Spokane7
53°
March 1, 2010 in City
Wash. House Democrats detail $760 million tax plan
OLYMPIA — State House Democrats want to raise about $760 million in taxes by closing a long list of sales and business tax exemptions and collecting more money from smokers, bankers, lawyers and accountants.
The House tax plan, announced Monday, is the latest of three proposals from state leaders as they seek to bridge a $2.8 billion state budget deficit.
Debate over the tax plans now heads toward high-pressure negotiations with Democratic Gov. Chris Gregoire and the Senate’s majority Democrats, with just 11 days left in the 2010 legislative session.
The House proposal is nearer to the laundry-list approach favored by Gregoire and does not include a general sales tax increase, which was a central part of the Senate’s tax blueprint.
House leaders said they tried to balance the need to preserve critical education and social services with worries that the wrong taxes could crimp a fragile economic recovery.
“Our focus was on removing exemptions and closing loopholes,” said House Finance Committee Chairman Ross Hunter, D-Medina. “This approach makes sure everyone is doing their fair share in helping our state get back on its feet.”
The House’s five-part revenue plan is four parts taxes, one part transfers from other state bank accounts.
It starts with a $385 million package of closed tax exemptions that is focused on out-of-state consumers and companies, including banks and credit-card issuers.
Another $163 million would be raised by spreading the sales tax to bottled water, custom software, candy, gum, plastic surgery and janitorial services. On top of that, the House wants to collect about $112 million by raising the cigarette tax by $1 per pack.
Some $99 million would be raised through an array of “tax fairness” measures, including higher business taxes on lawyers, accountants and consultants, and on investment earnings by nonfinancial firms.
The final piece of the House plan would grab about $100 million by raiding the state construction budget and proceeds from lottery games. That pushes the overall revenue package to $860 million.
The Legislature’s overall budget plans also rely on hundreds of millions of dollars in spending cuts, federal aid and one-time accounting fixes.
Republicans have staunchly opposed the Democratic drive for higher taxes, saying the majority hasn’t done enough to downsize government and cut state worker compensation.
Democrats respond that they closed a $9 billion deficit last year without general tax increases, and they must raise some taxes while cutting further spending to ensure a balanced solution to this year’s budget woes.
The $2.8 billion deficit represents the gap between current spending and expected tax collections in the state’s main checking account — called the general fund — through June 2011. Additional programs are driven by federal spending and separate accounts, and the state also maintains separate budgets for transportation and construction projects.
© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Man dies following early Saturday accident 
msledder on March 01 at 2:10 p.m.
Oh Yeah tax them smokers. What a joke. When are you dems going to stop with all this BS. No I don’t smoke.
Hank_Tingler on March 01 at 4:57 p.m.
tax the smokers the equivalent of the medical costs they generate.
JBlim on March 01 at 5:32 p.m.
msledder or any of you Republicans out there in the peanut gallery, Dems live in the real world. I assume you won’t favor any tax increases. Why don’t YOU tell us what you propose to cut and how much it would save?
getajob on March 01 at 7:16 p.m.
J Blim, the best way to reduce the shortfall is to cut spending. The excessive spending is to the unionized state work force. Gregoire did a great job taking care of the unions this year by negotiating the contracts a year early (last spring,) so as to freeze in the high wages on the contract before the tough budget year hit, (2010.) I am a conservitive, and a very high earner. The taxes will have no effect on me, nor will the health care legislation in Washington DC. But both will hammer on the middle class folks. I feel for them and the future. Speaking of over paid public sector workers, look to Greece for our future. they pay the public sector employees 14 months per year. You read it right, they pay them 2 monthly salaries they do not earn. Furthermore, they have a lower tax rate than private sector folks. They are going down in flames and may take the Euro with them. Unless we get serious about public employees wages and bensions, this place is headed to chaos, and I fear complete collapse like them. Study the real history and look around the world at socialism, it had never worked, and will fail here too. I wish people would wake up, we have a great country and are watching the few squander it.
dp on March 01 at 8:37 p.m.
getajob…I do agree with many of your points. I am sure there are some state agencies that are a drain on the budget and do not effectively use the money they are allocated from the state. However, additional budget cuts could do very serious damage to certain state agencies that are already hanging on by a thread. For example, my wife is a social worker who has been a state employee for several years. Her Spokane office has been continually slashed by the recent budget crisis. She has a Master’s degree in Social Work, and her gross salary is $40,000/year. She has not received a COLA in 2 years. She is fortunate to have a job; however, I wouldn’t consider her salary the result of a lucrative negotiation with the governor. Because her office has been decimated by cuts, she now has to dedicate part of her time to sort mail for her building because there are no longer office assistants to do so. This is only one example, but I think these specific examples need to be heard by those who advocate for more state cuts. Firing more state employees will be an even greater penalty on the middle class and will not shore up the state’s economy. Alternative revenue sources are needed.
JBlim on March 02 at 7:22 a.m.
getajob, you failed to state how much your scheme would save. I’ll save you the time. It’s only a drop in the bucket. Try again.
JusticeForAll on April 02 at 11:09 a.m.
JBlim, what happened when the economy was good? Tax revenues were high, and what did the state Dumbocrats do? Allocate ALL that extra tax revenue, which pretty much guarantees a a deficit at any economic downturn. God forbid we hold these people accountable for their reckless and irresponsible spending. Lets just raise taxes because it’s the simplest solution and the bloated government doesn’t want to retract itself, naturally. They want to be heroes and take credit for providing all these “wonderful” government programs, but none of the blame when they’ve over-extended themselves.