Building an Economy that Works for Everyone

2023 Legislative Session is in the Books!

The WaLeg Didn't Pass Significant Tax Reform in 2023 - Here's What They Did Do

After 105 days, the 2023 Washington State legislative session ended on April 23rd. Lawmakers achieved their main goal – to pass a new biennial budget – but throughout the session, the atmosphere in Olympia was thick with concerns around funding the programs and services that Washingtonians need. Lawmakers were not only facing the loss of federal pandemic relief that has helped shore up our budget for the past couple of years, but the lingering effects of COVID and ongoing economic instability throughout the region. Under this cloud of reduced revenue, it was a struggle to advance policies that promote economic stability; however, there were some wins to celebrate.

Steps Forward for Economic Stability

Despite ample challenges, lawmakers took positive steps forward to improve Washington’s Paid Family and Medical Leave Program (PFML). Their actions will ensure PFML is stable and ready to serve all eligible Washingtonians through a more consistent methodology for the fund. Lawmakers also established reserves that will ensure benefits can be paid even when there is high demand. Thinking ahead, the state legislature allocated funding to research the impact of the lack of job protection when taking PFML.

Financial stability for child care teachers and immigrants received a boost from new policies passed this session. The legislature passed a bill allowing access to Working Connections Child Care (WCCC), the state’s subsidized childcare program, to all children regardless of their immigration status. This bill also provides low or no cost child care to teachers who can’t afford child care for their own children. This is a huge win that addresses the complexity of recruitment and retention challenges for providers. More needs to be done in both areas, but overall, both paid leave and child care are one step ahead.

Frontline health care workers won an important victory with the passage of SB 5236 to ensure better working conditions – which will ultimately improve patient care. The final budget included $110 million for Cascade Care premium subsidies for people with low incomes, as well as nearly $50 million to create a Medicaid-lookalike for low-income undocumented immigrants. Though this funding is insufficient to cover expected enrollment numbers, it is an important foundation on which to build in future years. The final budget also included $600,000 for a study on health insurance affordability. This study will evaluate price regulation strategies used in other states and the feasibility of implementing global hospital budgeting here at home. The willingness to fund a study is significant; it sends the message that the legislature is beginning to turn its attention to needed reforms. Ideally, these steps will set the stage for advocacy in future years.

While not a legislative win specifically, it’s also worth noting the groundbreaking decision around from the Washington State Supreme Court in March. Following years of challenge and speculation, a majority of the Justices ruled that the voter-approved 2021 capital gains tax is, indeed, constitutional.

This decision helps clear a path for both future revenue generation and additional policies, like a wealth tax, which are aimed at balancing our tax code. Although the wealth tax did not move forward this session, the budget includes funding ($300,000) for a wealth tax study. This study is to be led by the Department of Revenue, who will research and analyze wealth taxes in other countries and proposals in other states, including administrative and compliance issues.

More Work Ahead

While we are celebrating the positive outcomes from this session, we also have a lot more work to do. Our tax code – as recognized by the Supreme Court in their ruling on capital gains – remains the most regressive in the nation. Lower-income earners, and Black, Indigenous, and communities of color shoulder a much larger tax burden than wealthier white Washingtonians. This is both unfair and unsustainable; it is an inefficient way to raise necessary funds, and, year after year, it traps Washington residents in a cycle of poverty. Once again, this year, lawmakers failed to pass any significant tax policy this session to generate new revenue. Despite the popularity– polling shows that as many as two-thirds of Washingtonians support a wealth tax – and clear evidence proving the necessity of tax reform, the legislature chose to maintain the status quo.

There were other disappointments, as well. Though the legislature took some significant steps forward for health care access, they ultimately failed to take sufficient steps forward to improve affordability or long-term sustainability. Not a single policy solution passed to control runaway health care prices that are impacting so many Washington residents, despite a clear need for legal action in order to achieve true affordability and improve the long-term sustainability of our health care system.

Other measures that would have provided meaningful investment in the financial stability of Washingtonians but failed to advance include: The Washington Future Fund (aka Baby Bonds) that would provide $4000 invested into a high-yield account for every child born in Washington and enrolled in Apple Health; a Guaranteed Basic Income pilot that would provide monthly cash payments to qualifying households; and an expansion of the Working Families Tax Credit that would extend the benefit to those ages 18-65.

Our policy analysts heard the same refrain on the hill this year: it was not due to lack of support for the ideas that lawmakers weren’t moving new policies, but for lack of funds. Because, though the problems in our state may seem complicated, the solutions are actually fairly simple. For the people of Washington to truly thrive – to have adequate financial resources and access to programs that help keep us safe, healthy, and housed –  we simply need more revenue. And more than that, we need sustainable, stable, and guaranteed revenue, generated from sources that will not be financially burdened.

Washington State is home to vast, unprecedented wealth, held by very few people. But consistently, we fail to advance policies to secure that wealth. When lawmakers don’t vote to implement progressive revenue-generating policies and programs, we leave money on the table and necessary programs go unfunded.

There is a solution for our state – though we couldn’t achieve it this year. Looking forward to the 2024 session, we will continue to remind our partners, the public, and our elected officials that it is within our power to make sure the people of Washington have what they need to work, live, and stay healthy. We can invest in programs and structures that shrink income and wealth inequality and serve the people of Washington State.

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