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Senate Republican Leader Mike Hewitt blasted the plan, saying it’s unwise to raise taxes when the economy is struggling. Sen. Rodney Tom, a Medina Democrat and budget writer for the majority party, called the budget a good start to addressing the state’s $2.8 billion budget problem.
Gregoire said her plan leans on discretionary taxes – including taxes on bottled water, carbonated beverages, cigarettes, candy and gum. It would restore about $769 million in school, health care and other programs for the vulnerable.
But her single biggest source of proposed new revenue – $148 million for the general fund and millions more for local government stormwater projects – comes from her request to triple the state’s toxic-substances tax.
Voters approved a 0.7 percent tax in a 1988 initiative, and Gregoire’s staff members are skeptical that oil companies will pass on the added costs of a new 2 percent tax to consumers – despite claims by oil company lobbyists that it could add 3 cents to 6 cents to the cost of a gallon of fuel.
Gregoire said in an interview with Capitol reporters that consumers can choose to avoid many of the taxes.
“It’s a tough choice not to buy a cigarette. They have a choice not to buy candy and gum. They have a choice not to buy pop and water,” she said.
Businesses that deal in those products, though, see any move to make the products more expensive as a threat. Taxes on cigarettes, candy and bottled water would be detrimental to the state’s businesses, said Amber Carter, a lobbyist for the Association of Washington Businesses.
Pierson Clair, chief executive of Tacoma confectioner Brown & Haley, said applying sales taxes to candy while keeping other food exempt would discriminate against his product.
Candy, he said, is not the only treat people can choose to skip.
“You don’t have to buy potato chips, do you?” Clair said Wednesday. “Do you have to buy peanuts? Do you have to buy cheese? I mean, it goes on and on.”
Brown & Haley employs about 300 workers in Tacoma.
“With our unemployment in Pierce County, do you think we should be taking action that would cause higher unemployment?” asked Rep. Bruce Dammeier, a Puyallup Republican who opposes raising taxes.
Gregoire said she needed to find some way to raise hundreds of millions of dollars, and someone would be unhappy no matter what she proposed. She rejected proposing an across-the-board sales tax increase over worries it would disproportionately hit the poor and might hamper the state as it pulls out of the economic downturn, she said.
The proposal goes to a divided Legislature, and Gregoire said she hopes her tax suggestions add a little “oomph” to majority Democrats’ deliberations in the Senate and House. The 60-day session is scheduled to end March 11, and Democrats appear to be getting stuck as they try to find a tax and revenue plan they can live with.
The Senate is expected to come out with its formal budget and tax plan as soon as Monday, and the House is to follow. Tom said he favors a balanced approach that includes relatively equal amounts of revenues and cuts, but some Senate Democrats want more revenues. Some also are split over whether to seek a menu of small tax increases or one broad sales tax boost.
Tom said Senate Democrats would meet in the next few days.
The Senate leadership has waited for the House to pass a bill to allow tax increases on a simple majority vote. The House was voting late Wednesday on Senate Bill 6130, which temporarily suspends the Initiative 960 requirement for a two-thirds vote to raise taxes.
Lawmakers also are looking for ways to raise money without tax increases. Tom favors privatizing the sale of liquor, and several bills under consideration would have the state move in that direction.
“As we come to an agreement, those could very much be in play,” Tom said.
Hewitt, the Republican leader, disputed Gregoire’s claim she was hitting discretionary spending, noting the toxics tax and its possible effect on fuel prices.
“I don’t know if families just trying to get to work will consider gas prices between three and seven cents a gallon higher ‘discretionary,’” Hewitt said.
Some opponents of further major budget cuts say the plan doesn’t go far enough.
Rep. Brendan Williams, D-Olympia, said Gregoire’s plan is “a year late and several hundred million dollars short. We must find more revenue to avoid an even more apocalyptic budget crisis in 2011.”
