1. www.eoionline.org Funding Education for the Long Run Tax Reform in Washington State by Marilyn Watkins Economic Opportunity Institute www.eoionline.org

3. Why we have taxes “To establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.” - U.S. Constitution

4. www.eoionline.org Why we have taxes “It is the Paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.” Article IX, Section 1, Washington State Constitution www.eoionline.org

5. State Budget Shortfall www.eoionline.org

6. K-12 State Budget (9,000 more students) www.eoionline.org

7. It’s not just the recession Washington’s rank in school spending www.eoionline.org Source: U.S. Census Bureau

8. Washington’s structural deficit Our tax base is shrinking Our need for public investment is growing www.eoionline.org

9. Washington’s economy has changed - but tax structure hasn’t www.eoionline.org Source: Washington Employment Security Department

10. Washington’s shrinking tax base www.eoionline.org

11. Other states are doing better Sources of state revenue www.eoionline.org Source: 2007 state tax collection by source, taxadmin.org

12. Washington has the most regressive taxes www.eoionline.org Source: Institute on Taxation and Economic Policy

13. Percentage of total state personal income collected in state revenue www.eoionline.org Source: Bureau of Economic Analysis and Washington Dept. of Revenue

14. New definition of Basic Ed Adds full day K Adds preschool for low income kids Adds 6 th period to middle school and high school Sets high standards of accountability Provides no way to pay for enhancements – and system already underfunded www.eoionline.org

15. We need to invest more in early learning State kindergarten teachers say over half of kids enter unprepared Only 1/3 of eligible kids get into federal and state Head Start Childcare teachers poorly paid, no incentive for training

16. We need to invest more in higher education Washington ranks: 5 th in community college enrollment 45 th in 4-year enrollment 46 th in graduate & professional enrollment www.eoionline.org

17. We can’t fund 21 st century education system with an early-20 th century tax structure www.eoionline.org

18. Goals Make our kids and our state more competitive Raise $2 billion per biennium for new education investments (P-16) Means Expand tax base to growing areas of the economy Make tax system fairer www.eoionline.org

19. Fair Share Tax Proposal Add new fair share tax on incomes over $200,000 Reduce property and business tax Raise $2 billion net new revenue per biennium, dedicated to education www.eoionline.org

20. A fair share tax: Revenue for biennium  Exempt first $200,000 of AGI ($100,000 for individuals)  3% between $200,000 and $499,999  5% over $500,000  7% over $1 million $3.4 billion Source: Institute on Taxation and Economic Policy based on 2006 income levels for Washington taxpayers

21. Reduce other taxes: Revenue loss for biennium Reduce state property tax by quarter($825 million) Increase B&O credit from $35 to $400/month (exempts gross revenues of $1 million at retail rate) ($522 million) Total loss($1,347 million) Net new revenue$2 billion www.eoionline.org

22. Results for taxpayers 4% of Washington households would pay new Fair Share tax All households would pay less property tax 88% of businesses would be exempt from B&O (now 48%) All would benefit from better schools www.eoionline.org

23. Context Tax-averse Governor and legislators Severe recession 1933 Supreme Court ruling I-960 www.eoionline.org

24. Reform will require citizen activism 2010 initiative? Court challenge Implementation in 2012 www.eoionline.org

25. When If Not Now? www.eoionline.org

26. Resources Economic Opportunity Institute www.eoionline.org www.eoionline.org Senate Ways & Means, www.leg.wa.gov:www.leg.wa.gov – “Citizen’s Guide to the Budget,” – “Citizen’s Guide to K-12 Finance” WA Dept. of Revenue, Tax Structure Study, Comparative state taxes, dor.wa.govdor.wa.gov Washington Education Association, Education Statistics, www.washingtonea.orgwww.washingtonea.org www.eoionline.org