Today is day 48 of the 60 day legislative session in Olympia.  Both chambers of the legislature have released their versions of the operating budget, while only the Senate has proposed a set of tax proposals to close the $2.8 billion budget gap facing our state.  The House, having 98 members, is still wrangling over what mix of tax increases, loophole closing and fund transfers they can get a majority of their members to vote on.

Both budgets make cuts to programs across the board, from K-12 and higher education to social services to parks and natural resources.  If you are interested in learning more about the budgets, here are the links:

http://leap.leg.wa.gov/leap/budget/detail/2010/ho2010p.asp  House budget overview and summary

http://leap.leg.wa.gov/leap/budget/detail/2010/so2010p.asp  Senate budget overview and summary

Both House and Senate Ways and Means Committees have passed their versions of the budget.  The full Senate is currently discussing the budget in caucus and will pass it sometime today.  The House will likely follow suit on Monday.

The Senate has introduced and held public hearings on three tax related proposals, SB 6873, 6874 and 6875.  SB 6873, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6873 closes various tax “loopholes” but also proposes several new and dangerous tax concepts.  It is similar to HB 3176 but contains additional provisions.

The biggest danger is Part 2 of SB 6873, which creates the idea of “tax avoidance” and grants the Dept. of Revenue an inordinate amount of authority to determine when an “abusive tax avoidance transaction” takes place.   Part 1 of the bill establishes “economic nexus” as a basis for tax liability, ostensibly to capture more tax revenue from out-of-state companies.   That section also allows for apportionment of royalty income, which helps many WTIA members.

Part 10 assigns personal liability for unpaid B&O taxes to corporate officers.  While this is already allowed for sales taxes that are held in trust, this section creates undue liability for corporate employees who have no connection to a company’s tax liabilities.

WTIA is working with other business groups to delete the more egregious sections of this bill.  However, in the legislature’s desperation for more money, some version of this bill is bound to pass.

SB 6874 raises the taxes on tobacco.  SB 6875 raises the sales tax .3 percent and dedicates it to K-12 and higher education.  While these areas are WTIA’s budget priorities, the legislature should fund those critical areas first instead of using an unpopular sales tax increase to fund what are the most important areas of the state budget.

What the legislature has not done is reform worker’s comp., get a handle on the growing problem of public employee pensions, truly reform (or eliminate) General Assistance-Unemployable and deal with overly generous eligibility requirements for some health care and social service programs.

On the education front, the Race to the Top bill, SB 6696, found here:  http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6696&year=2010 is now in the House Ways and Means Committee.  See earlier posts for additional details about this bill. If passed and signed into law, Washington will be eligible for a piece of the over $4 billion in federal money devoted to education reform and improvement.  WTIA is supporting this bill and working with the Excellent Schools Now coalition to see this bill through the legislature.

If you are interested in seeing all the legislation we are tracking and involved, check WTIA’s online bill tracker, http://capwiz.com/washingtontechnology/issues/bills/