A proposed billion-dollar sales tax hike barely cleared its first committee Tuesday, 8 votes to 7.

“We are at a time when people need our help,” said Rep. Eric Pettigrew, D-Seattle, urging lawmakers to support his plan. “The most vulnerable need us.”

If the House and Senate also approve, the proposal will appear on ballots in November for a statewide vote.

Republicans blasted the plan, saying Democratic budget writers should be scrubbing the budget more.

Rep. Joe Schmick suggested, for example, cutting state employees pay 2 percent or 3 percent, or by having them pay more than 12 percent of the cost of their health coverage.

“I’m here to tell you that Washington is hurting,” said Schmick, R-Colfax. “And they’re hurting because they’re overtaxed and they’re over-regulated.”

The proposed sales tax increase _ which works out to 3 cents on a $10 purchase _ would partly undue millions of dollars in looming budget cuts to hospitals, nursing homes and other health services.

“We have really gone over this budget,” Rep. Eileen Cody, D-Seattle, told Schmick. Sending the sales tax to voters, she said, gives the public a chance to undue some of the most serious cuts that lawmakers had to make.

Pettigrew noted that lawmakers weren’t voting to raise the tax, just to send it to voters to decide.
“It’s part of our effort to maintain our partnership with the public,” he said.

To offset the effect of the tax on the state’s poorest residents, the measure would also give a tax rebate averaging $100 to people who qualify for the federal Earned Income Tax Credit. This year, a family of four earning up to $43,415 would qualify. (NOTE: The amount of these rebates, however, was reduced from an earlier version of the bill, in order to steer millions of dollars more into the Basic Health Plan, mental health programs, vision/hearing services, and other health programs. The liberal Washington State Budget and Policy Center’s Schmudget blog has an excellent breakdown on the numbers before and after.

Some Republicans argue that the plan isn’t fair.

“You’re going to be taxing middle-income families struggling to get along and giving that money to lower-middle-class families,” said Rep. Doug Ericksen, R-Ferndale.

Rep. Mark Miloscia, D-Federal Way, crossed party lines to vote against the plan.

“I believe we are in the crisis of our generation and we are going to be judged on how we respond with real solutions,” he said.

Pettigrew said he agrees that sales tax, which hurts low-income people the most, is not ideal. But he said that lawmakers have few alternatives in the face of devastating cuts.

“When we go back to folks, I want to make sure I can look them in the eye…and say I’ve done everything possible to help you,” he said.

I’m sitting in the House hearing on a proposed .3 percent sales tax hike, HB 2377.

The proposal, from Rep. Eric Pettigrew, would raise just over $1 billion in three years. Much of that money would be steered into health care: mental health services, hospitals, nursing homes, public health programs and the state’s Basic Health Plan, which provides coverage for thousands of low-income folks. To offset the hit to low-income families, it would also send millions of dollars in state tax rebates back to people who qualify for the federal Earned Income Tax Credit.

The plan would only take effect if voters approve it in November.

The crowded hearing room is full of health care providers, officials and lobbyists representing nurses, hospitals, adult day health programs, public health, etc. They all support the plan as a critical lifeline.

A hospital official said that if the bill passes, hospitals will still see a state budget cut of $110 million over the next two years. Without it, that will be $350 million.

Dianse Sosne, with SEIU 1199 NW, said that proposed budget cuts would tear the state’s health safety net apart. That means mothers, babies, and elderly people ending up in emergency rooms, she said, and more mental health patients ending up in jails, prisons, under bridges and on the streets.

“And ultimately those costs will fall on taxpayers,” she said.

Among the few voices opposing the plan: anti-tax initiative promoter Tim Eyman.

Eyman blasted the proposal, saying that legislative budget writers are protecting non-essential state programs while asking voters to approve a billion-dollar tax hike to stave off cuts to people needing health care.

“Have you no shame?” he said.

“You are fooling no one,” he told lawmakers. “…The best thing you can do for the poor and the middle class is to stop taxing them to death.”

Pettigrew and many of the advocates will hold a press conference about the proposal later this morning.