OLYMPIA – Despite warnings of wrath from voters in November, Senate Democrats moved a step closer to a vote on some $890 million in tax increases to fix the state’s budget hole.
The Senate Ways and Means Committee approved 12-10 a three-year increase in the sales tax and a series of changes to tax laws and loopholes designed to help fix a projected operating budget shortfall of $2.8 billion. They also are proposing cutting about $829 million in programs and using federal funds or transferring money out of other accounts to cover the rest.
The 21-part tax package would extend the sales tax to bottled water, cut exemptions for some equipment on wind and solar energy, raise the business and occupation tax on service businesses and raise taxes on out-of-state firms with representatives who sell directly to Washington customers.
Senate Majority Leader Lisa Brown, D-Spokane, said the full Senate could debate the tax plan as early as today.
It does not include a recent proposal to ask voters in November if they want to cut back on the sales tax in favor of an income tax on people who make more than $200,000 a year. That could come up in a separate bill before the Legislature adjourns Thursday – if it can gather enough support, Brown said.
“There’s time (to pass the income tax bill) but there has to be willingness in both houses. On that, I’m not sure,” she said.
For almost every part of the 21-point tax package, Republicans offered amendments to strip or pare back a new tax or restore an exemption, then had separate amendments to put each tax change on the November ballot for an advisory vote.
“I think it is important to let people know who is doing what to whom,” Sen. Mike Carrell, R-Lakewood, said in asking for an advisory vote on changes to rules that establish when an out-of-state company is subject to Washington taxes.
At one point, the arguments became so repetitive that Minority Leader Mike Hewitt, R-Walla Walla, merely said “Same speech, Madame Chair.” Chairwoman Margarita Prentice, D-Renton, ordered a vote, which got the same result, and the amendment failed.
When the panel came to changes to some B&O taxes and the sales tax, Sen. Joe Zarelli, R-Ridgefield, noted those were the biggest items in the package: “Surely, you want (advisory votes) on the most important parts of the bill.”
“Don’t call me Shirley,” Prentice deadpanned, borrowing a line from the movie “Airplane!” She called for the vote. The amendment failed.
“I think we’re going to have an advisory vote in November, anyway,” Carrell said, referring to the legislative elections.
Countered Sen. Adam Kline, D-Seattle: “It isn’t advisory.”
Dropping tax breaks like one that was given to a coal-fired plant in Lewis County is a bad precedent because it breaks a deal between the business owner and the state, Zarelli said.
That tells businesses that if they make a deal with state government, “they’re in fact making a deal with the devil, and they can’t trust us,” he said.
Deals are important, Sen. Joe McDermott, D-Seattle, agreed. But the original deal was for the business owner to buy coal from a Washington supplier. “That deal is no longer in place and those jobs are lost,” he said.
The committee also approved a separate bill that would raise the tax on cigarettes by $1 a pack. Republicans argued the state won’t get as much money as projected because people will go across state lines or onto reservations to buy cigarettes. And while there, they’ll buy gasoline and bottled water that is cheaper, and maybe spend money on other things.
“It’s not a deterrent, it’s the Idaho economic development act,” Sen. Mark Schoesler, R-Ritzville, said of the cigarette tax hike. “Post Falls, Idaho, has long been a mecca for cheap cigarettes … and anything else.”