Tax Cuts Could Fall Victim To Lowry’s Veto Pen

The Legislature whacked taxes with an ax this year, but don’t spend the money just yet.

Gov. Mike Lowry says he may veto part of the $501 million in business and property tax cuts, and legislators fully expect it. Their only question is which cuts will get the red pen.

The tax cuts, contained in 16 different measures, include big breaks for manufacturers and the service industry, and modest relief for property owners.

“I’m very concerned about the wisdom” of what records show is the biggest tax cut in nearly two decades, Lowry said.

He said he will weigh vetoes against looming federal spending cuts, layoffs at Boeing and the Hanford nuclear reservation, and a softening national economy.

The tax cuts are expected to cost the treasury nearly $1 billion over the next four years. The new two-year operating budget is $17.6 billion.

“Who doesn’t want to give tax cuts?” the governor said with a forced laugh. “There isn’t a politician alive who does not want to give tax cuts. But why not make it $3 billion? Why not $8.9 billion? I mean, you listen to some of these people and no tax cut is enough.”

Not true, said House Finance Chairman Brian Thomas, R-Renton. He noted that the tax cuts were a hard-fought compromise between the Republican House and Democratic Senate.

“We would be disappointed, but we would not be totally shocked at vetoes. Obviously, the governor has a different philosophy than we have,” Thomas said.

But anger at the prospect is already building. Senate Republicans late Wednesday blocked the confirmation of Lowry’s revenue chief, Len McComb, saying he will be confirmed only if Lowry spares the red ink.

Some Democrats, though, say privately and publicly that they hope he does veto big parts of the package.

“All the tax rollbacks end up hurting our schools,” said Sen. Darlene Fairley, D-Lake Forest Park. Fairley, who pays business taxes as the owner of an antique store, said she wants to pay them to support schools. “I have different priorities.”

State Revenue Department offi cials said the tax cut package is the biggest since food was exempted from the sales tax in 1978. The value of that tax cut was $350 million, nominally less than the current reduction, but probably worth more in real dollars when inflation is taken into account, they said.

The current reductions include a $148.5 million sales tax exemption for manufacturing equipment and expansion; a $173.1 million cut in the business and occupation tax on gross receipts paid by the service industry; $146.3 million in property tax relief, worth about $19 a year to the owner of a $100,000 home; and assorted other cuts.