OLYMPIA — Lawmakers will return to the state capital Tuesday for the three days that remain in their current special session, but they expect to be back yet again next month.
The impasse over how to raise revenues will make Thursday’s adjournment an exercise in bungee-legislating, said state Rep. Steve Tharinger.
“We’re going to go down there on Tuesday, Wednesday and Thursday,” he said from his Sequim home, where he had sat out negotiations among party leaders.
Yet even if senior politicians break through their deadlock, rules of the state House and Senate preclude a solution this week.
“You have 24-hour notifications on some of these bills,” Tharinger said. “There’s just not enough time on the clock.”
Tharinger and state Rep. Kevin Van De Wege of Sequim and state Sen. Jim Hargrove of Hoquiam make up the legislative delegation of the 24th District that includes all of Clallam and Jefferson counties and most of Grays Harbor County.
All are Democrats.
Hargrove agreed that the state Legislature would need another overtime period.
“It would be almost physically impossible to get done even if we passed everything next week,” he said.
Meanwhile, “some side groups are working on things, such as a complete solution to McCleary,” he said, referring to the McCleary decision, the state Supreme Court’s order that the state provide primary funding for education.
“Progress is being made; hopefully we’ll have some sort of Senate proposal next week. That’s the goal.”
Tharinger said the wrangling between Democrats and Republicans probably will continue year after year if legislators must struggle with revenue that depends on a state sales tax. The tax, in turn, depends on the health of the economy.
And while the economy is turning upward for owners of stocks and bonds, it isn’t recovering so well for wage and salary earners, Tharinger said.
A capital gains tax, Tharinger said, would enable “equity recovery” of profits from sales of investments.
Dick Pilling, Clallam County Republican Party chairman, has called a capital gains tax unnecessary in light of increased revenue projections.
Pilling said the state could expect $3 billion in new revenue over the 2015-2017 biennium, but the state Economic and Revenue Forecast Council a week ago projected only a $309 million increase.
The council’s “optimistic” forecast, however, projects another $2.78 billion in revenue while its “pessimistic” projection reckons the state will collect $3 billion less.
For details of the prognostications, visit www.erfc.wa.gov/forecast.
Tharinger predicted a kind of deja vu deux.
“Every two years we’re going to be in the same situation,” he said, if the state doesn’t restructure its tax system.
An increased capital gains tax — Hargrove has proposed hiking it by one-tenth of 1 percent, which he said 7,500 people in the state would pay — could be part of that puzzle, Tharinger said.
So could charging sales tax on Internet transactions such as eBay purchases. Presently, he said, Washington misses out on $500 million a year because it does not tax such transactions at their place of purchase.
“We’re proposing that there would be a quick connection so that, if you click on that icon and make that sale, you would be taxed based on where you are,” Tharinger said.
Tharinger also has sponsored legislation reducing the Business and Occupation Tax on small new businesses, which presently must pay based on gross receipts even while their net profits are undercut by startup costs.
Pilling said he agreed that the system was “grossly unfair,” especially to startups, but said Tharinger’s “tinkering with the B&O tax obviously means attempting to increase it.”
No one except state Treasurer James L. McIntire has mentioned the “I-word.” He’s proposed a flat 5 percent income tax that would be offset by eliminating the state property tax, setting the B&O tax for most companies at 0.29 percent, and cutting the state sales tax from 6.5 percent to 5.5 percent.
For details of his plan, visit http://tinyurl.com/PDN-TaxPlan.
Meanwhile, Tharinger was pessimistic that Republicans, who control the Senate, would redesign the state’s tax system.
“Their DNA is not programmed for structural change,” he quipped.
Whereas Pilling blamed the situation on “30 years of continuous Democratic Party rule,” Tharinger said the Republicans’ Senate budget would spend roughly the same as the House Democrats’ outlay — but that the GOP plan wouldn’t raise as much revenue.
“They have a math problem and an ideology problem,” he said, “and I don’t know what will get them to see the light.”
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Reporter James Casey can be reached at 360-452-2345, ext. 5074, or at jcasey@peninsuladailynews.com.
