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Gregoire’s budget includes cuts, tax increases including fuel tax to pay school transportation costs

Post by Brad Shannon / The Olympian on Dec. 18, 2012 at 10:16 am |
December 18, 2012 10:20 am

Gov. Chris Gregoire’s lame-duck budget proposal is on the table this morning, calling for a mixture of tax increases and spending cuts to bridge a predicted $900 million shortfall and also raise $1 billion more to answer a court ruling on K-12 school funding. A few elements that caught my eye include a wholesale gasoline and diesel tax that would eventually fund all school transportation costs and cancellation of a tax break that the governor says benefits refineries. She also wants to extend a gross receipts tax surcharge on service businesses and a beer tax.

A link to the entire budget briefing package is here. The Democratic governor is talking about her budget at a news conference being aired live at 10 a.m. by TVW and streamed at tvw.org.

As the outbound governor, the least Gregoire can hope her budget plan provides a roadmap to her successor, Democratic Gov.-elect Jay Inslee, who has sworn off tax hikes. But Inslee has said he would like to close mostly unspecified tax “loopholes” or tax breaks that do not produce enough public benefit.

But any state leader faces a tough time moving a tax plan through the 2013 Legislature, which has a solid Democratic majority of 55-to-43 in the House but is virtually tied in the Senate with 23 Republicans and two crossover Democrats trying to take control. The GOP bloc is opposed to new taxes, and Republicans on a K-12 school funding task force also are opposing new taxes suggested by Democrats on the panel.

By contrast, House budget author Ross Hunter, D-Medina, said last week he does not see how new school funding investments of $1.7 billion to $2.1 billion can be made without new revenue sources.

A few items in Gregoire’s budget plan:

  • Medicaid – Gregoire appears to favor full expansion under the Affordable Care Act and this is expected to save the state $140 million while extending a hospital tax worth $276 million.
  • K-12 schools – The governor adds spending for preschool, faster expansion of all-day kindergartens and class size reductions in K-12. She also would cut $100 million in levy equalization, a subsidy for tax-poor school districts.
  • Gregoire also would suspend Initiative 732, which provides inflation-based pay raises for K-12 and community college employees. But she does restore cuts to teacher salaries and also restores 3 percent cuts to general-government workers’ pay.
  • Elimination of the State Food Assistance program and cuts of about $52 million to higher education.
  • Gregoire also is offering a capital projects budget that has more than a half-billion dollars worth of projects that appear targeted to Puget Sound.

We’ll have more about the budget and reactions to the plan later today and in print editions Wednesday of The News Tribune and The Olympian.

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