Sen. Ed Murray said he was led to believe the two sides fighting over a plan to streamline collection of state and local business and occupation taxes were coming together.
That's why Murray, chairman of the Senate Ways & Means Committee, scheduled a last-minute hearing Tuesday on a substitute version of Senate Bill 6176, the governor's proposal to make the state the central collection point for B&O taxes.
But the sign-up sheets in the committee hearing room suggested otherwise, Murray, D-Seattle, said at the start of the hearing.
And the testimony from representatives of several cities confirmed it.
"I don't think we are anywhere near a good relationship," Seattle City Councilember Richard Conlin said when Murray pressed him about the nature of the negotiations.
Testimony from Randy Lewis, the Westport city administrator, further confirmed that the cities are more interested in stopping the legislation than they are in making it easier for small businesses to pay their B&O taxes -- regardless of what they may be telling lawmakers in private conversations.
"This bill takes away local control of our tax system," Lewis said -- incorrectly.
For Washington employers, paying taxes can seem like playing a game with 50 different sets of rules, AWB President Don Brunell writes in his weekly column.
It's anything but simple.
Gov. Chris Gregoire is trying to make it a little less complicated. The governor wants to make the state the single collector of all local and state business and occupation taxes, similar to how the state currently handles state and local sales taxes.
Some cities are pushing back against the governor's proposal saying they will lose money as a result, but Brunell notes that Gregoire is rejecting their claims.
"These horror stories of how they're losing money? No They're not," Gregoire said.
"If we ever need a reform that helps business," Gregoire said, "this is it."
Now that the state Senate has voted to legalize same-sex marriage, maybe lawmakers will turn their attention to balancing the budget.
That's clearly the hope of Sen. Mike Hewitt, R-Walla Walla, who began his remarks Thursday at AWB's Lobby Lunch meeting by welcoming everyone "to the first day of session!"
In fact, lawmakers are now four weeks into the session -- seven weeks if you count last year's second special session -- and there has been "very little movement on the budget whatsoever," Hewitt said.
Other issues, he said, have "totally taken time away from what we need to do in a short, 60-day session."
The lunch meeting not only followed the Senate vote on same-sex marriage, but it also coincided with the release of the House Republican caucus's education budget.
Rep. Richard DeBolt, who joined Hewitt and Rep. Joel Kretz, R-Wauconda, at the meeting, said that after years of proposing a separate, stand-alone education budget and getting nowhere, he's pleased to see it finally get a hearing in committee.
Sen. David Frockt and Rep. Larry Springer said Thursday that lawmakers are making progress toward balancing the state budget, despite charges from critics that they've been distracted by other issues such as abortion and same-sex marriage.
Most of the work is occurring behind closed doors at this stage of the 60-day session. But the legislators told AWB's weekly Lobby Lunch meeting that budget writers in both the House and Senate are hard at work.
"Not to be flip, but we actually work on a lot of things," said Springer, D-Kirkland. "We're all segmented. I think it's a misplaced concern to worry about that. Whether we are making significant progress on the budget sort of depends on who you ask, but I can tell you it's not for lack of trying."
Producing the budget will be especially hard this year because all the cutting in previous years leaves lawmakers with no easy choices, Springer said. Even so, the House is committed to producing a balanced budget that does not anticipate any new revenue, he said.
In other words, they won't make cuts with the expectation that programs will be restored later through a voter-approved sales tax hike, as Gov. Chris Gregoire has proposed, or some other plan that emerges from the Legislature.
"You have to assume that a revenue package will not pass," Springer said.
The fallout from Tuesday's State of the Union address continues. Tom Dononhue, president of the U.S. Chamber of Commerce, told the Fox Business channel it was a political speech "full of taxes and taxes, regulations and regulations, stimulus and stimulus. It doesn't address the two fundamental questions at hand and that is how do we drive growth into the United States to the extent that, number two, it creates jobs?"
"I heard a lot about how we were going to regulate things, how we were going to constrain things, how we were going to tax issues. But I didn't hear anybody say 'and here's what we're going to do to move forward, to liberate the free enterprise system in this country to put people back to work.' It was all about what government was going to do and what the president was going to do with the arm of government to see what he could do to put people back to work. But that's not gonna help," Donohue concluded.
Jay Timmons, president of the National Association of Manufacturers, responded: "The President deserves credit for highlighting manufacturing on a national stage, but presidential leadership requires more than speeches. President Obama had a chance to set a bold manufacturing agenda in motion, and he missed it."
"On regulations, for example, the President touted his Administration’s efforts to rein in some regulatory excesses and costs—$10 billion in savings over the next five years. But, Boiler MACT, Utility MACT, Cement MACT and the Cross-State Air Pollution Rule, to name just a few of this Administration’s rules, would impose costs that dwarf the savings highlighted by the President.
"And on labor, the President never mentioned the aggressive actions that the National Labor Relations Board took in the past year. If President Obama wants manufacturing to lead the economy, federal agencies cannot swoop in and tell manufacturers where they can do business."
Timmons concluded: "It’s 20 percent more expensive to manufacture in the United States than it is among our major trading partners — even after excluding the cost of labor. The best way to create an environment to increase manufacturing employment in America is to lower the cost of doing business through pro-growth tax rates, sensible legal policy, reasonable regulations and affordable and secure energy supplies."
The Association of Washington Business is Washington's state chamber of commerce and manufacturing and technology association as recognized by the U.S. Chamber of Commerce and National Association of Manufacturers, respectively.
Snow and ice did not deter the governor -- or rather, the governor's fiscal and policy leaders -- from kicking off AWB's 2012 Lobby Lunch series last week.
Joining AWB members for lunch in Olympia last Thursday were Gov. Chris Gregoire's budget director, Marty Brown, and her legislative director, Jim Justin.
Brown, a longtime fixture in Olympia politics, did not mince words about the gravity of the challenge before lawmakers this session. While Brown believes the next revenue forecast will likely not be significantly different, caseload numbers are likely to shuffle the internal workings of putting together the supplemental budget. (State caseload figures are due out Feb. 10; the revenue forecast follows on Feb. 16.)
"This is tough. There is not an easy path to get this stuff done," said Brown. "There's a lot of uncertainty -- not so much in Washington state but...in the world economy. And our economy is not necessarily dependent on those things, but the consumer confidence that occurs with changes in Europe, activities of Congress, really is a key to our recovery."
Businesses are not back to full speed yet, Brown said, and any economic gains made through private sector hires are being offset by cuts in state and local governments.
"I don't see a real turn around, I don't see a real quick decision-making process here," Brown said, "but I also don't think [lawmakers] are going to stay long, either."
Given the legislative landscape, Justin characterized Gregoire's final policy agenda as a "fairly aggressive, broad" list of proposals for a 60-day session, offering thumbnail sketches of the governor's priority legislationn. The package includes 17 bills, though three of the six aerospace bills, Justin noted, were passed during the December 2011 special session.
Gov. Chris Gregoire called on the business community Tuesday to help pass her final legislative agenda, which includes an element designed to help small businesses: tax simplification.
Gregoire flatly disputed claims from the state's largest cities that they will lose millions of dollars in revenue if the state takes over collection of business and occupation taxes, comparing her proposal to the sales tax.
The state currently collects sales taxes and apportions money to local governments.
"These horror stories of how they're losing money? No they're not," Gregoire said. "We will give it back," she said, adding "I think it's the right thing to do for the small businesses of the state of Washington."
Gregoire also asked business leaders to support her proposed half-cent sales tax hike and to help persuade lawmakers to pass her education reform agenda, which she called a prerequisite for raising taxes. And she highlighted one way that her administration trying to lessen the regulatory burden imposed on business.
Partisan divide was clearly on display as AWB's annual Legislative Day began this morning in Olympia. Members of the first panel, Tax & Fiscal Policy, agreed that lawmakers in Olympia will produce a balanced budget that does not include new taxes.
But once they have done that, the talk will turn to taxes. And the disagreements will begin in earnest.
Sen. Joe Zarelli, R-Ridgefield, one of four panelists, began by noting that the recession isn't the only reason the state finds itself in a budget hole. Years of overspending also contributed to the problem, he said.
He also reminded the audience that despite the dire straits the state budget is in, there is actually more money than there was in the last biennium.
"It's very important that we balance the budget, as difficult as it may seem to some, within available revenue," Zarelli said.
Cutting programs and raising taxes might solve the state's immediate budget crisis, but it won't do anything to address the long-term problem.
Namely, expenses are rising faster than income.
Sen. Jim Kastama, D-Puyallup, explains the situation and -- and offers some solutions -- in a video to constituents. It's one of the best explanations we've seen for the state's seemingly never-ending budget woes.
He proposes eliminating some programs that have yet to be funded, addressing health care costs and making government more efficient. Whether or not you like those ideas, he makes a compelling case for doing something different.
"Even if we pass more taxes or make the cuts this year, the long-term projection in the state budget basically has to be dealt with, or else we will be in deficits every single year for the next five years," Kastama said.
Washington's revenue outlook hasn't gotten any worse since the last forecast, Arun Raha, the chief economist, declared this morning.
But it certainly could.
The European debt crisis has the potential to become a banking crisis, and if that happened it could spread to U.S. banks, undermining the fragile recovery, Raha said.
"The risk scenario remains the same, heavily weighted to the downside," he said.
As it stands now, Washington has taken in $12 million less than expected since September, a drop that amounts to a half of one percent. The projected tax revenue over the next two years is $122 million less than previously forecast.
Boeing and software publishing both continue to do well, car and truck sales are improving and there are faint glimmers of hope in non-residential construction, Raha said.
Consumer spending is also "mildly encouraging," he said, but only because expectations were so low.
Consumer and business confidence remain weak, however, and unemployment is still a major problem. The nation's real GDP is finally back to pre-recession levels, but it's being produced with 6.6 million fewer jobs, he said.
"We are in the aftermath of the Great Recession and nothing can be taken for granted," Raha said. "We've been here before in this recovery, only to be sucked back into the mire."
