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Published: Thursday, March 28, 2013, 11:10 a.m.

Inslee on budget: 'I choose education over tax breaks'

OLYMPIA — Gov. Jay Inslee prescribed his plan Thursday for pumping $1.3 billion more into the state’s public school system then challenged lawmakers to buck up and pay for it by ending popular tax breaks and extending taxes set to expire this summer.
The first-term governor wants to fund full-day kindergarten in high poverty schools and make preschool available for more children of low-income families.
He also wants to pay for smaller kindergarten and first grade classes, beef up reading intervention and dropout prevention programs and hire 1,400 secondary school teachers in order add courses in middle and high schools.
And he’d pour half of the new money into shouldering a greater share of the bill for school bus service and the purchase of materials and supplies in each school district.
Most of the investment is a first step toward complying with a Supreme Court decision last year that found lawmakers in violation of the state Constitution by not adequately funding public schools.
"To govern, it is said, is to choose," Inslee said after releasing a broad blueprint of his priorities for the next two-year state budget. "Today, I choose, and I believe we should all choose, education over tax breaks, and to make good on our constitutional and moral duty to quality schools for our children."
Republicans in the House and Senate didn’t object to how Inslee wants to spend the money only his reliance on taxes to pay for it. They wished he’d looked harder to trim government spending and not put as many dollars into salaries and benefits of state employees.
"I don’t see one on there I can support," Senate Republican Leader Mark Schoesler of Ritzville said of the list of tax breaks. "You’re not choosing between kids and tax cuts. You’re choosing between bureaucrats and tax hikes."
House Democrats said Inslee’s plan spending and tax proposals are on the same scale as the ones in the budget they are writing.
"Overall I think the budget reflected the values of our caucus pretty well," said House Majority Leader Pat Sullivan, D-Covington.
To pay for his education plan, Inslee wants to generate $565 million by repealing or revising 11 tax exemptions most of which have been a political hit list before and survived.
Among them are ones that could lead to bottled water getting taxed and Oregon residents paying sales taxes.
Time and again Thursday, Inslee said it comes down to preserving those breaks or preparing the next generation of engineers and scientists.
"I challenge anyone, anyone in any part of the state in any industry to argue that any single one of these tax breaks is more important than the STEM education of these students," he said.
Sen. Barbara Bailey, R-Oak Harbor, serves on the Senate budget committee that will have to approve any of them.
"I don’t think anything is more important than education other than getting our economy going again," she said. "Adding more taxes on businesses has a dampening effect on growth."
Inslee also wants to make permanent a hike in the business and occupation tax paid by doctors, lawyers and accountants and a 50-cent-per-gallon tax on beer. He also wants to expand the beer tax to cover all producers; today it only applies to those making in excess of 60,000 barrels a year.
Inslee hopes to bring in $661 million from these taxes which were enacted in 2010 and are set to expire June 30.
Inslee, who campaigned against raising taxes, said his plan doesn’t backtrack on that. He said he repeatedly pledged to close tax break and not seek a general tax increase.
"I am fulfilling on my commitment to the ‘T’," he said.
For owners of small breweries the change in the beer tax means they the tax they pay on each 31-gallon barrel produced could rise from $4.78 to $20.28.
"We’re going to pass it through and it will go through to the beer drinker," said co-owner Phil Bannan, co-owner of Scuttlebutt Brewing Co. in Everett. "Beer is a common man’s drink so this is going to hit the common man in the wallet."
Kegs, which hold 15.5 gallons and cost around $135 apiece today, could go up in price by about $10, he said.
"I don’t disagree with the priority of education," he said. "But I disagree with his way of solving it."
What Inslee released Thursday was his spending priorities for the two-year budget which begins July 1.
With a projected shortfall of $1.3 billion, Inslee is proposing to save $321 million by suspending the cost-of-living raises for teachers required under Initiative 732. He also suggests cutting $29.8 million in funding for alternative learning experience programs which cover costs of online and home school programs.
In other parts of his budget proposal Inslee backs full expansion of the Medicaid program. That move, he said, will reportedly save the state nearly $300 million as the federal government picks up the cost of covering the estimated 255,000 adults who could become eligible.
He wants to hire more child and adult protective services caseworkers, restore the 3 percent pay cuts for state employees and put $23.7 million into state parks.
With release of his proposal, Inslee kicked off the budget debate in Olympia.
The Republican-dominated Senate Majority Coalition expects to release its budget early next week followed by the House Democrats.
The 105-day legislative session is scheduled to end April 28.

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