Editorials

New tax hard to swallow; Washington Democrats pull fast one in Legislature’s last weekend

Forty eight hours is enough time for most people to digest their dinner. Fun fact: It’s also the estimated time the average human needs to digest a piece of chewing gum.

But 48 hours definitely isn’t enough time for the Washington Legislature to evaluate, debate and approve a new tax.

It’s not long enough for 147 elected lawmakers to hear from the public, including stakeholders who’d be hit hardest by the tax. And it’s not long enough to consult experts who can assess the consequences of imposing the tax, including the risk of lawsuits.

Unfortunately, Democrats who control state government let deadlines get the best of them during the Legislature’s closing weekend, cutting corners as they galloped toward the finish line.

The result is a major change in the state’s business-and-occupation tax structure, which people inside and outside the Capitol were given no real chance to chew or swallow, much less digest.

To be clear, the $52.4 billion, two-year state operating budget that lawmakers adopted Sunday reflects some good decision making, both in what was included and what wasn’t. For example, Tacoma and other financially struggling school districts will get levy flexibility with some accountability measures built in. And the budget was balanced without a controversial capital gains tax, much to Republicans’ relief.

The benefits of more than three months of public hearings, diligent caucus budget writing and bipartisan bargaining shouldn’t be underestimated.

But Democrats threw caution aside in the last 48 hours by steamrolling a steep increase in the B&O tax paid by large, out-of-state banks, nearly doubling it from 1.5 percent to 2.7 percent. They’re counting on it to generate $133 million in the 2019-2021 biennium.

“It’s an enormous new tax on a significant part of our economy; it deserves more careful deliberation before we put it into law,” warned Sen. John Braun of Centralia, a top GOP budget writer and a voice of common sense as the proposal was debated in the Senate Sunday.

Reasonable people can disagree on the merits of raising taxes. But a blatant disregard for public process, which often turns up in the waning days of legislative sessions, stinks. It’s an equal-opportunity odor that both political parties alternately have on their hands, depending who’s in charge in Olympia, as they face pressure (including from the news media) to finish their work on time.

Here’s how it wafted up this year:

On April 10, a “title only” bill was introduced in the House — a political shell game in which budget leaders create an empty bill as a placeholder.

Last Friday, the 103rd day of the 105-day session, the shell was filled. Legislators got their first look at the B&O tax increase on banks with at least $1 billion in global net profits. Hours later, the House approved it, 53-43.

On the penultimate day of the session, the bank tax zipped through the Senate Ways & Means Committee with limited public testimony. And on the last day, it passed the full Senate, 25-24.

The timeline was so compressed, the process so flawed, that even some Democrats broke ranks. Sen. Mark Mullet of Issaquah, a veteran of the Senate banking committee, said the tax is a lawsuit waiting to happen; it likely violates the U.S. Constitution’s Commerce Clause, Mullet said, because it targets out-of-state banks.

But with no time to consult state lawyers and other experts, the bill was approved on a wing and a prayer. The razor-thin Senate vote hardly inspires confidence.

Will Gov. Jay Inslee sign it into law? He could send legislators a strong message by issuing a partial veto while approving the rest of the budget.

Not out of sympathy for big banks, but out of recognition that a slapdash tax plan makes for bad public policy, accountability and transparency. To rush it through the Legislature in 48 hours is indefensible — and indigestible.

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