Eighty-seven days into state lawmakers’ work, Democrats showed the public a tax proposal Saturday that they hope is their ticket out of Olympia.
“The one thing people can’t say,” Sen. Ed Murray, D-Seattle, quipped while unveiling the plan, “is Democrats rushed to raise taxes.”
But now events are moving quickly. Less than six hours after the plan emerged, it cleared the House on a vote of 52-44.
In the next three days, majority Democrats hope to move the tax package through the Senate; put the finishing touches on their spending plan; and give a boost to the construction industry by spending borrowed money on energy-efficient upgrades for schools, an idea that appears to have a new lease on life.
Doing all that would allow for an exit by Tuesday, the expiration of a 30-day special session that has dragged on amid disagreements among Democrats over what taxes to raise.
“We struggled to find the appropriate balance between the services that people of the state of Washington need, and the level of revenue necessary to produce that,” said Rep. Ross Hunter, D-Medina, who, along with Murray and other negotiators, hammered out the latest agreement.
SELECT TAXES
They settled on raising taxes on cigarettes, beer, soda pop, bottled water, candy, gum, and a host of professionals: lawyers, accountants and real estate agents, to name a few.
Tax writers at times tried to keep the brunt of the burden away from small and in-state businesses.
Their proposal would end tax exemptions for certain out-of-state companies and double a tax credit that could help small businesses – say, a barber shop or a small accounting firm – avoid the tax increase for service professionals. Tax credits or exemptions would go to microbreweries, candy makers with Washington workers, and the smallest bottlers of soda pop.
Businesses complained they would be hit as they try to recover from a recession.
All Republicans and a few Democrats voted no on the proposal.
South Sound Democrats who broke with their party included Reps. Christopher Hurst of Enumclaw, Troy Kelley of Tacoma, Mark Miloscia of Federal Way and Larry Seaquist of Gig Harbor, who also opposed earlier versions of the tax package, plus Rep. Geoff Simpson of Covington, who switched from his support last time around.
SCHOOL BONDS
A public hearing is scheduled for today on the school bond proposal, which has languished since its approval by the House early in the 60-day regular session.
Senators, including Majority Leader Lisa Brown of Spokane, have been concerned about the effects on the state’s debt limit of borrowing $860 million for the voter-approved bonds.
But its main backer, Rep. Hans Dunshee, said he believes he has the votes for Senate approval of a modified version of the plan.
Jordan Schrader: 360-786-1826
jordan.schrader@thenewstribune.com
TAX DETAILS
The tax package unveiled Saturday would raise $667 million. Added to other legislation, including a $1-per-pack cigarette tax increase, it would bump new revenues to nearly $800 million. Among its provisions:
• Increase business taxes on most service businesses from the current 1.5 percent to 1.8 percent. The increase would last three years, and a tax credit for small businesses would permanently double. Raises $242 million.
• End a tax exemption for certain out-of-state businesses that do sales in Washington through representatives. Raises $155 million.
• Triple the beer tax, adding about 28 cents to cost of a six-pack. The increase would last three years, and microbrewers’ first 60,000 barrels would be exempt. Raises $59 million.
• Increase tax on soda pop by 2 cents per 12 ounces of pop, also for three years. Bottlers’ first $10 million in sales would be exempt. Raises $34 million.
• Apply sales tax to bottled water, also for three years. Raises $33 million. There are exemptions for people who don’t have potable water or have a medical need for bottled water.
• Apply sales tax to candy and gum, permanently. Candy makers will get a $1,000 tax credit for each of their employees for the next two years. Raises $31 million.
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