Senate changes rules to make raising taxes easier

BRAD SHANNON, THE OLYMPIAN

Originally published Friday, March 8, 2002

OLYMPIA -- Senate Democrats, unable to muster a two-thirds majority to close tax loopholes, began an end run around Republicans on Thursday that could raise new revenue.

The Democrats voted to temporarily suspend provisions of Initiative 601 so they won't need a two-thirds vote on tax increases. The Democrats sent their measure, Senate Bill 6819, to the House on a simple majority vote of 27-22.

They hope it will be passed in the House soon so Gov. Gary Locke can sign it and they can vote to close several tax exemptions with a simple, 50 percent majority.

But the GOP, led by Sen. Dino Rossi of Issaquah, claimed Democrats had made a "final gutting" of I-601, the voter-approved spending caps initiative. Enacted in 1993, I-601 has assumed a kind of holy grail status in Washington politics, even though Republicans have amended it.

"It proved our point, that Initiative 601 makes it simple to cut taxes but impossible to raise new revenues when we're facing an emergency," said Sen. Erik Poulsen, D-West Seattle, who had prepared a package of tax exemption closures aimed at raising several million dollars.

The Democrats face a hurdle on another of their revenue pieces: tapping the state's emergency reserves for about $250 million. Unless they suspend I-601, they'll need a two-thirds vote, which Republicans have been unwilling to give.

Lawmakers are rushing to complete their budget work by March 14, the last day of the 60-day session, and Democrats say new revenue and reserves are needed to plug a $1.6 billion budget gap. Republicans are pushing for deeper program cuts.

By lifting the supermajority vote requirements for tax increases, a 25-vote majority in the Senate will be enough to close three or four tax loopholes at which Senate Democrats have taken aim.

"We can't pass a budget without tools to fix the emergency," Poulsen said.

Among the bills that could not muster a two-thirds vote Thursday was SB 6822. It would slap a use tax on direct-mail advertising that is produced out of state, so that in-state printers would not face a competitive disadvantage based on taxation. Seven Republicans crossed over to join Democrats, but the 31-17 vote margin was not enough to enact the $4 million tax.

Republicans were far more eager to reduce taxes.

All 24 GOP senators, joined by 15 Democrats, agreed to shelter Simpson Investment Co., the Frank Russell Co. and other investment firms from a business-occupation tax that will be levied on certain investment income if lawmakers don't act. A recent court decision declared that the tax should be collected, although lawmakers previously had not intended that to happen.

Democrats were not stymied in all their efforts to raise new revenue. A bill letting the state join the multistate lottery called The Big Game cleared the chamber on a 27-22 vote with 10 Republicans and 17 Democrats in favor.

The I-601 bill now goes to the House, where Democratic leaders said they will adopt it if needed to get a budget done by Thursday.

"If that's what we need to do, we'll do it," said House Majority Leader Lynn Kessler, D-Hoquiam.

Republicans will not provide the votes for tax increases or to repeal tax exemptions, said House Minority Leader Clyde Ballard, R-East Wenatchee.

Quick action on the I-601 bill is needed so Locke can sign it and give the Senate time to move its revenue bills early next week, Poulsen said.

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- Washington State Legislature Bill Information

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