Washington State Gets Set For Fight Over New Taxes

AT Highline Community College just south of Seattle, a light rain is falling in the twilight. Inside a gymnasium on the campus, Washington Gov. Mike Lowry (D) confronts a downpour of a different sort - a torrent of criticism from state residents.

One woman in this "town meeting" approaches the microphone to explain that she worked for Mr. Lowry's election campaign last fall, believing he would keep his pledge to make tough budget cuts before resorting to new taxes.

"The very first week that you got into office you let us down," she complains, and the audience of about 100 people applauds.

The moment symbolizes just how restive voters have become since Lowry took office. He and his supporters in the Legislature are struggling to outflank a burgeoning tax revolt.

Last week, backers of two initiatives submitted enough signatures to get the measures on the ballot in November. Initiative 601 would limit state spending increases to the rate of inflation and population growth. Initiative 602 would keep state spending from growing faster than personal incomes, repeal $1 billion in taxes and fees passed this spring, and require new taxes to be approved by 60 percent of the Legislature.

Lowry's tax hikes are meeting criticism in a state already hit by thousands of job cuts at the Boeing Company and long-term restructuring in the timber industry. The increased taxes and fees are rooted in these very economic troubles: State tax revenues are coming in about $600 million lower than projected.

If either initiative passes, Washington would follow in the footsteps of Arizona, Colorado, and Oklahoma, which all passed tax-limitation measures last year, notes Scott Mackey, an analyst with the National Conference of State Legislatures.

Meanwhile, Montana voters last month voted down a proposed state sales tax and may hold a referendum this fall on a recent income-tax hike.

Despite plummeting popularity and moves by neighboring Oregon and California to rely on austerity budgets, Lowry is standing his ground.

On this night, he argues forcefully against the charge that he has broken campaign pledges.

"The whole election was [about] taxes," he says. "We went to Olympia and did exactly what I said we would do" - look for cuts and ways to operate more efficiently, but then raise new revenues if needed. "Some cuts cost too much.... That's what I said over and over again.... I keep my promises."

His response wins respectful applause. The budget did, in fact, cut spending in some areas before boosting college tuitions and raising business taxes and levies on liquor and cigarettes.

Yet, although Lowry never pledged not to raise taxes, many clearly expected him to make a greater effort to cut spending. The loudest applause comes for a man who says the tax-limitation measures have to do "with the fact that we demanded something from you."

Although tax-revolt proponents appear to hold the high ground for now, how things will develop between now and the November vote is uncertain.

Lowry, in his town meetings, is reminding voters that the lion's share of the state budget goes to fund education. (Washington schools rely more on state taxes and less on property taxes.)

The state's economic health will depend more on having a well-educated work force than on any other factor, Lowry argues.

Some people, in fact, have shown up at this evening's meeting specifically to argue against recent cuts in the higher-education system.

As for other parts of the budget, Lowry notes that areas such as health care and prison spending are growing because of mandates in federal or state legislation. Recent strengthening of the state's sentencing laws means that the state will need to build a new prison every 18 months, he says.

And he tells voters that Olympia has gotten the message about cutting fat in the budget. "We cut state employees per capita to the lowest level in 12 years," he says.

There is plenty of time between now and November for Lowry and others to argue that tying taxes to inflation or income levels is simplistic or unnecessary.

But many in the audience seem unconvinced by the governor's pitch.

"I could create jobs if I could pay less tax," says Steve Allen, who runs a roofing and painting business. He says Lowry's recently signed health-care reforms, which mandate universal health insurance by business, will cost more jobs in the state than the estimated 20,000 cuts planned at Boeing.

As Lowry makes the rounds in his town meetings, he is clearly listening for suggestions as well as defending his positions.

He promises to look into one man's suggestion that the state open its books to private-sector auditors. But on the ballot initiatives, Lowry is unequivocal: "I'm afraid they'll hurt our state badly," he says.