Politics & Government

Panel opens door for tax hikes

OLYMPIA - Armies of people on two sides of Washington's tax divide crowded into state House hearing rooms Saturday.

On one side, people argued that more budget cuts would put too many vulnerable people in peril. On the other side, a legion of business interests and anti-tax activists warned that higher taxes would kill off jobs. They urged lawmakers to uphold Initiative 960, which requires a two-thirds legislative vote to raises taxes, as a barrier to increased taxes.

In the end, majority Democrats on the House Finance Committee voted to make it easier to raise taxes, approving a bill to suspend I-960 temporarily. But they delayed action on a tax package that would raise an estimated $350 million or more with levies on a range of items including private airplanes, gold-coin dealers, and out-of-state businesses and residents who do business or buy things in Washington.

The vote was 6-3 along party lines to suspend Tim Eyman’s I-960 until July 2011. As approved, Engrossed Substitute Senate Bill 6130 gets rid of a two-thirds vote requirement for tax bills and eliminates advisory votes on each tax increase in November.


Lawmakers need to get moving, because they have only 25 days left in their session to close a $2.8 billion budget gap with new taxes, spending cuts, federal aid and shifting other state revenues.

“I think it will be sooner rather than later. We don’t want it to be hanging around,” House Majority Leader Lynn Kessler, D-Hoquiam, said about a coming vote on suspending I-960. The House is in a hurry to get a bill back to the Senate for approval, so Gov. Chris Gregoire can sign it and the Senate can roll out its budget plan, including tax increases, as soon as Wednesday.

Eyman testified against changing his initiative, accusing lawmakers of arrogance and defying what voters have said three times that they want: a supermajority requirement for tax increases, or a chance to vote on taxes themselves.

“It was heart-wrenching to watch,” Eyman said after the committee vote.

But Eyman had a victory. House Finance Chairman Ross Hunter, D-Medina, restored a piece of the public-notice requirements of I-960 that the Senate had stripped out when it passed ESSB 6130 late Wednesday on a partisan vote.

Hunter said that it makes sense in the short term to keep sending public notices by e-mail for all tax-bill filings at the Legislature, including a 10-year cost estimate on the bills. As approved, the bill gets rid of statewide advisory votes in November for any taxes enacted.

Hunter said he intends to look into questions raised by bankers, ports, truckers and other freight-transportation groups that testified against his tax package, House Bill 3176. But he was not dropping the bill, which would end tax breaks for certain out-of-state residents and business that have transactions inside the state; it also raises taxes on owners of airplanes, gold-coin dealers, certain bank foreclosure sales, and purchases of dairy nutrient-management equipment.

The hearing on both bills drew nearly 400 people – an unusual number for any bill. About 280 to 300 people signed in with opinions for or against each measure heard, and many testified in proceedings that were taped and available for the public to see on TVW, the public-affairs network.

Nora Gibson of Eldercare Northwest, which provides adult-day health services in King and Snohomish counties, said 65 percent of patients who lost their adult day-health services because of budget cuts last year are losing their ability to function.

Some elderly or disabled people who could walk then no longer can, she said. Some who used to talk no longer can speak. Gibson argued in favor of higher revenue and making it easier to increase taxes.

Peter Seto of Anderson Island said he is on the board of a clinic that has seen patients join the National Guard just to get health care coverage after the state cut into the Basic Health Plan.

“I want you to protect Washington’s investments over 25 years in health care for the little guy,” Seto said.

And Dr. Susan Powell, who works at Community Health Care in Spanaway, said she is asked every week by patients to prescribe medication without an exam, because they cannot afford an office visit. But she cannot do that and said, “I personally would gladly pay more taxes to see my patients and fellow citizens healthy.”

“Another all-cuts budget is not ethical or moral,” added Christine Johansen of the Washington State Coalition for the Homeless. She said those who voted for I-960 in 2007 did not foresee a “decimation of services for vulnerable citizens.”

Half as many people spoke against suspending the tax-vote law. But many, who instead testified on the tax package, were just as passionate and worried about what happens if taxes go up.

“I feel like I am vulnerable as a taxpayer, and I-960 protects me and the taxpayers of Washington from these kinds of actions by the Legislature,” said Olympia resident Chris Williams.

Amber Carter of the Association of Washington Business argued that I-960 requires lawmakers to act more responsibly.

“Raising taxes is supposed to be the last resort,” she said. “People are already hurting from the cost of workers compensation and unemployment insurance.”

Olympia-based coin dealer Dan Duncan, who testified for the Washington Coin and Bullion Association, said coin shops could be hurt if a tax break on bullion-related transactions is ended.

Larger business interests and Washington ports also weighed in against the tax bills, warning that some of the taxes on out-of-state firms with activities in Washington could include railroads, trucking firms and others that move freight through Washington for foreign export or for sale in other states.

Republican Rep. Ed Orcutt of Kalama tried to postpone the vote on suspending I-960, saying all the talk of tax increases was causing uncertainty in the business world and was stalling rehiring at some firms.

His motion to delay the bill died on a party-line vote.

Brad Shannon: 360-753-1688