Senators spar over tax hike package

OLYMPIA – After more than four hours of sometimes contentious debate over a proposal to raise taxes on consumers and a wide range of businesses, Senate Democrats and Republicans put off for at least a day a vote on the overall plan.

They debated whether the $805 million in extra taxes was the biggest in state history, whether it would kill jobs or save essential services, and whether it should get voter approval before taking effect.

Minority Republicans had amendments challenging almost all the 21 different tax changes, and while a few Democrats like Chris Marr, D-Spokane, joined them on most points, they were seldom able to muster enough votes to make significant changes.

Except one: After repeatedly questioning whether the increased sales tax would be temporary as Democrats insist, Sen. Joe Zarelli, R-Ridgeview, proposed an amendment that would strip legislators of their per diems during the session if the tax doesn’t end in 2013. It passed, apparently unanimously, on a voice vote.

That was a rare moment of agreement in an afternoon that featured some sharp disputes and heated words. Sen. Mark Schoesler, R-Ritzville, leapt to his feet when Sen. Adam Kline, D-Seattle, said Republicans’ rhetoric smacked of “new McCarthyism.” Sen. Lisa Brown, D-Spokane, objected when Sen. Pam Roach, R-Auburn, called the tax bill “vindictive and predatory.”

Lt. Gov. Brad Owen, who presides over the Senate, several times warned legislators to “temper their remarks” and speak to the issues, not impugn each other’s motives or character.

Among the tax changes are an extra three-tenths of one percent on the sales tax now levied on all consumer goods through July 1, 2013; extending the sales tax to bottled water; raising the business and occupation tax paid by service industries to 1.75 percent from 1.5 percent of gross receipts; and changing laws that cover out-of-state firms that use in-state “direct sellers.” The measure also removes some exemptions for individual companies or specific industries, but offers some tax credits and savings for small businesses and low-income residents.

Along with some $800 million in budget cuts, it’s a balanced approach to the state’s budget problems and spreads the burden around, Brown said. After Republicans said repeatedly it was the largest tax increase in history, she said that’s wrong. The largest came in 1981, when the state also faced a bad economy – and when the GOP controlled the Legislature and the governor’s mansion.

A three-tenths of 1 percent sales tax increase is 3 cents on a $10 purchase, or 30 cents on a $100 purchase, she said.

But it’s not just a third of a cent, countered Sen. Cheryl Pflug, R-Maple Valley, “it’s another third of a cent.” For construction firms, farmers or large industries buying big-ticket items, “three-tenths of a percent is real money,” said Schoesler.

In one of their last gambits, Republicans Don Benton of Vancouver and Janea Holmquist of Moses Lake tried an amendment to hold off any tax increases unless the voters approved them in November. The right of referendum was important to the state’s pioneer founders who came West to get away from oppressive governments in the East, Benton said.

“They knew how dangerous and tyrannical a government can be,” he said.

But Sen. Ken Jacobsen, D-Seattle, corrected Benton’s history. Referendum wasn’t in the state’s constitution until 1913, he said.

Sen. Rodney Tom, D-Medina, said members should vote for the bill if they support it and against it if they oppose it: “Don’t build budgets around referendums.”

But in the end, senators delayed voting on the overall bill, probably until this afternoon. Majority Democrats hold 31 seats in the Senate, but in a sign they may have only the bare minimum of 25 votes needed to pass the tax increases, they called for a recess because one of their members, Sen. Paull Shin, D-Lynnwood, was absent to attend a family funeral.