Law makes it easier to raise state taxes
Paving the way for hundreds of millions of dollars in new revenue for state coffers, Gov. Christine Gregoire signed into law on Monday a bill making it easier for lawmakers to raise taxes.
The new law allows the Legislature to raise taxes by a majority vote for the next two years, rather than the two-thirds supermajority required by state Initiative 601, which voters approved in 1993.
The law also changes the state spending cap, basing it on a 10-year average of personal income growth – about 5 percent a year – instead of the population-growth-and-inflation formula that voters approved, which works out to about 3.5 percent a year.
Gregoire said she’s just being realistic. The spending limit has been eroded time and time again, she said, in the face of accounting gimmicks by both Republican and Democratic budget writers.
“It’s been gamed far too many times by the Legislature. … It’s time that we stop the facade that there was a limit on spending in the state,” she said. “There wasn’t.”
Gregoire also said she’s not troubled that the law allows taxes to be raised by a simple majority vote.
“I am one who believes in a majority vote, … open and transparent and directly honest with the voters,” she said.
Republican leaders grimly watched the bill-signing from the back of the governor’s conference room, wearing “R.I.P. 601” stickers on their suit lapels.
“With the two-thirds vote (requirement) gone, it opens the door for raising all the taxes they want,” Rep. Mike Armstrong, R-Wenatchee, said later. State revenues rose 7 percent over the previous two years, he said, yet the House of Representatives proposed a 12 percent increase in spending.
“How much is enough?” he asked.
The principle behind Initiative 601 – keeping a lid on state spending – isn’t dead, said Rep. Alex Wood, D-Spokane.
In prior years, both Republican and Democratic lawmakers would routinely strip money from less-noticed state budgets to make it look like they were staying under the spending cap, he said. They’d pull millions from an account set up to combat violence, for example, or from the state’s health services account and use it to prop up the main state budget, making it look artificially low.
“Supposedly, when the economy was in good enough shape, the money would be put back,” Wood said. “But it kept going out and out.”
Initiative 601 “has been dying a long, slow death,” said Spokane Republican Rep. John Ahern. “We’re guilty; they’re guilty.
“But this is the death knell, the burial of 601,” he said. “It’s over. It’s done.”
The new law will allow Democrats to pass a budget this year without help from Republicans. Democrats hold a 55-43 majority in the House and a 26-23 majority in the Senate.
The change allowing a simple majority vote on taxes took effect when Gregoire signed the bill and will expire in July 2007.
House Finance Committee chairman Rep. Jim McIntire, D-Seattle, said the 601 spending limit didn’t reflect the state’s needs in areas such as health care. Some populations that need more state services – for example, the elderly – are growing at a much faster rate than the general population.
“The past spending limit was designed in a way to continuously shrink state government,” McIntire said. The new law, he said, “is a much more thoughtful approach.”