Gregoire proposes new fuel tax to fund education

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OLYMPIA — Gov. Chris Gregoire proposed higher taxes on gas, soda, candy and gum Tuesday in order to avoid more government cuts and to help fund education in response to a court order.

In her final budget plan, Gregoire said a budget without new revenues would force the closure of state parks, eliminate food assistance programs and cause additional cuts in education.

The new wholesale tax on gasoline and diesel fuel — paid by refineries but likely passed on to drivers — would eventually rise to 4.62 percent. The governor also wants to extend taxes on beer and business taxes paid by doctors, lawyers, accountants and others.

“We need revenue if we’re going to meet our constitutional and moral responsibility to fund education,” Gregoire said. The total revenue from the new tax and tax extensions would be about $1 billion for the two-year budget cycle that starts in July.

Gregoire noted that the country’s top oil companies have made billions of dollars in profits this year, “so I expect them to do this without passing this on to consumers.”

She said she saw no other way to find the large amount of money needed to properly invest in the education system.

“Time is up,” she said. “There is no more recess.”

Gregoire said the candy and soda tax was a way to pay an award issued by an independent arbitrator in October to give pay raises to the state’s home care workers.

“Do I think these people need and deserve raises? Absolutely,” she said. “I just can’t do it at this point. So I’ve tried to find a revenue source that had a direct nexus.”

Washington state governor-elect Jay Inslee will take office in January facing a projected $900 million deficit for the next two-year budget ending in mid-2015.

That doesn’t include money lawmakers will need to spend to improve funding for education as directed by the state Supreme Court earlier this year.

Inslee has said he will not raise taxes. Gregoire said a 2013-15 budget without taxes would have unacceptable consequences for people across the state and would hinder the state’s economic recovery.

Sterling Clifford, a spokesman for Inslee, issued a written statement saying that Inslee appreciated Gregoire’s “thoughtful effort and determination to address Washington’s fiscal reality.”

“In the upcoming legislative session, Governor-Elect Inslee will lay out his own budget priorities that reflect his vision for state government and his commitment to create a lasting economic recovery with secure jobs for Washington’s middle-class,” Clifford wrote.

Republican Sen. Andy Hill, who would lead the chamber’s budget committee under a proposed GOP-led majority coalition, said Gregoire’s budget will be a point of reference as lawmakers try to build a sustainable spending plan.

Hill noted that the state will bring in $2.1 billion in more revenue during the next budget cycle, even without new taxes.

“It’s really a matter of, 'How do we prioritize that spending?”’ Hill said.

Gregoire’s budget does include some cuts. She proposes to block cost-of-living increases for teachers, saving $360 million, and cut funding for local government programs by $57 million. Her budget totals $557 million in various cuts or savings. Her plan would also leave about $882 million in the bank.

Overall, Gregoire’s budget would total $34.4 billion in spending, up about 10 percent from the current biennium.