April 10, 2009 in City

Sales tax increase could go before state voters

Income tax levied on high earners among other proposals to help bolster budget
By The Spokesman-Review
 

OLYMPIA – Washington House Speaker Frank Chopp said Thursday that there’s a “better than 50-50” chance that voters will be asked to approve a sales tax increase this fall.

As envisioned now, the tax increase would be one-third of 1 percentage point more, or an extra 33 cents on a $100 purchase. It would bring in millions of dollars to help offset budget cuts to hospitals, nursing homes and health care programs.

Senate Democrats, led by Senate Majority Leader Lisa Brown, are floating the idea of a 1 percent to 3 percent state income tax on people earning more than $250,000. But critics, including Gov. Chris Gregoire, say that would likely be a steep uphill fight, both with voters and in the courts.

Brown, D-Spokane, insisted that the income-tax idea was still in play.

“I’ve always been realistic about the fact that it’s a short time frame for putting a big new idea out there,” she said. “… I still think it’s possible. I’m not going to say it’s likely, because … the governor’s made a pretty strong statement. It’s never easy when you’re talking about something like this.”

Facing a multibillion-dollar shortfall over the next two years, state lawmakers have proposed major budget cuts in higher education, health care, K-12 schools and some social service programs. A voter-approved tax increase would help offset some of those cuts.

Chopp also indicated support for a separate plan that voters may also see in November. It calls for the state to sell bonds to raise $1 billion or more to fix up schools and make them more energy efficient.

“I’m very pleased with that basic approach,” he said, although he said that lawmakers were still trying to agree on a way to pay for those 20-year bonds. Gregoire has also said she supports the idea.

Chopp and Gregoire also agree on a plan to let more than 70 school districts across the state – including several in and around Spokane – collect $62 million in voter-approved property taxes unable to be collected because of a state limit on property tax levies. Among House Democrats, “there’s real strong support” for that, Chopp said.

Some Republicans lawmakers maintain that the income tax proposal is a bluff to make other tax proposals look mild.

“This whole thing is gamesmanship,” said House Minority Leader Richard DeBolt, R-Chehalis. “You cut the most vulnerable. You cut the most atrocious things you can do. You send them to the voters. You show them pictures of people in basic states of panic. You tell them they have to give you more money. And then you take that money and you give it to the Arts Commission.”

Brown said the Senate is willing to discuss the sales tax proposal, but that many Democrats want it to be offset by a tax credit for low-income people. Under the state’s sales-tax-heavy system, she said, low- and middle-income families pay a far higher percentage of their earnings in taxes than the wealthy do. That’s why the income tax proposal is aimed at high earners.

“I’ve been really pleased with the fact that people are taking it seriously and having good conversations about it,” she said.


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