The state House passed its revenue package this afternoon 53-42, getting close to the $800 million mark, the golden number in negotiations between the House and Senate. The House had been closer to $700 million before the special session. (The Senate passed its $800 million revenue package yesterday, coming down from $890 million.)
The House package is the plan proposed by Gov. Chris Gregoire last night. Most notably, it does not include a sales tax. The Senate revenue package still includes a sales tax—reportedly over the objections of liberal members like Sens. Craig Pridemore (D-49, Vancouver) and Karen Keiser (D-33, Kent, Des Moines, Sea-Tac) in caucus yesterday. But the Senate did give a little by coming down on its sales tax proposal, going from .3 percent to .2 percent, costing them $104 million in revenue off an initial $312 million sales tax proposal.
While the House (and the governor) held firm on their "NO SALES TAX" position (and on their proposal to cancel a $67 million exemption for big banks), today's House revenue compromise did make two conciliatory gestures to the Senate. They dropped the $30 million gum and candy tax that was in the House's first revenue package (and not in the Senate's), and they extended the House list of business sectors that would see an increase in the B&O tax (their list of B&O increases was initially much smaller than the Senate's). The new House B&O plan increases business tax revenue from $46.6 million previously to $200 million now. (In fact, the House list is now bigger than the Senate's—who came down from $170 to $160 in B&O revenue yesterday when they included a few new exemptions.)
After the vote, a few reps put a populist spin on the B&O route as opposed to going with the Senate's sales tax increase.
“The tradeoff is it’s not on all people,” said Rep. Kathy Haigh (D-35, Shelton). “Unemployment in professional (occupations) is really only about 3 percent. It’s similar to increasing an income tax on the rich. We increase B&O tax on professional services that aren’t caught quite so much in the construction downturn.”
Even the usually inconsolable dissident lefty Rep. Brendan Williams (D-22, Olympia) voted 'Yea': "I think I'm pleased that at last we're moving in a progressive direction with revenue. I think there could be progressive criticism of the revenue (package), like it not going as far as creating sustainable revenue for next biennium, but the enemy of the good is the perfect."
The revenue package is now in the Senate's hands. The question is: Will they blink and drop the Sales tax?
Sen. Ed Murray (D-43, Capitol Hill) tells PubliCola the Senate will not change its position on increasing the sales tax. He said the vote on the House revenue proposal—the Senate has adjourned for the weekend and will reconvene on Monday—will be a "do not concur."
Other points of contention with the House plan: The Senate does not want to end the $67 million bank exemption on mortgage loan interest (noted above); the Senate does not want to end the $41.5 million of sales tax exemption on out state shoppers; and the Senate doesn't want to end $76.5 million exemption on custom software.
Camden Swita contributed to this report.
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