Gov. Chris Gregoire has ruled out tax increases next year. But some lawmakers and human services advocates say they still hope the Legislature can look at closing tax breaks to raise money in the 105-day session that begins in January.
Gregoire and lawmakers face a real deficit of several hundred million dollars through June and a predicted shortfall of $4.6 billion for the two-year budget cycle that starts July 1.
One contrarian idea that some advocates are toying with is to put tax breaks on the ballot next November for voters, in effect raising funds in 2012 for safety-net programs that are likely to be axed in 2011.
Another idea with more details is pushed by Democratic Rep. Larry Seaquist of Gig Harbor. He wants to create a process similar to a military base-closing commission that would recommend tax loopholes for closure every two years, and he would put a few on the ballot every two years to pay for school improvements.
“We should get it out of the Legislature with a two-thirds vote and let the public make the commitment,” Seaquist said last week. “We are no longer in a muscle-powered economy. We are in a brain-powered economy. We need to have our education system running at top speed.”
A legislative advisory committee already reviews the state’s more than 500 tax exemptions, but Seaquist said it fails to link the public cost of tax breaks or weigh those needs against school programs that also need money.
Under his plan, the Legislature would set up a panel of educators to identify which specific education reforms and outcomes they wanted to fund every two years. This would link funding for education to the reforms that lawmakers adopted in 2009.
Lastly, Seaquist would have his panel pair those outcomes with specific tax breaks that voters would consider in a statewide election.
Seaquist did not identify tax breaks to close, but his goal is to raise $2 billion in new revenue every two years for education improvements, including preschool, K-12 and colleges.
That would be in sharp contrast to the estimated $1.6 billion in public school cuts that Gregoire’s proposed two-year budget would require.
Few tax breaks are ever closed in Olympia, but Seaquist said House Speaker Frank Chopp, D-Seattle, encouraged him to keep working on the idea. He hopes to file his proposal early in the session.
That is not the only tax-loophole approach under consideration. In a scenario suggested by labor and human services advocates, voters could be given blunt choices on the ballot, such as ending a tax subsidy for large out-of-state banks or cutting the subsidy for children’s health insurance or another health program.
But Republicans at the Legislature are chilly to any revenue ideas – even ideas that go to the ballot. Under Initiative 1053, which voters approved handily Nov. 2, any tax increase or repealed tax subsidy would need a two-thirds majority vote to pass, or it would need to go to voters for ratification.
That makes it a tall order to raise revenues. And less than two months after voters repealed new taxes on candy, pop and bottled water, Gregoire is ruling out taxes while insisting that she wants to see Republicans and Democrats come together on a spending plan that centrists in both parties can support.
Gregoire said recently that the vote results were clear: Don’t raise taxes, and have government live within its expected means.
Republican Rep. Gary Alexander of Thurston County said efforts to raise revenues next year will lead only to stalling by majority Democrats on cuts that simply need to be made. Democrats have a majority of 56-42 in the House and 27-22 in the Senate.
“If there is an opportunity to restore (funds), they won’t go there,” Alexander said. “I think we should do what the governor is saying – to take some early actions by eliminating whole programs.”
But the alternatives are not appealing to many advocates. Gregoire’s budget proposals would cut state spending by at least $3 billion and shift other state funds to plug the $4.6 billion budget hole in 2011-13.
That is on top of more than $5 billion in spending reductions authorized by Democrats in the House and Senate over the past two budget cycles.
Some advocates for services say they plan to raise questions about raising revenues and think lawmakers should take steps to blunt the budget cuts.
“The governor has placed a flag half a mile behind the front line (to say), ‘Follow me and retreat.’ Someone has to put down a flag on the progressive side and say, ‘Follow me to examine some new options,’” said Jerry Reilly, an advocate for elder-care programs who said he was speaking for himself.
“I think frankly it’s fair to say the public has sent conflicting messages,” said Adam Glickman, spokesman for Service Employees International Union 775NW, which represents more than 39,000 home-care workers who face cuts of 10 percent in their working hours under Gregoire’s budget plans.
“The public has sent messages that they strongly support quality care for seniors and people with disabilities. They strongly support investing in education, while at the same time they have approved initiatives that limit the funding for those initiatives,” Glickman said.
Brad Shannon: 360-753-1688