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Governor’s Budget Proposal


There has been much talk about the Governor’s budget proposal in the news recently. Below is a quick summary of what his proposal includes. Several of these tax proposals, such as a capital gains tax, have been proposed in prior years and have failed to pass in the state legislature. While the chances may be better this year given Democratic control of both houses, we don’t expect his proposal to pass in its current form. The legislative process generally starts with proposals and develops these ideas into a final form that will be able to pass both houses and be signed by the Governor.

Finally if a capital gains tax similar to the Governor’s proposal does pass, we anticipate there will be court challenges to the constitutionality. Generally these challenges involve injunctions, so any implementation may likely be many years off.

Currently this is just a proposal. Once legislation is introduced, we will be monitoring the details and will keep you informed. We recommend reaching out to your legislators to let them know your opinions and suggestions.

Budget Proposal Tax Highlights (for July 1, 2019 – June 30, 2021 biennium):

  • The Governor proposes a $54.4B biennial budget for 2019-2021.  The 2017-2019 Biennium budget was $44.6B.  This is a 22.4% increase from the current budget.
  • A 9% capital gains tax is proposed on the sale of stocks, bonds and other assets. Exemptions would apply for retirement accounts, homes, farms and forestry and would not apply to annual gains under $25k/$50k depending on filing status. A capital gains tax has been included in prior proposals going back to 2015 and is expected to face court challenges if enacted.
  • B&O tax increase for those reporting revenues under the Service classification from 1.5% to 2.5%.
  • Real Estate Excise Tax, which applies to changes in real property ownership, would move to a graduated tax rate, depending on property value. The proposed rates would range from 0.75% – 2.5%. Currently the state rate is 1.28%.

If you have questions on how this will impact your business, please reach out to Rachel Roberson, Tax Senior Manager and State & Local Tax expert. Rachel can be reached at 425.454.7990 or rroberson@bpcpa.com.