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Tue., Feb. 23, 2010, 11:06 a.m.

Senate Dems: Sales tax hike would help balance cuts

OLYMPIA -- Senate Democrats unveiled a budget proposal that calls for a three-tenths of 1 cent sales tax hike for the next three years, an extra $1 per pack for cigarettes and the elimination of a string of tax exemptions.

At a morning press conference, Senate Democratic leaders said the state should cut about $840 million in programs, raise about $920 million in new taxes, transfer about $500 million from the Rainy Day Fund and other accounts and count on about $585 million in health care payment money from the federal government to fix a projected hole in the state's budget.

Senate Majority Leader Lisa Brown of Spokane called the budget, which has its first hearing this afternoon in the Ways and Means Committee, "a moral document...a document about people."

The proposal has some significant differences from Gov. Christine Gregoire's latest plan to fill that $2.8 billion hole.

Gregoire said last week she did not support a general increase in the sales tax because of fears it would hurt a recovering economy. In a press conference this morning, she said the sales tax proposal was "no surprise," but she would have to study the Senate Democrats' plan.

"I continue to be concerned about the revenue source being the sales tax," she said.


Gregoire proposed nearly tripling the Model Toxics Control Act tax on hazardous substances, which would raise the price of oil at the refineries and would likely be passed on to drivers with an estimated 3 cents per gallon. About two-thirds of that would be placed in the state General Fund next year to help balance the budget. Senate Democrats have no such tax for the general fund, but may seek an increase in the toxics tax to fund water cleanup projects in the Capital Budget.

"I don't th ink that debate is by any means over," Gregoire said this morning after the budget plan was released.

Gregoire proposed placing the sales tax on candy and gum, and an excise tax on bottled water and carbonated beverages. Senate Democrats don't put a sales tax on those items but do increase the sales tax by 0.3 cents on all items currently taxed.

Both say they want to "close tax loopholes" but Senate Democrats have a much longer list. Gregoire would bring in an extra $11.6 million, with the largest amount coming from repealing a tax credit for the syrup on soda pop. Senate Democrats Have a laundry list that totals about $518 million; included in their list is the sales stax exemption for fertilizers and other products used in commercial agriculture production,  unless it's an organic product and eliminating the brerak for sales tax that is applied to trade-ins. Right now, tax is purchased on the net value of the new vehicle minus the value of the vehicle traded in; this would extend the tax to the trade-in.

Both want to extend the business and occupation tax to out-of-state companies.

Senate Democrats also propose closing fewer state institutions. Gregoire wants to close 10 facilities, half of them for the developmentally disabled and half correctional facilities, including Pine Lodge Corrections Center for Women in Medical Lake. Senate Democrats propose closing or scaling back four institutions, and Pine Lodge is not on their list.

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The Spokesman-Review's political team keeps a critical eye on local, state and national politics.