $16.7 million (1.6%) higher than the February forecast.
  • Revenue Act collections came in $21.6 million (2.3%) less than forecasted while non-Revenue Act collections came in $38.3 million (38.9%) higher than forecasted.
  • The forecast included a $13.3 million audit payment that did not occur during the collection period but is still expected to occur. Had the payment occurred as expected, collections would have been $30.0 million (2.8%) higher than forecasted.

Here is a chart snipped from the Update showing monthly seasonally-adjusted Revenue Act collections since 2004.

Revenue-Act-Receipts March 15This is the first collections report since the revenue forecast was revised in February.

In the update, it was reported that migration into the state set an all-time high during the March 2014 – February 2015 period, at least as measured by the number of out-of-state licenses turned in by people applying for Washington drivers licenses at the Department of Licensing. During the last 12 months 180,700 out-of-state licenses were turned in to DOL. Here is a chart showing licenses surrendered to DOL since 1983.

Drivers Licenses March 15 This is a clear sign that the economy is returning to normal.

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January employment report shows state gained 18,300 jobs from December to January

The state Employment Security Department issued its employment report for January this morning. There was a lot of good news in this report.

The preliminary estimate is that seasonally adjusted employment in Washington increased by 18,300 from December to January. The estimate of November to December job growth was revised up to a gain 8,900, from the preliminary gain of 7,600 jobs announced in last month’s report. The estimate of October to November job growth was revised up to a gain 8,400 from the previously estimated gain of 5,800 jobs. On top of this, benchmarking to unemployment insurance tax records added 10,000 to the estimate of the September level of employment.

The preliminary estimate of January’s seasonally adjusted unemployment rate for the state is 6.4 percent. The estimate of November’s unemployment rate is unchanged from the initial figure of 6.3 percent.

The January employment report is available here.

The February employment report is scheduled to be released next Wednesday (March 18).

 

A chart showing initial unemployment claims in Washington

So far this year, weekly claims for unemployment insurance are running well below last year’s pace.

Initial Claims

The value for the most recent four-week moving average, 7,667, is 1,460 less than the value for the comparable period last year.  The data are available here. (Note that these numbers are not seasonally adjusted.)

Washington’s forecasted revenue growth is better than that of the average state

A recent post at TaxVox (the blog of the Urban Institute/Brookings Institution Tax Policy Center) examines state government revenue forecasts fore fiscal years 2015, 2016 and 2017.

State forecasters expect revenue growth to remain sluggish through fiscal year (FY) 2016 according to an Urban Institute analysis of agency reports. In FY17, states project revenue growth will return to its average post-2000 rate but remain significantly below its long term average.
Urban
The chart below shows revenue growth for these five years for Washington’s general fund-state account, as reported in today’s update to the state revenue forecast:
WA
Washington’s revenue growth exceeds the nationwide average in each of the five years. Who’d a thunk our creaky old tax system would stack up so well?
Here’s a link to the TaxVox post: State Revenue Growth Will Remain Sluggish

 

New general fund–state revenue forecast: up $106.8 million for 2013–15 biennium; up $129.4 million for 2015–17 biennium

The state Economic and Revenue Forecast Council (ERFC) held its quarterly meeting today. The forecast of general fund–state revenue for the current biennium (2013–15) increased by $106.8 million to $33,546.6 million. The forecast of general fund-state revenue for the upcoming biennium (2015–17) increased by $129.4 million to $36,448.9 million.

This is the eighth consecutive meeting at which the forecast for the 2013–15 biennium has been increased.

Budget reports from legislative fiscal committees often roll-up three accounts; the general fund–state, the education legacy trust account and the Washington opportunity pathways account. We refer to this three-account roll-up as the NGFS+. For the NGFS+ the forecast of revenue for the 2013–15 biennium increased by $134.3 million to $34,201.2 million, while the forecast for the 2015–17 biennium increased by $139.6 million to $37,124.4 million.

(The winter update to the revenue forecast had been originally scheduled for March 20. The early action supplemental budget (HB 1103), which the governor signed yesterday, moved the update meeting up to today.)

The press release is here; slides from the meeting are here.

Business costs do matter

The Seattle Times reports that Cascade Designs is moving jobs to Nevada because the cost of doing business in Seattle is too high.

Seattle-based outdoor-gear maker Cascade Designs will move about 100 jobs, roughly one fifth of its workforce, to a new manufacturing and distribution facility in Nevada as it seeks to keep costs down while pursuing growth.

The company said it needs to expand, but doing so in the Seattle area is too expensive. The main reason is increasingly expensive real estate, especially for the space it leases around the city to house its merchandise.

“We’re running out of space in Seattle,” spokesman Martin Maisonpierre said.

But labor costs — recently subject to a minimum wage of $15 per hour — also add up, especially as Cascade competes with brands that rely on cheap overseas labor, Maisonpierre said.

He said the jobs in Reno will pay $10 an hour or more. Many of them will be on the more labor-intensive, less-specialized end of the spectrum.

The complete Times story is here.

 

January 11–February 10 state revenue collections were $53.8 million greater than forecast

At noon the Economic and Revenue Forecast Council issued its monthly Economic and Revenue Update. Here are the key bullets on revenue from the summary:

  • Major General Fund-State revenue collections for the January 11 – February 10, 2015 collection period were $53.8 million (3.8%) higher than the November forecast.
  • Cumulatively, collections are now $69.0 million (1.5%) higher than forecasted.
  • Last month, there were several large one-time assessment payments and re-funds that totaled $21.2 million. In addition, a $21.0 million refund that was forecasted for the month is now expected to occur in March instead. Had the refund occurred when forecasted, and the one-time payments not occurred, cumulative collections would have been $26.8 million (0.6%) higher than forecasted.
  • Because the $21 million refund is still expected to occur, the effective cumulative surplus is $48.0 million (1.1%).

Here is a chart snipped from the Update showing monthly seasonally-adjusted Revenue Act collections since 2004.

Revenue-Act-Receipts Feb 15

This is the third collections report since the revenue forecast was last revised in November. Overall state revenues are on track: This month’s strong showing offsets weakness in last month’s report.

The next collection report is due on March 11. These will be followed by a revised revenue forecast on March 18.

New policy brief: Gov. Inslee’s Capital Gains Tax Proposal

Our new brief on Governor Inslee’s Capital Gains Tax Proposal is available through this link.

December employment report shows state gained 7,600 jobs from October to November

The state Employment Security Department issued its employment report for December this morning. The preliminary estimate is that seasonally adjusted employment in Washington increased by 7,600 from November to December. The estimate of October to November job growth was revised down to a gain of 5,800, from the preliminary gain of 6,800 jobs announced in last month’s report.

The preliminary estimate of December’s seasonally adjusted unemployment rate for the state is 6.3 percent. The estimate of November’s unemployment rate is unchanged from the initial figure of 6.2 percent.

The December employment report is available here.