February 29, 2008

Below is an article from yesterday’s Olympian. It is the first time since Gregoire’s first year in office that the Democrats are talking openly of raising taxes. The article notes that the state is looking at a $2.4 billion budget gap for the 2009-2011 biennial budget, which is adopted next year. This is similar to the size of the budget deficit the state faced in 2003. That year, the budget was balanced without raising taxes (thanks to Dino Rossi). In 2005, the legislature and governor increased taxes by about $500 million. The argument in 2005 was that increases were necessary to offset revenue losses from a court decision voiding the state’s inheritance tax. As it turned out revenues were spiking and, in retrospect, the tax increase was not needed to balance the budget. Since then, spending has increased by about 33%. Revenues have increased by about 16 or 17% during the same time frame.

A lot will be riding on the economy and which party is in control of the majorities and the Governorship when the budget is written. If the budget projections are accurate (and they usually are) we will have to be on the watch for bills proposing new or increased taxes. We need to make up ground in the legislature and regain the Governorship in 2009. All Republicans need to pull together this year and support our candidates. We need to be the party of leadership, willing to face up to the budget deficit without raising taxes, willing to ask the tough questions and focus on the constitutional priorities of government. We need solid business common sense – in the Governor’s office and in the legislature. It won’t be easy facing up to a budget deficit and facing down the Democrats push for new taxes, but I’m up for the challenge!

Published February 28, 2008

WA House speaker: Taxes possible to shore up next year's budget


Washington's powerful House speaker has acknowledged the possibility of tax increases to balance next year's state budget, but adds that Democrats want to avoid such a step if possible.

Thursday's comments from Speaker Frank Chopp, D-Seattle, are the strongest signal yet that Democratic leaders think higher taxes could be needed to balance the 2009-2011 budget, which will be written by next year's Legislature.

Chopp's statements also seemed to confirm months of Republican warnings about the need for tax hikes or spending cuts to deal with a looming state deficit, recently pegged by nonpartisan Senate staff at nearly $2.4 billion in the next biennium.

Senate Democrats telegraphed the need for more taxes earlier this week, when they tucked a nearly $10 million liquor tax increase into the Senate's proposed state budget. If approved, the money would be split between substance abuse treatment and drunken driving enforcement programs.

That liquor tax increase may soon come up for a vote in the Senate, but it would need to get support from two-thirds of the Legislature to become law because of the recently passed tax limits in Initiative 960.

Asked Thursday about this year's proposed liquor tax and the prospect for further increases, Chopp declined to rule out higher taxes in 2009, saying he had to withhold judgment until the next budget cycle's economic picture becomes clear.

He then added: "We'd obviously rather not do that. But we've done that in the past when we've had good justification for it, and when we've needed to make investments."

Chopp also said that recent state tax increases - particularly the gas-tax hikes dedicated to road and bridge construction - have been a boon to the overall economy by firing up the construction industry.

"We have literally invested more than the vast majority of other states in these infrastructure projects, on a per capita basis," Chopp said. "And those investments have paid off for the economy."

Asked about Chopp's comments, Senate budget Chairwoman Margarita Prentice, D-Renton, sounded a similar note: "Obviously, we'll take a look at anything. But we'll have to look at the circumstances then."

For Senate GOP budget chief Joseph Zarelli, R-Ridgefield, the acknowledgment that taxes are in the mix for 2009's two-year budget sounded familiar.

Republicans have consistently sent that warning, saying the past four years' 33 percent increase in state spending can't be sustained in a slackening economy.

"The bottom line is, there's two ways to get out of a deficit, and that's to cut spending or to raise taxes. We all know that," Zarelli said. "Our argument has been, let's not get to that decision."