State Senate trims sales tax increase in proposal

  • Fri Mar 19th, 2010 11:15pm
  • News

By Jerry Cornfield Herald Writer

OLYMPIA — Senate Democrats trimmed their sales tax increase Friday in hopes of securing House support of their plan for raising revenue for the state’s deficit-scarred budget.

On a 25-18 vote, the Senate approved a $717.7 million tax package that is about $100 million less than what cleared the chamber in the regular session. It now goes to the House for consideration. Late Friday night, the House was expected to discuss its own tax increase proposal.

That slimming down of revenues comes from scaling back the sales tax increase to two-tenths of a cent, from the three-tenths in the original package. As originally proposed, the increase would be in effect for three years.

Also Friday, Senate Democrats agreed to exempt real estate agents, hospitals and research and development firms from paying the higher tax rate on businesses contained in the proposal.

“To me it is less hurtful,” said Sen. Jean Berkey, D-Everett. “I think what we did today is give the House something they can look at and show we are trying to meet their needs and trying to come together. Now the ball is in their court.”

Sen. Ed Murray, D-Seattle, the chamber’s chief negotiator with the House on taxes, agreed.

“This shows where we could find 25 votes,” he said. “Hopefully this keeps the discussion going.”

As the Legislature begins the sixth day of its special session, an agreement continues to elude the House, Senate and Gov. Chris Gregoire on how to plug a $2.8 billion hole in the budget that runs through June 2011.

Democrats, as the majority party, are the ones trying to hammer out deals on the amount of spending to cut, reserves to tap, transfers to make from other funds and new money to collect from taxes.

On the matter of taxes, the House and Senate have settled on a target of $800 million.

Both endorse a $1-per-pack boost in the cigarette tax to cover roughly $90 million of the total. They also agree to end several exemptions, close some loopholes and start charging sales tax on bottled water.

The biggest bone of contention is the sales tax: The Senate counts on it, but the House doesn’t have in its package, which stood at $680 million on Friday.

For the Senate, the temporary sales tax increase accounts for the largest single chunk of new revenue: $313 million originally, and presumably a third less than that now. The Senate plan calls for providing cash rebates to low-income families who qualify for the federal earned income tax credit.

Sen. Rosa Franklin, D-Tacoma, sponsored the amendment reducing the size of the increase and to make the entire package “more palatable.”

Republicans, meanwhile, are pretty much bystanders to the process. That didn’t prevent them Friday from voicing disapproval.

Sen. Joe Zarelli, R-Ridgefield, the ranking Republican on the Senate budget committee, said the decision to exempt several professions from paying a higher tax shows that Democrats recognize the harm their proposal will bring.

“I still think it’s bad for businesses, bad for jobs and bad for the public,” he said.

Gregoire said Friday there’s been plenty of movement between the House and Senate on a final budget and tax package.

“I am hearing them making good progress. And I am going to encourage that progress be made, only at a faster speed,” she said.

She sounded resigned to the Legislature’s inability to conclude the special session by Sunday, as she requested.

“It’s going to be very hard to get that done, and I am absolutely disappointed,” she said.

Reporter Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.