Income tax bill dies in state Senate

OLYMPIA -- Senate Democratic leaders said Thursday that they're scrapping a proposal for a 1 percent income tax on high earners because the timing isn't right this year.

"It is clear we don't have the legislative support to move forward," Senate Majority Leader Lisa Brown, D-Spokane, said at a news conference Thursday.

She said the Senate won't advance any tax proposals this year after hearing from voters that it's the wrong time to add taxes while the economy is in recession.

But Democrats still believe the state's tax system -- which relies on sales tax for more than half of state revenues -- is unfair, overly burdens low- and middle-income citizens and must be reformed, Brown said.

Senate Minority Leader Mike Hewitt, R-Walla Walla, said it's about time Democrats realized the public has had enough of taxes.

"I think they've finally seen the light," Hewitt said when he heard Democrats were nixing the income tax proposal. "People clearly are not in the mood for more taxes."

Hewitt said he's seen enthusiasm for an income tax wane since more than 5,000 people gathered on the Capitol steps on April 15 to protest tax increases and government spending.

"The proposal has gone from a shout to a murmur," Hewitt said.

Sen. Jeanne Kohl-Welles, D-Seattle, said she'd continue pushing her idea to impose a 1 percent tax on income above $500,000 until the last minute of the session Sunday.

"At a time of recession, sales tax dependency is exacerbated in terms of our getting less revenue as people stop spending," Kohl-Welles said. "I believe it's time we recognize it for what it is and actually make some structural reform."

Kohl-Welles said she also plans to introduce a bill to tax gum and candy to pay for some children's health care services but doesn't expect that to go anywhere this session.

Democrats have said taxes may be necessary to save some important government services from cuts in the face of a projected $9 billion deficit for the 2009-11 biennium.

Rep. Eric Pettigrew, D-Seattle, introduced House Bill 2377, which would put a referendum on the ballot asking voters for a 0.3 percent sales tax increase to pay for health care services.

That would bring the base state sales tax rate from 6.5 cents to 6.8 cents a dollar. When local sales taxes are added on, the rate in the Tri-Cities would go from 8.3 cents to 8.6 cents a dollar if the referendum passes.

The House Health & Human Services Appropriations Committee, which Pettigrew chairs, recommended passing the bill Tuesday.

Rep. Hans Dunshee, D-Snohomish, proposed in House Bill 2334 putting a $3 billion bond measure on the ballot this fall to pay for school modernization and weatherization. The House Capital Budget Committee recommended passing the bill April 14.

Neither bill has gone to the House floor for a vote.

Brown said Senate Democrats haven't yet decided whether they'll support the sales tax if it's passed by the House, and that the bond issue seems unlikely to move out of either chamber.

Hewitt said he thought the bond issue was "dead on arrival" the minute he heard about it.

"Nobody's going to do that in this situation," Hewitt said.