The worst-case scenario for Vancouver-based distributor Corwin Beverage came Feb. 17 in the form of two small paragraphs tucked into a nine page budget proposal sent by Gov. Chris Gregoire (D-Wash.) to the Washington state Legislature.
Consisting of just a few lines of text, the paragraphs summarized two new state excise taxes covering bottled water and soft drinks. And while the governor's office touted the measures' potential to raise a combined $228.3 million for the cash-strapped state, Corwin Beverage co-owner Heidi Piper Schultz traveled to Olympia this week to make the case against a proposal she said could put 3,000 Washingtonians out of work.
"These taxes would be catastrophic, not only for us, but for bottlers and distributors across the state," said Schultz, who also handles human resources and governmental affairs for Corwin's plant in Ridgefield.
One of the governor's proposals would require Washington state bottlers and distributors to pay a tax of one cent per ounce on bottled water, a levy Schultz claimed would be more than the wholesale price Corwin currently pays for the product.
Another proposal calls for a five cent tax on every 12-ounce can of soda. That plan is similar to a 2008 proposal in New York State, meant not just as a means to raise additional revenue, but to combat an epidemic of childhood obesity in the U.S. that most experts partly link to the consumption of sugary soft drinks.
Similar to the tax on bottled water, Schultz said that Corwin could not pass along the added cost of soft drinks to the consumer, whom she said would likely balk at paying up to $1.20 more on an 18-can box of soda – a staple of many backyard barbecues throughout the state. "The increase in price is so great, we don't think the market will bear it," she said. "Our fear is that we will have to close."
The prospect of Corwin's demise would be a serious blow to Clark County's economy, still suffering through double-digit unemployment and a fragile recovery. Founded in 1941, Corwin employs 115 workers, many of whom earn competitive wages and garner generous health benefits as members of the Teamsters Local 58 in Vancouver.
However, in potential good news for bottling and distribution plants across the state, an alternate tax proposal for some of their products seemed to be gaining steam in the state House of Representatives. That proposal would remove the state's food classification from bottled water, thus making the product subject to the state sales tax, according to Rep. Jim Moeller (D-Vancouver).
Moeller said that, considering the generally financially well-off clientele for bottled water, he felt consumers could absorb the added cost.
Reached this week, Schultz seemed amenable to the sales tax proposal. "These are unprecedented times for our community and we know everyone has to play a part," she said. "This is a fair tax and it's something we can accept."
However, as of press time, any agreement on the bottle water and soda tax issue, along with a host of other tax proposals, was still elusive in both chambers of the Legislature.
"I've never liked taxes that target specific products and I'm hopeful that the final revenue package won't target bottled water or soda," said Sen. Craig Pridemore (D-Vancouver). "Right now, the range of possible revenues is extremely broad and there doesn't seem to be any consensus forming around any single proposal."
The Washington Beverage Association had scheduled a meeting with Gregoire on Wednesday to discuss the tax situation, according to Schultz.
This latest back-and-forth between business interests and lawmakers was indicative of Olympia's delicate balancing act between cutting essential programs on one hand and raising additional revenue on the other, all in an attempt to bridge a $2.8 billion budget gap.
Moeller defended the state's budgetary mix, citing a total of approximately $5 billion in cuts compared to about $1 billion in tax increases over the last two legislative sessions. "It's a good ratio given the budget situation," Moeller said.
However, allegations that the proposed cuts and revenue-generating measures unfairly targeted certain businesses created a palpable edge to ongoing budget negotiations at the State Capitol, with the legislative session scheduled to end Thursday, March 11.
Along with tax increases aimed at bottled water and soft drinks, legislators are considering additional levies against cigarettes, candy and gum and an end to a popular 1960s-era sales tax exemption for out-of-state residents. The scrapping of the exemption, first championed then quickly withdrawn earlier this year by Rep. Deb Wallace (D-Vancouver), resurfaced in the state Senate last week, shocking many downtown Vancouver retailers who thought they had already dodged a budgetary bullet.
"I can't believe this is still on the table," said Erik Runyan, owner of Erik Runyan Jewelers in Vancouver.
