Washington voters should have a chance to preserve endangered state programs by suspending $3 billion or more in tax breaks, the state's largest labor organization argued Thursday.
The Washington State Labor Council’s proposal provides a strong counterpoint to the budget-cutting message resonating from Democratic Gov. Chris Gregoire as state lawmakers plow into a legislative session dominated by a $4.6 billion two-year budget deficit.
Voters in November rejected major statewide tax increases, and they reinstated a difficult hurdle of a two-thirds legislative majority or voter approval to raise taxes. In her State of the State speech this week, Gregoire said voters want government to live within its means and that leaders “must recognize government cannot do it all.”
But on Thursday, Labor Council President Jeff Johnson said the state’s budget deficit also makes it clear that Washington can’t afford to continue offering the buffet of tax breaks that have built up over the years.
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“Whether they’re good, bad or indifferent, we simply can’t afford them right now,” Johnson said.
Labor Council officials said they were interested in targeting broader categories of tax exemptions as opposed to specific items, such as last year’s failed attempt to raise taxes on soda, candy, bottled water and some processed foods.
However, they pointed to tax breaks for legal services, investment advice, plastic surgery and private jets as examples of breaks that could be suspended to finance health or education programs.
Johnson and other Labor Council officials also warned that lives could be at stake if vulnerable Washingtonians see state health services eliminated because of the budget crunch.
Association of Washington Business President Don Brunell said the idea of reviewing tax exemptions’ performance is valid. “It’s just like in business: You’ve got to justify everything you do, and I think the state ought to be looking at the same thing,” he said.
But Brunell cautioned that a drive to suspend broad categories of tax exemptions without careful review was not the right approach. He also said that such uncollected revenue shouldn’t necessarily be counted as a guaranteed tax stream.
“If the company chooses to spend the money in another state or someplace else, they’re not going to get those taxes anyway,” Brunell said.
Among the Labor Council’s other priorities for the 2011 Legislature is a plan to increase unemployment aid by offering new benefits of up to $50 per week for jobless parents with children.
The money could be drawn from the state’s unemployment trust fund and would attract federal matching money, making it good for pairing with a proposed cap on a portion of employers’ unemployment taxes, Labor Council officials said.
Brunell was cool to that idea, saying businesses fear that increased benefits would lead to higher unemployment insurance costs.
Gregoire’s plan for unemployment insurance differs from the Labor Council’s idea: She would use increased training services as a way to attract federal matching money.