Published: Thursday, February 18, 2010
Gregoire seeks taxes on soda, candy, cigarettes to plug budget hole
OLYMPIA — Prices of bottled water, soda pop and candy could climb this summer to help lift the state out of its deep budget hole.
Cigarettes and gasoline could be more costly, too, if a collection of new and higher taxes proposed by Gov. Chris Gregoire on Wednesday finds its way into law.
The package, detailed to lawmakers by letter, is the most comprehensive she’s offered and the first in this legislative session relying on consumer spending to raise hundreds of millions of dollars.
Gregoire said she looked at an array of possible taxes before settling on ones she viewed as least harmful to the economy and affected items residents could choose to give up.
“I will say this inartfully: I don’t believe that the economic recovery of the state of Washington relies on cigarettes, candy, gum, bottled water and pop,” she said.
Majority Democrats in the Senate and House may mimic her approach in their proposed budgets and revenue proposals, due out as early as next week.
Members in both chambers said Wednesday there’s internal debate on how much money to raise and whether to do it by raising the sales tax statewide for a couple of years or following the targeted method laid down by Gregoire.
“We’re a ways from deciding that right now,” said Rep. Mark Ericks, D-Bothell, vice-chairman of the House budget committee.
What Gregoire issued Wednesday completes her equation for plugging the $2.8 billion hole in the state budget that runs though mid-2011.
She’s suggested cutting $1 billion in spending, siphoning reserves and grabbing dollars from other funds such as the lottery to cover the bulk of the shortfall. She also stuffs $435 million in expected federal dollars into future reserves.
Her tax package would generate $605 million. When combined with $154 million from revamping tax exemptions, Gregoire will have the amount she’s wanted to raise to sustain certain education, health care and human service programs.
A big chunk of the new revenues will come from tripling the hazardous substances tax levied on oil products and paid primarily by oil refiners.
She’s also suggesting boosting the cigarette tax by a $1 per pack of cigarettes, adding a penny-per-ounce on bottled water and a nickel per 12-ounce can of carbonated beverage, plus charging sales tax on purchases of gum and candy.
“All of these will cost jobs,” said Barbara Bailey, R-Oak Harbor, a member of the House budget committee, adding the amount in the governor’s plan may wind up far smaller than what ultimately emerges from the Democratic-controlled Legislature
The problem with the proposal is it does not revamp state spending habits to avoid another deficit in the next budget, she said
“It is trying to fill a pothole, and sooner or later we’re going to run out of asphalt,” she said. “We just continue to take steps that do not consider the future.”
Gregoire previously proposed raising $105 million through closing loopholes and revising tax laws to comply with lawsuits that extended exemptions to some out-of-state companies.
What she outlined Wednesday marks the most serious breach of her pledge in two campaigns to not raise taxes – a point not lost on Republicans.
Senate Minority Leader Mike Hewitt, R-Walla Walla, in a prepared statement quoted the governor’s 2008 comments that it was not the time to be raising taxes on residents and businesses.
“The economy is much worse today than it was a year ago. Why would that make this a better time to raise taxes? Why the flip-flop?” he said.
In the meantime, Democrats are trying this week to suspend portions of Initiative 960 requiring a two-thirds majority to approve any tax law changes. Once that’s set aside they can quickly advance tax packages.
The House debated the measure for close to six hours Tuesday with a final vote anticipated late Wednesday night. Because it has been amended, the bill will be sent back to the Senate for final passage and on to the governor for her expected signing.
Reporter Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.
Cigarettes and gasoline could be more costly, too, if a collection of new and higher taxes proposed by Gov. Chris Gregoire on Wednesday finds its way into law.
The package, detailed to lawmakers by letter, is the most comprehensive she’s offered and the first in this legislative session relying on consumer spending to raise hundreds of millions of dollars.
Gregoire said she looked at an array of possible taxes before settling on ones she viewed as least harmful to the economy and affected items residents could choose to give up.
“I will say this inartfully: I don’t believe that the economic recovery of the state of Washington relies on cigarettes, candy, gum, bottled water and pop,” she said.
Majority Democrats in the Senate and House may mimic her approach in their proposed budgets and revenue proposals, due out as early as next week.
Members in both chambers said Wednesday there’s internal debate on how much money to raise and whether to do it by raising the sales tax statewide for a couple of years or following the targeted method laid down by Gregoire.
“We’re a ways from deciding that right now,” said Rep. Mark Ericks, D-Bothell, vice-chairman of the House budget committee.
What Gregoire issued Wednesday completes her equation for plugging the $2.8 billion hole in the state budget that runs though mid-2011.
She’s suggested cutting $1 billion in spending, siphoning reserves and grabbing dollars from other funds such as the lottery to cover the bulk of the shortfall. She also stuffs $435 million in expected federal dollars into future reserves.
Her tax package would generate $605 million. When combined with $154 million from revamping tax exemptions, Gregoire will have the amount she’s wanted to raise to sustain certain education, health care and human service programs.
A big chunk of the new revenues will come from tripling the hazardous substances tax levied on oil products and paid primarily by oil refiners.
She’s also suggesting boosting the cigarette tax by a $1 per pack of cigarettes, adding a penny-per-ounce on bottled water and a nickel per 12-ounce can of carbonated beverage, plus charging sales tax on purchases of gum and candy.
“All of these will cost jobs,” said Barbara Bailey, R-Oak Harbor, a member of the House budget committee, adding the amount in the governor’s plan may wind up far smaller than what ultimately emerges from the Democratic-controlled Legislature
The problem with the proposal is it does not revamp state spending habits to avoid another deficit in the next budget, she said
“It is trying to fill a pothole, and sooner or later we’re going to run out of asphalt,” she said. “We just continue to take steps that do not consider the future.”
Gregoire previously proposed raising $105 million through closing loopholes and revising tax laws to comply with lawsuits that extended exemptions to some out-of-state companies.
What she outlined Wednesday marks the most serious breach of her pledge in two campaigns to not raise taxes – a point not lost on Republicans.
Senate Minority Leader Mike Hewitt, R-Walla Walla, in a prepared statement quoted the governor’s 2008 comments that it was not the time to be raising taxes on residents and businesses.
“The economy is much worse today than it was a year ago. Why would that make this a better time to raise taxes? Why the flip-flop?” he said.
In the meantime, Democrats are trying this week to suspend portions of Initiative 960 requiring a two-thirds majority to approve any tax law changes. Once that’s set aside they can quickly advance tax packages.
The House debated the measure for close to six hours Tuesday with a final vote anticipated late Wednesday night. Because it has been amended, the bill will be sent back to the Senate for final passage and on to the governor for her expected signing.
Reporter Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.
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