State income tax, sales-tax increase won't go to voters

OLYMPIA — Lawmakers apparently won't ask voters to create an income tax or increase the state sales tax this year.

Senate Majority Leader Lisa Brown, D-Spokane, said Thursday that Senate Democrats won't send voters a proposal for an income tax that targets people making more than $250,000.

And House Majority Leader Lynn Kessler, D-Hoquiam, said there wasn't enough support among House Democrats to ask voters to raise the sales tax three-tenths of a penny to help backfill proposed cuts in state health-care services.

Kessler, however, noted that health-care advocates who support a sales-tax increase are lobbying lawmakers to back the tax. It's not clear if they'll get anywhere, but "nothing is ever dead here," Kessler said.

Rep. Eric Pettigrew, D-Seattle, the prime sponsor of the sales-tax proposal, House Bill 2377, was pessimistic.

Pettigrew said House Democrats have caucused on the issue several times, but during a late-night vote count on Wednesday it was clear there isn't enough support for the bill. He said they have only about 25 votes, half of what is needed for the measure to pass the House.

"I think people are really concerned with the impact of taxes on folks," he said.

The bill passed the House Health and Human Services Appropriations Committee on an 8-7 vote earlier this week.

House leadership and a coalition of health-care groups have backed the proposal. If approved by the Legislature and voters, the tax increase would have raised $486 million over the next two years, according to House budget writers.

The tax would remain in place from Jan. 1, 2010, to Dec. 31, 2012, with money going to help pay for the Basic Health Plan, nursing-home care, adult day health programs, public health and other health services. The Basic Health Plan is a state-subsidized insurance program.

The proposal also includes a so-called working-family tax credit to help offset the higher sales taxes paid by the working poor.

The state sales tax now is 6.5 percent. With local sales taxes added in, it's 9.5 percent for most purchases in King County.

Cassie Sauer, spokeswoman for the Washington State Hospital Association, said the association's lobbyist warned her that the sales tax might not gain widespread support in the House.

"It's going to be an all-cuts budget," Sauer said. "Hospitals are going to cut services for sure. I anticipate that nursing homes will close; emergency rooms are going to be super, super crowded."

Lawmakers have proposed reductions in health care, education, corrections and other services to balance the next two-year state budget.

"We think it would be shameful if a supermajority of Democrats leaves town with an all-cuts budget, refusing to even send voters a small temporary tax increase to avoid massive cuts to health," said Adam Glickman, a spokesman with the Service Employees International Union, which represents health-care workers.

Brown has talked over the past few weeks about asking voters to approve an income tax on the wealthy as a way to reduce reliance on the sales tax.

She said the tax could be between 1 and 3 percent of income over $250,000 for individuals, which could raise between $500 million and $1.5 billion per biennium.

Brown said many Senate Democrats still believe that changing the state tax system is the right thing to do.

"However, we've concluded it's not the right time to do it," she said. "So we will not be moving forward with any proposals this session."

Brown did say the Senate was willing to consider the sales-tax ballot measure if the House is able to pass it.

Andrew Garber: 360-236-8268 or agarber@seattletimes.com

Jennifer Sullivan: 360-236-8267 or jensullivan@seattletimes.com