Givebacks Split Demos Lowry Blasts $235 Million Plan While Lawmakers Rush To Give Away Surplus

The tax giveback wars are escalating in Olympia, with lawmakers scrambling to outdo each other giving away the state’s largess.

Weeks before the 1996 election year even begins, Gov. Mike Lowry is fighting his own party over tax cuts. Senate Democrats are proposing a $235 million giveback that Lowry blasted Thursday as “irresponsible.”

The criticism distances Lowry from his own party and provides a big target for Republicans, who are pitching an even bigger tax cut of $400 million this biennium.

The bidding war is being fueled by a $700 million state budget surplus piled up by a robust economy.

Lowry took surprisingly strong shots at the Senate Democrats’ proposal, vowing to stand alone against his own party if necessary to protect the state budget from election year opportunists.

“One Republican Party is enough,” he snapped.

“I’m very concerned about the long range, deep damage tax cuts that large would do.

“It would hurt us as a state very badly in our ability to fund higher education… It’s very irresponsible, with vision that extends until Election Day 1996 and not one day further.”

Republicans ate up the spectacle of Democrats vying to sound more like Republicans and to distance themselves from each other.

“Democrats drive on the left side of the road except during election years, when they try to pass you on the right,” said Rep. Brian Thomas, R-Renton, chairman of the House Revenue Committee.

“This is going to be fun.”

Sen. Sid Snyder, D-Long Beach, chairman of the Senate Democratic Caucus, said Senate Democrats are holding the middle ground on tax cuts between the House and the governor.

Senate Democrats want to cut the state share of the property tax 5 percent, and halve the business and occupation tax increase on services enacted in 1993.

Lowry vetoed those same tax cuts last year, arguing the state can’t afford them. But Snyder called the cuts “reasonable.”

Republicans were only too eager to criticize Lowry for his caution. “Gov. Lowry is wrong again, as usual,” said House Majority Leader Dale Foreman, R-Wenatchee.

“Mike Lowry is trying to hold onto tax dollars for social service programs. We want to permanently reduce the size and scope of government.”

House Republicans are considering a rollback of business and occupation taxes all the way to 1992 levels and expanding exemptions for small businesses.

They may also propose a property tax cut that would both cap the rate of increase and roll back existing taxes.

The sales tax exemption on manufacturing also might be expanded to cover construction, research and development, Foreman said.

Lowry will propose a few tax cuts of his own when he reveals his supplemental budget proposal on Monday.

It will include a plan to allow people pushed out of their homes by high taxes to defer paying property taxes until they actually sell their home.

Lowry also will propose expanding his manufacturing tax incentive program, which allows businesses to avoid paying sales taxes on new plant and equipment.

The governor already handed a fat gift to voters, with a one-time, 27 percent cut in the workers’ compensation rate, worth $200 million next year.

Lowry announced the reduction at an Olympia news conference Thursday. It comes on top of a permanent 10 percent cut in the insurance rate last October.

The $200 million giveback is possible because the Department of Labor and Industries made a killing in the stock market with investments from the workers’ compensation fund.

, DataTimes ILLUSTRATION: Graphic: Proposed tax cuts