Article by Erik Smith. Published on Tuesday, April 27, 2010 EST.

1983 Made This Year’s Lawmakers Look Like Pikers, State Officials Say

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, April 27.—For months this year’s Legislature debated what Republicans call the biggest tax increase in state history. And there’s no question; what the Legislature passed this year was a mighty big ‘un. But is it the biggest? The Department of Revenue begs to differ.

            Mike Gowrylow, communications director for the Department of Revenue, said he asked the department’s staff after the session to take a look at the numbers for some of those tax increases the Legislature passed back in the 1980s. And by every yardstick, those lawmakers back in the ’80s make this year’s crop look a bunch of underachievers.

            The point is more important than it might sound: Lawmakers have been talking about “the biggest tax increase in state history” for a couple of months, to the point that it’s become a mantra, and it’s likely to become one of the key arguments in this year’s legislative races. So here’s how the Department of Revenue tells the story.

            Comparisons Drawn With Wrong Year

            This year’s tax increase is usually cited as $794 million. Actually, that’s only the portion that takes effect over the next year. Many of the tax increases run three years, for a total $2.5 billion. And some tax changes are permanent, so if you look at it that way, the correct number is a googol.

            But all the argument this year centered on the one-year tax increase, so let’s use that number. The first time the claim popped up, during a debate in the state House in early March, lawmakers were thinking of a tax increase of roughly $900 million the first year.

            Republicans started calling it the biggest tax increase ever, and Democrats were quick to point out that in 1981-83 the Legislature raised taxes by $1.13 billion. Everyone knows about that one, even though most lawmakers weren’t around when it happened. It’s become a legend around the Capitol.

At that time, Republicans controlled both houses of the Legislature as well as the governor’s office. But the economy was so awful, and Republicans were so reluctant to pass a great big tax increase, that they were called into special session six times to raise taxes. The number kept getting bigger every time. And partly because the Republicans reimposed the sales tax on food and public furor was so intense, Democrats won big in the 1982 elections, retaking control of both the House and the Senate. That’s the point everyone remembers.

            But that was a two-year tax increase. This was a one-year tax increase. So this one was bigger, or so everyone said.

            The trouble seems to be that nobody remembered what happened the next time the Legislature had to write a budget.

            1983-85 Was Even Worse

            When the newly Democratic Legislature took a whack at things in 1983, the picture was just as dire. Tax increases that time totaled $1.6 billion. About $1.2 billion of that was a sales tax increase; a business and occupations tax increase accounted for most of the rest.

            Now, if you cut that number in half, it comes to $818 million. Actually, Gowrylow says the tax increase was probably a little smaller than that in 1983-84, and a little bigger in 1984-85, because that’s the way things usually work. The musty tax records aren’t that precise.

            But $818 million is certainly bigger than $794 million.

           Not the Only Quibble

            Gowrylow makes a couple of other points. If you compare actual numbers, you aren’t taking inflation into account. If you take that $818 million and adjust for inflation, it comes to $1.6 billion. So this year’s tax increase looks even smaller.

            If you use the multi-year figure for this year’s tax package – $2.5 billion – Gowrylow says it’s only fair to consider the whole kit-‘n’-kaboodle back in the ’80s. This year’s Legislature loses that comparison, too. The ’80s gang has ’em beat, with a chart-topping $2.76 billion.

And he says it’s not fair to say that this year’s tax increase was $794 million. A big chunk of this year’s tax measures were intended to narrow and even cancel tax exemptions that had been expanded by court decisions. The most notable one was the Dot Foods decision handed down by the Supreme Court last September. That ruling gave certain big out-of-state wholesalers a tax break that had been intended for Tupperware and Mary Kay cosmetics salespeople. By canceling it for everyone, the state saves $155 million in the next year alone. Gowrylow asks, “But is it fair to call it a tax increase when almost all of it is preventing out-of-state businesses from getting a tax cut the Legislature never intended them to get?”

            The governor’s office says that if you look at the actual tax increases and the new taxes imposed by this year’s Legislature, the tax increases are actually $590 million.

            So whatever way you look at it, it appears this year’s Legislature doesn’t deserve the record.

            What Took so Long?

            One natural question – how come it took so long? It’s been weeks since lawmakers started calling it the biggest tax increase in state history. Gowrylow says Department of Revenue staffers were so busy dealing with the day-to-day work of the Legislature, writing fiscal notes on one bill after another, that it wasn’t until the session was over that they sat down and took a backward look. The department finished its analysis April 16, four days after the session was over, and the governor cited some of the figures when talking with reporters last Friday.

            “This is not about partisan politics,” she said. “This is about a tough time in the history of the state of Washington. As I look back in history, the last time our state had a recession of any magnitude was in the early ’80s. They raised about $814 million in taxes at that point. If I calculated that based on today’s dollars, that’s about $1.6 billion, and it was at that point of time the governor of the state was a Republican, John Spellman, the House was Republican, and the Senate was Republican. So this is not about partisan politics. This is about trying to see our way through the worst economic time in history since the Great Depression.”

            Actually, Democrats controlled both houses of the Legislature in 1983. And whether it’s $814 million or $818 million – that’s still close enough for government work.

           Still Pretty Big

            Whoever deserves the honors, Republicans still say this year’s tax increase was plenty big. “I love it when the governor is asking whose tax increase is the biggest,” said state Rep. Doug Ericksen, R-Ferndale. 

            “If the claim by the governor helps her sleep better at night, that’s good for her, but it doesn’t help the public that much.”

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