While the 2010 legislative session may be behind us, there is a burden before every employer in our state – and consumers as well.
The tax package passed during the 2010 session included direct taxes on businesses and some indirect taxes ("consumer paid" taxes). In addition to taxes on pop, water, cigarettes, beer and employers, there also was a tax increase on your telephones – 25 cents per line each month. The telephone tax increase – deemed necessary for public safety – has been used as a way to justify the repeal (suspension) of I-960, the Taxpayer Protection Act, which was passed by voters in 2007.
Many House and Senate Democrats deemed that the tax increase was so critical to public safety that the two-thirds majority vote required to approve tax increases needed to be suspended in order to pass the tax increase. Indeed, in order to pass the tax increase, they needed to suspend the two-thirds vote. But did they need the tax increase? No. Options were provided to fund the enhancements to our E-9-1-1 system out of existing revenues. But instead of giving the E-9-1-1 system the life-saving priority it deserved, the legislature opted instead to transfer the money proposed to pay for it to the general fund. Capital dollars could (and should) have been used for a capital project instead of for the general fund programs.
This is the same thought process that went into the $798 million general fund tax increase for 2010-11, a whopping $1.79 billion per biennium. The budget writers will claim that billions of dollars were cut and that most of the budget was balanced with cuts. In fact, total spending was reduced by a mere 1 percent in the 2010 supplemental budget. And $359 million in new spending was created in the 2010 session.
The whole reason for the Taxpayer Protection Act was to force legislators to find – and exhaust – all other avenues before resorting to tax increases. It is clear to me that all options were not exhausted. In fact many options were put on the table by Sen. Joe Zarelli (R-Ridgefield) and me. Few of these proposals received a hearing so none were adopted.
What is even worse than the tax increases, or the rejection of short-term and long-term savings ideas, is the fact that it was so easy to get around the two-thirds vote requirement. All it took was a simple majority vote. Talk about a "loophole"! And while the suspension of the two-thirds vote requirement is temporary, many of the taxes are permanent.
When we heard so much about "closing loopholes" to balance the budget, isn't it ironic that this loophole would be so exploited in order to do it?
State Rep. Ed Orcutt (R-Kalama) is the ranking minority member on the House Finance Committee which deals with tax policy.
