Locke Issues Election-Year Budget Plan Plan Boosts Spending And Gasoline Taxes, Cuts Other Taxes, And Keeps Fat Reserve

Democratic Gov. Gary Locke on Monday sent the Republican Legislature an election-year budget-and-tax package that boosts spending and the gasoline tax, while providing selected tax cuts and keeping a fat reserve of more than $580 million.

Locke called it “prudent and bold.” Republicans liked aspects of the plan, especially the big reserve, but differed over taxes and his desire to spend more than the current budget permits.

But the main fireworks are sure to come from the governor’s transportation funding plan. GOP leaders called it dead on arrival, since its centerpiece is a nickel increase in the state’s 23-cent-per-gallon gas tax, split among the state, cities and counties.

Locke also proposes to index the tax so that it rises with inflation and population growth. That would boost the tax another six cents over the next five years, for a total of 34 cents.

Republican leaders have flatly rejected a gas-tax increase, but say they might consider other funding sources, such as greater transportation use of the taxes collected on vehicle license tabs.

The governor’s supplemental budget is about $33 million above the $19.085 billion level lawmakers approved earlier this year. Locke also spends about $96 million in savings from lower school enrollment and other programs.

He proposes more for education and higher education, health care for the working poor, restoration of salmon runs and other priorities.

Legislative Republicans said they aren’t likely to accept any spending above the current level. “It would take a real compelling case to go beyond where we are today,” said House Speaker Clyde Ballard, R-East Wenatchee.

Locke’s biggest tax cut proposal is a $102 million reduction in the tax paid on car license tabs. Cars worth $1,600 or less would be exempt from taxation and higher value models would get a $35 reduction each year.

Locke, about to enter the second year of his term, took pains to portray his package as living within the spending limits of the voter-approved Initiative 601.

Although he initially called the supplemental budget “a series of midcourse adjustments,” he later conceded that he has jammed a number of key policy questions into his package.

“This is not a time to coast or to relax,” he said, referring to initiatives in transportation, education, economic development, salmon restoration and a dozen other issues he mentioned during an hourlong press briefing at the Capitol.

The proposals are but the first step in the annual budget-and-tax tussle between the Legislature and the chief executive. The House and Senate, both controlled by Republicans, will write their own proposals and eventually strike a deal to send to Locke.

Locke told reporters he hopes the Legislature and the general public won’t be misled by the size of the state’s projected surplus - $862 million.

“Our savings account isn’t extra money we can scatter around like rose petals,” he said.

In descending order, his suggestions for the surplus are:

Put the lion’s share, $583 million, into a reserve fund to help tide the state over during future recessions. Most legislators have talked of a $500 million reserve.

Cut taxes by $245 million. Proposals include the lower car tax, a tax credit for businesses that provide child care for their workers, a tax break for first-time home buyers, and business tax incentives for companies that invest in economically distressed areas and for the high-tech industry.

Spend $105 million more on education and other state programs and contribute $25 million of the surplus to transportation. Part of this supplemental spending is offset by savings elsewhere in the budget.

Locke would boost the Basic Health Plan enrollment by 7,200, at a cost of $11 million.

He proposes to spend $19.6 million on various programs to help restore salmon habitat and fish runs.

Locke’s budget includes previously announced proposals for a Washington Reading Corps, with a pricetag of $24 million, and a crime package that includes a crackdown on drunken drivers, $30 million from a variety of funding sources.

Locke proposed sales tax exemptions for school, college and transportation construction, a $3,000 bonus for teachers who achieve national certification as “excellent educators,” $8.8 million for technology in the classroom, $5.6 million for higher education student financial aid, and funding for 1,390 new college slots, mostly in community colleges.

“He kind of threw in everything but the kitchen sink,” Senate budget Chairman Jim West said with a laugh. “It’s a good political document for him.”

The Spokane Republican said the GOP won’t accept some of the governor’s ideas, including the gas tax increase and the spending proposals that go above the current appropriations level.

“That’s not going to fly,” he said of the latter. “We’re not going to go there.”

Added Ballard, “The good news is the governor is talking about tax cuts. Last year he was vetoing some of our ideas.”