Democratic legislators are exploring how to raise more revenue despite the incoming governor's campaign pledges to oppose tax increases.
Top Democratic legislators are looking for ways around incoming Gov. Jay Inslee's campaign promise to veto general any tax increases.
Sen. Ed Murray, D-Seattle and Senate Democratic caucus leader, said Friday that tax bills in the upcoming legislative session will likely be written so they will go to public referendums.
At a CityClub preview of the legislative session, Murray and three other top legislators all indicated Friday that they believe Gov.-elect Jay Inslee will stick to his campaign promise not to raise taxes. The others were House Speaker Frank Chopp, D-Seattle, House Republican Floor Leader J.T. Wilcox, R-Yelm, and incoming Rodney Tom, D-Bellevue and leader of a Republican-oriented coalition that will assume control of the Senate on Monday.
After the CityClub session, Murray said the way to deal with Inslee's no-new-taxes promise is to design any tax bill so it will be sent to a public vote in the fall. "That's the hand that we've been dealt," he said.
Also afterward, Chopp said: "We're working on something" to deal with Inslee's stance. He declined to elaborate.
Inslee, House Republicans and Tom's 23-Republican-two-Democrat Senate alliance say they won't allow tax increases. Legislative Democrats argue that new taxes are needed if the state meets its education obligations without gutting health and human services programs. Wilcox said that House Republicans intend to help Inslee keep his campaign promise.
The Legislature faces a potential $2.5 to $3 billion revenue shortfall during the 2013-2015 biennium, which includes the additional funding needed to adequately pay for K-12 education, as ordered by a Washington Supreme Court ruling. Republicans say an extra $924 million in education spending is needed in 2013-2015 to meet the Supreme Court's ruling, while Democrats say it's likely to be $1.4 billion. Between 2011 and 2013 the state will have spent $13.65 billion of a $32 billion operations budget for K-12 education. Inslee puts the education shortfall at about $1 billion.
Republicans and Democrats pin some hope for tax revenues on Congress repealing parts of a 1998 federal law that prohibits states from collecting sales taxes from online businesses — which could provide an extra $384 million to $500 million to Washington in 2013-2015.
Democrats have already floated some trial balloons on potential new taxes that might be considered, including taxes on corporate carbon emissions, capital gains, wholesale fuel sales, gum, candy and soda. A 5 percent capital gains tax on more than the first $10,000 in earning could raise $650 million to $1.4 billion. Expiring taxes that could be renewed include a beer tax, a hospital beds tax and a 0.3 percent business and occupation services surcharge — measures that could raise $650 million to $912 million a year.
In a related matter, a trial balloon by Tom to trim the Guaranteed Education Tuition program — dubbed "GET" — received a major setback Friday. At the CityClub forum, where a series of questions were answered via flash cards during a "lightning round," Murray and Wilcox held up cards to indicate they opposed Tom's proposal, while Chopp held up two cards to indicate opposition and waffling.
At a Thursday Associated Press forum, Tom proposed cutting the GET program to help tackle the overall budget shortfall without raising taxes. The GET program allows families to pay for state university tuitions in segments years in advance of a child actually attending college, with the program — not the child's parents — compensating for increased tuition.