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Inslee releases nearly $62 billion supplemental budget plan

Governor Jay Inslee stands at a podium with the Washington state seal on it. There is a video screen that says "2022 Budget Proposal" on it. A blue Washington state flag is behind him.
Rachel La Corte
The Associated Press
Washington Gov. Jay Inslee announces a supplemental budget that increases spending on the homelessness effort and climate proposals Thursday in Olympia, Wash. The 60-day legislative session begins Jan. 10, and Democratic leaders in the House will release their own proposals.

Washington Gov. Jay Inslee on Thursday released a nearly $62 billion supplemental state budget plan that looks to increase spending on efforts related to homelessness, climate change and salmon recovery.

The Democratic governor spent most of the week unveiling his priorities, which include a plan to offer rebates for new and used electric vehicles, setting new standards for salmon habitat protection and conservation efforts, and increasing permanent supporting housing and permanent affordable housing units to serve a variety of unhoused populations.

“We have to be big, and we have to be bold this year,” Inslee said at a news conference. “The moment calls for boldness and it calls for action that is at a scale commensurate with the challenges that we face."

No tax increases are included in the proposal, which builds off of the $59 billion two-year spending plan adopted by the Legislature earlier this year. That's in part because of about $1.3 billion in unspent pandemic-related federal relief funds and the fact that the state has seen a steady recovery of state revenues since the start of the COVID-19 pandemic.

The most recent numbers presented last month by the state’s Economic and Revenue Forecast Council showed that projected revenue collections for the 2021-2023 budget cycle were $898 million above what had been originally forecasted in September. And projections for the next two-year budget cycle that ends in mid-2025 increased by more than $965 million. Compared to the first forecast this year in March, overall revenues increased $3.6 billion for the current biennium and $4.1 billion for the next.

Inslee is looking to spend about $815 million in state and federal funds on homelessness efforts across the state, $626 million on his climate proposals, and $187 on his salmon recovery plan. He also wants to reinvest $900 million in K-12 savings seen due to declining enrollments during the pandemic to increase the number of school nurses, social workers, counselors and psychologists.

A policy brief released by Inslee’s office on Wednesday says that before the pandemic, about 30 out of every 10,000 Washingtonians were experiencing homelessness, and that preliminary data indicates that there was a 2% increase from January 2020 to January of this year.

His budget looks to use both state and federal money on on things like helping with unpaid utility bills in order to prevent eviction, acquiring housing ranging from tiny homes to enhanced emergency shelters, and expanding homeless shelter capacity. He also wants to expand treatment beds for chronic behavioral health conditions and to increase access to supportive housing and employment, and to help people maintain both even during behavioral health crises.

Inslee also wants to see a policy change on so-called “middle housing” and is looking for a new statewide policy to expand where housing supply like duplexes, triplexes and quads can be built.

He also wants to spend more than $248 million state and federal funds on poverty reduction effort. On Thursday he signed an executive order that creates a subcabinet within the Department of Social and Health Services tasked with implementing recommendations from a poverty reduction work group that was created in 2017.

On climate — in addition to tax rebates on electric vehicles — Inslee wants to expand clean building requirements, including requiring all new construction that begins in 2034 to reduce energy use by 80% and use all-electric equipment and appliances.

Additional spending in the proposal includes nearly $324 million over three years to pay for the first 144-car hybrid-electric ferry, build a second one, and convert a second Jumbo Mark II vessel to hybrid-electric. The governor also wants to increase spending to recruit and hire more ferry employees.

The budget looks to bolster the state’s reserves buy putting $600 million back into the so-called “rainy day fund,” after lawmakers drew about $1.8 billion last year in anticipation of a potential drop in revenues. With that restoration, total reserves rise to $2.5 billion at the end of the current biennium that ends July 2023.

Republican lawmakers, pointing to the strong state revenues, have said tax cuts should be part of any final plan because of the impact growing inflation has had on many across the state. But the governor didn't include any cuts to the state's sales tax or elsewhere in his proposal.

Rep. Drew Stokesbary, the budget lead for House Republicans, said in a written statement that he was disappointed to not see tax relief within the governor’s plan.

“Instead, the governor wants to spend our entire surplus on growing state government even more,” he wrote. “I share his intentions regarding the homelessness crisis and salmon restoration, but his approaches have yet to make serious progress on these issues during his decade in office.”

When asked if he would sign a budget that includes tax cuts if lawmakers ultimately decide to include them, Inslee said it “depends on the circumstances.”

“If we got additional revenues that came in over the next two or three months, that would be of interest to me,” he said. “ I do believe the things we have proposed respond responsibility to the crises we have. And I’m not sure that in the middle of a pandemic in the middle of a meant health crisis, in the middle of a homelessness crisis, in the middle of an educational crisis caused by our kids’ learning loss during COVID, that’s really the right moment to be doing big tax cuts.”

Inslee's budget is just the first of three budget proposals the public will see.

The Democratic-controlled House and Senate will each present their own budget plans during the 60-day legislative session that begins Jan. 10.

Rachel La Corte covers politics and the Washington state Legislature for The Associated Press.