Legislators look at rolling back tax breaks to solve budget problem

OLYMPIA — State lawmakers Wednesday considered various ways of ending corporate tax breaks to help balance the state budget but didn’t agree to pursue any of them right away.

People paraded in front of the Senate Ways and Means Committee for more than two hours voicing their views on three measures aimed at generating hundreds of millions of dollars in new tax revenues in the next two years.

Sen. Ed Murray, D-Seattle, speaking before the hearing, said he knows Republicans oppose the measures and pushing them could damage relations that wrought passage of a rare bipartisan budget in the Senate.

However, Murray insisted he planned to give the bills a public airing because “we’re not going to stop being Democrats, and they’re not going to stop being Republicans.”

At the end, the committee took no action and the Democratic chairman gave no indication if he’ll try to move the bills any further in the remaining three weeks of the special session.

On Wednesday, liberal Senate Democrats and their allies had a chance to argue how modifying and eliminating tax breaks could help fill part of the $5.1 billion hole in the next state budget and preserve some human service, health care and education programs.

The committee considered Senate Bill 5944 which would ask voters this November to modify rules put in place with passage of Initiative 1053 last year.

Right now, a simple majority of the Legislature can create a tax break, but it takes a two-thirds vote to modify or repeal it. That’s because eliminating a preference is considered a tax increase, and I-1053 requires a supermajority approval to increase any tax.

Murray wants to place a measure on the ballot to remove the two-thirds vote requirement for altering tax preferences. He and supporters think voters didn’t realize the handcuffs placed on lawmakers by the initiative.

“It would give voters a chance to create a more balanced and rational budgeting process,” said Andy Nicholas, a policy analyst with the Washington State Budget and Policy Center.

Tim Eyman of Mukilteo roared back.

Voters’ passage of Initiative 1053, which, he wrote, coupled with their rejection of an income tax and repeal of the soft drink levy left no doubt about their distaste for taxation.

“What part of the voters’ no new taxes message is unclear? Democratic politicians in Olympia think voters are stupid because they say that voters just didn’t know that 1053 said two-thirds for any tax increase, whether that increase was imposed on some of us or all of us,” he said “You’re proving that you’re the stupid ones.”

A second measure discussed Wednesday would raise $338 million in the next two years by giving a less generous break on the business and occupation tax rates paid by thousands of companies, including the Boeing Co.

Sen. Phil Rockefeller, D-Bainbridge Island, sponsor of SB 5945, said it ensures businesses share in the sacrifice alongside those losing state services. None of the proposed changes could occur unless voters passed the referendum pushed by Murray.

“We think voters deserve a chance to decide if you give tax breaks a hair cut or you cut the lifeline to low-income seniors,” Ingrid McDonald of AARP said.

But businessman Dave Tarzwell insisted the bill will harm firms struggling to survive.

“Taking away exemptions for anyone is just a tax increase. It’s just that simple,” he said.

The third measure, SB 5947 drafted by Sen. Tracey Eide, D-Federal Way, would generate an estimated $6.3 million by ending an exemption on sales tax on purchases of bedding materials for chickens, propane and natural gas to heat chicken pens and bull semen for artificial insemination of livestock.

“The last time I looked, chickens have feathers and are meant to heat themselves,” she said. “Are we going to pick chickens over children?”

Opponents said the millions of dollars they’re counting on won’t come in because people will be forced out of the business of raising and selling chickens.

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