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New taxes possible in 2010

Two top Democrats say a huge drop in revenue means tax hikes may be needed.

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By Jerry Cornfield
Herald Writer
OLYMPIA — Another crushing drop in expected revenues has pushed the state’s projected budget shortfall to $2.6 billion, prompting a key Senate Democrat on Thursday to say new taxes should be considered in 2010.
A report issued Thursday shows monthly tax collections continue to fall well below estimates and receipts will be $760 million less than what the state’s chief forecaster, Arun Raha, predicted in September.
Raha on Thursday described the problem as a “revenue-less” recovery from a recession that’s pushed consumers into saving.
The latest drop in tax income means the shortfall is up to $2.6 billion in the budget that runs through June 30, 2011, according to the governor’s budget office.
For Gov. Chris Gregoire, this represents the amount of red ink she needs to erase in her proposed supplemental budget to be delivered to legislators next month.
By law, Gregoire’s plan must be balanced without the use of new revenue from tax or fee increases. She said earlier this week she is looking to cut spending, tap into reserves and transfer a few million dollars from other accounts into the general fund used to keep government operating.
State Sen. Rodney Tom, D-Medina, an architect of the current budget, said lawmakers need to look at existing and new “sin taxes” and possibly close some tax loopholes as well as reduced spending. A possible new tax could be levied on candy and other sweets.
Rep. Ross Hunter, D-Medina, chairman of the House Finance Committee, said only with such a combination of approaches can the Legislature cover the gap.
“We’re not going to raise $2.6 billion in taxes,” he said, adding it’s unlikely that amount of money can be made up with cuts either.
Republican lawmakers resolutely oppose raising taxes in the manner suggested by those members of the majority party.
“We cannot afford to raise taxes on our working families and businesses,” said Ed Orcutt, R-Kalama.
A year ago, Gregoire faced a projected gap of $6 billion between the amount of incoming revenues and the costs of maintaining government services plus paying for new programs and pay hikes.
It grew to $9 billion by this spring. Gregoire and the Democrat-controlled Legislature eventually balanced the bottom line by using federal stimulus money, transfers within the budget and $3.3 billion in cuts.
The Legislature convenes Jan. 11 for a scheduled 60-day session. Raha’s next revenue forecast will come out in February and shape lawmakers’ budget-writing efforts.
Jerry Cornfield: 360-352-8623;
Story tags » TaxesGovernorLegislature

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