Senate Democrats Boost Gregoire’s Tax Level

By DAVID AMMONSAP Political Writer OLYMPIA, Wash. (AP) – Senate Democrats on Monday embraced Gov. Christine Gregoire’s proposal for taxes on smokers and estates of the wealthy to balance a $26 billion state budget — and boosted the total tax bite to $482 million. Higher liquor prices, college tuition increases of up to 7 percent a year, and Sunday liquor sales all are part of the new proposal, as lawmakers scramble to close a $1.6 billion spending gap. Senate leaders said the “sin” taxes will be relatively uncontroversial and that citizens will appreciate how lawmakers spend the money, including full financing of two voter-approved education initiatives and more college enrollment slots. “We believe it will pass,” said Senate budget Chairwoman Margarita Prentice, D-Renton, referring to the revenue plan. The Senate will vote on its plan Wednesday. The House Democrats are preparing a rival proposal and will release it next Monday. The Senate majority caucus, releasing the Legislature’s first draft of the budget as lawmakers enter their final month of the regular session, outdid their fellow Democrat, Gregoire, in the tax department, proposing a package that is more than twice as big. The Senate plan would raise $517 million during the next two years. Once a series of small tax cuts are absorbed, the net increase would be $482 million. Gregoire, in her debut as a budget writer last week, suggested increases of $203 million, including a 20-cent-per-pack increase in the cigarette tax this year and another 60 cents two years later. She also suggested a new tax on estates of more than $2 million. The Senate would accelerate the tax on smokes, raising it by 60 cents in July and another 20 cents in July 2007. As in the governor’s plan, the money would be earmarked for the voter-approved class-size reduction plan, Initiative 728. The Senate would generate a larger estate tax, at first taxing estates over $1.5 million and then moving to Gregoire’s level of over $2 million. The money also would help finance I-728. Senators also proposed a variety of other revenue-raisers, including a $1-per-liter increase in the liquor tax, a sales tax on extended warranty agreements and a higher business tax on processing of canned meat products such as chili. The proposal assumes more revenue from real estate transactions, tribal cigarette revenue-sharing, Sunday liquor sales, and real estate transaction fees. It also assumes $550 million in spending cuts and deferrals, including pension savings and reductions in a welfare program for the unemployable. The proposal leaves reserves of $214 million, about the same as Gregoire’s proposal. The plan emphasizes health care and public education. It includes more higher education enrollment increases and higher tuition than Gregoire suggested. The plan is about $214 million higher than Gregoire’s in total general fund spending for the next two years. Prentice said the $26 billion proposal is dedicated to providing quality schools, healthy families and strong communities, and defines the kind of state Washington should become. “I said at the very beginning of session that I would not apologize for wanting to live in the best state in the country, with the strongest schools, cleanest energy, healthiest economy and the best access to health care,” Prentice said in remarks prepared for a news conference. “I believe this budget makes the kind of investments that will keep Washington at the top.” The higher education portion of the Senate budget would boost enrollment by 8,100, up from Gregoire’s proposed 6,600. Prentice proposed annual tuition increases of 7 percent at the University of Washington and Washington State University, 6 percent at the other four-year colleges, and 5 percent at community and technical colleges. The Senate maintains 100,000 spots in the state’s subsidized health care program for the working poor and backfills $82 million for lost federal dollars for community mental health. The plan also provides money for the drought and combatting Hood Canal pollution.