Gov. Jay Inslee said Thursday that extending the three-year life of temporary taxes on service businesses and beer beyond their June expiration would not violate his no-new-taxes pledge.
“They do not raise taxes on people over the existing level that, in fact, are being paid today. And since they do not increase taxes, they are not a tax increase,” he said at his first news conference since Wednesday’s inauguration. “That is a numerical, mathematical conclusion that Huskies and Cougars, no matter where you went to school, can agree with on a mathematical basis.”
But, Inslee said, he is not actually advocating the taxes be extended, at least not yet.
“So I favor a good budget that we eventually will have that will be balanced, that will move forward to the extent humanly possible on school funding and will not increase taxes as much as humanly possible,” Inslee said.
The biggest hurdle Inslee or any other Democrat who backs tax extensions has is in the Senate, where the 23 Republicans have joined two Democrats in a majority coalition caucus. Republican lawmakers disagree with Inslee’s assessment of whether the extension would be a tax increase.
“My first priority is to help the governor keep his (no-tax) pledge,” Senate Republican Leader Mark Schoesler of Ritzville said. “We believe temporary really meant temporary on those taxes.”
The Department of Revenue says that extending a 0.3 percent surcharge on the gross receipts of service businesses would bring in $534 million over the next two years, and the beer tax would bring in an additional $101 million. The Legislature faces a nearly $1 billion shortfall to keep delivering programs written into current law, and some lawmakers say an additional $1.3 billion to $1.4 billion is needed to answer the state Supreme Court’s ruling call for more education funding.
Schoesler said he has talked to people in his community, including an accountant and a barber who understood the taxes on service businesses were temporary. “They are pillars of our community, and they are being punished,” he said.
The surcharge on service businesses added 0.3 percent to a 1.5 percent tax rate on a business’ gross receipts. The temporary beer tax is 50 cents per gallon.
Also at his news conference Thursday, Inslee revisited some of the green-jobs themes he spoke about in his inaugural address. He said that his first act as governor was to send a letter to a “cutting-edge, clean-energy” company that is thinking of moving its headquarters.