State House passes $668 million of $800 million tax increase

OLYMPIA — House Democrats ended weeks of struggle Saturday and approved a collection of tax increases that will push prices of candy, gum, bottled water, beer and soda pop higher this summer.

On a 52-44 vote, Democrats passed the bill to raise $668 million by taxing those consumer goods, increasing taxes on service businesses and ending several exemptions.

It is the biggest chunk of nearly $800 million in taxes Democrats are increasing to patch over part of the state’s $2.8 billion budget deficit. A boost in cigarette taxes covers most of the difference.

Today, Senate Democrats may try to follow suit, although it is not certain if leaders have all the needed votes.

“I think we were at 25 before, and I think we will be at 25 again,” Senate Majority Leader Lisa Brown said.

Saturday, the House conducted a rare voice vote shortly before 6:30 p.m. It followed speeches by only one Democrat and four Republicans, an anti-climactic finish to weeks of scrapping among Democrats on the contents of the package, a dispute forcing the special session that is to end Tuesday.

Republicans criticized the majority party for not trying harder to remake government into a less costly operation before pursuing taxes.

Rep. Kirk Pearson, R-Monroe, one of the speakers, said the increases “will hit the poor the most” by driving up the cost of items they enjoy, like candy and beer.

Afterward, Rep. Mary Helen Roberts, D-Lynnwood, said she didn’t have qualms voting for the bill because it focuses state spending on what is most important to her constituents.

“I’ve never had anybody disagree with me that the state’s top priorities should be education and children and that’s what I voted for today.”

The state faces a $2.8 billion deficit in its budget that runs through June 30, 2011. Democrats hope to erase it with spending cuts, reserves, transfers and the new tax revenues.

Under the bill, those dollars could start rolling in May 1 when the business and occupation tax rate paid by service businesses would climb from 1.5 percent to 1.8 percent.

Starting June 1, beer taxes would rise and candy, gum and bottled water would be subject to the sales tax. On July 1, an excise tax of 2 cents per 12-ounce can of carbonated beverage would kick in. The increases are set to expire June 30, 2013.

State Treasurer Jim McIntire said revenues generated from the bill will prevent the state from running out of money this fall as he warned about last year.

“If they will pass this I am not concerned about cash flow. We will have plenty of cash,” he said.

Upon arriving House Democrats encountered a gantlet of workers from bottling companies opposed to the inclusion of the soda pop tax.

Rep. Hans Dunshee, D-Snohomish, predicted their presence wouldn’t alter the outcome and the weight of new taxes was “not going to change anybody’s buying habits.

“It just means I’m going to have to pay a little more for my Fresca,” he said.

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

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