Democrats mull new tax options

OLYMPIA – With Gov. Chris Gregoire declaring she’s “disgusted” by the drawn-out special session, the state Senate’s top Democrat said Friday that lawmakers are weighing different tax options to help patch a $2.8 billion budget hole.

That offered a glimmer of progress in the Legislature’s tax negotiations, which are dragging the maximum 30-day special session toward its third week.

Majority Democrats in the House and Senate are trying to agree on a tax package worth roughly $800 million through June 2011. Leaders say they have general agreement on about $600 million worth of higher taxes, leaving some $200 million in dispute.

The final gap, however, has proved nearly impossible to bridge.

House Democrats and Gregoire are balking at the Senate’s preference for a two-tenths-of-a-cent temporary sales tax hike, while Senate Democrats say they can’t get enough votes for several of the targeted taxes offered by the House and the Democratic governor.

But Senate Majority Leader Lisa Brown, D-Spokane, said lawmakers are now looking at some fresh tax options to help break the stalemate. She declined to offer examples but said legislators are paging through the state’s “huge book of tax exemptions” to find possible solutions.

“I think it will have to involve things that have not been in the (tax) packages so far,” Brown said.

While refusing to abandon a sales tax increase, Brown said Senate Democrats probably would be willing to go with replacements that fit their share-the-pain principles.

That would presumably please Gregoire, a sales tax opponent who has criticized the Legislature’s inability to reach agreement. Gregoire originally asked lawmakers to limit their overtime session to one week, but they weren’t bound by that request and blew the deadline.

“I’m disgusted, period,” she said Friday morning.

Asked why she won’t explicitly take a sales tax hike off the table by threatening a veto, Gregoire said it would be pointless.

“That isn’t going to get them anywhere, I can assure you,” Gregoire said. “I’ve had those conversations. I’m just disgusted.

“Nothing is going on that I can tell. No matter how many offers I’ve given for compromise, they have not resulted in a compromise. Time’s up. Time was up, in my opinion, last Sunday.”

Brown and House Speaker Frank Chopp, D-Seattle, met Friday. Afterward, both leaders said they’re sensitive to the impression that lawmakers aren’t getting anything done. But they pointed to the extreme nature of this year’s budget hole, which pushes the combined deficit for this two-year budget cycle to about $12 billion – all on the heels of the recession.

Gregoire has warned that if lawmakers can’t find a solution, she could be forced to make across-the-board spending cuts of about 20 percent.

“We can’t afford those kind of cuts for our public schools and health care for the needy and other critical public services, so we’re working very hard to solve this thing as soon as possible,” Chopp said.

“I’m working every day,” Chopp added. “I’ll be here tomorrow, going through specific ideas for counteroffers and things like that – just trying to figure out a good compromise.”