Rep. Cary Condotta: Update from Olympia, May 1, 2013

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Dear Friends and Neighbors,

Once again the Legislature could not get its work done in the allotted 105 days and a special session will be called on May 13.

The primary reason for the special session is the operating budget. The governor and House Democrats want to raise taxes by roughly $1 billion, despite the state already expecting to take in $2 billion more, or a 6.6 percent increase in revenue. With the state expecting this increase in tax revenue, House Republicans and the Senate Majority Coalition Caucus believe an operating budget can be drafted without raising taxes.

While House Democrats’ spending plan relies on $1.3 billion in tax increases, their tax package raises “only” $879 million. So, they will either have to cut spending or find more taxes to increase. The tax bill, House Bill 2038, came to the floor for debate on April 24.

Prior to final passage, Republicans offered two amendments that would have deleted the emergency clause in the bill and put the tax package before voters in the November election. An emergency clause allows the bill to take effect immediately upon the governor’s signature. But it also does something else very concerning – it would prevent voters from petitioning to put a referendum on the ballot. Click on the photo below to watch my floor speech supporting the amendment that would have removed the emergency clause.

Democrats rejected our amendments, which means if this measure become law, voters would be unable to take it to a referendum vote. Despite vigorous opposition by House Republicans the measure passed by a vote of 50-47, with all Republicans and five Democrats voting against it.

If this bill becomes law it would raises taxes unnecessarily, lead to jobs lost in Washington, and businesses closing and moving away. Below is a list of the tax increases proposed in HB 2038.

Tax increases

$534 million – Would permanently extend the business and occupation (B&O) surtax on certain businesses.
$14.6 million – B&O tax rates for travel agents.
$51.5 million – Would place sales and use tax on bottled water. This is the same tax that was repealed by voters in 2010.
$43 million – Would repeal the nonresident sales and use tax exemption. This could especially hit our border counties very hard along Oregon and the British Columbia borders.
$78.7 million - B&O taxes for high-tech research and development.
$63.2 million – Public utility tax on truck transport of goods in state that are destined for out of state.
$24.1 million – B&O and sales and use taxes for import commerce.
$29 million – B&O tax for sellers of prescription drugs.
$40.8 million – Fuel tax for extracted fuel.
$5.2 million – Handling losses fuel tax.

TOTAL: $879 million

Special session – What does that mean?

We have a couple options: The governor can call a special session, but can only do so in 30-day increments. That does not mean we have to use the full 30 days. The other option is the Legislature can call a budget-focused special session and avoid rehashing the controversial policy debates of the previous 105 days, but so far the governor has expressed interest in opening up the controversial policy debates again.

The bills still under consideration at the end of the regular session go back to their chamber where they originated, meaning if any House bills died in the Senate, they must go back to the House and vice versa for Senate bills that died in the House.

It is also worth noting elected officials cannot fundraise while the Legislature is in session. That will have an impact on a couple legislative races.

Finally, there is speculation that those hoping for more revenue, Democrats and Gov. Inslee may be willing to drag this out until June when the next revenue forecast is scheduled. I cannot imagine our revenue outlook would improve much, if at all, especially given the uncertainty facing our businesses and taxpayers with the threat of new and higher taxes looming.

It will be an interesting special session, but it is unfortunate we are even going into extra time when it certainly isn’t needed because tax collections are already growing by $2 billion without increases taxes.

I will keep you updated as the session progresses. In the meantime, please do not hesitate to contact me if you have any questions.

Sincerely,