The Senate House 2017-19 Operating Budget (HB 1067)
The House Democrats released a budget plan that increases taxes by approximately $3 billion to address the Supreme Court’s McCleary decision, behavioral and mental health issues, and other fiscal and policy issues. The budget assumes forecasted revenue increases for the general fund of $2.6 billion over the 2015-17 biennium. The plan makes 2017-19 general fund appropriations of $44.9 billion, for a net policy level change of $3.2 billion.
- $3.0 billion in additional resources from new revenue legislation.
- $206 million in assumed reversions.
- $96 million in budget driven revenue, other legislation, and other adjustments.
The proposal institutes a 7 percent tax on capital-gains earnings above $25,000 for single filers and $50,000 for joint filers affecting approximately 48,000 tax returns. It also raises the state’s business-and-occupation tax rates 20 percent — but exempt businesses with less than $250,000 in annual gross revenue from paying the tax. Additional revenue is achieved by rolling back a handful of tax exemptions, collecting a sales tax from purchases made over the internet and a restructuring of the state’s real estate excise tax. The budget proposal is linked to the revenue sources addressed in HB 2186, legislation that raises revenue from six sources:
- Real Estate Excise Tax Reform: $419.7 million
- Capital Gains: $715.0 million
- Marketplace Fairness: Internet taxation for $340.8 million
- Business & Occupation Tax: Impose 20% increase on service, retail, wholesale & manufacturing rates with a small business deduction of $250K/$100K (72% of businesses exempt from B&O tax) for $1.2 billion
- Repeal Tax Preferences: $137.1 million
- Department of Revenue Administrative Options: $22.4 million
In addition to the revenue legislation, the budget proposal assumes passage of a number of policy bills necessary to implement the budget, including HB 1764
, which replaces the 1% property tax cap, part of the Fiscal Sustainability Initiative (FSI).
Budget documents and details an be found on the Leap website: LEAP budget summary.
Highlights of interest to WACO members:
- Funds MRSC (not in the Senate budget)
- Funds Local Government Fiscal Notes (not in the Senate budget)
- Funds Board of Tax Appeals (not in the Senate budget)
- The Fish and Wildlife PILT money would be frozen at the 2009 level (Senate version offered an increase in monies)
- Takes $50 million from the Public Safety Enhancement Account
- Takes from state costs for PERS
- Provides for six new BLEA classes (Senate provided for eight)
- The budget does NOT fund the Secretary of State’s election upgrades (the Senate budget provided for the upgrades)
There are already a number of proposed amendments to the House budget so this report is a snapshot in time, which may change very quickly and very significantly.