Governor works on jobs proposal

Session: She says she'll have tax request to help 'hardest hit' ready for lawmakers next week

January 5, 2010 

Gov. Chris Gregoire plans to unveil a job-creation proposal next week that could include four or five tax incentives for businesses to help hard-hit areas of the state.

But she hasn’t settled on details of a tax request to the Legislature, and she may not have details to share until after lawmakers start their 60-day session next Monday.

Gregoire, a second-term Democrat starting her sixth year in office, said in a short pre-session interview Monday that she and aides are still debating whether to ask for temporary or permanent tax increases to stave off cuts to health and education programs, and her decision might hinge on what kind of taxes she ultimately picks.

Details on the jobs plan are tentatively expected by Jan. 14, and include “11 different ideas” for improving the business climate.

“It’s intended to help the hardest hit, which includes small business, some of our geographic areas that are hardest hit, and to really stimulate opportunities we see out there where we can be much more competitive,” Gregoire said, declining to say more. But she did say there might be tax incentives for businesses, and legislative director Marty Brown said there could be as many as four or five small tax breaks.

Gregoire thinks the Democrat-controlled House and Senate will take early action on her slimmer government plan. It calls for elimination of as many as 78 boards and commissions and transfers of small agencies to larger bodies.

Gregoire issued a draft budget last month that calls for $1.7 billion in cuts to health care, education and other programs to close a $2.6 billion shortfall. She said her own plan was “unjust” and pledged to seek about $700 million in replacement funds to avoid cuts to many health and education programs.

But she is holding off on making specific recommendations for tax increases, because she wants to learn what kind of federal aid Washington might receive from Congress. She apparently won’t ask for tax increases to cover funds she is able to get from federal government.

“My restoration list is a little bit over $700 million,” Gregoire said. “I really am feeling very good that we’re going to get it (federal aid). I just can’t tell you when and how much.’’

The extra money would help continue health insurance coverage for children, sustain the Basic Health Plan for low-income workers, keep levy aid going to poorer school districts and college financial aid available to moderately low-income families, and other school and health programs.

Gregoire, House Speaker Frank Chopp and others spoke Monday with members of the state’s congressional delegation and representatives of Sen. Maria Cantwell, who organized the briefing about federal aid. Gregoire joined the talks by phone and came away pretty sure the state will get a couple of hundred million dollars in Medicaid and fiscal stabilization money to help through the next year.

There also might be help for the state’s Basic Health Plan in the Senate’s health reform bill, but it’s unclear how that will play out in a compromise with the House. And it’s uncertain if federal health reform will provide help to the BHP, which Gregoire is proposing to cut, in time to save it.

In the meantime, Gregoire said her staffers have “done a very healthy job of scrutinizing” tax exemptions, finding “some loopholes, areas that are really subject to misuse, abuse and fraud.” She declined to give an example, but hinted that it will be out-of-state businesses that pay some of the tax increases she proposes.

“Some of these have to do with how we treat people who do business inside the state versus people who do business outside the state to the detriment of those inside the state. That is just not fair to our homegrown businesses inside the state,’’ she said.

Despite the challenges ahead, Gregoire said she expects to work with lawmakers more easily than a year ago when she concedes her relationship with Democratic leaders was “tense.” She said she’s also had discussions with Republicans.

As a result, she expects movement on issues that got bottled up due to a late start last year – such as her proposal to streamline state government.

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