Gov. Inslee's tax plans stretch campaign promises

OLYMPIA, Wash. (AP) - Gov. Jay Inslee says he's following through on his "no new taxes" campaign pledge. Others disagree.

In unveiling a budget plan this week that would increase government spending by 10 percent, Inslee proposed to make temporary taxes permanent and to limit tax exemptions on everything from automobile trade-ins to bottled water.

"I am doing today exactly - exactly - what I said I was going to do," Inslee said in his news conference.

While voters are left to judge whether Inslee is following the specifics of his campaign promises, it's clear the tone of his message has changed. Here's a look at Inslee's campaign statements compared to his comments this week:

TAXES: Faced with a court order to increase education funding, candidate Inslee said last year the state didn't need new taxes.

"I would veto anything that heads the wrong direction, and the wrong direction is new taxes in the state of Washington," he said at one point.

Instead, Inslee said in the final campaign debate last year that the money would largely come from growing the state's economy - and revenues. He talked about an "Inslee for jobs" sign in Tacoma before concluding: "That pretty much encapsulates my program to make sure that we finance education."

The state's economy has been rebounding and the unemployment rate is down. Even without changes in state tax law, the state is already expected to bring in $1.9 billion more dollars in the next budget - a 6 percent increase.

Inslee, however, argued this week that those revenues aren't sufficient and proposed $1.2 billion in additional revenue from tax changes. He didn't propose any new types of taxes or broad-based tax increases, but he argued in favor of ending or shrinking tax deductions. He also proposed to make temporary tax increases - enacted amid the worst parts of the recession - permanent.

Randy Pepple, the campaign manager for former GOP gubernatorial candidate Rob McKenna, said extending taxes is a tax increase since the taxes would be lower without action. He said it was clear that Inslee was misleading voters all along.

"He's just parsing his words," Pepple said. "He knew that he was lying to get elected."

TAX DEDUCTIONS: Candidate Inslee did speak last year in favor of eliminating tax deductions. He often referred to them as loopholes secured by lobbyists and said he wanted to focus on eliminating ones that no longer made sense.

However, in one debate, Inslee also seemed to downplay which tax breaks would be in jeopardy. He said the state would have to target larger issues like growing jobs because "that is where the real money is."

Under his proposal advanced this week, Inslee seeks to raise $565 million over the next two years by targeting tax breaks - about half the money needed to fund education.

Many might dispute the characterization of the tax breaks as loopholes. One of his proposals would lower a tax deduction on a new car when trading in an old one. Another would increase taxes on bottled water. Along with making some temporary taxes permanent, he would broaden a beer tax to hit small brewers as well.

And Inslee didn't just target specific tax breaks that he didn't think were worthwhile; he also targeted whole blocs of them. The state tax code offers preferential tax rates to benefit 40 industries, and Inslee proposed to cut the value of the tax preferences by 25 percent across the industries, except for aerospace and radioactive waste cleanup by the federal government.

"I choose education over tax breaks," Inslee said.

GOVERNMENT EFFICIENCY: Along with job creation and tax deductions, Inslee talked extensively during his campaign about making government more efficient - by using "lean" management - and capturing that money to put into education.

Inslee said during the campaign that it would take only "months" to get a return on investment from enacting the management principles, disputing the opinion of another Democrat who suggested it would take years. House Republicans cited Inslee's "lean" goals in their spending proposal earlier this month, cutting agency budgets by 2 percent.

Lean management got minimal focus in Inslee's budget rollout, however. The governor doesn't count any savings from the efficiency effort and made minimal budget reductions.

"We figured booking savings from 'lean' was premature," said David Schumacher, Inslee's budget director. Schumacher said the office was being conservative.