Legislature nearing deal on tax package

OLYMPIA – Legislative Democrats and Gov. Chris Gregoire appeared close to a “deal” Wednesday on a package of taxes that would fill part of the state’s budget hole and end a special session without a hike in the sales tax. Close, but apparently no cigar yet. Gregoire, Senate Majority Leader Lisa Brown and House Speaker Frank Chopp met for slightly more than a half hour late Wednesday afternoon to discuss the latest tax proposal. The meeting ended without a formal announcement and Brown and Chopp left the governor’s office by a side door, avoiding reporters waiting in the lobby. Before the meeting, Brown said they were close on what she called a “go home” deal, because it would allow the Legislature to adjourn by next Tuesday, which is the final day allowed for the special session. The proposal has been stripped of the Senate Democrats’ plan for a bump in the sales tax, which was most recently at one-tenth of a cent, or a penny on a $10 purchase. It does include an increase in the tax on beer, she said, but declined further comments about what taxes could be raised because the package was under negotiations. “Probably there’s a tax in there that everyone can hate,” the Spokane Democrat said. While raising some business taxes through mid-2013, it would preserve a permanent increase of the business and occupation tax credit for small service businesses, she said. The state’s operating budget through June 2011 has an estimated $2.8 billion gap in what economists expect will come in through existing taxes and what is planned to be spent for existing programs and wages. The Democrats’ proposed budget revision would make some cuts and count on some extra money from the federal government. The latest tax proposal under discussion would raise an estimated $800 million in new taxes through June 2011, a level that was critical to getting support from Senate Democrats. Dropping the sales tax has been a key for getting support from House Democrats. Republicans in both chambers are expected to vote against any tax increase, as they have all year. Because of that, Democratic leaders will have to get at least 25 of their members in the Senate and 50 in the House to pass the tax package and the budget it supports. Before the meeting with the governor, Brown said she was close to having 25 “yes” votes in the Senate. The House votes aren’t so sure. After the meeting with the governor, House staff said as many as 25 representatives were expected to take part in a teleconference Wednesday evening for a briefing on the tax proposal and to indicate whether they would support it. If they can reach agreement, legislators would be called back to begin work on Friday.