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Gregoire proposes sales tax hike, budget cuts

by David Ammons | November 21st, 2011

Gov. Chris Gregoire has proposed a $2 billion all-cuts rewrite of the ailing state budget, along with a plan to ask the voters to OK a three-year state sales tax hike of a half-cent to head off some of the cuts.

The Democratic governor said the Legislature already has slashed the state budget by $10 billion in the past three years, “shredding” the state safety net and whacking K-12, higher education and other areas.  She said her latest list of budget cuts would be too damaging to school kids, public safety and the most vulnerable — and thus her decision to seek a temporary sales tax increase.

The increase, from 6.5 percent to 7 percent, would raise about $500 million per fiscal year, and would head off her plan for reducing the school year by four days and cutting levy equalization for property-poor districts, deep cuts in higher education and prisons, and her proposals to cut social and health services to the poor, including the Disability Lifeline and the Basic Health Program.

Gregoire insisted that she and lawmakers have  “reset” state government at a “leaner and, sadly, meaner” level and that “This is not about scare tactics.”  She said the sales tax, last adjusted by the state in the recession of 1983, would sunset after three years.  She repeatedly urged Washington residents to “Please stand with me,” and said she will stump the state to campaign for the tax plan if  legislators put it on the ballot.

Democratic leaders praised her willingness to lead on the tax issue, and Republicans pushed back.

A referendum bill takes only a simple majority in both chambers and voter approval.  Democrats control the House 56-42 and the Senate 27-22, although both chambers have some conservatives called “road kill Democrats” who have voted with Republicans on fiscal matters.  It takes 50 votes in the House and 25 in the Senate to pass a bill, so there is little room for maneuvering.

Gregoire is aiming for the March 13 special election date, which would require a decision by the Legislature by Dec. 30.   The governor has called lawmakers into emergency session beginning next Monday. That session can last up to 30 days.  The Legislature already has a regular session scheduled for January.

The sales tax increase would take effect in July.

The governor also released a list of $59 million in various fees that legislators could pass with a simple majority, and a more controversial list of tax items that total $282 million and would require a two-thirds vote in both chambers or public approval.  The latter includes a business tax increase on Big Oil and banks, repealing out-of-state sales tax exemptions, imposing a 5 percent tax on luxury cars, a 1.5 percent tax on gambling and lottery winnings, and a 25-cent-a-pack increase in the state’s cigarette tax, now about $3 a pack.

 

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