Hurdles persist for tax aid measure

By Brad Shannon | The Olympian • Published February 06, 2008

A bill giving a tax "rebate" to low-income working families appears to be running into financial obstacles in the state Legislature.

The House Finance Committee took testimony on the bill Wednesday, but the committee's chairman, Ross Hunter, D- Medina, said he's so concerned about costs that he might not bring House Bill 3234 up for a vote.

"I didn't move it out because it costs $130 million in the next biennium, and I don't know how much money I have," Hunter said. "I'd be surprised if that bill passes this year."

A fiscal note on the measure says it would cost almost $4 million in the short term for administration, including nearly 28 new people on the state payroll to handle claims. Activists say they think those costs are high, however.

The Working Family Tax Credit would piggyback on the federal Earned Income Tax Credit, which sends an average of $1,668 to almost 350,000 low-income working families statewide each year. The proposal would add 10 percent from the state as a rebate on sales taxes that low-income families pay but often cannot claim as deductions on federal income taxes.

Jeff Johnson of the Washington State Labor Council testified in favor of the measure, saying it would put money into the hands of people who most need it while adding a small amount of fairness to the state's regressive tax system. He also said it would stimulate the economy.

Johnson estimated the benefit would range "from about $150 to about $450 per family. It means a couple weeks' worth of groceries, a couple months' of electricity and energy costs."

Top Democratic leaders in the House and Senate say they support HB 3234 and its companion, Senate Bill 6809, but they say a lot depends on the Feb. 15 revenue forecast. Hunter said he has another hearing scheduled Tuesday, so he still could consider moving the measure ahead.

Pam Toal, executive director of United Way of Thurston County, testified in favor of the bill in a Senate committee, saying a family of four earning minimum wage could receive up to $470 a year. Toal noted that a recent survey of food bank clients showed 32 percent were employed, nearly half had children and more than half were disabled. She said they are the people who would benefit the most from a tax credit.