A compromise plan for balancing the state budget

THE Democratic majority in the Legislature needs a compromise. They want to save programs, but are afraid to pile on the $1 billion in taxes they need to do what they want.

We offer a plan. Take half in taxes and half in cuts, and pass it with a combination of Democratic and Republican votes in the middle. Our proposal will hurt here and there, but it gets the state through another year.

Here is our tax package:

• Close loopholes in business taxes opened by the Dot Foods and Agrilink court decisions: $159.5 million.

• Tax out-of-state companies, mainly bank-card issuers, that have business here but don't occupy a building: $73 million.

• Ban certain abusive strategies for selling real estate without paying the real estate transfer tax: $13.6 million.

• Raise tax on cigarettes to $3.02 a pack and other tobacco products like chewing tobacco at the cigarette rate: $111.6 million.

• Tax bottled water at 1 cent per ounce at the wholesale level: $134.7 million.

• Set the excise tax on small private planes at the rate used for boats: $9.4 million.

• Subject corporate directors' fees to the 1.5 percent B&O tax: $2.1 million.

• Make all foreclosure sales subject to real estate excise tax: $6.6 million.

• End tax breaks for livestock nutrient equipment: $1.3 million.

This package of loophole closers and luxury taxes totals almost $512 million. It is enough to save the state support for low-income school districts (called levy equalization) and state scholarships for college students. It raises more than half what the tax-raisers want without jacking up the general sales tax, doubling the estate tax or doing something unconstitutional like taxing gasoline and diesel as "hazardous substances" and not using the money for roads.

It also avoids some blatantly unfair taxes, such as subjecting all of a new car to the sales tax, instead of the amount above the value of the trade-in. The trade-in was taxed already. You should not have to pay tax on a car when you buy it and again when you sell it. And now is not the time to raise taxes on the sale of cars.

It is tempting to add sales tax to candy, but specialty candy has been a growing industry here with good potential, and it is unwise to step on it.

Along with new taxes have to come some cuts.

The General Assistance-Unemployable program has to go. This program, which provides a temporary safety net for people not working because of physical and mental disabilities, has been on just about every list of proposed cuts year after year. And every year, House Speaker Frank Chopp saves it. He needs to give it up.

Reforms have to be made. Get on with privatizing the state liquor stores, which would save money by reducing the claims on the state pension system. The state needs to focus on its core mission, and retailing liquor isn't it.

The other matter is to reopen state employee labor contracts so that workers pay more than 12 percent of their medical premiums. Gov. Chris Gregoire says she wants to do this, and could reopen the contract but that she has no leverage over the unions. We believe she has plenty of leverage and is politically reluctant to use it.

None of these suggestions comes without some pain. But looking at the menu of choices, pain is all there is.

We believe our proposal is considerably less harmful for the people, and their efforts to rebuild their wealth and income, than a rush to pile on nearly $1 billion in new taxes.