The Budget

Revenue

In order to re-balance the budget and still provide the kind of core services that reflect Washington values, many uncommonly difficult decisions were required. Over the past two legislative sessions, the Legislature has cut $5.1 billion in valued services and public employee compensation, eliminating 8,887 public sector jobs in the process.
 
This year the Legislature also voted to raise taxes by $794 million. Compared the overall two-year budget, revenue is a smaller percentage of the solution (6.7 percent) than the Rossi budget in 2003 (7.4 percent).

This is a carefully calibrated revenue package designed to minimize impact on our economic recovery. Our approach balances the responsibility between businesses and consumers.

About half of new revenues are raised on a temporary, three-year basis.

More than a third of new revenues are raised by closing unfair corporate loopholes that shift the burden from those who should pay to those who cannot, and by leveling the playing field for our home-grown businesses by making out-of-state companies pay their fair share.

We also temporarily increase the B&O rate for business services, such as lawyers and accountants, on a three-year basis. But we also permanently increase the small business tax credit so that businesses earning up to $93,389 annually are eligible. Services businesses earning up to $80,000 annually would actually pay less.

On the consumer side, we focus on nonessential items so that many households will be able to avoid paying any additional taxes at all.

We add a dollar per pack tax to cigarettes, and remove the sales tax exemption from bottled water, candy and gum.

We also temporarily increase taxes on beer and soda — both will go away in three years.

Macro-brews will cost an extra 28 cents per six-pack. Studies have shown that 10 cent increase per six-pack has the same effect on underage drinking as raising the drinking age one year.

Carbonated beverages will cost an extra 2 cents per 12 ounces. This will cost the average family $7 per year, but families have the choice to avoid it as well.

It’s important to note that for every $1 in new revenue, $5 is cut from state spending in the 2009-11 budget.