Gregoire: New tax package the only option left

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by Associated Press

NWCN.com

Posted on April 9, 2010 at 6:16 PM

OLYMPIA, Wash. -  Gov. Chris Gregoire declared an end to any lingering tax-increase negotiations Friday, saying her "go-home" tax package is now the only way for lawmakers to end their special session and avoid sweeping budget cuts.

House and Senate Democratic leaders have spent most of the week scrounging up votes for the proposal. It would raise about $800 million through June 2011 through higher taxes on service businesses, beer, pop, candy, gum, cigarettes, out-of-state companies and more.

It's the final piece of a blueprint for plugging the state's projected $2.8 billion budget deficit. The rest would come from a combination of spending cuts, federal bailouts and one-time accounting maneuvers.

Gregoire, a second-term Democrat, was forced to call the overtime session after the Democratic majority failed to agree on a revenue package during its regular two-month session. Lawmakers are now creeping close to Tuesday's end of the special session.

Gregoire turned up the pressure Friday, saying the tax package under consideration is the final option -- unless Democrats want her to carry out a previous threat to balance the budget by broadly slashing spending, as allowed under state law.

"There isn't an alternative. The alternative is we're done, we go home and I impose 20 percent across-the-board cuts," she said. "That is not acceptable to anyone."

Most lawmakers have been away from Olympia for several days as leaders negotiate a deal on taxes and spending. They were scheduled to return Saturday, and Gregoire said it's possible lawmakers won't be able to confirm an agreement until then.

House Speaker Frank Chopp, D-Seattle, said he's reminding legislators that further cutbacks to key public services are at stake.

"It's basically reminding people about what we're about to do, which is to benefit the public interest of literally hundreds of thousands of people around the state," Chopp said. "Whether it's public schools or health care, or care for the disabled, that's what it's all about."

Pressure also mounted outside the Capitol, with grocers and some convenience store operators joining the state's pop bottlers to oppose Gregoire's final offer on taxes.

Bottlers already have started a campaign against the proposed pop tax, which they said will stretch into the fall elections if necessary. The alternative is lost jobs, said Bob Slack, a regional vice president for Coca-Cola Bottling Co. of the Northwest.

"If they do need to raise revenue, they should do it in a broad-based manner," Slack told reporters Friday on the Capitol steps. "They shouldn't single out the beverage industry that has great-paying jobs in the state of Washington."

Supporters of a comprehensive tax package, including many stalwarts of the Democratic Party's base, are ready to support any ballot-measure challenge to the Legislature's eventual revenue plans.

The biggest piece of the proposed tax package is a temporary surcharge for service businesses, estimated to generate about $246 million. Hospitals would be exempt, while small businesses would see their tax credit double.

The beer tax would add another 50 cents per gallon to major brands, the equivalent of about 28 cents on a six-pack. That would raise about $58 million, with microbrews exempt.

The proposed pop tax would add 2 cents to every 12-ounce container, with bottlers under $10 million in volume exempt. That raises about $38 million.

The higher pop, beer and service taxes would expire in mid-2013.

Candy and gum also would be subject to the state's 6.5 percent sales tax, with a business-tax credit for Washington companies such as Tacoma-based Brown & Haley, makers of Almond Roca. That would raise about $29 million.

The balance of the roughly $800 million package would be collected through an array of additional taxes, most of which were agreed to by House and Senate members in previous proposals. Those include higher tobacco taxes, extension of the sales tax to bottled water and collecting more money from out-of-state businesses -- mostly banks.

Gregoire said she would only contemplate calling a second special session if lawmakers had a budget queued up for votes and simply needed more time to push the legislation through.

"I learned my lesson," she said. "I'm not calling a special session and having everybody sit around and look at each other. Not on the taxpayers' dime."

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