Monday, February 3, 2014
OLYMPIA - Paying sales tax on bottled water and for janitorial services will be in the offing if Gov. Jay Inslee’s plan to speed up K-12 funding finds approval in the legislature.
Last Wednesday, the governor contended that the pace of state funding for education has to be ramped up to meet the mandate of the state Supreme Court’s finding in McCleary v. State of Washington.
The court ruling decreed that lawmakers were not meeting the state’s constitutional obligational to adequately fund basic education.
Accordingly, Inslee proposes repealing what he calls several tax breaks.
“Our constitution makes clear that education is this state’s paramount duty. And in recent years the legislature has come together in a bipartisan fashion to pass promising school reforms,” said Inslee. “What’s missing is action, follow through, making good on our commitment. What’s missing is funding.”
Besides levying a sales tax on bottled water, in conflict with a 2010 voter-approved measure, Inslee also wants to make janitorial services subject to the tax.
Inslee further seeks to make it more difficult for shoppers from out of state to forgo paying sales tax.
If his idea passes muster in the state house, shoppers from Oregon, for example, would no longer be exempt from paying sales tax at the counter.
Instead, they would have to pay the sales tax, then apply for a refund once each year for purchases over $25. Purchases under that amount would not be eligible for the rebate.
Closing the so-called tax breaks is expected to generate $200 million in additional K-12 funds for the current biennium and another $414 million for the 2015-17 biennium. Inslee says the additional funds would be used to ensure classrooms are properly equipped and to pay for voter-mandated cost-of-living salary increases for teachers.
Randy Dorn is Washington’s superintendent of public instruction, and he doesn’t think the governor is going far enough.
“While I think Gov. Inslee’s proposal is a step forward, it is not the $400 million I think is needed to help us meet the deadline,” said Dorn. “It is also not the complete plan to fund basic education, which the Supreme Court has mandated by April 30. I look forward to seeing that plan. In the meantime, this is the first proposal I’ve seen in this session that would add money to basic education. I urge the legislature to pass the governor’s proposal, plus $200 million more.”
That’s all well and good, but the impacts of Inslee’s proposal will hit pocketbooks. That includes here in Sunnyside, where Dean Broersma, owner of Valley Professional Carpet and Upholstery Cleaners, is wary of Inslee’s bid to assess sales tax on his customers.
Rather than closing a tax break as the governor claims, Broersma says Inslee’s proposal is in essence a new tax. It’s a new tax, he adds, that could harm him and other small business owners.
“We’re not selling a product, we’re providing a service,” says Broersma, who serves on the Sunnyside City Council. “Where it becomes a problem is that most businesses in my industry are sole proprietorships, and this is one more thing we’ll have to deal with, one more hurdle we’ll have to jump through.”
Broersma calls the potential sales tax on janitorial services a “logistical mess” for his business, which serves a large geographic area. He says sales tax rates can vary from city to city. “Yakima alone has two or three different sales tax areas,” he said.
Besides bottled water, out-of-state shoppers and janitorial services, other sales tax changes the governor proposes include repealing:
Sales tax exemptions for trade-in vehicles valued at more than $10,000;
The public utility tax deduction for the in-state portion of interstate transportation, such as by motor vehicle, rail or pipeline;
Use tax exemption for extracted fuel. Only wood by-products would be exempt;
Preferential B&O tax rates for resellers of prescription drugs;
Inslee’s proposal will now be considered by the Washington state legislature during its current 60-day session, which is scheduled set to expire on March 13.