Gregoire troubled by fervor for tax breaks

Tuesday, February 14, 2006

By DAVID AMMONS
THE ASSOCIATED PRESS

OLYMPIA -- Gov. Christine Gregoire, increasingly concerned that tax-break fever has gripped the Legislature, warned Monday that she'll use her veto pen if her fellow Democrats get carried away.

"I have been very clear that (granting) a tax break is spending money," she told a news conference a few days before the Senate Democrats roll out their budget. "At the end of the day, we have less revenue, no matter how you cut it.

"So I am troubled by the amount of tax breaks I have seen, coupled with what I see as the potential spending."

According to a tally by The Olympian newspaper, the House alone has racked up $45 million in assorted tax breaks, ranging from tax cuts for the semiconductor industry and aerospace suppliers to lower taxes for some farm operations and the movie industry. The House also has approved a $25 million subsidy to help finance grain crushers for biodiesel and ethanol producers.

It also diverted $25 million in real estate excise taxes to boost the state's housing program, and sponsors expect an additional $75 million in be authorized over the following three years.

The Senate has some separate tax-cut proposals, including a $12 million plan for the timber industry.

The financial impact of the tax breaks is calculated on just one fiscal year, so the cost would double in the 2007-09 biennium. House Appropriations Chairwoman Helen Sommers, D-Seattle, said that troubles her.

Gregoire didn't criticize any single tax break but said it's the overall level that concerns her.

Asked if that means she'd veto some of her own party's ideas, she said, "I think that is implicit in my comments."

She said she expects some good news in Wednesday's revenue update but that her advisers believe the economic growth is about to slow down as housing and construction cool off.

The Revenue Forecast Council reported Monday that actual revenue collections are up $76 million since the last forecast, in November. That should drive the state's projected surplus to more than $1.5 billion.

But Gregoire said future forecasts won't be so rosy and unavoidable costs in the next budget will more than absorb the reserves.

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