Senate votes to kill two-thirds vote requirement for raising taxes

The state Senate voted narrowly Tuesday to let tax increases pass on a simple majority vote, suspending the two-thirds requirement under voter-approved Initiative 960.

The 26-23 vote on Senate Bill 6843 moved the Democrat-controlled Legislature another step closer to being able to raise taxes as lawmakers work to plug a budget gap now measuring $2.2 billion. Sen. Tim Sheldon of Potlatch and four other Democrats – Steve Hobbs of Lake Forest Park, Claudia Kaufmann of Kent, Derek Kilmer of Gig Harbor and Chris Marr of Spokane – crossed over to vote with Republicans in opposition.

The bill now goes to the House, where Democratic leaders say it might not be voted on until next week. Democrats need Gov. Chris Gregoire to sign the bill into law before tax bills can move easily through the two chambers, because they do not have two-thirds majorities needed to approve taxes. Gregoire favors the bill; her legislative director said she wants to be sure lawmakers can provide revenue to avoid an all-cuts budget.

In a lead-up to their vote, Democrats dropped a plan to amend several details of I-960 besides the tax-vote requirements. Instead, they chose to focus on the vote requirements – a move that is similar to legislative moves in 2003 and again last year dealing with voter-approved measures on teacher pay and funding for public schools.

Rural Democratic Sens. Jim Hargrove of Hoquiam and Brian Hatfield of Raymond led the changed strategy, and it was the way a majority of the caucus preferred to go, according to Sen. Tracey Eide, the Democrats’ floor leader.

But it still drew thundering objections from Republicans, who said its emergency clause prevents a public referendum to overturn SSB 6843 in November.

Republican Sen. Mike Carrell of Lakewood and others complained Democrats were “thwarting the will of the people.’’

But Democratic Sen. Rodney Tom of Medina said the circumstances of the state have changed dramatically since 51 percent of voters approved I-960 in November 2007, and the economic downturn has cost 225,000 jobs in the state.

“This is not an easy vote, but it is the right vote,” Tom said.

“We are in unprecedented times. How many of you have lived through a time like this? How many of you have family members that are unemployed, that are losing their jobs? I do,” said Eide, D-Federal Way. “Think about this. We are in a crisis. We need to think logically. And who do the people of this state turn to when they need help? To you, me, all of us. They turn to us.”

The measure goes to the House, where it will be heard first in the Finance Committee. House Majority Leader Lynn Kessler, D-Hoquiam, said a floor vote is more likely next week.

“I know we are going to do it,” Kessler said.

The vote on I-960 is needed to free up action on other measures to raise revenue.

For instance, the House is waiting to act on a bill that closes several tax “loopholes.” Among those is House Bill 3176, which could be heard as soon as Thursday in the House Finance Committee.

HB 3176 would raise $205 million in the budget year ending in June 2011, according to Rep. Ross Hunter, the Medina Democrat who sponsored the bill and is the chairman of the Finance Committee. The bill closes a tax break that was widened by a 2009 Supreme Court ruling in the Dot Foods case; it also adds an excise tax to privately owned airplanes, eliminates a sales-tax break for out-of-state residents who shop in Washington, and imposes other taxes on out-of-state firms that do a certain minimum amount of business in Washington.

Numerous other tax proposals are on the table, including a tripling of a hazardous-materials tax that would mainly hit oil refiners and makes of pesticides, a cigarette-tax increase, and taxes on candy, bottled water and other products. Hospitals also have a proposal for increasing the tax, or “assessment,” they pay as a way to generate a larger matching payment by the federal government.

Senate Majority Leader Lisa Brown has not ruled out broader taxes on businesses instead.

Sen. Don Benton, R-Vancouver, said after the floor vote that Republicans and angry voters had kept turning back the Democrats’ effort to erase even more provisions of I-960.

“This is a victory for taxpayers, but not a total win,” Benton said in a statement.

Remaining in effect is a requirement to notify residents in the November voter pamphlet of tax increases imposed by legislators.

Whatever happens, Republican Sen. Cheryl Pflug of Maple Valley warned in a floor speech that lawmakers face “a wall of rage” from voters if they repeal or suspend I-960.

Democrats say that misses a larger point. Hatfield, a conservative Democrat, said in an interview before the vote that Democrats face voter anger no matter what they do. He said lawmakers already cut several billion in spending last year, which affected law enforcement and drug-prevention efforts in his district.

“I think we get a wall of rage either way. If we vote for another all cuts budget, we’ll have a wall of rage,” Hatfield said. “The easy thing to do is say, ‘Let someone else solve the problem’ and vote no. That’s irresponsible.”