OLYMPIA — The state Senate has approved two bills that free up more than $500 million to help reduce Washington’s massive budget shortfall, as lawmakers move into the final week of their scheduled legislative session.
The largest chunk of money approved Sunday was some $430 million in deferred state pension payments, achieved by changing various formulas that determine how much money flows into pension investment accounts.
The skipped payments are part of a huge amount of one-time money Democrats need to balance the budget, which is running a roughly $9 billion deficit between projected revenue and spending through mid-2011.
Republican critics said taking the savings now wasn’t responsible, since the state still must meet its pension debts in the future. The bill passed the Senate on a nearly party-line 30-17 vote.
The second bill factoring into the budget solution forces construction contractors to give up their wholesale tax exemption, switching instead to a sales tax rebate on materials and services that are resold to their customers.
The contractor rebate plan is expected to raise about $105 million over two years, which will help Senate and House budget negotiators avoid some deeper cuts to public services.
Democratic supporters said the plan would cut down on fraud in the system, stopping dishonest contractors from avoiding the sales tax on purchases that aren’t ultimately resold as intended.
The measure passed on a vote of 26-21, with a few conservative Democrats joining Republicans in opposition.
While getting rid of fraud is a good idea, the rebate plan also ends up pushing more burden onto small businesses, said Senate Republican budget chief Joe Zarelli, R-Ridgefield.
“We need to remember that businesses are doing the state a favor: They’re collecting sales taxes on behalf of the state, and they’re doing it for free,” he said.
Both bills now go to the state House for consideration. They’re part of the final push to make ends meet as lawmakers struggle to balance the state budget, which is moving into the final stages of negotiations.
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