Gov. Gregoire's surprising signal on taxes
Come make the case for a tax increase, she tells legislators, adding that she's still against such an idea during a recession. That may be an artful waffle, but it's a distinct shift from her firm line against new taxes at the last session.
CTED
Washington lawmakers face another billion-dollar-plus budget shortfall in the 2010 session. That means, with Democrats in control, tax hikes are back on the table. That’s the somewhat surprising take-away after lawmakers returned to Olympia last week for committee days. Last session, when the deficit was even higher, few dared mention the T-word until a little flurry by a few Democrats in the waning days.
Now Gov. Chris Gregoire, of all people, jump-started the tax talk in response to a question from Associated Press reporter Curt Woodward. The governor said her “door is open” to lawmakers and advocates who want to make the case for a tax package come January. “I’ve told them come on in, convince me that that’s the right thing to do and that the people will support it,” said Gregoire in a briefing with Capitol reporters. “At some point the people, I assume, don’t want us to take any more cuts. I mean I’m already hearing about why did you cut education? Well there aren’t any options, we’re without options.”
That's a significant change in tone from a year ago when the governor was campaigning for re-election. Back then she forcefully dismissed talk of new taxes: “Now is not the time... period, not the time to consider raising anything,” insisted Gregoire at one of her debates with Republican challenger Dino Rossi, who kept insisting that Gregoire would raise taxes if reelected.
Today the Democratic Governor explains her position back then this way: “I didn’t want revenue last year because I couldn’t figure out how you could you do a revenue package that wouldn’t hurt the economy — either individuals or businesses. I’m still stuck in that rut. But I’ve told the leadership come make your case."
Senate Majority Leader Lisa Brown, a Spokane Democrat, was a rare politician open to the idea of tax reform during the last session, even though it went nowhere. Brown isn’t wasting the moment. Last Thursday she once again raised the issue of taxes on her blog:
“Gov. Gregoire made news this week when she did not rule out taxes as a partial budget fix in 2010. And the governor is right: We already cut too much from critical health services, education, and public health to balance the budget last session. Making more cuts risks real and lasting damage to our families and communities. The governor also pointed out that, this year, there will be no federal stimulus help. While that puts a revenue increase squarely on the table for the legislature and governor to consider, any revenue package needs public understanding of the problem — and public support of the solution — in order to succeed.”
During the 2009 legislative session, Brown, who reportedly has gubernatorial aspirations, used her blog to float the idea of a new tax on high-wage earners. This time around Brown says her readers know where she stands, but she’s not “going to presuppose what a possible revenue proposal might look like at this point.”
As Brown says, the need to get public buy-in on any tax increase is key. Next year is an election year with all House members and about half the senators up for re-election. There’s also the Tim Eyman factor. Currently state lawmakers are bound by Eyman’s Initiative 960, which requires a two-thirds vote of the legislature or a vote of the people for tax increases. Democrats are making some noise about amending 960, but Brown told me last week it won’t be a wholesale revision or undoing.
So what kind of taxes might be on the table? Probably not a temporary sales tax increase. That idea was bandied about this past session, but never got traction. It would be an especially bitter pill to swallow in King County where the sales tax is already approaching the dreaded 10 percent.
There are always sin taxes, a legislative favorite since they’re politically safe, but they don’t necessarily raise much money. Lawmakers could also look at extending the sales tax to professional services like lawyers and accountants. But targeting well-defended interests means lawmakers would have a stiff fight on their hands. Then there are the more out-of-the-box ideas like Sen. Brown’s tax on the rich. Another option Democrats will likely consider is closing some tax loopholes — which also stirs up fierce opposition from affected groups.
None of these ideas is easy and none solves a billion-dollar-plus budget problem for the coming short session. (The budget passed in the last session is a two-year budget, so this next session is mostly adjusting for further shortfalls.) The fall tea leaves suggest Democrats will rebalance the budget in 2010 with a combination of cuts and taxes.
Like what you just read? Support high quality local journalism. Become a member of Crosscut today!
Twitter
Facebook
RSS Feeds
Comments:
Posted Mon, Oct 5, 11:18 a.m. Inappropriate
It seems to me that both Gregoire and Brown are missing the boat here. Whether or not there is a tax increase proposal will much more depend on the fate of Initiative 1033 than anything they say. And they are pretty much leaving the discussion to others.
Eyman's simplistic approach to government and taxes is to do everything he can to eliminate them. He is only interested in pursuing trying to implement the long ago discredited trickle down economics theory that you reduce taxes on the rich and the public will benefit.
Eyman proposes to do this in several ways. One is to freeze the current budget under I-1033 at its current recession level and only allow adjustments for inflation and population. Unfortunately inflation adjustments at best only allow you to buy this year's services next year at their inflated price. And population only adjusts for more people needing services. It doesn't increase te level of individual services.
But the real trickle down comes in his property tax rebate proposal which is really a wealth transfer scheme. Property tax rebates are not based on sales taxes or other fees one pays. Last year some 57% of state revenue came from sales taxes which everyone pays.
But not everyone owns property. Some 35% of households in the state are not owner occupied. So seniors and working families and other who rent will still pay sales taxes and other fees at the same level but will lose twice by not getting a tax rebate or see public services restored or increased when tax collections rise above the baseline.
Initiative 1033 only makes our current tax system more regressive by shifting the tax burden even more onto those who don't own property who are usually also lower income.
Who benefits the most are wealthy property owners because the rebate is not based on the sales taxes you pay but on the amount of property you own. The more property you own the more your rebate.
And in addition some 40% must go to commercial real estate. So large corporations, real estate developers, shopping mall owners and owners of apartment buildings benefit most.
And the whole idea is based on trickle down economics, that somehow helping rich property owners pay their property taxes is a benefit to our society. Eyman says this is more important than paying for educating our children or providing health care for seniors and children, paying for additional police and firemen, cleaning up pollution, keeping Puget Sound healthy, keeping parks and libraries open, fixing our roads and bridges, more transit in urban areas, sidewalks and all the rest.
Initiative 1033 is a question of political philosophy and priorities. Eyman's view is the selfish one, that all that matters is that people pay as few taxes as possible, regardless of their ability to pay or the need for public services. It involves no public commitment to the greater good but only to the philosophy that it's everyone for themselves and the public be damned.
Hopefully the voting public will see the danger of Eyman's lack of a caring public vision and his myopic of humanity that extends only as far as his pocketbook and no further.
Posted Mon, Oct 5, 5:09 p.m. Inappropriate
DON'T RAISE TAXES! It only drives business out of state.
Get ANWR opened up and boost the WA economy, create 12,000 mostly union jobs, and lower cost of fuel.
Eliminate ethanol mandates. Ethanol increases deadly ozone pollution and increases cost of fuel for consumers, industry, and government.
Provide $8000 school vouchers and lower overall cost of education. Get school districts to consolidate and reduce redundant overhead.
Fund the schools by sending nearly all the money in block payment to the schools and let them decide how best to spend it.
Get colleges and universities to offer many of their courses and degree programs and save big bucks for parents and schools.
Combine Dept of Natural Resources and Dept, Dept of Ecology, of Fish and Wildlife.
Implement tort reform and loser pays, eliminate joint and several liability "deep pockets", and watch companies stop departing WA state. This will save industry and government money, and make business more efficient.
This recession ISN'T over. Pension funds are underfunded, some insurance companies may fail, commercial real estate is on the ropes, and we WILL see another dip.
Posted Mon, Oct 5, 5:11 p.m. Inappropriate
Correction: Get colleges and universities to offer many of their courses and degree programs ONLINE and save big bucks for parents and schools. Force professors to spend more time in the classroom and less time on writing.
Posted Mon, Oct 5, 10:47 p.m. Inappropriate
The Governor isn't even considering taxes in her budget. Austin Jenkins post makes it clear there aren't any real taxing options. Senator Brown makes it clear they won't tinker with I-960 much. I don't think the Feds will provide another stimulus for Washington. The polling on 1033 shows a majority wants to CUT taxes even if they clear their heads by election day.
Unfortunately with or without 1033 it looks like drastic cuts for the state budget from which we won't recover for a long time.
We have the 8th highest total income per capita in the nation and yet we will likely slash funding for education. I-1033 threatens to add insult to injury by further cutting revenues per capita below the levels of Mississippi and South Carolina.
I-1033 should be an embarrassment for the citizens of Washington.
Login or register to add your voice to the conversation.