Wash. lawmakers consider higher beer tax as special session’s budget-balancing act winds on

Wash. lawmakers eye higher beer tax to help budget

OLYMPIA, Wash. — Hold on to your six-packs: Democratic lawmakers are considering a tax increase on mass-market beer, betting that suds drinkers won’t mind paying a little more to bail out a busted state budget.

The idea surfaced publicly Monday as part of a new tax proposal from the state Senate, which is negotiating a budget-balancing plan with the House and Gov. Chris Gregoire.

A higher tax on big-brand beers — microbrews would be exempt — is one of the first new revenue-raising ideas to emerge in weeks as majority Democrats work their way through difficult tax-and-spending negotiations.

“There are no real good choices when you’re raising taxes,” said Senate Democratic Caucus Chairman Ed Murray, of Seattle. “Our concern was that it was not just placed all on business, but it was somewhat spread throughout the state.”

The state House’s revenue chairman and Gregoire didn’t immediately reject the notion, raising the possibility that a higher beer tax could make it into the Democrats’ final tax package.

“It’s discretionary spending, so as far as I’m concerned, I’m open to it,” Gregoire said.

House officials said they could have their own counteroffer on tax hikes later Monday.

Democratic leaders have struggled all year to agree on a revenue package to help balance the state’s budget. The state’s main checking account is running a projected $2.8 billion deficit through June 2011, with the slow economy draining revenue collections and more people seeking state services.

Lawmakers have agreed on the general outlines of a budget-balancing plan that combines spending cuts, federal bailouts and one-time accounting maneuvers with about $800 million in tax increases. But the details of how to build that tax package have vexed legislative leaders and Gregoire, pushing their work into a 30-day special session that expires in about a week.

Lawmakers have basic agreement on most of the revenue package, including a temporary surcharge on service businesses and the shrinking of various tax exemptions. That has left about $200 million worth of taxes stuck in negotiations.

The new Senate Democratic plan for bridging that gap was offered to other officials over the weekend. The biggest chunk raises $90 million by increasing the state sales tax to 6.6 percent from 6.5 percent. That would be paired with a rebate for poorer consumers.

Another $58 million comes from the higher beer tax: 50 cents per gallon, which translates to about 43 cents per six-pack, officials said. Microbrews, which have a strong following in Washington, would be exempt.

Extending the sales tax to bottled water would generate about $35 million, and charging sales tax on candy and gum would bring in about $29 million, with a corresponding business tax credit for Washington-based candy companies.

House Democrats and Gregoire have balked at the Senate’s preference for a temporary sales-tax hike, saying it’s too harmful to the fragile economic recovery.

Senate Democrats say they can’t attract enough votes for several of the targeted taxes offered by the House and Democratic governor, including taxes on banks’ mortgage interest, custom software products, and sales to out-of-state shoppers.

House officials and Gregoire kept up their criticism of a sales tax Monday, while the Senate continued to favor that approach instead of targeted tax hikes on certain industries.

On the Net:

Legislature: www.leg.wa.gov

Governor: www.governor.wa.gov