House Democrats ready to pull plug on sales tax hike
By DAVID AMMONS
OLYMPIA, WA(AP) -- House Democrats are preparing to jettison a $350 million sales tax increase proposal, eying replacement taxes and further budget cuts as they prepare for a state budget faceoff with the Republican Senate.
Democrats on Friday signaled that they will drop the proposal for a 0.2 percent sales tax hike -- a penny on a $5 purchase -- after enduring several days of attacks from Republicans, businesses and editorial pages.
The GOP Senate and Democratic Gov. Gary Locke have drawn the line against a general tax increase -- specifically an increase in the sales, property or business taxes. Increases in fees, tuition and other revenue sources are considered acceptable to them, and they haven't ruled out "sin tax" increases being proposed by the Democrats.
House Democrats didn't officially withdraw the sales tax plan, but Finance Chairman Jeff Gombosky, D-Spokane, conceded that he hadn't rounded up enough votes in his own caucus to pass it.
Gombosky and House Speaker Frank Chopp, D-Seattle, notified the Locke administration that the plan will have to be dropped.
Gombosky tentatively settled on a new revenue package worth about $140 million, including higher public utility taxes on trucking, raising $80 million, and a higher business and occupation tax rate on legal services, generating $60 million.
If those are the only additional ideas acceptable to the caucus, that would mean cutting the Democrats' $23.3 billion two-year budget plan by about $200 million, Gombosky said.
The governor's budget director, Marty Brown, said Locke hasn't necessarily endorsed the new plan, but appreciates that the sales tax apparently is off the table.
"The governor has said all along that he didn't like a general tax increase," Brown said in an interview. "They're being creative to look for other revenue ideas. It seems pretty smart."
The Democrats' package still includes about $300 million in other taxes, including a 50-cent-a-pack increase in the cigarette tax, higher liquor taxes and a new sales tax on candy and gum.
The House delayed an expected vote on the budget until Monday or Tuesday, in order to give the Finance Committee more time to work on the new package.
"We're obviously struggling, with so many people unhappy with the revenue side of things," said House Appropriations Chairwoman Helen Sommers, D-Seattle.
Some members flatly opposed the sales tax proposal, yet others felt that a broad-based tax was an essential part of the package, she said in an interview.
Sommers said the additional budget cuts, on top of $1.7 billion in cuts already accepted by the House Democrats, would be "very difficult" for her members. A proposed $100 million pay boost for 26,000 home care workers would be on the line, she said.
Sommers said she doesn't expect to wait for the tax package to jell before sending the House budget over to the Senate, even though Senate budget Chairman Dino Rossi, R-Sammamish, has insisted he won't start budget talks until the House passes its full spending-and-taxes package.
Sommers also said she doesn't intend to cut the $200 million before sending the House budget to the Senate. She said she thinks she will have the necessary 50 votes to approve the work-in-progress budget.
Rossi continued to pressure the House to peel back the taxes and lower its spending level.
"We don't believe they have the votes to pass out their tax increases, so there's no reason to negotiate on their wishlist of raises for government employees," he said.
"A no-new-taxes budget isn't a Republican or Democrat thing to do. It's simply what the Legislature should do to ensure that Washington continues efforts to get the economy moving and get people back to work."
Neighboring Idaho approved a 1-cent increase in its 5-cent state sales tax on Thursday.
One of the many anti-tax messages that Washington lawmakers got this week was a new study by the Washington Policy Center, a conservative free-market think tank, that said a sales tax hike would have "a broad and detrimental impact on the state economy."
The study calculated that more than 2,100 jobs would be lost, business
investment would fall $22 million and personal income would drop $132
million as the impact worked its way through the economy.
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