Governor Gary Locke’s Remarks
Budget Rollout
December 16, 1999

BUDGET ROLLOUT: EDUCATION FIRST

Good morning. Thank you all for being here.

We're gathered here today to talk about the future of Washington State, and I'm here to present a budget plan that will make that future brighter for every family in every region of our state.

Typically we write our budgets for a two-year cycle and halfway through that cycle we make some minor adjustments to make sure we're steering on the right course. But this year is not a typical year.

We must respond to the challenges of I-695.

But this is also the beginning of a new millennium in which families are focusing on their economic future and the future of their children.

So this supplemental budget will accomplish four things.
1. It will responsibly address the challenges of Initiative 695.
2. It will intensify our commitment to ensuring prosperity for our children by refining our strategy for achieving excellence in education.
3. It will change the focus of tax cuts from businesses to individuals-the individual working families that make Washington what it is.
4. And this budget will maintain our rainy day fund of almost ¾ of a billion dollars.

And these four objectives will get us closer to achieving our top two priorities: education and government accountability.

Initiative 601 was designed to fund education. With spending limits we were going to build reserves, and when our reserves reached a certain level, anything that spilled over was supposed to feed into education.

But unfortunately tax cuts always kept our surplus funds at a low enough level, so none of the funds that we saved by putting a cap on government spending ever spilled over into education. That money went to tax cuts for businesses.

Today's budget takes a big step for working families and schools by settling once and for all how we will use surplus state revenue-the funds generated when our strong economy provides more money than we can use under the state's Initiative 601 spending limits.

What I'm proposing is that we share future surpluses. That we split them fifty-fifty between schools and individual citizens. That we give every citizen of our state a prosperity dividend.

This fifty-fifty split of the surplus will ensure that schools will be able to increase student achievement, and taxpayers will see surplus tax dollars go back into their own pockets. Presuming our economy stays strong, this proposal will generate as much as $700 million for schools and return as much as $700 million to taxpayers over the next 5 years.

I'll say more about this fundamental change in the way we do business a little later. Now, I want to address how we are responding to Initiative 695.

I am proposing that we take $387 million from our reserves to protect basic public safety and transit services through a combination of ongoing and one-time funding and tax credits. As a result, no city or county will lose more than 10 percent of its budget, despite passage of 695.

This will help local governments as they adjust to the impacts of I-695. But in the long run, local governments will have to rely on their own resources to fill the gaps. For example, we'll stabilize transit districts with one-time funding, but then local voters will have to determine how to fund their local needs. In the past year, community members have taken huge strides in partnering with government on the local level to improve local communities. We must have faith that they will continue to do so.

Initiative 695 also eliminated the funding source for more than $2 billion dollars that the voters chose to dedicate to highway projects just one year earlier, in Referendum 49.

Like everyone else waiting in traffic, I want to get moving on important transportation projects. We have to break the gridlock. But the transportation-funding problem is just too large to be addressed by the general fund. And like I said, we cannot have a situation where schools are competing with highways for dollars.

So we must reach a lasting consensus on transportation. We've lost our bipartisan approach and we must get it back. We have to pick a course and stick with it. We can't keep changing directions and hope to get anywhere.

Last year, the Legislature created the Blue Ribbon Commission on Transportation Funding-I see that commission co-chairman Doug Bieghle is here today. Hi, Doug.

This group will review our transportation funding needs for the next 20 years-well beyond the scope of Referendum 49 projects. With I-695, the commission certainly has its work cut out for it. This commission will ask the people of this state what needs to be done, and propose a transportation-funding plan that the citizens of Washington will support.

Implementing Initiative 695 is this year's problem-but failing to address the needs of our children and their schools would be every year's problem. And we can't allow that to happen. We must set the course for the new millennium. And that course is a steady pace towards the best education system in the nation.

For our children, let's take the money we are saving in our education budget this year, and reallocate it to get 1,000 new teachers into our schools.

And let's allow state property taxes generated by a community to stay in the community-in the local school districts. Individual communities will use this money to make classes smaller, to provide more individual attention and instruction. So our children will reach higher levels of academic achievement, and be assured a prosperous future.

And let's make sure that we deposit half of the prosperity dividend into the bank account of our childrens' futures-into one-time education investments-be it buildings or technology for our public schools and colleges-and put the other half in the pockets of our citizens.

During the I-695 campaign, people complained that it took more than 60 years for government to realize how much people disliked the car tax. People are equally concerned about property taxes. We need to fix the property tax right now. We can't afford not to.

None of us want to see our senior citizens-our parents-forced out of their homes-the homes we grew up in as families-because of property taxes.

Let's permanently eliminate the state portion of property tax for our low-income senior citizens and people with disabilities living in their own homes. With this plan, our elders (depending on their income) will realize annual savings of $200 to $500 on a $150,000 house.

My proposal also includes a tax cut of 6.2 percent on the state portion of our property taxes for all property owners.

Property taxes spike up when the houses in our neighborhoods are sold. But that jump isn't reflected in your paychecks. So we need to eliminate those spikes that can put a real strain on the lives of our working families. We need to institute a four-year rolling average of evaluations.

Referendum 47 tried to address this problem but the courts ruled it had to be done by a constitutional amendment.

So I am once again proposing a constitutional amendment that will smooth out increases in property assessments so values won't jump too high too fast. I have supported this as a legislator, asked for it as governor, and I ask for it again. Let's do the right thing this time.

Before I take your questions, I want to say more about the ground-breaking initiatives we are proposing for education-this state's paramount duty.

What I am proposing-the Learning Improvement Tax Credit for public schools and our proposal for immediate property tax cuts-will, over five years, provide more than 1 billion dollars for schools and more than half a billion in tax cuts. If the economy improves, an additional $1.4 billion will be shared equally between schools and every Washington resident.

Our schools will use this money to reduce class size and provide more individualized instruction to increase academic achievement. And the A+ Commission will ensure accountability-it will ensure that class size reduction leads to increased student achievement. It will ensure that the money we invest in education will raise our childrens' test scores and ensure their future prosperity.

These proposals I'm outlining today won't change Initiative 601 spending limits, but they will revitalize the intent of Initiative 601 to benefit education. The initiative was designed to fund education by dedicating reserve excesses to education. I'm proposing to make that happen without changing one word of the law on spending limits.

It's not the time to let up on our mission to improve education. We must be impatient, not complacent. We can't lull ourselves into believing that just because we've put higher academic standards in place, we can just sit back and wait for the harvest. We have set tough academic standards for our children, and we are holding schools accountable for results. But the hard work has just begun.

I am more committed than ever to creating the strongest education system in the nation. I will not slow down until every child meets our tough, new education standards and is rewarded for doing so. I will not slow down until our classes are smaller, so our students get the individualized attention they need. Our children-all of our children-must excel. They must increase academic achievement and meet our tough standards, and we have to do everything in our power to make it so. We must reduce class sizes.

Is it acceptable that the state of Washington ranks third worst in the U.S. in class size? I say NO. We need to get those class sizes down. Our children cannot wait.

We all want the same for our children. The best. We want them to have everything. We want them to have everything we've ever had. AND MORE. And excellence in education is the gateway to happiness, success, and opportunity. It's our duty to place our children on the threshold of the prosperity and to allow them to achieve it.

Educating our children is our paramount duty. Now let's fulfill it. Let's do it for our children.

So this groundbreaking supplemental budget-this first budget of the new millennium-will help us to tighten our belts and address our priorities: education and government accountability.

We are lowering property taxes for working families. We are maintaining reserves of almost ¾ billion dollars. We are giving working families prosperity dividends so they can improve their quality of life. And we are intensifying our commitment to provide excellence in education for every child in every family in Washington. Because families are the backbone of our society, and the children are our future.

Thank you very much.