Higher taxes. Slashed programs. Whatever the Legislature's majority Democrats do to fix the budget shortfall in the special session starting today, it will be memorable to voters.
To leave behind something that will be remembered more fondly than their budget work come Election Day, Democrats have given themselves a second mission for the overtime period: Create jobs in Washington.
“I think one of our core responsibilities, particularly in this economic climate, is to get this economy moving,” said Sen. Derek Kilmer, a Gig Harbor Democrat.
More than 328,000 Washingtonians were considered unemployed in January, for a jobless rate of 9.3 percent. Yet lawmakers didn’t move forward any of their major initiatives on jobs in the 60-day regular session that ended Thursday.
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The Senate sat on one of the first pieces of legislation passed by the House: asking voters to let the state borrow $861 million for energy-efficient upgrades to public schools and colleges. The supporters who dub it the “Jobs Act of 2010” say it will create more than 30,000 construction jobs spread over six years.
Even one of the Senate’s own proposals, a tax break for small businesses that create jobs, moved on to the House with only one day to spare.
Neither chamber tried a floor vote on an increase in the hazardous-materials tax backed by environmentalists. At first seeing it as a way to help the budget crisis, lawmakers now agree that the proposed tax on oil companies and other polluters should stay entirely devoted to preventing water pollution – projects that will help the hard-hit construction industry.
Even a popular proposal intended to create more construction jobs in hard-hit rural counties – a tax break for technology companies that build data centers – will have to wait until the special session.
The special session will give lawmakers more time to decide whether to spend $10 million to give businesses of up to 20 employees a tax credit for creating jobs.
Businesses would get $2,000 for adding a job that pays at least 150 percent of minimum wage and offers health care. The credit would double for a job paying more than $40,000.
Kilmer modeled the idea after a credit the City of Tacoma hands out, worth $2,500 to businesses that hire and keep an employee for five years while paying at least $16.82 an hour.
By failing to reach a deal on the budget in the 60-day session, requiring at least another week of work, Democrats also reset their opportunity to do something they can pitch as a job engine.
But jobs efforts are unlikely to catch the public’s attention as much as the extra taxes they will pay, especially broad-based ones like the sales tax, said Todd Donovan, a professor at Western Washington University. Senate Democrats voted to raise the sales tax by three-tenths of a cent.
Voters are paying attention to the larger jobs outlook, for which they will mostly credit or blame Washington, D.C., Donovan said.
“That just isn’t something that’s going to be objectively noticeable for most voters,” he said.
Rep. Hans Dunshee, the Snohomish Democrat pushing the school bonds for the second year in a row, said his project is alive because Gov. Chris Gregoire wants to create jobs.
But the proposal has languished in the Senate, where there are worries about interest payments on state debt. The debt is close to a constitutional ceiling of 9 percent of state revenue, but voter approval would allow the projects to get around that limit.
“We just want to make sure we’re in a fiscal position to be able to afford the interest costs of that in a responsible way,” said Senate Majority Leader Lisa Brown.
Dunshee said sales taxes that the projects bring in over the first six years would cover all interest costs. After six years, the interest burden would be $40 million a year.
The resulting projects would reduce heating and fuel costs for public buildings.
“When you look at all the benefits of the jobs created plus the energy savings over time,” House Speaker Frank Chopp said, “it’s well worth the investment.”
Supporters of the hazardous materials tax describe it as a way to put people to work on local stormwater cleanup projects.
Oil companies and refineries that would pay most of the tax have pushed back hard, saying it would act as a back-door gas tax by increasing the price at the pump.
The toxics tax would raise $104 million a year for projects, said Rep. Timm Ormsby, the Spokane Democrat who sponsored the House version of the bill. Toxics tax collections would go to city and county projects that must be done to comply with federal requirements.
Without the tax linked to oil products that cause water quality problems, local governments would have to look elsewhere – to property taxes or utility charges.
The projects should create thousands of jobs statewide, keeping stormwater out of Puget Sound and other bodies of water including Pierce County’s Spanaway Creek, said Kerry McHugh, spokeswoman for the Washington Environmental Council.
As it now is to be amended, House Bill 3181 would impose a tax rate of 1.55 percent, up from the 0.7 percent rate set by voters in 1988 when they approved Initiative 97.
The Senate version approved in committee would raise the rate to 1.2 percent, but it lacks a tax credit the House put in for oil products produced in Washington and sold out of state. Ormsby said that tax credit was added to avoid hurting refineries such as the Tesoro-owned facility in Anacortes, which is not part of a larger oil company and as a result cannot absorb costs as easily.
But with the credit, Ormsby said, “This has zero impact from what I can see’’ on refineries.
“It’s certainly going to have a negative impact on jobs, not just in the petroleum industry,” countered Dave Fisher, a spokesman for the industry coalition Stop Washington Hidden Gas Taxes.
It would hit the convenience stores that buy gas and the truckers they sell it to, Fisher said, along with the farmers who would pay more for pesticides.
The prospect of adding taxes or debt does not faze Dunshee, even in an election year. “You know, I’ve been hit for raising taxes every time – whether I did or not,” Dunshee said. “What really determines the election is Obama’s favorable numbers (and) the jobs numbers.’’