Democrats search for funds to counter GOP budget plan

Monday, April 7, 2003 8:25 AM PDT

By Associated Press

OLYMPIA -- Here's Jeff Gombosky's unenviable task -- find $600 million in new tax money to grease the balky machinery of Washington's budget process.

That's a tall order for the Spokane Democrat, who leads the House Finance Committee.

One of his challenges comes from his counterpart in the Republican-controlled Senate, Ways and Means Chairman Dino Rossi, who has echoed Gov. Gary Locke's proposal for a no-new-taxes budget, and is pushing a series of bills aimed at reducing state government's bottom line to make it balance.

Rossi's problem? Many of those bills -- and his budget proposal -- face stiff opposition in the Democratic House.

But for now, it's Gombosky who's in the squeeze, trying to find the money for a House counteroffer to the budget Rossi unveiled last week, but hemmed in on all sides by policy and politics.

On one side, he faces the liberal end of his own Democratic majority -- who want taxes raised to avoid the cuts to education and health care proposed by Locke and Rossi.

"Cutting 40,000 kids off of health insurance is not something that most Democrats are willing to do," Gombosky said, referring to the most reviled part of Rossi's budget proposal, which would reduce the number of children eligible for Medicaid coverage.

On the other side, Democratic moderates -- including Locke, argue that raising taxes would hurt the already flagging economy.

They also remember the last big tax increase in Washington, which helped sweep Democrats out of the statehouse by the dozen in the Republican Revolution of 1994. Many current House Democrats were elected during the boom years that followed that political firestorm, and have never cast a vote for a general tax increase.

"That is not lost on me," said Gombosky. "It is obviously not lost on the governor."

So increases in the business and occupation tax are off the table, Gombosky said. Also off-limits are increases in the state's share of the property tax, which would likely galvanize Washington's robust anti-tax initiative movement, led by Tim Eyman.

That leaves just a handful of options, including increasing the sales tax, repealing existing tax breaks, raising "sin taxes" on booze and smokes -- and gambling.

First the sales tax. Raising the state's 6.5 percent rate to 6.9 percent would bring in $700 million.

But the sales tax hits everybody and is widely considered overly burdensome on the poor. That makes it an unpopular vote, and Gombosky figures an increase would fall about 10 votes shy of the 50 needed in the House.

The idea of getting rid of tax exemptions on everything from bull semen to manufacturing equipment gets plenty of ink, but the breaks are often broadly popular among lawmakers and thus difficult to get rid of. Still, Gombosky is eyeing a few, including one that allows businesses a tax deduction for dues to country clubs. Getting rid of that one would bring in just $5 million, but packaging several could add up to serious money.

"We're combing through tax exemptions, asking the question: Are these tax exemptions more important than children having health care?" Gombosky said.

Sin taxes might be an easier vote. Boosting Washington's already high cigarette tax by 50 cents brings in $83 million. Raise the state's take on hard alcohol by half and you've got $100 million, Gombosky said. Either would largely erase the cuts to children's health care.

A broad expansion of gambling -- video poker or slot machines -- could bring in hundreds of millions of dollars, but faces stiff opposition from Indian tribes and antigambling forces.

More likely, Gombosky said -- is increasing the frequency of the state lottery's Keno drawings from once a day to once every five minutes -- bringing in $39 million.

Still, when you add up Keno, booze and smokes, you've got less than $250 million -- well short of Gombosky's goal.

Meanwhile, in the Senate, Rossi's taking a different approach by pushing bills aimed at reducing the cost of government, arguing that the weak economy demands a tight rein on spending, including raises for state employees and teachers.

"No whining, that's the theme," said Rossi, R-Sammamish. "I have a little trouble saying we're going to give a tax increase to people who are unemployed, in order to give pay increases to people who have jobs."

For example, Rossi largely adopts Gov. Gary Locke's proposal to suspend two voter-approved initiatives that mandate higher teacher pay and smaller class sizes. That saves more than $500 million, but could face a bitter fight in the House.

His budget also assumes the passage of other changes that make the bottom line smaller. Among the ideas: freeing some prison inmates early, protecting agencies from big legal judgments, changing the way the state calculates the yield on its pension funds so state contributions can be reduced, and raising tuition dramatically for students who linger in college. Just those ideas add up to nearly $200 million.

Some of those ideas face tough opposition. The pension change, for example, is opposed by public employee unions. The protections against legal judgments, meanwhile, are part of a larger lawsuit reform package stalled in the a House committee.

The Senate passed its budget on Friday, but delayed action on many of the bills that would make it work. In the House, the budget's still under wraps, and Gombosky's still looking for money.

"I don't see at this point in time where there are the votes to pass any particular bill," Gombosky said.

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