OLYMPIA — As Gov. Chris Gregoire tries to steer them toward taxing candy, soda pop and bottled water, many in the Legislature’s majority party prefer increasing the state sales tax for a while to help balance the budget.
Democrats in both chambers are warming to the idea of boosting the state sales tax for three years. And, depending on which lawmaker you speak with, the amount of increases ranges from a penny more for each dollar spent, down to a fourth of a penny. Currently, the state sales tax adds 6.5 cents on every dollar.
House Democrats spent four hours deliberating and debating this and other revenue-raising options in a Tumwater restaurant Thursday night without reaching any conclusions.
“There really is no consensus. We are looking at the numbers in the governor’s plan and what are the different ways of getting there,” said Rep. Dawn Morrell, D-Puyallup, the caucus chairwoman who ran the meeting. “We would likely raise it in a different manner.”
Senate Democrats consider the governor’s tax package issued Thursday as something from which they can cull ideas to help clear a trail for bringing in hundreds of millions of dollars to patch part of the projected $2.8 billion hole in the budget.
“Anytime the governor speaks, it does frame the contents,” said Sen. Rodney Tom, D-Medina, vice chairman of the Senate budget committee. “Our caucus members are all free agents. Some have made up their mind and they have a direction. I’ll wait and see how this impacts them.”
This week the House and Senate are expected to roll out their respective plans for balancing the budget that runs through mid-2011.
Everyone will be looking to see how each deals with the $2.8 billion gap, which represents the difference between the cost of government today and the amount of revenues the state expects to pocket in the remaining 16 months of this budget cycle.
Lawmakers, like the governor, will surely propose using reserves, transfers from other funds like the lottery and cuts in spending in every state agency.
It is expected the House and Senate will be looking to raise in the neighborhood of $1 billion to sustain programs serving public schools and college students and providing medical care and social services for the poor.
Closing tax loopholes, eliminating tax preferences and a near tripling of the fee paid by users of hazardous substances will get them part of the way.
Getting the rest of the distance is where the governor’s plan and that of lawmakers may diverge sharply.
Half of Gregoire’s $605 million package is revenue from a buffet of new taxes on bottled water, soda pop and candy plus another $1 for each pack of cigarettes.
Democrats who prefer her idea detest a higher sales tax and think the items she’s picked on are ones consumers can learn to live without.
“Among Democrats I think there is still significant concern about a general sales tax increase and it’s impact on working families,” said Rep. Marko Liias, D-Edmonds. “I don’t think it’s a done deal.
Rep. Hans Dunshee, D-Snohomish, said he liked “the smorgasbord because people can make decisions.”
When asked if Gregoire’s plan offers Democrats a shield against political attack, he laughed.
“There’s no cover provided. When they hit me with a (campaign) piece that says I raised taxes, I can’t say she provided me cover. I take responsibility for what I do,” he said.
Democrats wanting to push up the statewide sales tax think it is a better and more lucrative source of money in the current economic situation.
Enacted in 1935, the original rate was 2 cents on every $1 purchase. It’s climbed steadily and in 1982 stood at 5.4 cents on each dollar. A year later, with the state facing a deficit, the Legislature increased it to its present level of 6.5 cents per dollar. The rate charged in stores is usually higher, because cities, counties and other agencies collect a portion as well.
This session, some Democrats like the idea of adding as much as 1 cent to the rate and then slowly decreasing that as the unemployment rate dips. Others back a smaller increase with a specific expiration date.
House Majority Leader Lynn Kessler, D-Hoquiam, is one of them.
“There are more and more members going the way of the sales tax that is temporary and that has triggers so it is reduced as the economic recovery picks up,” she said.
“It is a way in which we all take part in helping get us through in this unprecedented downturn in the economy.”
Rep. Kelli Linville, D-Bellingham, the lead budget writer in the House, has warmed to the idea, too.
“I think everybody could pay a little and I think everybody can benefit a little,” she said. “I think it’s the simplest thing and the most sustainable thing we can do over our recovery.”
Gregoire has repeatedly rejected hiking the sales tax but is making no attempt to blunt discussion on the idea in the Legislature.
“I’m not going to put a line in the sand, but I’ve made it clear that I find it troubling,” she said.
“This is my offer to be of help to them,” she said of her package. “Let’s have the debate; that’s appropriate. I’ve shown them a way to go home.”
Reporter Jerry Cornfield: 360-352-8623, jcornfield@heraldnet.com.
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