A blunt lawmaker once told me that Democrats in Olympia walk around with two numbers stamped on their foreheads: 1994 and 133.
1994 is the year Democrats over-reached, raised taxes, and lost their majority status; 133 is number of votes by which Gov. Chris Gregoire eventually won the 2004 gubernatorial election. Those numbers serve as haunting reminders to Democrats — at least those who experienced the 1994 bloodbath and the 2004 embarrassment — of days they hope not to relive.
It is against this historical backdrop that the majority party enters the 2010 legislative session. There’s reason for Democrats in Olympia to be concerned. Nationally, political analysts are watching for signs that another 1994-style voter backlash against Democrats is fomenting.
All this helps explain why last week Speaker of the House Frank Chopp sent strong signals that a general sales tax increase is all but dead on arrival this year. Lawmakers, who just convened for a 60-day election year session, must close another $2.6 billion hole in the budget. On TVW’s “Inside Olympia program, I asked Chopp if a sales tax hike is on the table, off the table,or on the edge of the table. “Well, I think it’s more on the edge of the table,” answered Chopp. “I think most folks worry that it might add to the more regressive nature of our tax system. So a general sales tax, I think there are a lot of people concerned about that.”
Chopp did acknowledge that one sales tax proposal remains in the mix. That’s a temporary one-cent increase coupled with a tax credit for lower-income working families based on their federal Earned Income Tax Credit. This is a concept Senate Majority Leader Lisa Brown, D-Spokane, has mentioned and the Budget and Policy Center in Seattle is pushing. The liberal think tank projects it would raise $1 billion in revenues in fiscal year 2011.
But even this idea, with its offset for the working poor, would be risky for Democrats. And Chopp told me, in the “final analysis,” he doubts it will pass. Polling last year showed the electorate is very cool to any type of sales tax hike, especially one that would push the combined state and local sales tax in King County over the dreaded 10-percent mark.
Furthermore, consumer spending is a key part of the economic recovery and Democrats have to be mindful of the psychological impact of any tax increases on consumers, not to mention voters.
So instead of looking at general tax increases, the code term of the session for Democrats is going to be “tax fairness.” What this means is Democrats are going to target people and businesses they think aren’t paying their fair share — and that’s how they’re going to sell it to the public. Who do Democrats have in their sights? For starters: out-of-state corporations, airplane owners, and sinners.
Gov. Gregoire has a proposal to charge the B&O tax on services and royalties to out-of-state companies that do big business in Washington. This would mostly snare banks and credit card issuers.
In the Senate, Ed Murray, D-Seattle, the go-to guy on revenue options, thinks Democrats will have to do more than just close loopholes in order to solve the budget gap. That doesn't necessarily mean an across-the-board tax hike, but Murray mentions two ideas that are floating around the legislature: taxing water bottles and soda pop syrup. Both could raise considerable revenue. Murray is particularly concerned that state's capital construction budget is now imperiled by the state of the operating budget.
Speaker Chopp told me about a plan to charge an annual excise tax for privately owned airplanes similar to what boat owners pay. He said he doesn’t think “wealthy” aircraft owners deserve a break when public education is being cut. There are also proposals to increase the cigarette tax and end the sales tax exemption for gum, candy, and bakery goods.
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