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Proposed budget avoids tax hike

Wed., Feb. 22, 2012

House Democrats’ plan spares cuts to schools

OLYMPIA – House Democrats offered a budget plan that doesn’t call for a state tax increase and doesn’t make some of the cuts to public schools and state services Gov. Chris Gregoire proposed in November.

The school year wouldn’t be shorter under this plan. The money the state sends to school districts to help make up for the differences in property values between high- and low-income areas, known as levy equalization, wouldn’t be cut. Inmates wouldn’t be released early from state prisons.

But House Democrats would pull back some state money currently going to counties and cities, and give local governments the authority to raise local taxes to cover the difference. They would delay payments to school districts a few days in what some Republicans call an accounting gimmick. They would reduce the state workforce by more than 1,500 full-time workers. They would leave less money in the treasury at the end of the fiscal period than Gregoire or the House Republicans would.

“It’s a first draft,” House Ways and Means Committee Chairman Ross Hunter said. The proposal will change in the coming days, with hearings and negotiations with the Senate, which will produce a budget proposal next week. “We spend less than we take in revenue.”

The proposal does not call for a state tax increase, although that doesn’t mean there won’t be some discussion of a tax hike in the coming days, Hunter, D-Medina, said. But it does not cut key programs then ask voters to “buy back” some of them by approving a half-cent sales tax, as Gregoire proposed with her budget.

“If you put something on the ballot, it may not pass,” he said.

But even without the tax hike Gregoire proposed, many state residents could see their taxes go up. Spokane and other large counties could get the authority to raise their sales tax by one-tenth of 1 percent and split it with the cities inside their borders. Large cities would have the authority to raise their sales tax if their county didn’t. Local governments could levy a local option restaurant tax of as much as one-half of 1 percent, and counties could levy a utility tax in unincorporated areas.

That money would help make up for cuts in state money sent to local governments for criminal justice, and for increased charges those governments would see for state services like crime laboratory services, police training and district or municipal court salaries. Hunter said the state increased payments to cities and counties after Initiative 695 ended a motor vehicle excise tax.

“We can’t afford to do that any more,” he said. “Something has to give.”

The budget was quickly criticized by House Republicans, who released their own alternative budget last week. State Rep. Gary Alexander, R-Olympia, said Democrats were hanging on to “lower-priority” programs like the Basic Health plan and the Disability Lifeline. Giving the cities and counties authority to raise taxes is an “end run” around the requirement for a two-thirds vote of the Legislature to raise taxes statewide, he added.

In announcing the budget, Hunter said county and city officials are close enough to their constituents to make a decision on raising taxes without voter approval. But if they want to put them on the ballot, they have that option.

The state teachers union and the League of Education Voters praised the proposal for spending more on schools than Gregoire proposed. It’s also more in line with a recent state Supreme Court ruling on the state’s responsibility to spend more on “basic education,” they said.

House Democrats had an advantage Gregoire didn’t have last fall when crafting her budget, Hunter said. An economic forecast and a projection of the need for state services improved the budget outlook by nearly $440 million last week.

Senate Democrats, who are writing that chamber’s budget proposal, and Gregoire called the latest spending plan “a good start” at developing a final budget, which both houses must pass by March 8 to avoid a special session.

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