Gregoire says tax increases an option

OLYMPIA — Gov. Chris Gregoire said Tuesday she would consider tax increases as officials run out of ways to fix the state’s recession- hammered budget.

Gregoire was a staunch opponent of tax hikes during the last legislative session. But she said Tuesday that she’s worried about further cuts to state programs.

“At some point, the people, I assume, don’t want us to take any more cuts,” she said. “I mean, I’m already hearing about, ‘Why did you cut education?’ Well, there weren’t any options. We’re without options.”

The state’s most recent two-year budget patched a revenue deficit of about $9 billion over 2½ years, with about $4 billion in spending cuts and about $5 billion in federal spending and other one-time fixes.

But further weakening of the state’s economy has taken a toll on state government revenue, and officials now think Washington could face an additional $1 billion deficit when the Legislature meets again in January.

The No. 2 legislator on the Senate’s budget-writing Ways and Means Committee, Rodney Tom, D-Medina, said he thinks lawmakers may look into narrow revenue sources, such as higher “sin” taxes levied on liquor or cigarettes.

Raising any of Washington’s three major broad-based taxes — on property, sales or business receipts — seems unlikely, he said, adding that lawmakers will focus on spending cuts and other efficiencies before reaching for new revenue.

“I could definitely say that’s not going to be the first thing we look at,” Tom said. “There’s still a lot of anxiety out there in the economy, and consumer spending is still not rocking and rolling.”

Senate Republican budget chief Joe Zarelli, R-Ridgefield, countered that majority Democrats shouldn’t start counting on new revenue just yet.

While the recession may have hit bottom, the state’s economic recovery is expected to be long and slow. Zarelli said that means Washington must focus on making government more efficient, and ensure that its growth doesn’t outpace the economic recovery.

“We’ve got to understand that as difficult as it is for us, it’s even more difficult for the average man or woman on the street,” Zarelli said.

The great unknown in any debate over higher taxes is a pair of voter initiatives that restrict state revenues.

Initiative 960, already on the books, requires a difficult two-thirds vote of the Legislature to raise taxes. Lawmakers could suspend that law with a simple majority vote next year. But if I-1033 is approved by voters this November, it would place a new cap on the growth of the state’s main checking account, with any excess revenue dedicated to property tax relief.

“If I-1033 passes, I think we just all go home and bury our heads in the sand,” Tom said.

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