Tag Archives: revenue

Week Two of Special Session Nears End; Adjournment Still Unclear

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As Special Session nears the end of week two, movement has been slow but still forward in nature.  Today, the full Senate is on the floor to move a handful of job-creation related bills, while the House is expected to return to the floor tomorrow.  The leadership of both chambers have been in negotiations for most of the week while the majority of legislators have been away as negotiations continue.

As stated earlier this week, policymakers have reached an agreement that $800 million is the revenue target. In addition, negotiations are taking place with regard to the operating and capital budgets for the 2010 supplemental session, though neither can be finalized until the elephant in the room is resolved – revenue.

Lawmakers remain gridlocked over how to raise this revenue, the primary dividing point being the implementation of a sales tax. The Senate still supports a temporary general sales-taxe increase and the House does not.

Frustration is in abundance. The Democrats are frustrated that they cannot get the votes necessary to pass an agreed upon revenue package. The Republicans are frustrated because the special session continues. The Governor is frustrated regarding all the above.

In the latest to come out of Olympia, Governor Gregoire has made it clear that she may be forced to make across-the-board cuts of 20 percent if the Legislature does not reach a budget-balancing agreement.  Gregoire has no plans to call a second special session unless a firm deal is in place. In lieu of any firm deal post the first special session, the only other choice would be across-the-board cuts.

As for now, the bills needed to implement a 2010 supplemental operating budget, 2010 supplemental capital budget, and increase revenue remain where they were this weekend. In addition, the bills that Evergreen is tracking this special session also have not moved further in the process.

Special Session Enters Second Week

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Nine days into the first special session of 2010, policymakers have reached an agreement that $800 million is the revenue target.

However, lawmakers remain gridlocked over how to raise this revenue, the primary dividing point being the implementation of a sales tax. The Senate still supports a temporary general sales-taxe increase and the House does not.

It has been reported that policymakers from both chambers agree on more than they disagree, such as closing tax loopholes and raising the cigarette tax. In addition, there is agreement on the expenditure side to make hundreds of millions of dollars in cuts and use one-time fixes, such as federal aid and reserves, to bridge the gap until the 2011-13 biennium.

As for now, the bills needed to implement a 2010 supplemental operating budget, 2010 supplemental capital budget, and increase revenue remain where they were this weekend. In addition, the bills that Evergreen is tracking this special session also have not moved further in the process.

As the Legislature convened on Monday, hopes were that an agreement would be reached by Wednesday, March 24. Now as Wednesday approaches, it looks like perhaps adjournment will have to wait either until the weekend (optimistic) or next week (reality).

Budget and Revenue Bills Emerge as the One Week Anniversary of Special Session Nears

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The somewhat slow pace by which legislators hit the ground last Monday has been replaced by at least a jog as the one week timeline for the first special session of 2010 nears. 

Over the last few days the major pieces needed for the Legislature to adjourn and go home have emerged in the process. With that said, doubts remain whether the emergence of key revenue and budget bills in the last couple of days is enough to reach adjournment by Monday, the one week deadline many legislators set out to meet when the special session was convened.

The Senate passed their proposed 2010 supplemental operating budget on the first day of the special session. Since then proposals on the $30.6 billion operating budget have been exchanged between the House and Senate in search of a compromise.  For the moment, however, the bill (ESSB 6444) awaits further consideration on the House floor. 

Yesterday, the House passed their proposed 2010 supplemental capital budget. Not much negotiation has taken place with regard to the capital budget. Leaders on the capital buget continue to wait for decisions on revenue and operating dollars to determine how much money is available for capital. The bill (ESHB 2836) awaits further consideration in the Senate Ways & Means Committee.

Also yesterday, the Senate passed, 25-18, a revenue generating bill (SESSB 6143) which is half of a two bill revenue package that would raise $809 million through June 30, 2011.  The bill is the same as the revenue bill passed by the Senate in the regular session except for two changes. The first is a reduction in a sales tax increase from a three-tenths proposed increased to two-tenths. In addition, under the revised version, realtors, research and development businesses, and nonprofit and public hospitals would not be affected by the surcharge.

Other than these changes, the bill remains the same as the original bill.  The revised bill : (1) closes dozens of tax loopholes, (2) extends the sales tax to bottled water for three years, and (3) increases the occupation tax on service businesses by one-quarter of 1 percent for three years each. Finally, the bill doubles the small business tax credit permanently for service businesses and funds the implementation of the Working Families Tax Rebate. Low-income families would start receiving checks in 2012.

The Senate’s two-bill revenue package also includes Senate Bill 6874 to increase state cigarette taxes by $1 per pack. SB 6874  still needs to be approved by the full Senate.

Today, the House passed a revised version of SESSB 6143 with a vote of 53-42. 

The revised bill passed by the House is a plan that was offerd by Governor Gregorie as a compromise between the differing House and Senate proposals. The plan would generate nearly $800 million in new revenue without a sales tax increase. Instead the plan, which includes elements from the Senate and the House proposals,  is a temporary business-and-occupations tax surcharge of 0.25 percent on some service businesses.  Finally, the plan would close tax loopholes, extend the sales tax to bottled water, and overhaul the way taxes are charged to out-of-state businesses.  The Senate and House continue to remain divided on the implementation of a sales tax, with the Senate favoring a sales taxes increase and the House opposing an increase.

Like the Senate, the House’s proposal consists of a two-bill revenue package. House Bill 2493 , like SB 6874, raises state cigarette taxes by $1 per pack and increases taxes on other tobacco products. Yesterday, the House passed HB 2493 witha  vote of 54-42. The bill now awaits further consideration on the Senate floor.

 

Activities Move from Floor to Committee in the Senate

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For the first time this special session, the activity moved away from the decorated chamber floor of the Senate to the more utilitarian committee rooms.

The Senate spent most of the morning in caucus, moving a single bill prior to adjourning until Noon tomorrow. The action then moved to the Senate Ways & Means Committee who held a work session, several public hearings, and finally moved a handful of bills to the floor.

The Committee held a work session on new language put forth by Sen. Rockefeller that would provide substance to Senate Bill 6853 which currenlty exists in “title only” format. 

The Rockefeller language, which has been in development for some time, recognizes the intent of the Washington Legislature to review tax preferences in the same manner as budget expenditures.  The language sets standards for what should be considered in future tax preference legislation and changes  membership of the Citizen Commission on the Performance Review of Tax Measures to include the State Treasurer and two members appointed by the Governor of which one must be a citizen representing working families or a nonprofit organization. In addition, the Governor would be required, when submitting tax preference requests to the Legislature, to offset the cost of any preference by reductions/eliminations of existing preferences. Finally, the language would require the Washington Department of Revenue to provide the tax exemption report every 2 years rather than every 4 years.

The Committee took no action on the bill.

Though the Committee took action on several bills, moving them forward to the floor for further consideration, the Commitee only held a public hearing on the one bill of interest to Evergreen. House Bill 2854 was heard before Senate Ways & Means Committee. House Bill 2854 establishes a low interest state loan for students seeking a college education. The Committee took no further action on the bill this afternoon.

Governor Convenes Special Session Beginning Monday

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This evening the Washington State Legislature adjourned the regular 2010 supplemental session. Shortly thereafter, Governor Gregoire signed a proclamation to convene a special session of the Legislature beginning Monday, March 15th.

The Governor asked Senate and House leadership to focus on reaching a compromise budget and revenue package to close the state’s $2.8 billion gap, as well as legislation to create jobs.

Gregoire is urging the House and Senate to complete their work in a seven day session. The overtime period can run up to 30 days.

Legislature Adjourns 2010 Session; Special Session Announcement Expected

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At 8:40 p.m. the Washinton State Legislature adjourned the regular 2010 supplemental legislative session. The Legislature worked tireslessly through the evening to pass several major policy bills prior to adjournment, including major K-12 reform legislation. 

Despite the difficult and hard work by the Legislature to take action on several critical policy bills, the Legislature did not pass a supplemental operating budget or revenue legislation prior to adjournment this evening.  The Legislature also did not pass a supplemental capital budget. In fact neither the House nor the Senate passed their proposed supplemental capital bugets off their respective floors by sine die.

An annoucement regarding the timing and focus of a special session is expected.

Three Days Until Adjournment: The Latest

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With only three days to go until the Washington Legislature must adjourn the 2010 supplemental session several major pieces necessary to allow policymakers to leave Olympia without a special session remain in motion.

Here is the latest as of this morning.

Operating Budget
The 2010 supplemental operating budget (ESSB 6444) has passed both the House and Senate and is now in conference.

Capital Budget
The House proposed 2010 supplemental capital budget (HB 2836) is on the House floor waiting for further consideration. The Senate proposed 2010 supplemental capital budget (SB 6364) is on the Senate floor waiting for further consideration.

Revenue Legislation
Two revenue-related bills have made it into the end-game. Senate Bill 6143– increases taxes and closes loopholes –  and Senate Bill 6874 – increases tobacco product tax. 

Senate Bill 6134 has passed both the House and Senate and is now in conference.

Senate Bill 6874 is on the House floor awaiting further consideration.

House Passes Revenue Legislation

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Late last night the House passed their proposed revenue package (SB 6143) with a vote of 52-45.

Though the House passed their proposed revenue package from committee to the floor last week  (HB 3191), it is the Senate’s proposed revenue legislation that the House voted on last night.

The House passed a striker, which removes the language from the Senate’s revenue legislation and replaces it with the House’s proposed revenue package (HB 3191). As a result the House effectively passed their proposed revenue package using SB 6143 as the vehicle.

The striking language passed by the House narrows or eliminates numerous current tax loopholes; removes sales tax exemptions for bottled water, elective cosmetic surgery, candy & gum, and custom software; and includes various other measures.

The House considered 18 amendments to the bill, of which nine were adopted.

  • Requires the applicant for the rural county sales tax exemption/deferral program to provide information on new jobs for the local work force.
  • Requires the department of revenue and the other members of the streamlined sales tax project advisory group to recommend modifications to the definition of candy under the streamlined agreement.
  • Removes provisions imposing sales tax on janitorial services.
  • Changes the effective date of the minimum nexus provisions from April 1, 2010, to July 1, 2010. Makes a technical correction.
  • Eliminates the July 1, 2020, expiration date for the livestock nutrient management sales and use tax exemption.
  • Expires, on July 1, 2011, the section that allow the DOR to disregard tax avoidance transactions.
  • Changes the effective date of the provisions modifying the 1st  mortgage deduction from April 1, 2010, to July 1, 2010.
  • Caps the aircraft tax for aircraft manufactured in 1970 and before to an amount that is twice the current aircraft tax.
  • Clarifies that the nexus and apportionment provisions only apply to state business and occupation taxes and not local taxes.

The House’s revenue legislation generates $700 million in new revenue for the 2009-11 biennium. This is approximately $190 million less than the revenue passed by the Senate over the weekend.  

SB 6143 now goes back to the Senate for concurrence. If the Senate does not agree to the changes the House made then the bill will move to conference.

Senate Passes Tobacco Product Tax Increase

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On Sunday the Senate passed the second of a two-bill revenue legislative package, an increase on tobacco products.

Substitute Senate Bill 6874, passed on 29-19. The bill would significantly increase the cost of tobacco products in Washington.  If enacted, the bill would increase the tax on cigarettes by $1, to a total of $3.025 per pack of 20 cigarettes. In addition, an added tax of  $1.825 per pack is included on promotions such “as buy one pack get one free” and “two packs for the price of one”.  Finally, cigarettes that are manufactured by nonparticipating members in the master settlement agreement are subject to an additional tax of 42 cents per pack.

The bill also creates the basic health plan stabilization account in which the tax revenue generated will go to  support enrollment in the basic health plan.

Senate Bill 6874 now goes to the House for further consideration.

Senate Passes Sales Tax Revenue Legislation

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Today, the Senate passed Substitute Senate Bill 6143. SSB 6143 is one of a two-bill revenue package that the Senate Ways & Means Committee took action on late this week.  The other revenue bill SSB 6874 – increases taxes on tobacco products – awaits further action on the Senate floor.

SSB 6143 modifies excise tax laws to preserve funding for public schools, colleges, and universities, as well as other public systems essential for the safety, health, and security of all Washingtonians.

SSB 6143 includes a proposed temporary three-tenths of 1 percent sales tax increase and the implementation of the Working Families Tax Credit. The sales tax increase would be for three years and would include funding for the Working Families Tax Credit to dramatically reduce the impact on low income families. The Washington Department of Revenue has estimated the tax increase would cost the typical household $29.33 a year. The tax credit, provided to those eligible for the federal Earned Income Tax Credit, would provide a minimum rebate of $25.

In addition, the bill closes more than a dozen tax loopholes ( No longer among them is a sales tax exemption for used car trade-ins). Finally, the bill includes the implementation of a sales tax on bottled water and the implementation of a three-year business and occupation tax surcharge on services of one-quarter of 1 percent. The latter would be teamed with an increase in the small business tax credit from $35 per month to $70 per month.

The Senate considered 27 amendments to the bill, of which seven were adopted.

  1. Removed the appropriation and the state expenditure limit sections of the underlying bill.
  2. Permanently doubles the small business credit for businesses paying under the service rate.
  3. Changes the expiration of the sales tax on bottled water from 2015 to 2013.
  4. Allows an exemption from the sales tax on bottled water for persons without potable water.
  5. Makes a technical change to the banking provisions of the economic nexus provisions.
  6. Removes sections related to local use tax on brokered natural gas to conform this bill with the passage of ESHB 3179 (which made the same amendments to local use tax on brokered natural gas).
  7. Prohibits legislative expense allowances if the temporary sales tax increase is extended beyond June 30, 2013.

SSB 6143 now goes to the House for further consideration.