“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.


Latest In Focus episode


Above is the latest episode of our In Focus podcast. Lew and Kriss talk about:

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.
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:
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.

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.

“Too few people” buying insurance through the Healthplanfinder

The Seattle Times has a good article from Lisa Stiffler about enrollment issues at the Washington Health Benefit Exchange (HBE). I wrote last week that enrollments are well short of the HBE’s goal for this year’s open enrollment, which ends Feb. 15. Stiffler provides more details:

The trouble for the Washington Health Benefit Exchange, which runs the state insurance marketplace, is that too few people are buying their coverage through the Washington Healthplanfinder website, which needs to reach the enrollment targets to help pay for its operating costs. . . .

There are numerous reasons for the underwhelming sales. Some officials think the nationally set enrollment window was badly timed, spanning Thanksgiving and Christmas holidays, when distractions abound and pocketbooks are strained. Then there’s the challenge of enrollment closing before most people fill out their tax returns, which means many uninsured people will realize too late how much they’re being penalized for going without coverage.

In addition, enrollment projections in Washington underestimated how many residents would be eligible for Medicaid, pulling them out of the pool of potential exchange customers. In the past 16 months, the number of Medicaid enrollees has grown by nearly half a million, to 1.7 million.

Finally, many exchange customers from the first enrollment received confusing or insufficient notices about what they needed to do to renew their plans, sometimes leaving them uninsured when they meant for their coverage to continue.

On the point about the timing of open enrollment, Howard Gleckman of the Tax Policy Center compares getting insurance under the Affordable Care Act (ACA) to charitable giving. Gleckman argues that since both these activities are tax-driven, their deadlines should be linked to tax filing season, rather than the end of the calendar year (or thereabouts). This, he thinks, would help maximize participation.

Also, it’s interesting that the HBE underestimated the numbers who would be eligible for Medicaid. There are three sets of people signing up for Medicaid through the Exchange. First are those who were covered by Medicaid before the ACA — they are simply re-enrolling and are funded at the regular federal match (the state pays 50 percent and the feds pay 50 percent). Second are those who are newly eligible for Medicaid as a result of the ACA’s expansion. These are funded 100 percent by the federal government through calendar year 2016, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent thereafter. Third are those who were previously eligible for Medicaid but had not enrolled; they are funded at the regular match.

The HBE has not released Medicaid enrollment numbers broken down into these categories for this enrollment period. A September report noted that enrollments in Medicaid by those newly eligible under the expansion totaled 352,386; enrollments by those previously eligible totaled 199,631; and renewals totaled 583,765. The apparently unexpectedly high Medicaid numbers are doubly problematic for budget purposes: It means the Exchange gets less business, hurting its budget, and it means that the state must pay more to fund Medicaid (even though there is a high federal match for a portion of those enrollees).

Regarding the HBE budget, Stiffler writes,

. . . funding for Healthplanfinder comes from three sources: the exchange’s share of a 2 percent tax on all insurance premiums, a fee charged on insurance companies selling through the exchange, and from cost sharing with the state agency that manages Medicaid. . . .

The board overseeing the exchange is asking state lawmakers to approve a budget request of $147 million over two years, which is already higher than what the Legislature initially allocated.

Through new sales or renewals, the exchange needs to sell 86,000 plans in the last three weeks of open enrollment to reach its target and provide funding to operate within that request.

Marchand said the exchange knows lawmakers will be looking everywhere to make cuts, not grow budgets.

That could mean paring back services, he said. “We’ve got to figure out how to live within our means.”

Podcast: Governor’s Budget


The second episode of our podcast is up now — click above to listen. Lew, Kriss and I talk about Governor Inslee’s proposed 2015-17 budget. For more details on the budget proposal, see our policy brief.

Progress on Government Reform

In December, Governor Inslee reported on the progress of the Lean/performance management program, originally conceived at MIT and instituted by the legislature to create savings and efficiencies in the delivery of government services. This interesting reform initiative has progressed due in no small measure to over $6m worth of pro bono training efforts by many Washington businesses, including Research Council members Alaska Airlines, Premera Blue Cross, and The Boeing Co.

22,000 state employees, among them over 9,000 managers, have received training in lean management implementation, giving one hope of cultural and structural improvements within the agencies that could pay big dividends down the road. To date OFM is making modest claims of success, including $5.92 million in savings, $27.4 million in costs avoided, and $3.16 million in additional revenue.

One metric in the report that particularly caught my eye—with my driver’s license due for renewal soon—in 2013 “Washingtonians saved more than 1 million hours of wait time at driver licensing offices compared to 2012.” To study and perhaps celebrate other successes, you can view the full report  here.