House, Senate back different tax plans, and neither yielding

OLYMPIA — The special session has come down to a game of chicken, in slow motion.

Democratic leaders have agreed to about $800 million in taxes to help close a $2.8 billion budget shortfall. But they're still divided on the mix, in particular whether to include a general sales-tax increase. The Senate wants a three-tenths of a cent increase. The House wants none at all.

Neither side seems ready to budge as the Legislature heads into its fourth day of a special session.

"One way or another, somebody is going to have to blink," House Majority Leader Lynn Kessler, D-Hoquiam, said Wednesday.

Gov. Chris Gregoire is meeting with leaders and urging a compromise. The governor has said she doesn't like the idea of sales tax but so far hasn't been willing to threaten a veto to move lawmakers off center.

In the meantime, the Legislature is working short hours for the most part. Lawmakers come in, pass a few bills, meet for caucus and then adjourn for the day. There's so little going on, in fact, that the House plans to send most of its members home Thursday so they don't have to be paid a per diem. They return Friday.

"That's just in response to the public's angst over how much we're spending," Kessler said. "If you're not actively doing something, why would we want them hanging around?"

It costs about $18,000 a day to keep the entire Legislature in session. However, as of Wednesday, 71 lawmakers — out of 147 — had opted to not take their $90-per-day expense allowance at all, or only on certain days. The list has been growing.

In the Senate, the plan is to keep members in town, said Sen. Ed Murray, chairman of the Senate Democratic caucus. He argued they're needed to keep the process moving.

Also, "I think people need to be here, need to be working, need to be unhappy and wanting to get back to their jobs and families to make this get done fast," said Murray, of Seattle.

So far, legislators don't seem worn out enough to compromise. House Democratic leaders maintain they don't have the votes to approve a sales-tax increase.

Rep. Hans Dunshee, D-Snohomish, for example, said he'd never vote for one because "it whacks all the people who can least afford it."

In the Senate, there are lawmakers who will not vote for a tax package without a sales tax.

Sen. Mary Margaret Haugen, D-Camano Island, said she'd "have a hard time" voting for a tax plan unless it included a general sales-tax increase. "The fact is, this whole state is in this problem together, and I think everybody needs to be part of trying to solve it," she said.

Haugen noted the Senate sales-tax proposal includes a tax rebate for low-income families. Basically, families that qualify for the federal Earned Income Tax Credit also would be eligible for a tax rebate from the state. The rebates would start at 5 percent of the federal credit and ramp up to 10 percent over time.

Gregoire met with Democratic leaders Wednesday morning. She's proposed a tax package that she says would raise enough money without a general sales-tax increase. The governor would not discuss details.

When asked why she hasn't flatly rejected a sales tax, Gregoire said: "That's an option that I'm holding. Right now I'm just trying to work both sides so that they can work together and come to a resolution."

The House and Senate also have to reach agreement on a budget, but leaders say they're more worried about taxes at this point.

There is broad agreement to close the budget shortfall through a combination of taxes, one-time fixes such as using federal aid and reserves, as well as several hundred million dollars in cuts.

Progress is being made in negotiations, Kessler said, "It's not as bad as it sounds, even though we haven't closed a deal yet."

Minority Republicans, who are largely bystanders to the process, said they've asked Democrats to send everybody home until they figure out what they're going to do.

"Have your internal struggles all you want and then call us when you're done and you'll save taxpayers some money," said House Minority Leader Richard DeBolt, R-Chehalis.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com