No Agreement Yet…But Here is What All the Buzz is About

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This week the House and Senate have been busy exchanging revenue proposals and counter-proposals.  Though no agreement has been reached between the two chambers, details of the single revenue package that is being shared among members of both the House and Senate have been revealed.

The current revenue package being discussed by all on The Hill does not include a sales tax or a a tax on software. In addition the package would continue exemptions on first mortgage interest income and out-of-state shoppers.

Further examination shows that three of the proposed provisions are temporary and expire in 2013. These include the B&O surcharge on most service businesses, the beer tax increase, and the soda/pop tax increase. To protect small service businesses, the B&O surcharge includes a doubling of the small business tax credit. Small businesses with gross sales up to about $56K will be exempt and those making up to about $80K will pay less. None of Washington’s breweries should be impacted by the beer tax increase since microbreweries will continue paying the same tax. Finally, a B&O tax credit for jobs at Washington’s candy manufacturers will likely buffer them from any negative impact of the candy sales tax.

Current Revenue Proposal
($801.3 million)

  • Temporary Services B&O surcharge to 1.8% without hospitals. Small business credit doubled. Effective May 1, 2010 and expires June 30, 2013 ($245.9 million)
  • Temporary Beer Tax increase of 50 cents per gallon. Microbreweries exempt. Effective June 1, 2010 and expires June 30, 2013 ($57.8 million)
  • Temporary soda/pop tax increase of 2 cents per 12 oz. Bottlers under $10 million in volume exempt. Effective July 1, 2010 and expires June 30, 2013 ($38.1 million)
  • Dot Foods ($154.7 million)
  • Cigarettes and other tobacco products (House Bill 2493) ($101.4 million)
  • Nexus ($82.4 million)
  • Sales and use tax applied to bottled water ($35.3 million)
  • Sales tax applied to candy and gum. B&O credit for jobs ($29 million)
  • Lottery Marketing (Senate Bill 6409) ($15 million)
  • Convention Center (Senate Bill 6889– Delivered to the Governor) ($10 million)
  • Tax avoidance ($8.2 million)
  • Property management. B&O ($6.9 million)
  • Agrilink ($4.1 million)
  • Homestreet fix ($3.9 million)
  • Corp. Dir. B& O ($2.1 million)
  • Bad debt ($1.7 million)
  • Livestock nutrients ($1.5 million)
  • PUD clarification ($1.2 million)
  • Tax debts corp ($1.1 million)
  • B&O dues ($1 million)

Both chambers hope to announce an agreement or disagreement sometime today with regard to the current proposed revenue package.

Over the weekend and through Tuesday, the Senate and House will need to pass a revenue package and operating and capital budgets, as well as, take action on various bills necessary to implement revenue and/or the budget, including the cigarette tax (HB 2493) which has passed the House and is now in the Senate; the lottery bill (SB 6409) which has passed the Senate and awaits action by the House; and finally perhaps take action on Senate Bill 6503 which would require state agencies to take a portion of their cuts in compensation related actions.