Little support for taxes

Lawmakers were reluctant to anger supporters

BRAD SHANNON, THE OLYMPIAN

Originally published Sunday, April 7, 2002

OLYMPIA -- In the waning days of the legislative session that ended last month, Democratic lawmakers scrambled for votes to approve several taxes that could raise an extra $40 million or more.

The goal was to avoid having to make additional cuts in spending -- such as Gov. Gary Locke's Friday veto of pay raises for home care workers, money to recruit university professors and a tax break for arts centers including The Washington Center for the Performing Arts in Olympia.

Locke also had considered cuts in health insurance coverage for state workers to ensure the state has enough in reserve to weather another economic downturn, but instead chose to veto other spending items.

But the Democratic leaders' first choice -- a new tax on hard liquor -- met strong resistance from lobbyists for restaurants and liquor distributors. A tax on hazardous materials met resistance from the petroleum industry.

And so it went, tax by tax, as the clock ticked toward the session's midnight adjournment March 14.

What killed the tax proposals more than lobbyists, though, was the reluctance of members to approve any new taxes, said Rep. Jeff Gombosky, D-Spokane, chairman of the House Finance Committee. It was his job to find a tax that could get the needed votes.

The same problem arose over expanding the state's keno game, which some opponents of liquor taxes thought was a better approach, he said. Gambling foes came from every corner, and about 15 Democrats opposed it, although some House Republicans might have voted for it.

"The numbers in the caucuses are so narrow, it becomes very difficult. If you try to raise taxes one way or the other, there are objections," Gombosky said after the session ended.

"Some people thought we shouldn't consider tax options at all. We had people who didn't want to expand sources of revenue such as gambling. ... So you have less dollars."

Sen. Erik Poulsen, D-West Seattle, who took on the vote-roundup task in the Senate, found the same problem there.

Liquor tax pressure

Still, there was pressure on lawmakers to raise the liquor tax by 6.6 percent. Some of that pressure came from Locke.

"The governor pulled me off the floor and asked me to vote for it," said Rep. Brian Sullivan, D-Mukilteo, one of the strongest of a half-dozen House Democrats firmly opposed to the liquor tax. "I said: 'This is an industry in crisis. I come from this industry. I have friends who are small restaurant owners who are immigrants, and they depend on that liquor revenue to carry them through slow times. It's a bad vote for me.' "

Locke's effort was last-ditch. "It was 10:30 at night" on the session's final day, Sullivan said.

It was Sullivan's victory in a Snohomish County legislative race last fall that broke the 49-49 tie in the House, giving Democrats a narrow advantage and ending their dependence on Republicans before bringing matters to floor votes. But in the end, despite predictions by Republicans that Democrats would raise taxes significantly, it didn't happen.

The effort to raise the liquor tax failed after a concerted effort by the Washington Restaurant Association's three hired lobbyists to head it off.

Lobbyist Denny Eliason estimated he and Gombosky alone had about 25 conversations in the last four days of the session about the tax.

"Restaurants in Washington state are down 10 percent in the last five years. That was largely in a good economy, Eliason said. "You just can't deny the numbers. We simply made the point to legislators that raising the alcohol tax was yet another significant hit on our bottom lines when we just couldn't afford it."

A lobbyist for the 4,700-member Washington Restaurant Association, Eliason also represents the petroleum industry and presented arguments against that tax, too. But most of his work was conversational, he said.

Although restaurateurs used to wine and dine lawmakers as part of heavy-handed lobbying, Eliason said they no longer do that and, besides, they lacked time, with lawmakers spending most of their time on the floor the final week.

Lobbyist-expenditure reports on file with the Public Disclosure Commission showed Eliason was paid $7,864 in January for his work on behalf of restaurants and $6,540 for BP Amoco. His expenditures for entertainment, gifts and travel in that period amounted to $116 on restaurant-related business.

Eliason's report for February was not on file, missing a PDC deadline that triggered a caution letter last week. His March report is due April 15.

A report after the session indicated Gombosky and Eliason had words in the waning days of the session, but both said that wasn't true for either the liquor or hazardous substance taxes.

"In all of those cases, I would not say the lobbying was heavy-handed. They pressed their case," Gombosky said. He added that the lobbying over taxes was less intense than what the prescription drug industry mounted this year against bills that could have limited the state's costs for medications.

"Never, ever was there a heated word," Eliason said. "He understood fully the reason we opposed the tax and we were doing our jobs."

$270 million reserve

In the end, lawmakers passed a $22.5 billion budget that left $270 million in reserve, about $30 million short of what Locke initially said was the minimum safeguard needed against a further drop in the state's economy.

Some Republicans, who were loud in their opposition to tax increases, have criticized the Democrats for leaving so little and for failing to cut more in state services as they maneuvered to bridge the state's $1.6 billion budget gap.

But Rep. Gary Alexander, R-Thurston County, said last week he was against Locke cutting the $6 million in health care benefits money that Democratic Reps. Sam Hunt and Sandra Romero of Olympia managed to get into the budget at the last minute.

He also wanted to see the 25-cent pay raises for home care workers left in the budget.

Contradicting his own party's mantra during the budget-writing, Alexander said he thinks the economy is recovering and an uptick in the state's employment picture could mean higher than expected revenue and a lesser need for a reserve.

Brad Shannon, political editor for The Olympian, can be reached at 360-753-1688 and at beshanno@olympia.gannett.com.

The Olympian Copyright 2002

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