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March 31, 2023

Dear Friends and Neighbors,

I would like to thank all of the 4th District constituents who attended the town hall event I co-hosted with my House seatmate Rep. Leonard Christian a couple of weeks ago. We had a great turnout and discussed a variety of public policy issues that are before us in the Legislature. If you were not able to attend and have questions about any legislation before us or other state government issues, please do not hesitate to contact me at any time. My door is always open.

With less than a month left in the legislative session, the state’s three main budgets – the transportation, operating, and capital are the main focus. The House transportation spending plan provided us some good news!

North-South freeway funded in House spending plan

We received great news when the House transportation budget, House Bill 1125, was unveiled on Monday. It included funding, and an additional $176 million for the North-South freeway or North Spokane Corridor (NSC). You may recall, Gov. Inslee’s proposed transportation budget called for pulling the funding for the NSC project for four years.

Rep. Mike Volz and I, who are both members of the House Transportation Committee, issued a news release on Monday after the House transportation spending plan was released. Click here to read it. This was a bipartisan and collaborative effort at the legislative and local levels. Folks understand how critical this project is to our region. Without it economic growth would slow and our commutes will worsen quickly.

Housing

Washington state is producing the fewest housing units per household of any state in the country due to unnecessary regulatory costs and fees, permit delays, restrictive zoning laws and an outdated Growth Management Act (GMA).

To keep up, we need one million new homes in the next 20 years, half of which need to be affordable at 30 to 50% of
area median income. Working families are being priced out of the housing market.

Housing has been a tough issue this session. Both sides of the aisle realize there is a problem, but there are differing opinions on how to address the crisis.

We have been able to stop some bad housing policy, such as House Bill 1389 on rent control, and House Bill 1124 on landlord-tenant provisions.

We were able to get some key bills out of the House including legislation that would help increase supply such as:

• House Bill 1293 that would streamline housing development regulations;
• House Bill 1110 would provide middle housing; and
• House Bill 1337 would work on providing more accessory dwelling units.

House Bill 1110 has generated a lot of interest. It passed the House with strong bipartisan support. I voted in favor of the bill along with other Spokane area legislators in support of our Housing-lead Rep. Andrew Barkis.

Under the legislation, certain cities planning under GMA would authorize minimum development densities in residential
zones, establish requirements for middle housing development regulations, and require the Department of Commerce to provide technical assistance to cities in implementing the requirements and to develop model middle housing ordinances.

This bill, with some of our other legislation, would create new pathways for developers to cut through red tape and start building sooner. This would help us strike a balance between single family and multifamily housing.

The bill is still moving, but has been amended significantly in the Senate Housing Committee. It is now the Senate Ways and Means Committee for consideration. I will need to review all the amendments and changes if or when it comes back to the House of Representatives to see if it is still something I can support.

Operating budget

The majority party’s proposed spending plan, House Bill 1140, has been drafted with very little input from House Republicans. Their budget proposal spends about $70 billion over the next two years. As you can see by the chart below, state spending has more than doubled over the past 10 years.

The majority party cannot continue to keep spending at this level in a fiscally responsible and sustainable manner, especially as we face a precarious economy. The House version, which spends about one billion dollars more than the Senate proposal, also allocates money to fund about 1,500 new or expanded programs. This is in addition to other ongoing general fund programs.

While House and Senate budget negotiators are currently working out the differences between the two budgets, it is hard to envision an operating spending plan I could support. However, we will see what the final operating budget looks like in the next couple weeks.

Capital gains tax upheld

Last week, in what I view as a big setback for our state, the Washington State Supreme Court decided to ignore longstanding legal precedent and upheld the 7% capital gains tax approved on party lines by the majority party in 2021.

The court’s 7-2 decision said the capital gains tax is an excise tax, not a property tax, which the state constitution limits to 1% annually.

The ruling is not surprising, but certainly disappointing. All 49 states and the IRS recognize capital gains as income. This decision is likely unconstitutional and not only lets the capital gain tax stand but it will likely open the door to future state income taxes. This will cost the average taxpayer, not just those in higher income brackets.

And our employers? For a number of years Washington’s Department of Commerce pointed out the state not having an income tax as being a competitive advantage. Although they removed the reference from their “Choose Washington” website years ago, we can officially consider that advantage for our businesses eliminated.

Follow the Legislature

I encourage you to stay engaged and continue to follow what is happening in Olympia. Please contact me with any questions, concerns or comments you have as the Legislature is scheduled to adjourn on April 23. I appreciate your input and feedback.

Here are some websites and links that may help you stay engaged, testify or comment on legislation this session.

• Representative Suzanne Schmidt (my legislative website)
• The Ledger – a legislative news aggregator
• Capitol Buzz – Daily news clips
• How you can be involved in the legislative process

It is an honor to serve the 4th District in the state House of Representatives.

Suzanne Schmidt