Business

WA Business Leaders Open to Sales Tax Increase

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credit: Ethan Miller/Getty Images

credit: Ethan Miller/Getty Images

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OLYMPIA, Wash. (AP) — Washington business leaders who opposed an income tax proposal last year are signaling that they are prepared to embrace Gov. Chris Gregoire’s new revenue plan.

With further cuts to education on the line, Gregoire wants voters to approve a temporary increase in the state sales tax in the coming months. Jim Albaugh, president and CEO of Boeing Co.’s commercial aircraft division, said this week that the state must consider revenues along with reforms on the table.

“It’s a very difficult situation that we’re in with the budget,” Albaugh said. “It’s very hard for me not to support what the governor is proposing.”

Democratic leaders have struggled to corral business support for recent tax proposals. The income tax was defeated last year, with opposition from Boeing and Microsoft. Voters also repealed taxes on soda, candy and other items after a campaign by the American Beverage Association.

But now, businesses such as Boeing and Microsoft are concerned that pulling more cash from education will lead to a less-qualified workforce down the line.

Microsoft general counsel Brad Smith said it’s important that reforms are approved along with revenue. He wants to see the state adopt a more sustainable budget for the long-term as well as ensure public schools are a funding priority. But he also acknowledged a need for cash, just a year after he said an income tax proposal would make it harder to attract talent to Washington.

“We need to have a conversation and explore ways to add to the revenue base for the state,” Smith said.

In the past couple weeks, Gregoire has proposed a variety of reforms popular among business circles. She is exploring the privatization of the state lottery, wants to eliminate the liquor control board, is pursuing a more streamlined government through “lean” consulting, and she wants a new system for evaluating teachers that could hasten low performers to termination.

Don Brunell, president of the Association of Washington Business, said Gregoire has responded well to requests from the private sector.

“It seems to me that we’re moving in a right direction and we’re not in a stalemate like in Washington D.C.,” Brunell said. “She’s putting some skin in the game and she’s challenging the Legislature. I think that she’s done a pretty good job.”

Brunell said he’d like to see lawmakers explore alternative ways to raise revenue, such as re-opening agreements with tribes on gambling revenue.

State lawmakers are returning in January as they continue seeking an agreement on where to cut the budget. Gregoire’s proposed spending plan includes shortening the school year, the elimination of social services for thousands of low-income residents and the early release of some prisoners.

The half-cent sales tax proposal would raise nearly $500 million a year and offset some of the state’s cuts. It would expire after three years.

Gregoire said it’s very important that business get on board with the plan.

“They send a really strong message: That message is that we can’t afford to cut education any more in this state,” Gregoire said.

– AP Writer Mike Baker

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