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Facing a $9 billion state budget deficit, Gov. Chris Gregoire and the legislature claim they're looking everywhere for cutbacks. But Alex Ng, Ricky Tran, Jennifer

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$9 Billion Deficit: Students Have an Answer

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Facing a $9 billion state budget deficit, Gov. Chris Gregoire and the legislature claim they're looking everywhere for cutbacks. But Alex Ng, Ricky Tran, Jennifer Truong, and Joann Ucol, students in Miriam Miller's 10th Grade Law & Society/History & Humanities classes at Franklin High School, think state officials ought to look under their long noses. Rather than, say, cut housing, education and medical benefits to the poor, how about removing some of those multi-million-dollar tax breaks for Boeing, Microsoft and other corpulent cats?

Miller's students put together a PowerPoint presentation, using figures from a 2004 Seattle Weekly story detailing 503 tax exemptions on state books, worth $64 billion in givebacks to individuals and industry. The presentation asked why, for one, Washington schools could be so underfunded when the repeal of just a few select tax breaks could solve that? "I sent the PowerPoint to [House speaker] Frank Chopp, [county exec] Ron Sims, the presidents of the various bar associations, and so on," says Miller. "And there was no response."

That's likely because no one wants to talk about erasing tax exemptions that, rather than being reversed, have steadily been expanded by state lawmakers. Today, "tax preference items," as the state Department of Revenue (DOR) calls them in its 2008 exemptions report, number 567 and total $98.5 billion - up more than $34 billion in four years (inflation plays a role). They include, for example, the more than $4 billion tax breaks given to Boeing - $3.2 billion of it approved in 2004 as a bribe to build the new 787 jet in Everett - to smaller exemptions handed out to a myriad of businesses - grocers, caterers, farmers, brewers, right down to medical firms that buy and sell body parts.

Typically, those are exemptions the recipients obtained by lobbying the governor and legislature, claiming the breaks were needed to profit and survive. And while many exemptions are necessary and commonplace - property tax breaks, for example - DOR director Cindi Holmstrom says her staff has identified a series of exemptions that, if eliminated, could bring $15 billion into state coffers. They include reversing exemptions on some aerospace, high-tech, biotech, agriculture, newspaper, vehicle, fruit-processing, fuel, tobacco, and beverage products and processes - including those body-parts sales. The exemptions and potential revenue makers are listed in a 330-page report on Revenue's website.

There is also a state commission reviewing the exemptions, notes DOR spokesperson Mike Gowrylow. But it has made little headway. The breaks aren't a sexy topic, nor easily understood, and there's no public pressure on lawmakers to counter the industry elbow-twisting. Miller's class realized that, and in their PowerPoint, suggested the answer might be a state income tax. But, as they put it, "The people of the State of Washington have no will to change the tax system," or challenge their exemption-happy legislators, and for that, class gets an A.

 
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