State Sen. Rodney Tom (D-48, Medina), the renegade Democrat who joined with the Republicans in the state senate this year to become the senate majority leader of the Republican-dominated Majority Coalition Caucus, held a press conference this afternoon in response to yesterday's Democratic press conference where the Democrats scaled back their tax proposal—forgoing $500 million in a B&O tax surcharge and giving up on about $250 million in tax exemptions they'd initially proposed closing (while still trying to close about $255 million worth)—in hopes of reaching a budget compromise.
The Democrats say the budget will not work without new revenue; the MCC has said no to new taxes. There's a $900 million shortfall in the budget to meet current services and the state Supreme Court, in the now famous McCleary decision, has said the state needs to put around $1 billion to $1.4 billion toward K-12 education in addition to the $14 billion they already spend per biennium.
The scaled back Democratic proposal includes $700 million in McCleary spending, down from the Democrats' initial $1.2 billion. And it closes seven of the initial 15 tax breaks they wanted to close—worth $255.6 million. That money would also go toward education spending—$180 million of it to K-12 for things such as all-day kindergarten and $78 million to higher ed for things like engineering slots.
"There's a perfect nexus for the investment in science and technology education," Democratic house finance chair Rep. Reuven Carlyle (D-46, Queen Anne), the sponsor of the legislation, says, referring to two high tech industry loopholes that benefit companies like Microsoft and Google that he's proposing getting rid of—$23 million in an R&D tax credit and $55 million in a sales use tax exemption. (There's also a $41 million tax break for oil companies on the chopping block.)
Tom's response to the proposal today was brief and bizarre.
Asked about the Democratic proposal, Tom said it wouldn't meet the "dependable funding" requirement of the McCleary decision because the money from closing tax loopholes was going to the public for a vote. "This isn't the old Soviet Union where you can guarantee an election," he said.
However, the Democrats' proposal to close $255.6 million in seven tax loopholes is not attached to a public vote. Sponsor Carlyle says: "There is no referendum clause. There never has been. Absolutely not. Unequivocally. Emphatically. Period. End of sentence. Have a nice day."
Watch a flummoxed Sen. Tom freeze during the press conference.
And even if Tom was right, his point still didn't make sense.
His initial argument was that McCleary money needs to be dependable—but then he identifies the $255 million in tax loophole closures as being "in addition to" the Democrats' $700 million in McCleary money.
Tom wants to have it both ways: He wants to say the Democrats are only putting $700 million toward McCleary—as opposed to the MCC's $1 billion—but then he wants the Democrats' additional $255 million to be part of McCleary so he can call the Democrats' McCleary money unreliable.
You can watch the whole strange, and oddly abbreviated, press conference here which Sen. Linda Evans Parlette (R-12, Wenatchee) cuts short. The press conference runs about six minutes, whereas the Democratic press conference yesterday ran about 40 minutes.
Theory: Perhpas behind closed doors, the MCC has proposed making the Democrats' proposal to close tax exemptions go to a vote of the people, and Tom simply slipped up.
Tom, of course, is a Democrat, and one Democratic staffer—who used to work with Tom before the Republican staff transformed into MCC staff—told me—"He's usually great on TV. I've never seen him get flummoxed that badly."
Footnote, by the way, the Democratic house closed a tax break for phone companies today worth $109 million. However, they couldn't close a satellite portion of the loophole and they'd been relying on about $50 million from that for the general fund. To cover that, they moved one of the tax exemption closures that was paying for education—the non-resident sales tax break worth $50 million—into the general fund. That means the $255.6 million at issue in additional K-12 and higher ed funding had to be scaled back to $200 million. K-12, rather than higher ed, will reportedly take the hit.