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Posts tagged: taxes

State Supreme Court will hear super-majority appeal

OLYMPIA — The state Supreme Court agreed to fast-track an appeal of a case involving the two-thirds majority for tax increases that voters have imposed through initiatives.

The high court said today it will hear the appeal of a challenge to the law by the League of Education Voters, the Washington Education Association and several legislators who filed suit after a bill to end a tax break for large banks received a simple majority, but not the required supermajority. It will take up the case on “an expedited basis” suggesting it could be  heard and decided by the time the next regular session of the Legislature convenes in January.

But possibly not before voters go to the polls in November, with a  new initiative that asks them to extend supermajority for another two years.

The court also refused to grant Attorney General Rob McKenna's request a stay of the judgment issued by King County Superior Court Judge Bruce Heller in May, meaning the supermajority requirement is not in effect now. But because the Legislature isn't in session, that has little practical effect.

Heller ruled the state constitution calls for a simple majority, not a supermajority, to raise taxes. The constitution does require supermajorities for some other things, so if the writers wanted it for taxes, they could have put it in at that time, he said.

Requiring a higher standard  through an initiative is unconstitutional, Heller said. So is the requirement that a tax passed with a simple majority go to voters, which isn't in the constitution.

Tim Eyman, the sponsor of several voter-approved initiatives to enact or re-enact the super-majority and this year's measure to extend it for two years, said he's confident the Supreme Court will uphold the requirement because it has done so  in the past.

But opponents of I-1185 counter that the court has never ruled directly on the issue of the supermajority. Instead it has let the provision stand by refusing to rule on cases because they didn't provide a “justiciable issue”, or something which the court had the authority to decide.

Heller's ruling gives the court a justiciable issue. The case involves a bill that would have removed a tax break large out-of-state banks receive for some first mortgages, while leaving that incentive in place for smaller banks. Money collected from the change in tax policy would have been used to reduce public school class sizes in kindergarten through grade 3. The three legislators who later became plaintiffs in the lawsuit, specifically asked if the change could be passed by a simple majority, or if the House could override that requirement, and were told no by House Speaker Frank Chopp in a dialog that foreshadowed the challenge.

Another potential challenge to the supermajority, which involved taxes on roll-your-own cigarette machines, was dismissed this month when both sides agreed to drop the case.

Roll-your-own operations shut down

OLYMPIA — Between the courts and Congress, operators of roll-your-own cigarette machines in Washington are essentially out of business for the foreseeable future. Read the story on the main website by clicking here.

Shall we hold our breath?

During the special session, both chambers approved a Joint Resolution asking Congress to pass the Main Street Fairness Act, which would require Internet retailers to collect sales tax from their customers, just like brick-and-mortar stores do, and remit those taxes to the appropriate states.

Could be worth hundreds of millions a year for Washington, so it’s nothing to scoff at. But isn’t there something odd about a Legislature, itself divided on taxes, asking a paralyzed Congress to do something about them?
  

Spec Sess Day4: Shin says raise sales tax 1 percent

OLYMPIA — State Sen. Paull Shin, D-Edmonds, is doubling down on Gov. Chris Gregoire's proposal to raise the state sales tax by a half-cent for three years to help rescue state programs from the chopping block.

Shin introduced a bill to raise the sales tax by 1 percent, or one penny on each dollar spent, from June 1, 2012 to June 30, 2015. That would raise an estimated $1 billion to be applied to the gap between scheduled state spending and projected state revenues currently estimated at $1.4 billion. He has two other Democrats in the Senate as co-sponsors.

Also on the tax front, a group of Republican senators have a joint resolution that would make all new tax increases expire after five years.

Sunday spin: Tax the rich? We could do better

The Supercommittee charged cutting the federal deficit got off to a raucous start last week, as protesters cut off one GOP member’s opening remarks with chants that Congress should “tax the rich.”

As enticing as that may sound to those who do not consider themselves rich – that is, practically everyone below Bill Gates and Warren Buffett – Congress might be more amenable, and the nation better off, should protesters take up the chant of “tax the obnoxious.”

Tax policy has long been a way of discouraging bad behavior, like smoking and drinking. Cigarettes and alcohol cost relatively little to make compared to the taxes and fees the various governments impose, trying to save us from ourselves.

Under that precedent, Congress should levy a tax on television newscasters who misuse the word “literally.” The word has become a staple on both national and local news programs, where reporters seem to believe it is interchangeable with really or truly – which it literally is not. For the sake of the children, tax it hard, tax it now.

A source close to the supercommittee said there’s a problem…

No need to sing Auld Lang Syne

Happy new fiscal year, Washingtonians.

Forget about making resolutions, but remember to get a new tab for your boat, or a Discover Pass if you plan to be spending time in state parks. If you’re a state employee, your paycheck gets smaller starting today.

Some restaurant owners get a break, shoppers who come down from Canada don’t. The state’s two-year budgeting cycle starts today, although many program cuts the Legislature approved to make that budget balance will be phased in…
  

To read the rest of this item, or to comment, go inside the blog.

Spec Sess Day 24: ‘Tourism’ tax extension fails

OLYMPIA — The Senate narrowly rejected a plan to extend taxes levied to build Seattle's baseball stadium as a way to pay for expansion of the state convention center, arts and culture programs and housing projects.

By a 24-22 vote, a proposal to continue a tax on hotel and motel rooms and rental cars in King County went down in the face of warnings that voters would be convinced of the adage that there's nothing more permanent than a temporary tax. To pass the Senate, a bill needs at least 25 votes. It could be brought back for another vote sometime Friday if one of the 22 “no” votes switches sides.

The taxes were approved in 1995 to build a new stadium for the Mariners, now known as Safeco Field, during a special session of the Legislature. The taxes were to stay in place until bonds were paid off or 2015, whichever came first.

The bonds will be retired later this year. SB 5958 would have continued charging the taxes until 2015, and redirect the money to expand and renovate the Convention Center in Seattle, Pioneer Square preservation projects, affordable housing projects in Seattle and arts programs. 

“We made a commitment to the people of King County and the state of Washington,” Sen. Mark Schoesler, R-Ritzville, said. “Voters have to know that when we say a tax is going away, it really will go away.”

Special Session Day 8: Tax amnesty pulls in $321 million

OLYMPIA — The state collected $321 million in delinquent taxes from nearly 9,000 businesses through an amnesty program that ended Saturday. The success of the program surprised state officials, who were expecting to pick up about $24 million when the program was proposed in December.
To read the rest of this item, click here to go inside the blog.

6th initiative makes ballot, would cut taxes

OLYMPIA — The sixth initiative to the people qualified for the Nov. 2 ballot this afternoon. Initiative 1107 asks voters to repeal taxes the Legislature levied earlier this year on soda, candy, bottled water and some processed foods.

That means voters will have two chances to undo things the Legislature did: repeal some of the taxes the Democrats passed as a temporary measure to ease the state’s budget problems, and reinstate a two-thirds majority for any tax increase (I-1053).

And they’ll have four chances to do things the Legislature has been asked to do several times, but  has never had the votes to accomplish: end state-run liquor stores (I-1100 and I-1105); add private insurance to the workers compensation system (I-1082); and pass a state income tax for the upper income levels (1-1098).

There will also be three referenda on the ballot: R-52 to approve bonds for energy efficiency projects at schools and colleges; HJR 4220, to amend the state constitution to expand bail requirements and HJR 8225, to change the constitution’s rules on debt limits for the state.

Economy improving, state budget in black from tax hikes

OLYMPIA — Although the economic recovery “lost steam” in May, the state’s economic outlook is slowly improving and the state’s budget no longer awash in red ink.

What’s keeping it in the black, however, are hundreds of millions in new taxes the state expects to collect through mid 2013, and an as-yet unfulfilled promise of $480 million in federal money.

Arun Raha, the state’s chief economist, said this morning the state’s job growth was “disappointing” in May, after several good months of increases when manufacturing and software jobs improved. In May, most of the job growth was from temporary employment for people helping with the U.S. Census.

Some employers are holding off on new hires…

Correction on tax initiatives

OLYMPIA — Initiative sponsor par excellance and alert reader Tim Eyman points out an inaccuracy in last Saturday’s item about the tax increases Gov. Chris Gregoire signed.

He and other tax foes in his camp have filed initiatives to repeal six of the taxes passed by the Legislature in its special session. The story said they had filed initiatives to repeal most of the taxes, and that’s numerically incorrect. The Legislature raised 17 taxes, so their initiatives only cover about a third of them.

Through various initiatives, Eyman et al want to repeal the new soda tax, the bottled water tax, the beer tax, the candy tax, the cigarette tax and the service industry business and occupation tax increase.

While these are the most recognizable (some might say notorious) tax changes coming out of the special session, there are about a dozen other smaller ones, such as the clarification of taxes on electricity from Public Utility Districts, taxes for officers of a failed limited liability corporation or the end to the sales tax exemption for handling livestock nutrients at dairies.

In terms of dollar figures, they are seeking to repeal taxes that would provide more than half of the new revenues the state expects to collect. But that’s different than “most of the taxes,” which is the phrase used in the item.

Gregoire signs, defends tax hikes

Gregoire signs tax bill as crowd that includes Rep. Ross Hunter (right) looks on.

OLYMPIA — Gov. Chris Gregoire signed two major tax increases Friday, insisting the state had no choice but to raise taxes on a wide range of businesses and consumer goods to protect key services.

She discounted any potential electoral backlash for Democrats from the tax increases in November, saying the budget isn’t a partisan issue.

“This is not about partisan politics. This is about tough times in the state of Washington,” Gregoire said.

When Washington was in a major economic downturn in the early 1980s, the governor was a Republican and both house of the Legislature were controlled by the GOP. They raised taxes, too, she said.

But voters gave the Legislature back to Democrats in the 1982 election, and defeated Gov. John Spellman in 1984.

“I’m not forgetting that,” Gregoire said. But she did consult with Spellman during the tax discussions, and he said the biggest mistake he made was extending the sales tax to food, a move which was overturned at the ballot box. “That’s why I’ve said let’s go for things that are discretionary.”

Between May 1 and July 1, taxes will go up on a wide range of goods and services.

Cigarettes will cost an extra $1 per pack. Candy, gum and bottled water will be subject to state and local sales taxes (they’re currently exempt as food). Soda pop will cost an extra 2 cents per 12 ounce can. Beer from major breweries will cost an extra 28 cents per six-pack, although microbrewed beer will be exempt from the new tax levy.

The service industry, which includes a wide range of businesses from lawyers and accountants to barbers and musicians, will pay an extra .3 percent on gross revenues. Out of state businesses will see new tax formulas, and companies that supply goods to in-state distributors will continue paying a tax that the state Supreme Court ruled last fall was improperly being levied against one major food supplier, DOT Foods.

Gregoire said Washington residents could avoid many of the consumption taxes by changing their habits — drinking tap water instead of bottled water, for example, or giving up smoking. Or they could continue buying those items and pay the increases, which would find everything from education programs to health care to senior programs: “I believe in the people of the state of Washington. I’m asking them to stand up.”

Republicans, who spent the 60-day regular session and the 30-day special session fighting any tax increases, called them job killers. Sen Janea Holmquist, R-Moses Lake, dubbed it the 7-11 Kwik-E-Mart tax package because so  many of the items are the stables of convenience store sales.

“This package exempts things like expensive microbrews, but taxes those items that most impact working class and low-income Washingtonians like canned meat,” said Holmquist. “This is no way to balance a budget.”
Gregoire said Republicans who complained about taxes never proposed a budget that showed what services they would cut without raising taxes: “Everyone could easily say waht the didn’t like. It’s easy to sit in the minority and say ‘No.’”
Initiative promoter Tim Eyman has filed a series of initiatives to give voters the chance to repeal most of the taxes if his organization collects enough signatures. Another group has filed an initiative to remove some of the current taxes and replace it with an income tax on people making more than $200,000 or couples making more than $400,000.
Gregoire said she would sign the income tax initiative petition, welcome the debate over it if the proposal makes it to the ballot, and may support it after studying it further:”I have been opposed to an income tax. This is a different kind of income tax.”
That prompted swift criticism from state Republican Party Chairman Luke Esser, who said Gregoire campaigned for re-election in 2008 by saying it wasn’t time to raise taxes and that she did not support a state income tax.
“Taxpayers should note that Gov. Gregoire never wahts to ‘have a good discussion’ and a ‘debate’ over lowering taxes or keeping them constant but is always open to discussing tax increases,” Esser said in a press release.


WA Lege SpecSess: Looking back

OLYMPIA – Most years when the Legislature goes home, the winners and losers are pretty obvious. You count the scars and tote up the pork.
This year, everyone has scars and the Lege wasn’t cutting on a fat hog, so the final judgment may wait at least until November when voters decide whether half the Senate and the whole House should be rehired.
But some folks are better or worse off after the session lurched to its close early Tuesday morning than they were when it started in January with all the yada-yada about bipartisan cooperation.
Bipartisanship was a clear loser. Democrats had such a big majorities in both chambers that the real fight was among their factions, rather than a Republican/Democrat struggle.
The “business moderate” wing of the Democratic Party, which would include Spokane Sen. Chris Marr and Rep. John Driscoll, argued for more cuts and fewer tax hikes. They lost. They consistently voted against the budgets, but the budgets passed. Republican opponents might not be able to pound them quite so hard this fall, but the biz Ds will still have to work to distance themselves from the rest of the pack if voters are torqued.

WA Lege SpecSess: At the end of the day…it’s the middle of the night

OLYMPIA – By the time the Legislature wrapped up 90 days of heated and sometimes confusing debate over taxes and spending Tuesday, it had raised taxes on a wide array of consumers and businesses, cut some programs, boosted others, moved hundreds of millions of dollars around, and penciled in hundreds of millions more by betting on the federal government to come through.
But the final hours of the special session did not go smoothly, and at one point the governor made a rare visit to the Senate floor to keep the state from facing cash flow problems in the fall. The Senate had not passed a bill to move some $230 million from the state’s Rainy Day account into the general operating budget and without it, the state’s cash reserves could dip perilously low at some point before the two-year budget cycle ends in June 2011.
“I have a problem,” a visibly angry Gregoire said as she stormed passed reporters, into the wings of the Senate chamber and Senate Majority Leader Lisa Brown’s office at 11:12 p.m….

State treasurer to Lege: OK, we can pay the bills.

OLYMPIA — State Treasurer Jim McIntire added his kudos to the just concluded legislative session with a note that should make all Washingtonians feel a little better.

The state now probably has enough money to pay its bills through June 2011.

Not that the state would be bouncing checks or anything. But earlier in the session, McIntire notified legislators and the governor that the rate that money was coming in was not keeping pace with the way it was going out, and Washington could hit a point in the fall were its reserves were so low it might have to borrow short-term to pay some of its obligations. Like payroll.

“Based on a preliminary assessment of the tax and budget package, we believe we have a sufficient cushion to ensure we have the cash necessary to pay our bills,” McIntire said.

Other states, most notably California, had to issue I.O.U.s at one point because of cash flow problems.

WA Lege SpecSess: Capital budget passes

OLYMPIA — The House passed the supplemental capital budget, the “bricks and mortar” budget that spends money on things like school buildings and sewer plants, as well as fire reduction, water projects and corrections.

It passed 61-36. Republicans, including Rep. Gary Alexander of Olympia, warned of the rising debt level the state is amassing. But Democrats said the bill provides jobs as well as needed infrastructure.

The end of the session is near.

WA Lege SpecSess: Senate passes budget

OLYMPIA — The Senate passed the supplemental budget Monday evening, joining the House in a spending plan that tries to fill an estimated $2.8 billion hole in the state’s two-year operating budget.

On a 25-21 vote, it added its approval to the budget approved a few hours earlier across the Capitol.

Republicans, who were unanimous in their opposition, said the bill was being forced through without careful consideration, in the closing hours of the session, and has significant problems.

“Voting on a budget is a big decision,” Sen. Mark Schoesler, R-Ritzville said. “Those who are going to vote for it, have you read it?”

Sen. Mike Carrell, R-Lakewood, said the Legislature spent the month of a special session, figuring out how to raise taxes, not making any changes to a broken system.

Some Democrats also refused to support the budget. Sen. Rodney Tom of Bellevue said it doesn’t grasp the reality of the economy, and sets up education to fail.

But Majority Leader Lisa Brown, D-Spokane, said the economy is cyclical, and when times are tough, the demand for state services go up. “Just when the gap opens up, we need it the most. Many things are going to cost more, but we did the right thing..”

The budget has cuts as well as tax increases, Brown said, and no one say it’s perfect. “We are not a Legislature of 1. This job gets done by working together.”

Sen. Cheryl Pflug, R-Maple Valley, an economic downturn is not the time to implement all day kindergarten or a major energy savings construction plan. “How can we say it suddenly became a crisis to add these programs?” It may not be a Legislature of 1, she added “but it is a Legislature of one party.”

WA Lege SpecSess: Budgets released, vote to come

OLYMPIA — Democratic legislators released their spending plan  with a combination of cuts and assumed tax hikes, designed to fill a $2.8 billion hole in the state’s operating budget.

If passed as expected later today or Tuesday, the budget pulls in $757 million in new taxes, cuts $840 million in programs, pulls in at least $618 million in federal funds, and moves nearly $600 million around from other accounts and reserves.

Among the cuts are nearly $55 million by closing or reducing state prisons. Slated for closure is  the Pine Lodge Correctional Facililty for Women in Medical Lake.

In making the closures, budget negotiators “looked closely at a report done last year…and tried to minimize politics,” Rep. Kelli Linville, D-Bellingham, said. Pine Lodge is in the Spokane area, which has Senate Majority Leader Lisa Brown among its legislative delegation.

That report,  however, recommends leaving Pine Lodge open to have a corrections center for women inmates in Eastern Washington. Asked about the difference, Linville replied: “We used the report as a basis. We were trying to use real information first, and then we negotiated the budget.”

The budget also cuts more than $150 million in  K-12 programs, $73 million from colleges and assumes almost $49 million in savings through temporary layoffs of state employees.

It uses money from the tax increases to maintain all-day kindergarten, gifted program and levy equalization for public schools, state need grants for college students, the current levels for Basic Health and the Apple Health for children programs. Temporary assistance for needy family levels would remain at their current levels, as would most foster care payments and nursing home payments, and some nursing home cuts would be restored.

Approved by the Senate Ways and Means Committee was a supplemental Capital Budget Plan that would spend nearly $241 million for major and minor construction projects.

Included in the supplemental capital budget are $3.5 million for the Biomedical and Health Sciences Building at Washington State University Spokane’s Riverpoint Campus and about $3.5 million in repairs, maintenance and improvements to buildings at Eastern Washington State University. The proposed Spokane Aerospace Center also would receive $400,000.

The budgets have been under discussion since before the session began because the two-year budget approved by the Legislature last year has been out of balance almost from the day it went into effect on July 1, 2009. The gap between what the state can expect to take in from taxes and fees compared to what that original budget planned to spend grew to $2.8 billion by February. In ability to agree on a spending plan and tax increases forced a 30-day special session that is scheduled to end Tuesday.

But Monday afternoon was the first chance the public and some members of the Legislature got to see the finished product, which has been the subject of intense negotiations by Democratic leaders. Republicans who are in the minority and have refused to vote for any tax increases until significant reforms are made, have been largely shut out of the process.

Democratic budget negotiators defended the short notice and review time before legislators vote.

“We have gone through this time after time,” Sen. Ed Murray, D-Seattle, said. “I believe our members know what’s in this. There aren’t any surprises.”

“It was mostly our budget 30 days ago,” Linville said.

A different way to chew on the tax debate

OLYMPIA – When talking about the Legislature, it’s easy to get wrapped up in parliamentary details and arcane political jargon. To avoid that, here’s a simple way to look at the budget and tax plans as the “seven-day” special session enters Day 28.

Think of solving the budget deficit as a family dinner. Like parents who profess to know what’s good for us, top legislative Democrats are about to make Washington residents eat our Brussels sprouts for the next 30 months.

They’ve treated options on the budget and taxes like menu choices. There’s stuff we all like, other things we’re OK with, and some things we’re going to turn our collective nose up at. Just as mom and dad don’t ask the kids to plan the menu, lest we ask for pizza and ice cream three times a day, they didn’t give us much say in what to serve.

For those who say “No fair!” parents can argue that when you’re going to serve Brussels sprouts, you certainly don’t tell the kids at noon, because they’ll just talk friends into having their moms invite them over. So the Democratic parental units held the menu close to the vest, not even releasing it until about a half-hour before the other grown-ups showed up Saturday. By then the menu was a done deal, with the Brussels sprouts purchased, in the pot, about to be put on the stove.

In the living room, the Republicans are arguing that we don’t need to eat Brussels sprouts.

Tax plan passes House, heads to Senate

OLYMPIA – Democratic leaders began pushing a package of some $668 million in higher taxes through the Legislature Saturday, suspending rules as they tried to beat the Tuesday deadline to adjourn.
The House of Representatives voted 52-44 to approve the tax plan that was just made public a few hours earlier after more than a week of closed-door negotiations between Democratic leaders and Gov. Chris Gregoire.
Some Democrats who voted yes conceded it was a less than perfect plan. Rep. Timm Ormsby of Spokane said he liked some of the earlier House tax proposals which closed off more tax exemptions and hit consumers of certain items less.
The proposal would raise taxes on candy and gum, soda, bottled water and mass-production beer.
“These are some of the things that people use to reward themselves,” said Ormsby, the sole Spokane-area representative voting yes. But the bill couldn’t be amended because of legislative rules governing the way it was presented, so it was an up or down vote on a plan to balance the budget, he said.
Republicans were united against the bill, contending it wouldn’t treat people equally. Rep. Doug Ericksen, R-Ferndale, noted that beer from large out-of-state breweries is taxed an extra 50 cents a gallon, or about a nickel for a 12-ounce can, but more expensive beer from microbreweries is exempt from the tax.
“This Legislature couldn’t even be fair on how it raises the tax on beer,” he said. “You stick it to the working man and give the high-fallutin’, high-paid guy in Seattle a break.”

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About this blog

Jim Camden is a veteran political reporter for The Spokesman-Review.


Jonathan Brunt is an enterprise reporter for The Spokesman-Review.


Kip Hill is a general assignments reporter for The Spokesman-Review.

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