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Lawmakers weigh their options for new revenue

Sun., March 8, 2009

Law requires public OK of tax increases

OLYMPIA – As lawmakers chop their way out of an estimated $8 billion budget deficit, voices in the Democratic majority’s political base are calling for higher taxes to save favorite state services.

So where’s the money? One place to look is the so-called “shopping list,” a state Revenue Department compilation of possible sources of additional money for the state.

For example: Gov. Chris Gregoire proposed whacking the Basic Health Plan by 42 percent through mid-2011, for a savings of about $252 million, according to a legislative analysis.

Raising the state sales tax from 6.5 percent to 6.6 percent wouldn’t quite replace that entire cut, generating about $237 million in the 2009-2011 budget period.

Gregoire’s proposal to skip teacher raises under Initiative 732 saved about $390 million. Slapping a penny-per-ounce tax on bottled water at the wholesale level would get pretty close to replacing that cut, raising an estimated $366 million.

The state could raise enough money to solve both those cuts – and then some – by overhauling the tax on shiploads of crude oil and petroleum products, which currently sends money into oil-spill related accounts. Changing that “oil spill tax” from 5 cents per barrel to 5 percent of the oil’s value would raise about $783 million.

Officials aren’t publicly advocating any of these examples. But they’re some of the 134 ideas detailed on the Revenue Department’s list of tax alternatives.

The list is published four times a year to give lawmakers an idea how much money could be raised through various changes to the tax code. The latest version came out in November.

So the list itself is routine. But the interest in its cash cows is probably more intense this year, since almost every interest group that depends on state spending is scrambling to keep its money flowing during a deficit-dominated legislative session.

With the legislative session about half over, the overall game plan for solving the budget deficit seems fairly clear.

Legislators will likely carve out a budget they can live with, cutting services and using one-time patches to fill the deficit. Then, after illustrating how deep the cuts are, lawmakers could send a tax package to voters.

Any possible tax increases will have to go on the ballot, because voter-approved limits on the Legislature’s taxing powers make it impossible for Democrats to pass taxes with their present majorities.

It’s still unclear what the tax package could include, but any such plan would probably be tied to specific state programs. That would give voters the option of “buying back” some services with a yes vote, affirming both the program and its source of money in one package.

“The budget we put forward will be the budget,” said Senate Majority Leader Lisa Brown, D-Spokane. “If there’s also some kind of revenue proposal put to the voters, it will be a very clear-cut thing: This source of revenue, and these kinds of education or health services, for example.”

But there may be few politically palatable ways to raise the huge chunks of money needed to plug the budget’s holes.

Lawmakers have been steadfast in saying they will go through the difficult work of balancing the budget without new revenue before deciding what might be on a tax referendum.

Some lawmakers are certain the public would reject any tax vote in the current economic climate. Others, like Brown, don’t want to speculate just yet.

“I would never presume what the outcome of an election will be in November,” she said. “I’ve been surprised enough times.”


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