This Washington

Senate Keeps (Smaller) Sales Tax Increase. Says More Cuts Needed.

By Camden Swita March 19, 2010

The Senate just passed their revenue bill with several new amendments, and it is not the package the governor or House wanted. In short: The sales tax increase was lowered, not eliminated (as the House has been demanding in negotiations.)



Senate Majority Leader Sen. Lisa Brown (D-3, Spokane), Photo by Camden Swita

The Senate moved from a 0.3 percent increase to a 0.2 percent increase, which will cost them about $104 million in revenue.

Bottom line: The Senate has proposed a smaller revenue package—going from their original proposal of $890 million in new revenue to $809 million. (The House proposal was around $700 million.)

Sen. Lisa Brown (D-3) said that in the end the Senate will have to squeeze more money out of the budget—meaning more cuts—in order to have a healthy ending fund balance.

The budget passed by the Senate during regular session left an ending fund balance of $523 million.

The Senate wants to hit an ending fund balance of $500 million (they're uncomfortable relying on federal dollars as the House does). To hit their goal now, they need to find about $68 million in cuts. No word yet on where those cuts might happen.



The ending fund balance is a key part of the budget negotiations with the House, and the Senate wants to keep as close to that $500 million amount as possible in negotiations. (The House budget's ending fund balance was at about $356 million when regular session ended.)

The Senate also added three exemptions from the B&O tax: Giving nonprofit and public hospitals, realtors, and companies doing R&D a break, basically shrinking the number of biz categories they were planning to tax. This moves them closer to the House's agenda of taxing fewer companies, but it also lowers their revenue.

The House has not passed its revised revenue package yet, but they did pass their capital budget today—unchanged from the one they passed during the session, meaning Rep. Hans Dunshee's (D-44, Snohomish) $861 million green retrofit bond proposal is back in the Senate's lap.
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