WA State: Senate Democrats unveil 1st major tax-hike plans
By CURT WOODWARD Associated Press Writer
KOMO News
February 4, 2010
Olympia, WA - (AP) - The Washington state Legislature's ruling Democrats took their first serious step toward tax increases Wednesday, unveiling plans to close an array of tax exemptions and dump the voter-approved roadblocks that make it harder to raise revenue.
The new revenue package's public debut kicks off serious debate about raising taxes in the aftermath of a crippling recession, amid the highest state unemployment rate in 25 years.
But it won't be the last word on tax hikes at this year's legislative session, which is focused almost entirely on closing an estimated $2.6 billion hole in the state budget.
The first step is to amend Initiative 960, which requires a difficult two-thirds vote in the Legislature to raise taxes. Voters have approved the policy several times, but lawmakers can amend such laws after they've been on the books for two years.
The I-960 bill discussed Wednesday would suspend the two-thirds vote hurdle until July 2011.
In addition, any tax increases that pay for voter-mandated programs - such as teacher raises or training for home-care aides - would be permanently exempt from a two-thirds vote. So would any measures that change or remove tax breaks, transfer money between state accounts, or respond to court rulings that could decrease tax collections.
The bill also would water down public notice requirements for tax proposals, making mandatory cost projections cover six years instead of 10 and limiting extensive reports to tax bills that get an actual public hearing.
Finally, the measure would remove the requirement for a nonbinding public advisory vote on any tax hikes that aren't subject to a referendum.
Once those changes are made, the Democratic majority would be able to start voting on bills that raise revenue. The first major proposal was a wide-ranging plan to shrink an assortment of tax exemptions and loopholes, including a change that would tax some out-of-state businesses' transactions in Washington.
That bill would deliver about $270 million to the budget, while also reversing a recent state Supreme Court decision that would make the deficit about $95 million larger if not addressed.
Democrats said their two-part plan was a reasonable, responsible way to respect the broad strokes of I-960's policy while also making it possible for legislators to deal with a mounting financial crisis.
Senate Majority Leader Lisa Brown, D-Spokane, noted that the Legislature solved a roughly $9 billion deficit last year without raising taxes, relying instead on major spending cuts, federal aid and one-time fixes.
"Continuing to cut deeply into essential public services at a time when the public needs them the most will do damage to our communities and our long-term economic future," she said.
Republican leaders, who have little ability to control the game plan in Olympia, said Democrats were ignoring the fragile nature of the state's economy.
"Working people and employers are just trying to survive," said Senate Minority Leader Mike Hewitt, R-Walla Walla. "They should not be asked to bail out poor state-spending decisions through higher taxes."
Conservative activist Tim Eyman said he was flabbergasted by the wide range of changes that lawmakers might make to his I-960, which was approved with a narrow margin in 2007.
"Even though everyone saw this coming, it still is galling to see them do it," Eyman said.
But House Finance Committee Chairman Ross Hunter, D-Medina, said there are some parts of the bill that simply make no sense.
If a simple majority of legislators can't repeal a tax exemption that isn't performing as intended, he said, the appetite for legitimate tax breaks will simply dry up.
"It's hard to get two-thirds of our Legislature to agree on when to adjourn for dinner, let alone agree to end a bad tax exemption that has outlived its usefulness," he said.
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The I-960 bill is Senate Bill 6843. The tax exemption bill is House Bill 3176.