Everett, Wash.
Published: Saturday, March 8, 2008

Some in Washington state could see sales tax rebate

Those who qualify for the Earned Income Tax Credit could get the state break, but Republicans warn it hasn't been funded.

By Curt Woodward
Associated Press

 OLYMPIA -- Lawmakers are moving ahead with a sales tax rebate program for poor Washingtonians, but Republican critics say the plan amounts to election-year posturing because there's not yet any money behind the promise.

The tax credit program, sponsored by state Sen. Craig Pridemore, D-Vancouver, could cost the state about $110 million in lost sales tax revenue in the next two-year state budget, and almost $165 million in the subsequent budget.

Instead of flowing into the general fund, that cash would be refunded to poorer taxpayers who also qualify for the federal Earned Income Tax Credit. State budget officials estimate that about 337,000 people might apply for the linked state sales tax rebate in the 2010 budget year.

But lawmakers aren't paying for the tax refunds yet. The measure, expected to pass the Legislature in the coming week, sets up the program in the state Revenue Department, which would eventually send out rebate checks.

Money for the actual rebates will need to be budgeted in the next two-year state spending plan, and in subsequent state budgets if the program continues. If the money isn't set aside, the checks won't be mailed.

Pridemore, the No. 2 budget writer for majority Senate Democrats, should be in a strong position to make sure the tax refunds are bankrolled. He said paying for the refunds should be a high priority for the next Legislature.

"Otherwise, what you're saying is that the working poor, the people who qualify for this tax (credit), should be bearing the burden" for other state programs, Pridemore said.

But GOP skeptics say the state shouldn't be spending millions of dollars on administrative costs when there's no guarantee the program will actually start in 2008.

Instead, Republicans argue the Legislature could put more money in needy taxpayers' hands by giving an immediate tax break of some kind.

"It's an empty promise," Rep. Ed Orcutt, R-Carrolls, said in House debate on the bill. "We put a trigger in the appropriations budget and say, 'If we've got the money, we'll do it.' Then we don't have any money.

"And we go out and boast about what a great thing we did, when we didn't do anything. We passed an authority that we're never going to implement."

Senate GOP budget chief Joseph Zarelli, R-Ridgefield, said passing the program without paying for its benefits also has a political advantage for majority Democrats in the upcoming fall elections.

"One could go say, 'I voted to give you a tax break, and those silly guys didn't,'" he said. "But 'Oh, by the way, you're not really going to get anything.'"
© 2009The Daily Herald Co., Everett, WA