Gregoire to present all-cuts budget today
Though she faces a $2.6 billion budget deficit, Gov. Chris Gregoire won’t try to balance the state’s books on the backs of Washington’s cities, Vancouver’s lobbyist told the city council Monday. Gregoire will roll out her all-cuts budget today.
That’s the good news, lobbyist Mark Brown said, in an effort to put a positive face on a grim situation. Cities should not expect new state revenue in 2010, he warned.
“This is not the climate to be asking for more money,” Brown said in a follow-up interview. “That is why the Association of Washington Cities is not asking for any direct state funding. They just want to protect what they have. We’re asking (lawmakers) to give us greater flexibility on how a number of existing sources of revenue are used.”
As required by law, Gregoire today will release her plan for balancing the budget within existing state revenue. It’s expected to slash spending for discretionary social services, education and corrections programs. Only about $9.3 billion of the $31 billion two-year budget falls into the discretionary category.
Advocates for the elderly, K-12 and higher education and health care have scheduled a rally immediately after her presentation to denounce the “devastating human costs” of the all-cuts budget.
Before the Legislature convenes Jan. 11, the governor will unveil her proposal for a series of tax and fee increases that would save some programs.
The list of possible revenue sources under discussion is wide-ranging, Brown said, from a 5-cent tax on sodas to an increase in the general sales tax to a sales tax on professional services.
“She will put a Book B on the table in January that would restore some programs,” Brown said.
“That is one of the options,” Glenn Kuper, the governor’s spokesman, confirmed. But he said no decision has been made on how the revenue package will be structured.
The governor’s budget will call for specific program cuts rather than across-the-board cuts in each department, Kuper said.
The Department of Revenue has prepared a list of revenue-raising options for legislators and interest groups. It includes increases in the retail sales and use tax rate; repeal of sales tax exemptions on prescription drugs, custom software, motor vehicle fuel and manufacturing machinery and equipment; and new taxes on cosmetic surgery, bakery products and consumer, business and financial services.
Also on the table is Rep. Deb Wallace’s proposal to repeal the nonresident sales tax exemption that allows Oregonians to escape paying sales tax on retail products they buy in Clark County.
“These are items that we consider doable and that have been commonly requested,” said Department of Revenue spokesman Mike Gowrylow. He stressed that they do not represent recommendations by the revenue department.
Lean wish list
The city of Vancouver’s legislative agenda, mirroring the state association’s, is relatively modest. It focuses on legislation that would give the city more choices in how it uses existing revenue and some new ways to pay for street and stormwater improvements.
“The city is joining the state association in asking the Legislature to approve legislation that gives them greater flexibility in how they can use current revenue,” Brown said.
For example, the AWC’s “flexibility package” would allow cities to use gambling taxes for general public safety purposes, not just for local gambling enforcement.
The current lodging tax, presently restricted to tourism-related programs, would be broadened so cities could use it to pay for policing at major events.
The cities’ agenda also asks for new ways to pay for street repairs and stormwater control infrastructure.
A top priority, both in Vancouver and statewide, is legislation that would let a city establish a “street utility authority” for the single purpose of paying maintenance of existing streets. A city would be authorized to collect a fee from every property owner within its city limits.
The counties have a road fund for that purpose, but cities have no similar source of funding, Brown said. “We had it in the 1990s, but it was struck down by the courts.”
“The only other way we can raise these funds for transportation is by submitting a property tax bond issue to voters,” Brown said. “Because a lot more people will pay through a street utility than strictly through property ownership, you end up with the average cost being much less.”
Fees would be based on a formula that estimates how many trips a piece of property generates.
Stormwater fee
Vancouver also supports legislation that would impose a fee of $1.50 per barrel of petroleum to help cities and counties pay for federally mandated stormwater control facilities.
“It’s a big cost, a tremendous cost,” Brown said. “The city of Vancouver is probably spending over $8 million a year on stormwater infrastructure.”
Clark County, Camas, Washougal and Battle Ground are subject to the same mandate under the federal Clean Water Act.
The measure would raise $120 million statewide, which would be shared by cities, counties and the state. Sen. Craig Pridemore, D-Vancouver, sponsored a bill to impose the fee in the 2009 session. It passed the House but died in the Senate. House Speaker Frank Chopp has listed the measure as a top priority for the Democratic caucus. It’s also a top priority of the environmental community.
Petroleum manufacturers oppose the measure.
Vancouver also will support legislation to undo a state appeals court ruling that deprives 44 cities, including Vancouver, of up to $50 million in tax revenue from brokered natural gas. If the ruling stands, the city could lose $1.4 million a year from its general fund.
The appeals court ruled in 2008, overturning a Pierce County Superior Court ruling, that cities do not have the authority impose a utility tax on natural gas purchased directly from a broker if the broker does not live within the city limits. The ruling affects mainly large manufacturers.
“AWC went to the Legislature and said, ‘Let’s reconstitute the tax,’” Brown said. “Even if you purchase it from a broker, if you consume it in the city limits you should pay the tax like anyone else. Everybody in the city of Vancouver who consumes natural gas pays a utility tax, except for a handful of people who buy it in significant volume.”
