Tag Archives: revenue

Senate Ways and Means Takes Action on Revenue Bills

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Yesterday, the Senate Ways & Means Committee held a long executive session to take action on  two revenue bills – Senate Bills 6874 and 6143. Both bills reflect the intent of the Senate’s revenue package released in February.

Substitute Senate Bill 6874, passed on a voice vote, 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.

The revenue generated for FY11 is expected to be $85.698 million and is estimated to fund approximately 36,600 enrollments in the basic health plan.

Substitute Senate Bill 6874 nows goes to the Senate Floor for further consideration.

Substitute Senate Bill 6143 passed with a vote of 12-10. 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 (expires June 1, 2015) 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 two-bill revenue package would generate $890 million. SSB 6143 now goes to the Senate floor for further consideration.

Senate Ways and Means Hears Income Tax Legislation

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The Senate Ways & Means Committee held a public hearing late this afternoon on income tax legislation.

The proposed Substitute Senate Bill 6250 refers a new income tax to voters at the next general election. The income tax would be imposed on:

  • An individual’s income that is over $200,000.
  • For a head of a household, income over $300,000 is taxed.
  • For a married couple, the tax applies to income over $400,000.
  • If approved a tax on income is imposed on January 1, 2011, andthe state sales tax would be reduced to 5.5 percent on July 1, 2012.

The plan,presented by some Senate Democrats, would go something like this. The Legislature would pass a temporary sales tax increase, which would go into effect immediately to help alleviate our state’s looming cash-flow problem. In addition, the Legislature would also pass a referendum to the people, giving them the opportunity in November to repeal not just that three-tenths-of-a-cent increase, but an additional half-cent off the state sales tax – taking the state rate down to 6 cents, a level not seen in thirty years. Finally, in its place would go a high earners’ income tax of 4.5 percent on all income over $200,000 for individuals, $300,000 for heads of households, and $400,000 for married couples.

As with any other public hearing on a bill, committee staff provided by an overview of the bill. What was different during this hearing was the normal procedural overview of the bill was intermixed with parliamentary procedures rarely heard. An exciting moment for any political wonk.

After clarification and at the Chair’s discretion, the public hearing moved forward. Testimony opened with an eloquent and strong statement by the sponsor of the legislation, Sen. Rosa Franklin.

Testimony was presented that both favored and challenged the proposed subsitute bill heard before the Committee. Some of those that testified in favor of the bill included students from The Evergreen State College.

The Committee did not take any action on the bill.

House Looks to Move Operating and Capital Budgets; Revenue Passes House Committee

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Overnight the focus of the Washington Legislature has moved from committees to the floor.

The House is expected to take up the operating budget and the capital budget today.

Though the House passed their proposed 2010 supplemental operating budget from committee to the floor late last week (HB 2824), it is the Senate’s proposed budget that will likely be the version voted on in the House.

The House has prepared a bill to strike the language from the Senate’s proposed 2010 operating budget (SB 6444) and include the House’s proposed operating budget language. As a result the House will effectively pass their proposed operating budget using SB 6444 as the vehicle.

This will force the bill to go to conference between the Senate and the House because it is unlikely that the Senate will agree to the changes the House will make on the floor when it votes on SB 6444.

The House will vote on its proposed 2010 supplemental capital budget as soon as today (HB 2836) . The Senate has yet to release a proposed 2010 supplemental capital budget.

Finally, the House Finance Committee held a public hearing and moved the House’s revenue package (HB 3191) out of committee and to the House floor.

House Releases Revenue Package

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This afternoon the House released their proposed 2010 supplemental revenue package.

The House’s revenue package generates $758 million in new revenue for the remainder of the 2009-11 biennium and anticipates another $100 million to be generated from anticipated budget actions this session.

The House’s package resembles both the Governor and Senate’s proposed package. All three include closing tax loophooles and increases in sin taxes and both the House and Senate include savings from legislation to be enacted this session.

The largest difference among the revenue packages proposed is either the presence or absence of a sales tax. The Senate revenue package is the only one that includes a temporary increase in the sales tax.

Highlights of the House’s revenue package are below.

Highlights of Revenue Package

  • Narrows or eliminates numerous current tax preferences or “tax loopholes” ($385.31 million).
  • Removes sales tax exemptions for bottled water, elective cosmetic surgery, candy & gum, custom software, and janitorial services ($163.2million).
  • The cigarette tax is increased by $1 per package and taxes on other tobacco products are equalized ($111.6 million)
  • Increases taxes by 0.5% on lawyers, accountants, agends, marketing and management consultants ($21.7 million).
  • Repeals exemptions on investment earlings for nonfinancial firms ($58 million).
  • Implements savings from the Convention Center Tax Recovery (HB 3027) ($10.1 million)
  • Limits exemption to the wind M&E ($7.8 million)
  • Restores the PUD privilege tax to original legislative intent ($1.2 million).
  • Implements SB 6409 ($30 million)
  • Transfers funds from the captal budget ($70 million).

Details on the House’s proposed revenue package can be found on the House Democratic Caucus website.  

A public hearing on the revenue package (HB 3191) is scheduled for tomorrow, March 2, at 9:00 a.m. before the House Finance Committee.

Legislature Week 8: What is Happening

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The eighth week of the 2010 supplemental session will be focused on budget and revenue.

Both the House and Senate released their proposed 2010 supplemental operating budgets this past week. The Senate has yet to release its proposed 2010 supplemental capital budget and the House has yet to release a revenue package.

Fiscal committees will be busy through Monday of next week moving the proposed budget and revenue packages forward as well as any remaining bills in their committees. Both committees must have moved bills from the opposite chamber to the floor by end of day Monday, March 1.

Tuesday through the adjournment of the 2010 supplemental session will be focused on finalizing budgets and revenue packages. So the floors of both chambers will be the center of legislative action from here on out.

Having said that it is worth keeping an eye on the House and Senate fiscal committees for a conference budget and bills (i.e. fiscal and policy) that are Necessary to Implement the Budget (NITB) (i.e. Senate Ways & Means and House Ways & Means).

It is also worth watching legislative policy committees (i.e. House Higher Education and Senate Higher Education & Workforce Development) . Many of the policy committees will hold work sessions next week on hot issues or plans for the Interim.

Analysis of Governor and Senate Revenue Packages

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To date the Governor and the Senate have each proposed a revenue package to accompany their proposed 2010 supplemental operating budgets. The House’s revenue package is expected any day.

The Governor was first out of the gate with her revenue package last week (February 17) for $605 million.  The Governor’s revenue package is a two-pronged approach: (1) Closing tax loopholes ($112.35 million) and (2) Increasing “sin” taxes ($493.1 million).

Governor Revenue Package

The Governor’s revenue package restores funding to a variety of public services and programs in the areas of education, health care and human services.  Specific to higher education, the Governor restores full funding to the State Need Grant.

Governor's Restoration

The Senate’s revenue package is $313 million dollars larger than the Governor’s proposed package (Total revenue increase of $918 million).

The Senate, like the Governor, targets closing tax loopholes and increasing “sin” taxes. However, the Senate only raises a single “sin” tax (i.e. cigarette tax) and also incorporates revenue from a  temporaray sales tax increase and savings from the implementation of various Senate Bills.

As eluded to above, the Senate used a four-pronged approach in the development of its revenue package: (1) Closing tax loopholes ($518 million); (2) Temporary 0.3%  increase in sales tax ($313 million); (3) Increase cigarette tax by $1 per pack ($85.7 million); and Enactment of various Senate Bills ($1.3 million).Senate Revenue SummaryThe Senate restores funding to many of the same public services and programs that the Governor’s revenue package identifies. Specific to higher education, the Senate restores full funding to the State Need Grant, restores partial funding to the State Work Study program, and maintains commitments to recipients of several smaller financial aid programs that are suspended for the second year of the biennium.

Any revenue increase proposal still has a long way to go in the legislative process before it is law. The Senate and the House must first move their revenue proposals through the appropriate committees in their respective chambers as well as the committees in the opposite chamber.

Any differences between the House and Senate proposals, after the process has been conducted, will need to be settled through conference committee and both chambers will have to concur on any final legislative revenue package.

Governor Signs I-960 Legislation

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This afternoon Governor Gregoire signed into law  Senate Bill 6130.

Senate Bill 6130 temporarily suspends tax-limiting Initiative 960 in its entirety. From the effective date through July 1, 2011, any action or combination of actions by the Legislature that raises taxes may be taken with the approval of a majority of members elected to each house of the Legislature.

Senate Bill 6130 is effective immediately.

Senate Concurs with House Version of Bill to Suspend I-960

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This evening the Senate concurred to the House amended version of Senate Bill 6130.

Senate Bill 6130 temporarily suspends tax-limiting Initiative 960 in its entirety.  The passage of the bill publicly indicates the Legislature’s intent to raise revenue in the 2009-2011 fiscal biennium.  From the effective date through July 1, 2011, any action or combination of actions by the Legislature that raises taxes may be taken with the approval of a majority of members elected to each house of the Legislature.

The final version of Senate Bill 6130 passed by both chambers reinstates the public notification requirements for tax and fee increases through July 1, 2011.

Senate Bill 6130 now goes to the Governor for her signature.

House Passes I-960 Related Legislation

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After ten hours of debate over three days, the House passed Senate Bill 6130.

Senate Bill 6130 temporarily suspends tax-limiting Initiative 960 in its entirety.  The passage of the bill publicly indicates the House’s intent to raise revenue in the 2009-2011 fiscal biennium.  From the effective date through July 1, 2011, any action or combination of actions by the Legislature that raises taxes may be taken with the approval of a majority of members elected to each house of the Legislature.

Senate Bill 6130 passed in a close vote (51-47) in the House. The close vote in the House mirrored the vote in the Senate (26-22) last week.

Senate Bill 6130 now returns to the Senate for further consideration. The House, in its process, amended the bill by reinstating the public notification requirements for tax and fee increases through July 1, 2011. This portion of current law had been suspended in a floor amendment in the Senate.

The Senate has two options: (1) Concur on the bill, accepting the changes made by the House. The bill would then go to the Governor for her signature or (2) Not concur, which would require the House and Senate to establish a conference committee to work out the differences between the House and Senate versions of the bill.

Governor Proposes $605 Million in New Revenues

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This afternoon Governor Gregorie, in a letter to members of the Washington Legislature, asked policymakers to close tax loopholes and raise “sin” taxes to generate $605 million in additional state revenues for the current biennium.

Gregoire’s plan reaches the $605 million mark by increasing taxes on products including refined oil, bottled-water, carbonated beverages, cigarettes, candy and gum.

The largest of the increases applies to toxic and hazardous materials which would triple the current toxics tax from 0.7 percent to 2 percent, raising $148 million for general fund programs in the next year and $67 million for city and county storm-water projects around the state. In addition, the following increases were also proposed:

  •  A bottled water tax levied at 1 cent per ounce at wholesale, raising $134.7 million in the next year.
  • A carbonated beverages tax levied at 5 cents per 12 ounces that raises $93.6 million in the first year.
  • A$1 per pack in cigarette taxes, raising the state levy to $3.025 per pack and raising $88.8 million in revenue in the first year.
  • A sales tax on candy and gum would raise $28 million.

In addition to raising taxes on specific products, Gregoire supports moves to close tax loopholes. Specifically, she cited closing tax loopholes that favor out-of-state businesses, raising $73 million; eliminating a business tax break for gold bullion dealers; and repeal ing a tax credit for syrup taxes.