Gov. Gregoire looks to broker one last big tax deal
OLYMPIA, Wash. (AP) - Gov. Chris Gregoire's time in office may be best remembered for the major deals she helped broker, often in late-night bargaining sessions in which negotiators were ordered to find a resolution.
Now the Democrat, two months away from leaving Washington state government, is looking to finalize one more big agreement.
Over the past year, Gregoire has been working to build support for a congressional plan that would allow states to collect sales tax from online retailers based elsewhere. Similar efforts in Congress over the past decade have all failed, even as online sales have become more common.
Gregoire said the current lame-duck Congress is perhaps the best time to pass the measure, with some Republican governors and lawmakers signaling their support. She said the issue is a matter of fairness, helping states collect taxes that are due and helping local businesses compete on a level playing field with online counterparts.
"I will tell you that our companies in this state are suffering mightily because of this fundamental unfairness," Gregoire said.
A deal would also provide Washington with hundreds of millions of dollars in revenues, helping deal with budget shortfalls in a state dependent on the sales tax.
Gregoire, who is working along with Republican Tennessee Gov. Bill Haslam, believes any agreement will have to be part of larger negotiations to avoid the so-called "fiscal cliff" - in which a batch of tax increases and government spending cuts are set to take effect in the new year unless Congress acts. If Congress fails to reach agreement to that issue, she doesn't see a pathway for the online sales tax measure.
Working with a bipartisan team of senators, Gregoire said she is prepared to testify or do any other advocacy work that may be needed on Capitol Hill. She leaves office in January.
Gregoire is no stranger to high-stakes negotiations, as they have come to define her tenure as governor. Much of her work in recent years has been mediating budget disputes between caucuses in the state Legislature, but last year she also spent months of behind-the-scenes work trying to negotiate the end of a tense disagreement between the grain export company EGT and longshoremen. Both sides praised the governor for ending that conflict, which had involved damaged property and arrests.
Gregoire's negotiating work began before she was governor. In 1998, when she was serving as attorney general, Gregoire helped negotiate a $206 billion settlement between tobacco companies and 46 states. Since then, she's also brokered other major deals: She helped secure a Columbia River water plan that had eluded both sides for decades. She hosted late-night meetings to find a compromise that overhauled the state's workers' compensation system. And she finalized new tribal compacts that allowed a limited expansion of gaming.
Last year, when the Tacoma teachers went on strike at the beginning of the school year, former school board president Kurt Miller said the gap between the two sides was so wide that he expected a strike that would last a minimum of 20 days. He said Gregoire immediately stepped in, keeping in constant contact. He would phone Gregoire's office and she would quickly take the call and walk through the various scenarios and issues at hand.
When negotiations stalled, Gregoire called both sides to her office. He recalled Gregoire being firm but understanding of the challenge, encouraging both sides to separate and then return to the table with new ideas.
"We were pretty far apart when we walked into her office," Miller said. "And within a few hours we had an agreement."
Gregoire acknowledged that working with Congress offers a different set of challenges, especially when the "fiscal cliff" negotiations are out of her control.
As one of her final jobs as governor, she will propose a new budget plan that will need to fill a $900 million shortfall and dedicate new money to education in response to a court order. The sales tax plan would provide a major boost to that effort.
"It's one of my top priorities right now," Gregoire said. "We desperately need the money."
Now the Democrat, two months away from leaving Washington state government, is looking to finalize one more big agreement.
Over the past year, Gregoire has been working to build support for a congressional plan that would allow states to collect sales tax from online retailers based elsewhere. Similar efforts in Congress over the past decade have all failed, even as online sales have become more common.
Gregoire said the current lame-duck Congress is perhaps the best time to pass the measure, with some Republican governors and lawmakers signaling their support. She said the issue is a matter of fairness, helping states collect taxes that are due and helping local businesses compete on a level playing field with online counterparts.
"I will tell you that our companies in this state are suffering mightily because of this fundamental unfairness," Gregoire said.
A deal would also provide Washington with hundreds of millions of dollars in revenues, helping deal with budget shortfalls in a state dependent on the sales tax.
Gregoire, who is working along with Republican Tennessee Gov. Bill Haslam, believes any agreement will have to be part of larger negotiations to avoid the so-called "fiscal cliff" - in which a batch of tax increases and government spending cuts are set to take effect in the new year unless Congress acts. If Congress fails to reach agreement to that issue, she doesn't see a pathway for the online sales tax measure.
Working with a bipartisan team of senators, Gregoire said she is prepared to testify or do any other advocacy work that may be needed on Capitol Hill. She leaves office in January.
Gregoire is no stranger to high-stakes negotiations, as they have come to define her tenure as governor. Much of her work in recent years has been mediating budget disputes between caucuses in the state Legislature, but last year she also spent months of behind-the-scenes work trying to negotiate the end of a tense disagreement between the grain export company EGT and longshoremen. Both sides praised the governor for ending that conflict, which had involved damaged property and arrests.
Gregoire's negotiating work began before she was governor. In 1998, when she was serving as attorney general, Gregoire helped negotiate a $206 billion settlement between tobacco companies and 46 states. Since then, she's also brokered other major deals: She helped secure a Columbia River water plan that had eluded both sides for decades. She hosted late-night meetings to find a compromise that overhauled the state's workers' compensation system. And she finalized new tribal compacts that allowed a limited expansion of gaming.
Last year, when the Tacoma teachers went on strike at the beginning of the school year, former school board president Kurt Miller said the gap between the two sides was so wide that he expected a strike that would last a minimum of 20 days. He said Gregoire immediately stepped in, keeping in constant contact. He would phone Gregoire's office and she would quickly take the call and walk through the various scenarios and issues at hand.
When negotiations stalled, Gregoire called both sides to her office. He recalled Gregoire being firm but understanding of the challenge, encouraging both sides to separate and then return to the table with new ideas.
"We were pretty far apart when we walked into her office," Miller said. "And within a few hours we had an agreement."
Gregoire acknowledged that working with Congress offers a different set of challenges, especially when the "fiscal cliff" negotiations are out of her control.
As one of her final jobs as governor, she will propose a new budget plan that will need to fill a $900 million shortfall and dedicate new money to education in response to a court order. The sales tax plan would provide a major boost to that effort.
"It's one of my top priorities right now," Gregoire said. "We desperately need the money."
Will this women never stop, leave already, there is another loser standing in line ready to screw up.
The discusion has become convoluted. I agree 100% that spending needs to be controlled, and taxes need to be lowered. But you cannot achieve the latter, if not everyone pays their share. I am fine without new laws, if we enforce the ones we already have.
Glad to see this completely worthless individual leave office. People wine and complain about her but she did get voted for twice, not by me. Not this state has got another worthless individual that will be in office. Stupid people in this state. I will tell you that I wouldn't want my last act of governor to be remembered by raising more taxes. How about these idiots be responsible with our $$$$$$$$.
I've read a lot of the discussions herein. Agree with some, not with others. I see this ploy to be just one more attempt to tax Washingtonians by changing current state laws, while she and her administration have approved fee, after fee, tax, after tax, during her entire time in office. Sorry, Chris, but if this is what you want to be your last hoorah, then I am glad to see you go.
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 @scootdog5 Well, really no, thanks to the state voters we are forced to put in Gregoire II, THIS TIME "SHE" has a penis.
After reading all the comments and the resistance to collecting tax from online retailers, the only alternative is to make every Washingtonian submit an annual USE TAX return, where we list the purchases made out of state (mostly online, of course) and submit the sales tax for those items that we didn't pay sales tax on. I rather do that than have the State turn to state income taxes.
 @Komo Dragon Sure. I bough a $5-7 trinket from Amazon every year.
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P.S. My Oregon ID doesn't expire until 2015.
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That still wouldn't solve the sales tax problem, I'm opposed to expanding a flawed tax structure. Gov Gregoire is trying to take the easy way out because no politician that I know of other than Ron Sims has the leadership skill necessary to make the sales tax argument to the public.
 @Evan  @Komo Dragon Why do you believe that submitting annual Use tax returns won't solve the sales tax problem? This is what the state does with businesses.
 @Evan http://www.streamlinedsalestax.org/index.php?page=faqs
 @Evan As I said before, if you want to get rid of the sales tax, you can go right ahead and work towards that end.
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Meanwhile, the law we have now is that the sale of goods purchased by residents of this state are subject to tax, and that tax should be applied uniformly, rather than just making the businesses here subject to collection of it. That's a fairness issue.
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Not my job to show leadership. I just help businesses comply with the current law, and try to work towards fairness of application, which we don't have now.
If you would benefit from the sales tax expansion, a tax increase of a billion dollars that would fund state government, you have an interest in supporting Gregoire.
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Many interest groups would have an interest in seeing more government spending.
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But all of Washington would benefit if the sales tax burden was leveled so that it doesn't afflict one group more than another.
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Expanding the sales tax wouldn't do that, it would put us even further down the path to permanent counter-cyclical income mobility in this state.
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Expanding the sales tax by a trillion dollars takes a trillion dollars out of consumers pockets and will have a negative impact on demand, which will slow the economy.
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If Washington residents are paying more taxes, they will have less money to spend locally. Expanding sales taxes could even have the opposite effect, as online retailers already have lower costs than real stores.
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Its absurd to say that we have to raise taxes to help local businesses, that just goes to show how convoluted this proposal is.
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Why not just get rid of the sales tax? Would that not bring local businesses on par with out of state ones? Why is Gregoire only obsessed with doubling down on a inherently flawed system?
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Show some leadership for a change.
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 @Evan Wait, I get it - you're one of those people that think that businesses are evil, right? And all of us business owners are just greedy, blood-suckers that want to bleed the hard-working poor.Â
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Actually, I'm an SEIU member, that makes my income from providing personal care services to a severely handicapped young lady. :-)
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 @Evan I have no desire to disadvantage any business. The system we have in place now does just that, though, because Washington businesses have to collect sales tax from customers, whereas an out-of-state business, selling to the same customers, does not. To compete a Washington business would have to reduce the amount that they charge by 10%, and for most retail businesses, that would not leave enough profit margin to pay expenses.
I think Gov. Gregoire is right on this issue, and I think it's great that she's working with people from other states to get it passed.
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If you want to change our tax system, go ahead and give it a try. While you're at it, you can try to fix the Business & Occupation tax, which is pretty unfair also.
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As for me, I'd like to see our current tax system fairly applied, so that all businesses can compete on equal footing. The sales tax doesn't apply to my services, so I have no vested interest in the outcome - sorry but your argument there doesn't hold water. As a business, I certainly have no desire to disadvantage other businesses - other businesses are our clients, so we work hard to help them succeed.
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 @T2q Mom  @EvanÂ
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There is no tax on out of state businesses.
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Experience is relative.
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I understand if your a private business you want to disadvantage other businesses, you have no interest in leveling the tax burden for the citizens of Washington State.
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That makes your argument a conflict of interest since you have a special interest in the outcome.
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My interest is correcting the regressive burden the sales tax places on Washington residents, and expanding it to include your competitors is just corporate dirtywork.
 @Evan As much fun as I'm having here, I've got to get back to filing B&O tax returns for our monthly clients.
 @Evan You believe it to be the worst (based on reports you have read). My experience with it has been other than the worst. So should I rely on a report written by a (biased) third party, or rely on my own experience? I'll do the latter, thank you. (by the way, Retirementliving.com has pretty complete information on the taxes assessed by state)
 @Evan As the law stands now, it is incumbent on the people purchasing the goods from out-of-state to pay the Use tax on those goods. If the people buying from Publisher's Clearing House did that, the state would have no need to try to collect from the out-of-state businesses.
Different states have tried to address this issue in different ways. North Carolina passed laws requiring out-of-state sellers that sell goods into the state (like Amazon) to provide a list of their customers and how much was sold to them. The Streamlined Sales Tax Initiative has bi-partisan support in an attempt to enable all states to collect the sales taxes due, by putting the burden on the businesses to collect the taxes at the time of purchase.Â
 If something is documented as being the worst why would we ever want to make it even more biased? Instead of attacking my factual sources, why not provide your own?
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 @T2q Mom  @Evan Thats not the point of my argument, Im opposed to expanding a flawed tax structure.
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If they 'owed' that much money why would we need a new law to collect?
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Seems you argument fails in its basic premise as well.
 @Evan You should try reading my replies as well. One of the "offenders" in the article was an out-of-state company with no nexus here, so no tax liability.Â
 @Evan  @Komo Dragon Utah: State sales tax that can rise to 9.95%, tax on food, tax on utilities, plus income tax for individuals (flat 5%) and businesses. Pennsylvania: State sales tax that can rise to 8%, plus flat income tax rate of 3.07%. New Mexico: State sales tax rate up to 8.685%, applies to services as well as goods (some food and medical expenses exempt), plus individual income tax rate of 1.7%-5.3%. These are states that I deal with clients in, so have personal experience with. How about you? Do you get anything other than from Progressive websites?
 @T2q Mom  @Komo DragonÂ
If you read my previous reply you would see that I already talked about this, that the department of revenue already ignores tax bills from large businesses and private wealth.
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If you are talking about closing loopholes, the only loophole that KOMO exposed was that the tax collectors were told to ignore the biggest offenders, or risk political consequences.
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Why would we trust them now?
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Why would we trust you when you tried equivocating on our sales tax that 'other states have it worse' when you have no proof to back up your claim, and that the facts bare the opposite?
And the state will spend a big chunk of the revenue policing this activity to make sure everyone is complying and paying.
The problem isn't raising taxes, its what tax is raised.
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The Washington sales tax structure is the most regressive in the entire country, so raising it would likely have a negative effect on demand on those who would be most affected by a sales tax increase.
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Since many people come from out to state to work in Washington (eg Microsoft), these immigrants have little interest in helping a state they have no historical ties to and wouldn't benefit from educationally, so they will vote against other forms of taxes that would help state funded education.
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This is coupled with the fact that the people who are hit hardest by the sales tax have little clout in Olympia, the fact that many believe they pay 'too much' in taxes sentiment is common in many places, people who have a political agenda and see proposals through a political lens, and the fact that the sales tax and fees are easier to pass.
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This explains why Washington has raised licensing fees steadily over the past few years.
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The effect this has is two-fold as fees are inherently regressive, (those with more money are less affected) and long-time Washington residents effectively subsidize new residents because Washington residents have always paid the fees and transportation taxes, but new residents have not, yet both reap the same benefit.
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Even with the help of Bill Gates Sr., Washington voters still rejected revenue for our failing colleges, universities and schools, and adopted race-to-the-bottom charter schools as a 'solution' so they wouldn't be asked to ever pay more for education.
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This mentality of new Washington residents and big business cherry picking the tax climate and the immigration climate has left many native Washingtonians in the dark.
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Native Washingtonians and those who have lived here for most of their lives have seen their frontier heritage of libertarianism turned against them in the form of a persistent regression of taxes, and self-entitlement has led to local and state governments using every 'gotcha capitalism' trick they can find to squeeze dollars from the bottom up.
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You would'nt guess Washington has a progressive nature based on its tax structure. And you would find even less who would appreciate irony of this situation.
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 @Evan Actually, our sales tax structure isn't worse than any other state's sales tax structure. It's better than some, such as New Mexico, which assess tax on services as well as goods.
It's our business & occupation tax, which is assessed on gross receipts, which is more regressive than most states, because companies owe tax even when they are operating at a loss.Â
This sales tax initiative wouldn't impose any new taxes on Washington residents buying products from Washington businesses. Rather it would level the playing field for Washington businesses, primarily those that operate a storefront in this state. Right now it is difficult for these businesses to compete with online competitors that have no physical presence (nexus) in this state, because those competitors don't have to charge sales tax, and that gives them an unfair advantage. Technically, people who buy products/merchandise from out of state are supposed to pay use tax to the state, to compensate for the unpaid sales tax. In reality, though, it is only businesses that end up paying this tax.Â
So perhaps, if you are opposed to the Streamlined Sales Tax Initiative, you would rather the state start enforcing the use tax assessments for individuals?
 @T2q Mom http://www.examiner.com/article/the-terrible-10-most-unfair-state-tax-systems
 @T2q Mom http://realwashingtonstatebudget.info/index.php?option=com_content&view=article&id=96&Itemid=114
 @Evan My daughter is one of those poor people you refer to. I can assure you that little of her income is spent on taxable items - most is spent on food and prescription medications, which are specifically excluded in this state, unlike other states.
Also, this article states that Washington has no corporate income tax. Kind of true - we have a business tax, but it's called a business & occupation tax, rather than a corporate income tax. But because it taxes the gross, we collect a substantial amount from businesses.
 @T2q Mom http://www.thestranger.com/seattle/tax-the-filthy-rich/Content?oid=4837455
 @T2q MomÂ
There have been dozens of studies that have documented our tax structure is the most regressive in the country.
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http://blog.seattlepi.com/seattlepolitics/2009/11/18/study-washington-state-has-usas-most-regressive-taxes/
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And as for assessing use taxes, KOMO just did a story less than two weeks ago about the Deparment of Revenue being exposed as not enforcing our tax laws already on the books, especially on large businesses and private wealth.
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http://www.komonews.com/news/local/Whistleblower--Million-dollar-tax-bills-made-to-simply-disappear-179534621.html
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If you are going to argue to expand the sales tax without backing up your claims, at least be honest about its affect. Otherwise, its just a political speech.
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 @Evan Yes, and that story specifically talked about assessing tax on a business (Publisher's Clearing House) that had no nexus in the state (everything sold via mail order). That is exactly the kind of situation that the Streamlined Sales Tax Initiative would address.
By her doing this, Inslee doesn't have to and he can say he hasn't raised taxes. I'm sure he is in full agreement though. This is a win for Inslee. The tax is going to happen.... its a national movement for states.
They already screwed up the tax system in state for online retailers, you have to find and charge the local sales tax rate, an accounting nightmare. Who knows how bad it would be if it goes national? I think Skeletor can leave early, fine with me and take Inslee(ze) with you too please.
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 @Lbaba The reason we switched to destination based taxes a few years back was in preparation for the Streamlined Sales Tax Initiative. Yes, the businesses here would have to collect sales taxes for other states, but businesses in other states would also have to collect and remit taxes here. And part of the SSTI is to facilitate software to make this easier for businesses everywhere.
Gotta stick it to us one more time don't you Chrissy?
 @makeadifference For years we've all been enjoying a free ride on goods bought on the internet. This causes the tax revenues that the state is dependent upon to run to drop significantly. This is no small potatoes issue. We need this.
 @mhungry  @makeadifference Then how come revenues keep increasing{10%last year] the spending goes up double ?  There is not a revenue problem ,there is a spending problem.
 @Maynard G Krebbs  @mhungry  @makeadifference It's a longterm issue. 10% is enough to drive business out of state long term, so eventually income will drop, but also it will kill local retail business.Â
Proves she has no faith in Inslee and moving WA forward, if she feels she has to hit us as hard as possible before she leaves office. When will the so-called intelligent folks decide they've paid enough? I work hard for my money and I can't afford to keep pulling this state's butt out of the fire, why do the democrats remain in power when all they do is suck us dry?
For the love of God, please just go away......Did you ever spend as much time trying to reduce waste, fraud and abuse as you do on trying to raise taxes??
 @MidnightRambler she will go away, luckily, but I support her on this one: she is not raising taxes, she is trying to collect taxes
 I'm a demorat, gimmie.
This is not "negotiating" as the State has nothing to offer. Congress can simply say no. She's putting in a request. There's a big difference KOMO.
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The problem is Congress needs their OWN revenue and the States are kinda on their own. Congress is deciding whether to allow mortgage deductions on second homes, if an employer can deduct their medical insurance cost from their income, new tax rates etc.
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I have been paying taxes when I do online purchases! Mainly with the big boy's. Does that mean the companies are not giving this to the state or are they pocketing it?
 @Grumpa Depends on who yuo think the big boys are. The Supreme court ruling stipulated if the business has a presence in the state,store,warehouse,etc. Since most larger box stores have a "presence' in most states they have to collect the sales tax. This is why many ship to store,or store pick up service.
@Grumpa - I didn't think that anybody didn't know this legal situation....
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Here it is in it's simplest. If you live in a state where a company has a physical presence, you are required to pay the sales taxes even if you purchase something on the internet.
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Example:
Amazon.com - physical presence in Wa. state, so you pay sales taxes on internet purchases.
Newegg.com - No physical presence in Wa. state, so you do not pay sales taxes on these purchases.
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 @Grumpa a lot of the "big boys" already have a relationship with WA state in accordance with collection of WA state Sales Tax, so in that aspect the answer is very likely yes. Are you paying into the companies as a business or a consumer? Are you adding sales tax when no option is provided? If you are, then I cant really answer other than to say they should be refunding to you and expect you to pay the sales tax owed directly to Dept of Revenue.
Seem reasonable to me that the state should get taxes from online purchases. Nobody wants more taxes, but with all of the out of state buying this could add to the coffers and to me since people choose to shop on line and what they buy then I see it as more fair than some of these other permanent taxes and fees we could end up with. Purchasing something is a choice.
 @Jatok Yea, you could always steal it... seriously?
@makeadifference I'm not in the habit of taking things that don't belong to me. Everything I have I've worked for and paid for. If I can't afford it I do without. Thank you very much.