Devote Sales Tax on Road Projects to Road?

By Jordan Schrader, January 27, 2014, The Olympian

Every time it builds a road, state government pays sales tax to contractors that ends up returning to state coffers to be used for schools, social services and other general purposes.


For future highway projects, though, Senate Republicans want to plow that revenue back into the projects themselves.


The Democrats who run the House don’t like the idea. They say it’s hard enough to meet the state’s obligations to schools and balance the budget without taking money away — an estimated $750 million over the long haul.


But it’s one of the concessions the mostly Republican Senate majority is demanding in exchange for providing votes for a gas-tax increase. Talks have stalled on a transportation revenue package, but Republican Senate Transportation Committee Co-Chairman Curtis King said Monday he’s working on a new offer to send his Democratic counterpart as early as this week.


Most Republican policy proposals have stayed bottled up in the bipartisan committee along with the revenue package, but a different committee held a hearing Monday on King’s proposal for shifting sales tax revenue.


King, R-Yakima, argued the extra sales tax pouring in after the economic stimulus of a gas-tax increase to fund highway projects would more than make up for the money the budget loses due to his proposal.


“It’s going to have absolutely no impact upon our ability to fund education, which is what everybody keeps telling us it’s all about,” he said before the hearing.


That was in dispute at the hearing, and the state teachers union testified that losing sales tax revenue would make it more difficult to address a court order for ample funding of schools.


“We need the economic stimulus that an education system provides and we need the economic stimulus that a transportation system provides,” Shawn Lewis of the Washington Education Association said, “and we’re concerned this will be one or the other.”


King expects the plan to advance out of the Ways and Means Committee, where chairman Andy Hill supports it — even though he’s the one who has to lead the balancing of the general budget.


As it stands, “You’re taking a chunk of that fuel tax and you’re putting it in the general fund via a sales tax,” said Hill, R-Redmond. “You ask the average person, did you know that some of it gets diverted? I think they’d be surprised.”


Lobbyist Nick Federici told lawmakers it’s a slippery slope. “You could see a scenario where sales tax on school construction went to schools, sales tax on housing construction went to housing,” said Federici, whose Our Economic Future Coalition includes a host of groups that want more tax revenue for the general budget.


“We believe you should invest as much in people as you do in pavement.”


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