OLYMPIA - The state House has approved a multimillion-dollar tax package that increases the cost of candy, soda, and beer and also eliminates some tax exemptions.
The measure passed on a close 52-44 vote Saturday night and now heads to the Senate, which will need to vote on it before the overtime legislative session ends on Tuesday. District 19 Reps. Dean Takko, D-Longview, and Brian Blake, D-Aberdeen, voted with the majority.
"I don't like everything in this package," said House Finance Committee Chairman Ross Hunter, D-Medina. "There are some things in this package I really don't like. But Mr. Speaker, I like 20 percent cuts across the board even less. I think this is an appropriate balance."
Democratic leaders had struggled to agree on a revenue package to help balance the state budget's projected $2.8 billion deficit through June 2011, pushing them into a 30-day special session that expires on Tuesday.
Saturday night's vote came hours after a conference committee where House and Senate members officially agreed on the main part of their compromise tax proposal. The bill that passed Saturday night is worth about $668 million, including temporary tax increases on service businesses, pop bottlers, beer, and more.
Separate bills would raise the rest of the nearly $800 million lawmakers need to balance the budget, including higher cigarette taxes that would bring in about $101 million through June 2011.
Gov. Chris Gregoire had threatened that if lawmakers couldn't come up with a tax plan by Tuesday, she'd be faced with having to make deep cuts to programs across the state.
No Republicans voted in favor of the measure.
"This is a tax increase on the working families of Washington state," said Rep. Doug Ericksen, R-Ferndale.
Eight Democrats voted no: Reps. Chris Hurst, of Enumclaw, Mark Miloscia of Federal Way, Sharon Tomiko Santos of Seattle, Larry Seaquist of Gig Harbor, Troy Kelley of Tacoma, John Driscoll of Spokane, Geoff Simpson of Covington and Tim Probst of Vancouver.
The biggest chunk of the main bill is a temporary tax increase for service businesses that would bring in about $242 million. Taxes on bottled water, soda, candy and gum and mass-produced beer would add nearly $156 million.
The higher beer tax of 50 cents per gallon - a 28 cent-increase on a six-pack - would bring in $59 million. Microbrews would be exempt.
The beer tax, along with the microbrew exemption, drew the largest complaints from opponents on the House floor.
"If you're a blue-collar worker in a mill, who goes out after work and wants to have a PBR or Coors Light, we're going to tax you. But if you live in downtown Seattle and you want to go to your boutique bar and have some microbrew, you're exempt," Ericksen said. "Wow. Stick it to the working man, give the highfalutin, big-paid guy in Seattle a tax break on the beer they drink. That's not fair."
The tax on soda bottlers would add 2 cents to every 12-ounce container, with bottlers under $10 million in volume exempt. That raises nearly $34 million.
The plan also makes some revisions to the tax code, removing or modifying some tax exemptions, including reversing a court ruling that extended tax breaks to out-of-state direct sales companies, which alone will bring the state $155 million.
Candy and gum also would be subject to the state's 6.5 percent sales tax, with a temporary tax credit tied to jobs for candy manufacturers with employees in the state. That would raise nearly $31 million.
The higher pop, beer and service taxes would expire in mid-2013.
Bottlers already have started a campaign against the proposed soda tax, and have said that if it is approved and becomes law, they are willing to consider a referendum campaign to put the issue before voters in November.
Lawmakers acknowledged that not everyone will be happy with individual aspects of the compromise.
"Some of these taxes are very unpopular, but we need to be responsible, not popular," said Sen. Ed Murray, D-Seattle.