OLYMPIA — A windfall of revenue from delinquent taxpayers provided a jolt of good news Tuesday that may speed up a deal on a new state budget.
Gov. Chris Gregoire announced thousands of businesses paid $321 million in back taxes through a just-completed amnesty program, four times greater th
an what she and lawmakers anticipated only weeks ago.
Once those dollars are divided between state and local governments there will be $263.4 million for state coffers — $182 million more in revenue than the House and Senate counted on when they started their negotiations on a final spending
plan.
“This was truly a shock to all of us,” Gregoire said. “It will give our lawmakers a needed solution to complete their budget work.”
Today is the ninth day of a special session in which a primary focus for the House and Senate is reaching agreement on a balanced budget for the 2011-13 biennium. It’s been tough because there is a projected $5.1 billion deficit and the two chambers differ on about $300 million worth of spending cuts.
The House and Senate also are tied up on some knotty policy issues which are getting intertwined with the budget talks, such as reform of the workers compensation system.
So Tuesday’s announcement seemed to buoy spirits in the Capitol, where one could sense lawmakers had become edgy about the possibility that a second special session would be needed to sort out all the differences.
“It certainly puts us in a better situation than we were in when we came in this morning,” said Sen. Ed Murray, D-Seattle, the Democrats’ lead budget writer. “But all of those policy issues are very difficult bills, so we’re not done.”
Rep. Ross Hunter, D-Medina, the chief architect of the House spending plan, offered a similar analysis.
“This will solve some of the financial differences,” he said. “We still have some policy differences that we have to work out. I see no reason why we should not finish by the end of the special session.”
When Gregoire informed Democratic and Republican leaders of the tax revenue, she said she told them it provides an opportunity to reach compromise quickly.
“I’m not interested in a second special session. With this information, they can go home,” she said.
But the Republicans’ lead budget author in the Senate stressed a deal on the budget numbers is only part of the puzzle being constructed this session.
“It helps us solve that money piece,” said Sen. Joe Zarelli, R-Ridgefield.”This was never all about agreeing on how we spend money. It’s also been about how we reform government. The Senate has agreed on a small list of reforms that are critical and bipartisan that the House needs to consider in earnest.”
Rep. Hans Dunshee, D-Snohomish, said once the operating budget agreement is reached, the rest of the pieces should fall into place quickly.
That is, he said, unless the Senate holds policy matters like the workers comp bill hostage to passage of the budget.
“The operating budget is the key to getting out of here. The wild card is the Senate,” he said. “No one should hold the operating budget hostage for extraneous reasons. People want us to get work done.”
Prospects for getting the budget agreement nailed down improved with the unexpected success of the tax amnesty program proposed by Gregoire in December. At the time, she guessed it would net the state $24 million.
Between Feb. 1 and April 30, the state offered companies a chance to pay back taxes they owed without penalty fees and interest. Nearly 11,000 applied and 8,888 qualified, according to figures released by Gregoire.
Most were small businesses, and there were some companies the state never knew existed until they applied to pay. At least one large company that sued the state on its tax bill forked over “tens of millions of dollars” and ended its litigation, she said. The governor declined to name the company, saying tax information is confidential.
Figures on the program came out a day after House Republicans vented their frustration over the slow pace of the extra session.
Monday marked the first time the House had convened. After voting on a handful of bills, lawmakers departed and won’t return until next Monday, though the budget committee will hold hearings later this week.
“I came here to work,” said Rep. Kirk Pearson, R-Monroe, on Monday. “The public loses faith in us when they see this. I don’t want to come back for another special session.”
GOP members said the majority Democrats wasted time in the regular session and had been showing little urgency in the first week of the extra session.
Rep. Norma Smith, R-Clinton, called it a “failure of leadership” of the majority Democrats.
“At the end of the day, we knew last fall we had a budget deficit and had a challenge to meet and solution to find,” she said.
Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com
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