Gregoire urges tax hike, reform in her final annual speech

In final State of the State talk, governor hits big issues

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The video of Chris Gregoire’s speech:

http://www.tvw.org/index.php?option=com_tvwplayer&eventID=2012010056

Joe Zarelli’s comments on the speech:

http://src.leg.wa.gov/news/2012/zarelli/011012republicanresponse.htm

Gov. Chris Gregoire in her State of the State address on Tuesday said she hopes lawmakers in Olympia can fix the $1 billion budget crisis, pass a temporary half-cent sales tax increase, reform education, approve a $3.6 billion transportation package and legalize same-sex marriage during the 60-day legislative session.

Republican legislators from Southwest Washington agreed that the budget must be cut but criticized other aspects of the Democratic governor’s agenda.

“While we must cut, we must also find real reforms,” Gregoire said. “We must look for new revenue for the state of Washington.”

Regarding the half-cent sales tax increase, Gregoire said that the state’s portion of the sales tax has not been increased since 1983, when a Republican governor passed a 1-cent increase to fund education during the worst recession since the current recession. Gregoire said $411 million of the $492 million in annual revenues from her proposed sales tax increase would go to K-12 and higher education.

Gregoire’s sales tax proposal has a referendum clause, so if passed by the Legislature, it would have to ultimately be approved by the voters in November.

State Rep. Ann Rivers, R-La Center, said she was encouraged by the governor listing education and safety nets for the vulnerable as top priorities. “I think that’s what most people really, really expect of us,” Rivers said. But Rivers said it is a bad idea to leave education funding up to a public vote. If the public does not approve the half-cent sales tax increase, then “we’re in the same boat that we’re in right now.”

State Sen. Joe Zarelli, R-Ridgefield, gave the Republican rebuttal to Gregoire’s address and said he disagrees with a sales tax hike. He said reforming taxes and prioritizing spending would be enough to fix the crisis. At the top of the spending list should be “education, and public safety, and services for the most vulnerable,” Zarelli said.

He added he would like to amend the state constitution to lower the amount of debt the state is allowed to have, because the state “spends $2 billion in the current budget just to service the amount of debt we carry,” he said. Zarelli also said the state should lower the amount it spends on co-payments and premiums for public health care subsidies, and it should stop funding social services for people who aren’t citizens.

“Our focus must be on changes that put the budget on a sustainable course,” Zarelli said.

Lawmakers made some adjustments to the state budget during a special legislative session in December, relying on some cuts, transfers and delayed payments. Along with fixing the budget gap, Gregoire wants them to leave several hundred million dollars as a buffer in case the economy underperforms.

Gregoire said she wants to see lawmakers close tax loopholes and preserve programs for students, seniors and the developmentally disabled.

She said the state should create an Office of Student Achievement to study and fix problems in the education system. Other education reforms Gregoire asked for include enhancing evaluation systems for teachers and principals and creating opportunities for struggling schools to partner with universities.

Gregoire also included in her address a plea for lawmakers to tackle a contentious social issue.

“It’s time for marriage equality,” Gregoire said, igniting a round of applause from within the House of Representative chambers.

“Gay marriage, really, of all the things we have to do right now in the state?” state Rep. Paul Harris, R-Vancouver, asked during a phone interview following the governor’s address. “I find it odd that we’re going to get involved in a divisive social issue and then think we’re going to be able to come together on a budget issue.”

Gregoire compared the state in economic crisis to a car negotiating a tight turn in the road. While other cars might slow down around the bend, Gregoire said Washington state should take risks, accelerate, and lead the pack coming out of the curve.

“The winner hits the gas pedal just when everybody else is hitting the brakes,” she said. “It’s our turn to win at the turn, and it’s our responsibility.”

The Associated Press contributed to this report.