$800 Million From Where?: Gov. Won’t Veto Sales Tax, Senate “Wants Real Movement” From House
One day into a special session of the Washington State Legislature, Democratic negotiators for the state House and state Senate have agreed on a tax package of $800 million to help close the $2.8 billion state budget deficit, according to legislators. The House and Senate have not agreed on what specific taxes should be raised, however.
Many liberals in the House Democratic caucus continue to be opposed to the Senate’s proposal to increase the sales tax by 0.3 percent to raise $300 million. Moderates in the Senate’s Democratic caucus are reluctant to embrace a number of smaller measures passed by the House including: ending the “first mortgage” tax exemption for large banks ($67 million), no longer giving out-of-state residents a break on sales tax ($41 million) and extending the sales tax to candy and gum ($30 million).
State House Speaker Frank Chopp, D-Seattle, state Senate Majority Leader Lisa Brown, D-Spokane and Governor Christine Gregoire have been holding face-to-face negotiations. While Gov. Gregoire continues to oppose a sales-tax increase, she has told Majority Leader Brown that she will not veto a budget agreement that contains a sales tax increase, according to state Senator Ken Jacobsen, D-Seattle.
The Senate has a budget and revenue team of Majority Leader Brown, Senate Ways and Means Chair Margarita Prentice, D-Renton, state Senator Ed Murray and state Senator Rodney Tom. The House has separate negotiating teams for spending and taxes: The spending or budget team is House Ways and Means Chair Kelli Linville, D-Bellingham, and state Rep. Pat Sullivan, D-Covington; The tax negotiators are Speaker Chopp and House Finance Chair Ross Hunter, D-Medina.
Sen. Tom says the negotiating teams are not yet conducting face-to-face negotiations, but rather having staff members send paper offers back-and-forth. That’s how the agreement on an $800 million tax package was reached. Tom, however, cautions that this is not a major breakthrough. “It’s very interesting how you get to 25 votes in the Senate and 50 votes in the House when you have a House that says, ‘No sales tax’ and a Senate that says, ‘ No first mortgage and no candy-and-gum,’” says Tom. “There’s only about $300 million in agreement. Where are they going to find $500 million?”
Tom outlined Majority Leader Brown’s approach to negotiations. “What are the big six items where we have differences?” He mentioned the differences between the House and Senate on spending for the Basic Health Plan (insurance for low-income people), money for General Assistance Unemployable (cash grants for disabled people), the ending fund balance (how much money should the Legislature keep in reserve in case the economy gets worse), contributions to public employees benefits and the specific makeup of the tax packages. “You need to list them and say, ‘We are willing to give on these three and you need to give on those three,’” says Tom.
Tom is not optimistic about the House adopting this approach. State House Speaker “Frank Chopp doesn’t negotiate that way. He’ll give you his three that are worth $3 million and take your three that are worth $300 million,” says Tom.
Senator Jacobsen says many Senators are wary of negotiations with the House. “There has been a long-term pattern where the House prevails over the Senate,” observes Jacobsen.
Sen. Tom says this year may break that pattern. “Lisa [Brown] wants some real movement from the House before she makes concessions,” says Tom.
Comments
By Reality Check on March 18th, 2010 at 8:18 am
All taxes end up being paid by the consumer, sooner or later.
Oregon shoppers will not drive to Washington for the privilege of paying 8% to 10% more for everything they buy.
Drop exemptions for Oregon residents who cross into Washington to shop – and businesses will move a couple miles across the border to Oregon where neither Washington nor Oregon shoppers will pay taxes to Washington.
Many Washington residents will drive a couple of miles into Oregon to buy from the larger, cheaper retailers who moved to Oregon.
Businesses left in Washington will have less volume and will raise prices on Washington shoppers who do not drive to Oregon, which will encourage more shoppers to drive to Oregon.
B&O tax revenue will drop when the volume of sales drop so tax revenues will also drop.
By Reality Check on March 18th, 2010 at 8:18 am
They plan to raise taxes by Nearly one Billion dollars and only 300 Million of that is proposed to be an honest, above board, tax on the consumers, and that is in the Senate only.
The House wants to raise all the taxes as hidden taxes, they believe nobody will blame them when the rate at which jobs leave one of the highest tax states in the United States accelerates.
Who are they going to tax when all the jobs are gone ???
By Reality Check on March 18th, 2010 at 8:29 am
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Let’s not forget one of the most important things the Legislators are taking care of this session, and last session.
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Government employees retirement savings took a huge hit over the last two years, just like those in the Private sector.
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These legislators have quietly diverted existing tax revenue to their own retirement accounts, and other government employees retirement accounts, to make up for the retirement loses they would have to live with if a government bail out of their retirement accounts was not part of the state budget last session and this session.
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Of course the tax payers will not have their retirement accounts bailed out, they just get to pay to bail out the legislators retirement savings.
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Pretty clever, divert money for programs tax payers like to your own retirement, then raise taxes to fix the crisis you caused by diverting tax dollars to your own retirement.
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Sweet deal when you make the rules and you do not mind cheating and a few lies to cover everything up.
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By Reality Check on March 18th, 2010 at 8:34 am
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Remember, the current ran for re-election denying that a budget crisis that would require massive tax increases was imminent.
Of course she forgot all about that a few days after she was re-elected.
Since then the main goals have been increase payments to government retirement accounts, slash spending for education, and push for huge, permanent, tax increases.
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How long will the current batch of bait and switch politicians running WA State be tolerated by the voters ???
By Reality Check on March 18th, 2010 at 8:43 am
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But one thing all Washingtonians can be proud of, Washington State has one of the most well funded State Employee Pension systems in the United States.
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The people of Washington State will always slash their children s grade school, high school and college education before they would allow the employees of the state of Washington to take a hit on their retirement savings the way the average Washingtonian did.
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That is the number one priority every Washington citizen had when they voted – make sure those politicians and state employees enjoy first class retirement benefits.
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By Reality Check on March 18th, 2010 at 9:17 am
Another source of pride for Washington residents is the the health care system for the state employees.
Washington state runs too health care systems without federal government interference.
One is the state employee insurance system and the other is the Basic Health insurance system for private workers.
Obama has praised the Basic Health system as the kind of government run health care all US citizens should have the option of getting.
State legislators have maintained the top notch Government Employee health insurance system through this budget crisis, both last year and this year, which is where the priority should be.
Basic Health, well those are private workers being insured, and they are, rightly, different class of workers and they deserved a “different solution” to the budget crises.
Less than a year ago, shortly after the Governor was re-elected, The legislators doubled the premiums and forced half of the private workers off of the Basic Health Insurance system to save money for more important government programs, like the government worker health care system.
Then, three months ago, the governor announced that she was taking the remaining private workers on the government run Basic Health system hostage. Unless the legislators raised taxes by almost 1 Billion dollars the Governor announced she would shut down the Basic Health Insurance system in three months ( June 2010 ) and cancel all health insurance coverage for the private workers using this state insurance plan.
To her credit, the Governor did not take the government employees on health insurance hostage and she made sure that even if education had to be slashed and taxes were NOT raised, government employees would continue to enjoy some of the best health insurance coverage in Washington state.
The Governor has once again made all Washingtonians proud.
By John on March 18th, 2010 at 9:54 pm
Got an axe to grind there “Reality Check?” If you come back to make a seventh comment, how about getting the facts straight about the State government’s responsibility to honor it’s pension obligations. You act like it has a choice to not fully fund benefits. It doesn’t.
You would probably fit in better over in the Seattle Times comments section.
By John on March 18th, 2010 at 10:07 pm
So Reality Check, I copied “highest tax states in the United States” from one of your comments and pasted it into the google search box and came up with this chart from 2008.
http://www.census.gov/govs/statetax/05staxrank.html
Note that Washington ranks 17th in total tax per capita. Yes, that is approximately in the top third, but look at the states listed after Washington. Are you familiar with the phrase “standard of living” Reality Check? You ever been to Arkansas? You can save $7 a year in taxes by moving there. You’ll get an even better deal in Texas. You can save a whopping $930 a year living in South Dakota.