Senator Linda Evans Parlette checks in with Olympia's solution to their money woes: Raise taxes on the already overtaxed citizens. 

Senate passes suspension of taxpayer protection act, governor signs it into law

On Monday night the state Senate passed Senate Bill 6130, a measure that suspends key portions of the taxpayer protection law enacted by Initiative 960. Although the bill passed the Senate Feb. 10, the House amended it slightly so it came back to the Senate for a concurrence vote. I voted "no."

The bill as passed:

• removes the two-thirds vote requirement for the Legislature to raise taxes;

• takes away the public advisory vote on tax increases;

• removes the requirement to put information in the voter's pamphlet about tax increases and how legislators voted on them; and

• includes an emergency clause, so the bill takes effect immediately and does not give the public an opportunity to repeal it via referendum.

Senate Republicans sent a letter to the governor asking Gov. Gregoire to veto SB 6130, or at least the portion of it that removes the advisory vote and information in the voter's pamphlet. Regretfully, the governor declined our request and signed the bill into law on Wednesday.

This week USA Today and KING-5 TV conducted a poll on the repeal of the taxpayer protection act. Here is the question they asked:

The Washington state Legislature and the governor have suspended Initiative 960, which requires two-thirds of lawmakers to vote yet in order to raise taxes. Was suspending Initiative 960 the right thing to do? Or the wrong thing to do?

Here are the responses:

Wrong thing - 68%

Right thing - 24%

Not sure - 8 %

Senate's proposed operating budget unveiled

Once SB 6130 had passed the Legislature, the stage was set for a budget that includes new taxes. On Tuesday, budget writers in the Senate and House released their proposed 2010 supplemental budgets. Among other things, the Senate budget proposal includes:

• Tax increases of more than $3 billion over the next three years;
• Reliance on an assumed $583 million in additional federal funds; and
• $498 million in transfers from the Rainy Day Fund and other accounts, including $96 million from the toxics account slated for environmental cleanup.

There is concern about this budget proposal on several fronts. It does not take into account what voters have told us three times in recent history - that they want to limit state government's ability to raise taxes. Raising taxes will have a detrimental effect on our consumer-driven economy by putting a bigger tax burden on both citizens and employers. It will also negatively impact agriculture (see next section). In addition to the budget, there are several tax bills moving through the Legislature - one bill, Senate Bill 6873, raises taxes 26 different ways. 

The House budget, also released Tuesday, differed from the Senate in a few key areas, including:           

• It spends about $218 million more than the Senate budget;

• It relies even more heavily on federal money ($641 million vs. $583 million); and

• It also raises taxes, but by a slightly smaller amount. Although the House budget figured in tax increases, it did not identify specifically which taxes it would raise. That announcement is expected soon.

Once the Senate and House vote on their budgets, majority-party budget writers will meet to reconcile the differences and come up with a final budget proposal.

Proposals affect agriculture

The proposed Senate budget, plus another major bill moving through the Legislature, would hit agriculture hard, raising the price of everything from fuel to food.

• Higher costs to grow food. The proposed Senate budget removes the sales tax exemption for fertilizer, spray materials (including crop protection products) and chemical sprays used in agriculture unless farmers use higher-cost, organic products. This sales tax exemption has been in place since 1943; limiting it would raise agricultural taxes by $84 million over three years. The average per-acre cost for crop-protection products is already more than $1,000 per acre. Adding sales tax to these products would be extremely costly for orchardists and farmers, and would undoubtedly increase the price of food.

• Tripling the tax on fertilizers and crop protection products. Senate Bill 6851 (companion House Bill 3181) would nearly triple the tax on "hazardous substances," including oil imported into Washington, plus fertilizers and crop protection products used by farmers. This will hit anyone involved in agriculture in the form of higher costs for many of the products needed to grow our food.

Proposal threatens auto-industry jobs, raises taxes

One provision in the Senate budget would affect anyone who trades in a car by eliminating the sales tax exemption on vehicle trade-ins. Voters authorized this exemption in 1984 through Initiative 484; the measure passed with a 69 percent "yes" vote.

Here is how the trade-in allowance works. If, for example, a dealer offers you $10,000 for a trade-in on a $30,000 car, you only pay sales tax on the $20,000 difference. Under this proposal you'd be required to pay sales tax on the entire $30,000 price of the new car - without credit for the trade-in. Our auto industry is already hurting. Raising taxes on these transactions will further threaten its viability. The proposal will also hit farmers and orchardists especially hard, as they tend to trade in expensive equipment like combines and tractors. This budget proposal would be implemented through Senate Bill 6873, which raises 26 taxes, including this one.

Transportation budget amended to include additional funding for US 97A wildlife fence

The Senate Transportation Committee amended the purposed 2010 supplemental transportation budget Tuesday to include additional funds for the wildlife fence along the west side of U.S. 97A between Rocky Reach Dam to the north of Spencer Canyon in Chelan County. A nine-mile corridor along US 97A in Chelan County is one of the most dangerous for vehicle-wildlife collisions, posing a serious safety risk to the driving public and wildlife.

The amendment increases the appropriation for the wildlife fence by $200,000 in the 2009-11 biennium, allowing the existing fence to be extended an additional 1.5 miles further south to the quarry this spring. Phase one of this project ended in a location that permits these animals to get around it and wander onto the highway, putting drivers and the animals at risk.

Construction of the fence's first 4.5-mile section, from milepost 207.98 to 212.10, was complete on Dec. 5. The final stage is expected to be completed in spring of 2011. When complete, the fence will run from milepost 203.13 to milepost 212.10. In addition to public funding, many private groups have contributed funding to this project.

Estate and trust bill passes House committee

On Monday, the House Judiciary Committee passed Senate Bill 6831, a measure I prime-sponsored aimed at protecting the public from misinterpretation of a spouse's final wishes regarding his or her will. The bill moved to the House Finance Committee and passed out of that committee today. I am hopeful the entire House of Representatives will take action on the bill soon.

In December 2009, the federal law regarding the estate tax lapsed. Many wills and trusts are affected, as they were drafted to refer to federal estate tax laws. Since the federal bill lapsed, many of these wills may have to be decided in court. Depending on what a judge decides, a child or spouse could be left out of a loved one's will - even if the deceased was clear that they should be included.

SB 6831 will not increase or decrease the estate tax for Washington citizens. It will simply address the gap in federal law by ensuring Washington estates and trusts refer to the federal estate tax laws as they existed before the exemption lapsed. Bottom line, it provides a one-year "patch" until Congress can address the issue. The U.S. House of Representatives passed a similar bill in late 2009 but the U.S. Senate ran out of time prior to breaking for the holidays. Washington's bill is modeled after similar legislation in Virginia, and similar bills are moving forward all across the country.