The Senate announced a new revenue package today — instead of a two-tenths of a percent increase in the sales tax, they’re going for one tenth. And there are many more changes:

“It also includes a 50 cents per gallon beer tax with micro-brews exempted, a new tax on candy and gum with in-state producers getting a jobs tax credit. The new package also assumes the House position on proposed tobacco taxes to include all tobacco products, not just cigarettes.”

More details — and the Governor’s remarks — coming soon, so check back.

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The Senate is starting debate on SB 6143 — their tax package. The package has some amendments, including one to drop the temporary sales tax increase from .3 to .2 percent.

Gov. Chris Gregoire was asked during a bill signing this afternoon if she would reject a sales tax, and she said there are too many moving pieces right now to make that call.

Update: The Senate just passed the amendment to drop the sales tax from .3 percent to .2 percent. Sen. Rosa Franklin said she’s opposed increasing the sales tax, but she can support a smaller increase — as long as it’s offset by the Working Families Tax Credit.

“This bill that we’re about to pass, prior to it we considered some amendments,” Sen. Joe Zarelli said. And in each case, senators argued that certain sectors should be exempt from the tax package because they’ll be hurt. He said it was interesting that they’d make the case for some sectors, but not others.  “This bill is going to cost (Alaska Airlines) approximately $2.4 million,” he said. “This is a very short-sighted approach to solving a very mid- to long-term problem.”

Sen. Jim Hargrove: “I’m not really excited about raising taxes … I passed out this little sheet here because I did a little calculation,” he said. “If you look at a 33 percent shortfall in our budget on this little sheet here … that’s the biggest shortfall we’ve had — ever,” he said. Most of the reductions have come through cuts, federal assistance and fund shifts, he said.

Sen. Mike  Hewitt: “This budget is going to be $2.2 billion more than the budget we passed just two years ago,” he said. He said the Republican caucus has a sign that says “We don’t have a revenue problem, we have a spending problem.” He said the sign has been up for five years.

Sen. Cheryl Pflug read from some letters she’d received from constituents. “Now is not the time to increase taxes on business and the public,” one person wrote.

Sen. Lisa Brown: “State government in Washington state balances our budget every year,” she said — including this year, the toughest time since the Great Depression. “I wish this package was larger and contained more structural reform,” she said, but “I’m proud that we’ve made modest reforms” in the package. She said some of those reforms will mean that small businesses will be better off and thousands of families will qualify for a state rebate for low-income families. She said families in the state will pay an average of $20 more to help balance the state’s budget.

Sen. Mark Schoessler: “The math here is kind of interesting,” he said. “Twelve billion dollars in cuts? No, it’s actually twelve billion dollars from the wish list… that’s Olympia math,” he said. “The majority has made the package a little bit better  today,” he said, but they’ve picked winners and losers, which isn’t fair.

Update: The Senate passed the bill. It now heads to the House.

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The House passed their tax package last night, 52 to 45. Read the bill here. And read some of the debate below.

Rep. Ross Hunter: “As you’re aware, we face a difficult supplemental budget. Our job is to produce a balanced budget. In fact, it’s a legal requirement,” he said. “It’s also important that we have a balanced budget that meets a moral definition of balanced,” he said. He said the package closes exemptions that have been in place for decades and no longer make economic sense. “The revenue from this part of the package funds core services.

Rep. Ed Orcutt: “I don’t think we have exhausted all opportunities and I don’t think that the gentleman from the 48th has listed all the options,” he said. He said the Legislature hasn’t taken reform seriously enough. “It’s unfortunate that we haven’t taken that road, because that’s a win-win road. Here, we’re pitting the taxpayer against the tax taker.”

Rep. Larry Haler said he is opposed to the candy tax because it will affect Washington-based businesses like Almond Roca and Liberty Orchards.

Rep. Jay Rodne: “There has been no attempt, Mr. Speaker, to really look at structural reform of our budget,” he said. He said failure to look at reform has led to legislators saying they must choose between “kids and healthcare and forgo our commitments to our communities and our future or raise taxes.” “We’re going to come back here next year and the situation will be of a much greater magnitude.”

Rep. Kevin Parker: “My fear is, this is not a credible plan to balance the budget,” he said. “This budget is a stew that is undigestible to the stomach of Washington.” He said Washington has high unemployment and low consumer confidence — and that means it’s not the time for a big tax increase.

Rep. Larry Springer: “I’ve been in business for 30 years … and in order to do that, I’ve had to have one primary objective,” he said: Cash flow. “And in fact, I have been able to maintain that cash flow by competing,” he said. “What I hope to see out of this package is the realization from my government that while I’m not afraid of competition … I would like that fight to be fair,” he said. Thsi tax proposal does that, he said, because it eliminates tax exemptions for out-of-state business.

Rep. Norm Johnson said he doesn’t think elective cosmetic surgeries should not be taxes. “Maybe this is something that maybe should come out of this bill because I think we need to be thinking about the human aspects of people who face surgery,” he said. He said many people who choose to have plastic surgery have a reason for doing so.

Rep. Eileen Cody: “I just have to correct some misinformation here,” she said. “We are talking about cosmetic surgery …not reconstructive surgery.”

(more…)

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The Senate is gearing up for debate on the tax increase bills — including the cigarette tax increase and bill to tax bottled water, close loopholes and more. You can watch live on TVW now.

The House is still in caucus. Stay tuned.

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“The only real solution was to raise sufficient revenue to offset further cuts. I’m concerned that this bill does not go far enough,” Rep. Bob Hasegawa said. He’s also concerned about tax fairness. “By tax fairness, I mean to say that everybody should be paying their fare share,” he said. “There are portions of society that are not now paying their fair share or could stand to do more.”

Rep. Cary Condotta: “Certainly voting no today. As a student of economics for years and years and years,” he said, he’s looked at revenue shortfall situations for years. “In terms of performance, our revenue system has held up quite well … I think the numbers we’ve got — around $30 billion — are quite adequate,” he said, “particularly for those most in need.” He said he was sad to hear in testimony that “we have made so many people reliant on our government.”

(more…)

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Maria Roselle with Food Lifeline said she appreciates how the budget was handled. She said many people are choosing between paying for food and paying rent.

“I support all of the revenue sources in this package,” she said. “I believe that as community members, we must be willing to pay slightly more for optional services so that essential services are available when they’re needed most.”

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Watch live on TVW. Follow-along live here.

A refresher: The House tax plan would raise $758 million in revenue through a $1 per pack cigarette tax increase, extending the sales tax to bottled water, candy, gum, janitor services, custom software and elective plastic surgery, and closing tax loopholes. It also applies B&O taxes to businesses that operate in Washington but are based elsewhere. Here’s the bill analysis.

Rep. Ross Hunter opened the hearing by saying they only have until 11:30 or so and they plan to vote the bill out of committee. He said he’s going to try to hear from as many people as possible. Rep. Ed Orcutt, the ranking minority member of the committee, said he hopes people focus their anger on the bill — not on personal attacks.

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This just in from the House:

The House proposal would generate about $758 million for the 2009-2011 biennium, primarily by ending certain tax exemptions and closing tax loopholes. Additional anticipated budget actions will generate about $100 million.

• Part One is an amended version of Hunter’s House Bill 3176 which closes about $385 million in tax loopholes and tax avoidance schemes. The funds will be used to maintain lower class-size in grades K-4, provide levy equalization around the state, and maintain financial aid for college students.
• Part Two increases the cigarette tax by $1 per pack of cigarettes and equalizes the tax on other tobacco products. The $111 million raised will help maintain the Basic Health Plan, Apple Health for Kids, and tobacco prevention programs.
• Part Three ends the sales tax exemption for products and services such as elective cosmetic surgery, candy and gum, custom software, janitorial services and bottled water. It generates about $163 million for public health, children’s dental care, children’s health, and services for the disabled.
• Part Four increases B&O rates by 0.5 percent for certain professional service providers such as lawyers and accountants. It also removes a B&O tax exemption on investment earnings beyond $250,000 for non-financial firms. It raises about $99 million for financial aid, levy equalization, and natural resources.
• Part Five includes other anticipated operating budget actions and raises $100 million for natural resources and public education.

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Here’s yesterday’s hearing on the bill to triple the hazardous waste tax. That bill is scheduled for executive session this afternoon:

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If you park on the Capitol campus, Adam Wilson at The Olympian has a blog post you may be interested in: The spaces will be taxed. And the tax will depend on what type of space you have.

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