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Lawmakers OK largest operating budget tax increase in state history

OLYMPIA - Beer drinkers, those with a sweet tooth for soda pop, candy and gum, cigarette smokers and even the health-conscious among us who opt for bottled water instead of drinking straight out of the tap, will be paying more than their fair share to keep Washington state up and operating at full speed ahead.

The state Senate has passed Senate Bill 6143, a measure that will raise taxes by $794 million in the current biennium and nearly $1.7 billion in the 2011-13 biennium. The Senate also passed Senate Bill 6444, the state's supplemental 2009-11 operating budget.

Sen. Jim Honeyford (R-Sunnyside) voted against both measures, saying that this is the wrong time to raise taxes on the workers and employers of our state.

The tax package adopted by the Democrat-controlled Senate in Olympia includes a 20 percent business and occupation (B&O) tax increase on service employers, effective May 1. This amounts to a $242 million tax increase between now and July 1, 2011, and a $483 million increase in the 2011-13 biennium.

The increase in the beer tax will be 50 cents per gallon. Microbrews are exempt. This increases the tax on a barrel of beer from $8.08 to $23.58.

The increased taxes on carbonated beverages, including soda pop, will be two cents per 12-oz bottle.

The new sales tax on candy and gum is expected to generate $94 million in taxes between now and the end of the 2013 biennium.

The sales tax on bottled water is estimated to be worth more than $100 million between now and the end of the 2013 biennium.

Higher taxes on cigarettes and other tobacco products is expected to raise nearly $300 million between now and the end of the 2013 biennium.

"This proposal is really unfair to the taxpayers of this state," said Honeyford, who serves on the Senate Ways and Means Committee.

"Raising taxes during a recession is the wrong direction for our state, and is no way to create jobs. It will only result in fewer jobs, fewer small businesses and a slower economic recovery.

"Tax increases should be a last resort, not the first, and I cannot support adding even more to the burdens our families and employers are already facing," the Sunnyside senator said after joining a long of Republicans in voting no on the tax increases.

Honeyford said the long-awaited tax package was part of a $30.9 billion supplemental operating budget, which only decreases spending by less than 1 percent from last year's budget and contains no significant reforms or long-term, sustainable cuts.

He explained that it seeks to close the state's $2.8 billion budget shortfall through $794 million in new tax increases, $661 million in spending reductions, $633 million in still-unconfirmed funds from the federal government, $328 million in transfers from other accounts, $256 million in reserve funds, including the total depletion of the rainy-day fund, and $178 million in budget gimmicks and cost shifts to other accounts.

"None of the 'sacred cows' of state government have been touched," said Honeyford. "We haven't contracted out state printing, privatized liquor sales, or reopened the collective bargaining contracts. The majority party (Democrats) failed to act on any major reforms, and wasted nearly 90 days simply arguing about how to raise taxes."

Despite not being able to support the final bill, Honeyford said he worked to make sure that some issues vital to the Yakima Valley were addressed in the final budget passed by Democrats.

"I'm pleased that I was able to preserve $500,000 in the budget for clean water in the Lower Yakima Basin to help address the nitrate/storm run-off problem," said Honeyford, the lead Republican on the Senate Environment, Water and Energy Committee. "This will allow the Department of Ecology to begin addressing the problem, perhaps with a Ground Water Management Area."

Honeyford also fought to preserve the sales tax exemption for wind power.

"Local communities, where wind farms are sited, welcome the jobs and income they produce," Honeyford said. "These wind-power plants provide good jobs, a revenue base for our communities, lease income and renewable energy. I know of several projects that would produce about 1,500 megawatts of wind power proposed for construction in 2010 to 2013, but it is unlikely they would be built if this critical incentive had been removed."

Senate Bill 6143 and Senate Bill 6444 will now go to the governor for her consideration. Gov. Christine Gregoire is expected to sign the legislation this week.

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