Washington tax amnesty brings state $263 million

An amnesty program that offered Washington businesses a chance to pay overdue taxes brought the state a surge of funds that far surpassed expectations, officials said Tuesday.

Gov. Chris Gregoire said the three-month program collected $263 million for the state - about 10 times the amount that officials had initially projected. Gregoire said more than 10,000 businesses applied to pay their back taxes while waiving any penalties and interest.

"This is truly a shock to all of us," Gregoire said. "It brings us much-needed cash."

The amnesty program also brought in $57 million for local jurisdictions. Participants were mostly small businesses and included unregistered entities that the state may not have ever identified. Some large businesses also participated, including one firm that officials declined to identify that paid tens of millions of dollars in back taxes.

The settlements mean the state waived about $41 million in penalties and interest.

Gregoire said the influx of cash will help state lawmakers as they grapple over the next operating budget. They are slashing spending to close a projected shortfall of about $5 billion.

Officials had first projected that the amnesty program would bring in $24 million for the state and about $4 million for local governments. That projection was later upgraded, but the final results were $182 million more than lawmakers were expecting just days ago.

Budget discussions have been slowly progressing behind closed doors. Rep. Jeannie Darneille, a Democrat from Tacoma who is involved in the daily negotiations, declined to discuss specifics but said the House and Senate still have many issues left to address. She said the new funds surpass expectations and will help with the process.

"It certainly helps get those goal posts a little bit closer," she said.

The budget isn't the only issue in focus during the 30-day special session. Gregoire said she'd like to see changes to the state's workers' compensation system before lawmakers go home for the year.