Evan Smith: Ryu, other freshman legislators want to end tax breaks, to support schools

By Evan Smith

ShorelineAreaNews Politics Writer

April 14, 2011.  State Rep. Cindy Ryu and 10 other Democratic freshman legislators have introduced a bill to eliminate two tax exemptions as a way to pay for smaller school class sizes.

One of the exemptions is an exemption from the business and occupations tax enjoyed by out-of-state banks.

The other is a sales-tax exemption for tourists.

The first-term legislators say that ending the two tax breaks would generate $170.3 million for smaller class sizes in kindergarten through third grade.

The legislators acknowledge that the proposal would require a two-thirds vote of both houses of the Legislature to pass.

Ryu acknowledged that a two-thirds vote would be difficult but added. “With so much at stake, we must try.”

Seventh-term Rep. Ruth Kagi, one of dozens of co-sponsors of the bill, said that the proposal might not get two-thirds support in the Legislature but could go to a November referendum with simple majorities in both the House and the Senate.

Ryu and Kagi are Democrats from the 32nd Legislative District, including Shoreline, Lake Forest Park, Kenmore, Woodway and parts of Edmonds and Kirkland.

A Monday news release from Ryu noted that the budget that the State House of Representatives approved Saturday requires $4.4 billion in cuts for public schools, colleges and human services.

“One of the most painful choices in this budget was the decision to [again] suspend the effort to reduce class sizes in public schools,” Ryu said. “Education is my top priority, and the people of Washington passed I-728 because we know that children get more individual attention and do better in smaller classes. We must try to find a way to reduce class sizes and help children learn.
“The amendment we are proposing to the B&O exemption for banks, worth $86.6 million over the next two years, protects local community banks while ensuring that Wall Street banks pay their fair share,” Ryu added. ”The State Department of Revenue is unable to find any other state offering a similar exemption. These same Wall Street banks are enjoying record profits after receiving massive taxpayer bailouts. For example, JPMorgan Chase just gave CEO Jamie Dimon a $19 million raise. Our children and schools need $86 million more than the out-of-state bankers do.”

Of the other change, Ryu said, “Asking tourists to pay the same sales taxes the rest of us pay will not be popular, but we must remember that education is our paramount responsibility and it is more important to save our schools than it is to save preferential tax-treatment for out-of-state shoppers.


“In the remaining [two] weeks of the legislative session, we must work together for a budget that is balanced morally as well as legally,” Ryu said. "I urge lawmakers of both political parties to join us in working for a budget that comes closer to meeting the needs of our people. Passing House Bill 2078 will bring us closer to that goal”

The freshman Democrats, who have dubbed themselves the “11 in 2011,” said they were inspired by the thousands of people who rallied in Olympia last week protesting budget cuts and asking to abolish certain tax exemptions as a way to help protect funding for education and vital human services.

“Working families have sacrificed over and over to balance our budget, and now it’s time for out-of-state Wall Street banks and nonresidents to pay their fair share,” said Rep. Derek Stanford, D-Bothell. “These tax loopholes aren’t serving our economy, and eliminating them will keep class sizes low in our elementary schools.”

A news release from Stanford and Rep. Luis Moscoso, D-Mountlake Terrace, said that the money from eliminating the tax exemptions would be “an investment linked to basic education reforms that have stalled due to a $5.1 billion shortfall in the state’s budget.”

“I’ve heard loud and clear from constituents in my district to do something about funding our eroding education system, which, according to our constitution, is the state’s paramount duty,” Moscoso said. “The federal government has bailed out financial institutions to help them survive this Great Recession; it is now the Legislature’s turn to end tax breaks for corporate banks and carry out its main duty to restore much needed education funding for our children."