Legislative Leaders Say Taxes Needed to Close Gap

Today's news stories on yesterday's revenue forecast focus on the partisan divide over how to handle a $2.6 billion shortfall. Simply, Democrats say the fix will require both spending cuts and new revenues; Republicans oppose tax hikes.

Associated Press reports it this way:

Tax increases probably can't be avoided as the state tries to patch a budget deficit that's ballooned to about $2.6 billion, top Democratic lawmakers said Thursday.

Leading options include closing tax loopholes and raising "sin" taxes, typically levied on indulgences like tobacco and alcohol. Broad-based tax hikes, such as the levies on sales and business revenue, are probably a last resort because of the fragile economic recovery, Democrats said.

Meanwhile,

Republican lawmakers said the fragile recovery and sour job market are precisely the reasons Democrats should avoid tax hikes when the Legislature reconvenes in January.

Instead, lawmakers should start work immediately on a package to fundamentally alter the way government services are delivered, seeking out every cent of savings before considering new revenue, said Republican Rep. Ed Orcutt, of Kalama, Cowlitz County.

The size of the hole makes loophole closing and sin taxing an interesting first stop. In the past, estimates of returns from tobacco and liquor taxes have fallen far short of estimates. I'm going to guess candy sales fall into the same category. Plus, tax "loopholes" are often overstated. Gov. Gregoire is not the first elected executive who campaigned against tax exemptions only to discover that there was much less there than she originally imagined.

Other good stories in the Herald of Everett, the Olympian, and The Daily News. 

For some perspective on revenue forecasts, see this Stateline.org story. Everyone is struggling to get the numbers right.

Meanwhile, in troubled California, the UC Regents voted to increase undergraduate fees 32 percent. Check out the photograph accompanying the story. And get this:

Ricardo Gomez came from UC Berkeley on a bus trip that was financed by labor unions fighting UC over proposed pay cuts.

A third-year student in interdisciplinary studies, he said he has a scholarship that shields him from the fee increase, but "lots of my friends don't have that security. So I felt it was my duty to advocate for them."

Gives a whole new meaning to the term "free ride."