Incumbent State Rep. Ruth Kagi, D-Lake Forest Park, emphasized delivery of the state’s core services, especially basic education.

Challenging Kagi for the District 32, Position 2 seat, Shoreline Republican Gary Gagliardi believes the first order of business for state legislators must be, in his terms, to make Washington friendly once again for business. And, for Gagliardi, that certainly means opposing Issue 1098, which establishes the state’s first income tax. Kagi has thrown her support behind the initiative, though she added it’s far from perfect.

“It starts to address our very regressive tax system,” Kagi said, a system she further declared the worst in the country.

In the past, Kagi has referred to a 2009 study completed by a Washington, D.C., group that showed the poorest Washington residents pay 17.3 percent of their incomes in taxes, while the wealthiest contribute only 2.9 percent. The study maintains the state’s middle class chips in about 9.5 percent of their incomes. According to the study, the culprit behind the alleged regressiveness is the state’s reliance on sales and property taxes.

I-1098 supporters say that in addition to imposing an income tax on high-income residents, the ballot question also cuts property taxes for many state residents and slices the business and occupation (B&O) tax for small businesses. Kagi contends that one other major reason to support I-1098 is that the tax will create a steady revenue stream for public education.

According to Kagi, in 1932, right in the midst of the Great Depression, Washington residents were asked to create a state income tax. The state Supreme Court later rejected the tax, but Kagi said voters approved it despite dire economic straits because, Kagi believes, they wanted the state to fulfill its basic duties. Because of what some have dubbed the Great Recession, Kagi maintains history is repeating itself.

“We are in the same situation,” she said. Kagi added legislators do need to take a hard look at some areas of state spending, particularly on Medicaid, which she called the “Pac-Man” of Washington’s budget, constantly gobbling a greater share of the dollars.

For his part, Gagliardi counters Kagi’s arguments by first contending that all taxes are regressive.

“This idea that some are more regressive than others is just silly,” he said, adding taxes simply get passed along to the last consumer in line.

“They always fall more heavily on the poorest populations,” Gagliardi added, saying an income tax wouldn’t change that situation.

Gagliardi believes Washington is caught in a “vicious circle.” He said higher taxes chase businesses out of the state, which in turn means the state tends to raise taxes to make up losses in revenue.

“We just need to get our priorities straight,” Gagliardi said, adding the absence of an income tax, a highly educated populace and great water access could make this area of Washington extremely attractive to businesses. He contends the problem currently is what he called a stifling amount of regulation and bureaucracy.

While they clearly don’t agree on state money issues, Kagi and Gagliardi particularly have clashed over the latter’s criticism of Washington’s schools. Kagi said Gagliardi has made slamming the system a cornerstone of his campaign from the start.

“I think just trashing the public school system is really a disservice to that system,” Kagi said.

While she granted that the schools have their problems, particularly a high drop-out rate, Kagi also maintains the system has its strong points. As an example, Kagi said some 54 percent of Washington students take standardized college entrance exams and earn scores that are among the highest in the country.

Gagliardi hits again on one of his main themes, arguing that like the state’s approach to business, its approach to education is mired in regulation and bureaucracy. He claims only 59 cents of every dollar spent on education makes it into classrooms, that Olympia and not principals and teachers are setting educational policy.

Kagi has served in Olympia for 12 years. In the August primary, she easily came out on top, earning 56.4 percent of the voter tally.

Gagliardi was well behind with 35.7 percent of the votes.