Is the income tax proposal for real this year? Every year, state Sen. Rosa Franklin, D-Tacoma, introduces a bill calling for a state income tax. Hers often is the only name listed as a sponsor. Such is the case this year. She dropped the bill Jan. 13.

The real interesting thing is that a fiscal note was completed on Feb. 11 and it is really elaborate! I mean, state agency and legislative committee staff put one heckuva lot of work into something that in years past has been a non-starter of a bill.

Has something changed? Is this what Democratic majorities in the House and Senate really have been waiting for? (Next week, we also get word from Congress on how much money Washington will get in bailout money, and how bad the financial situation is. Is it a $7.5 billion shortfall?)

Here is a link to the full text of Senate Bill 5104. But just even more interesting are the numbers in the fiscal note.

Here's a quick summary: An income tax ranging from 2.2 percent to 6 percent would be put in place. The state portion of property tax would be eliminated entirely. The state's 6.5 percent sales tax would be reduced to 3.5 percent.

In state fiscal year 2012, the state would collect $6.67 billion in income taxes, but would forego $3.9 billion in sales taxes and $1.9 billion less from a zero property tax.

The state would have a net gain of $854 million for that year. The bill says the income tax measure would be put on the November 2009 ballot.

Tim Eyman is the one who pointed this bill out to me. Give credit where it's due. I saw it the first week of session but dismissed out of hand as Frankin's usual non-starter. Perhaps I should not have. He pointed out, rightly so, that his I-960 is much of the reason for the more intense scrutiny. I-960 requires the governor's budget office to lay out the 10-year financial impact of any bill that raises fees or taxes.

It's bound to be part of the discussion with Democrats having such hefty majorities. Although they are still shy of two-thirds votes needed to put a constitutional amendment on the ballot without some Republican help.

There's an excellent explanation of why the Federal Medicaid Assistance Percentage, aka FMAP, is such an important component to helping Washington get out of his $6 or $7 billion budget problem.

It's the percentage of state money that is saved by going from a 50-50 split of federal state spending to 60-40. Under the 50-50 split, Washington would be spending a total of $2 billion on Medicaid by putting up $1 billion of state money to match $1 billion from the feds.

But under the 60-40 split, the state still can spend $2 billion overall on Medicaid programs, but it shells out only $800 million and the feds pay $1.2 billion. The state "saves" $200 million that it can shift to other stuff.

Those are just "for instance" numbers. The real ones are bigger.

Here is the link to Schmudget, the blog for the Washington State Budget and Policy Center.

The graphic tells it all.

One sign that these are tough budget times: Pierce County may cut hundreds of thousands of dollars in funding to community groups and charities.

The details are yet to come. But County Executive Pat McCarthy has recommended cutting $565,000 in funding to outside groups as part of an $8 million spending reduction.

County Council members and the executive divvy up millions of dollars in such spending each year. This year’s budget includes $4.8 million for “miscellaneous current expenses,” which includes funding for the community groups. It’s a way for elected officials to fund what they say are worthy programs.

Council members clearly are uncomfortable with the idea of reneging on funding for those groups. At a retreat this morning, the council and the executive played a little ping pong on who will decide which groups get cut.

“Those are your choices to make,” McCarthy told the council when the issue initially came up.

Council members pressed the executive, asking if she would suggest specific cuts. Ultimately, McCarthy said her office would review spending placed in the budget by previous Executive John Ladenburg, while suggesting the council review its own spending on community groups.

“We’ll do our due diligence,” McCarthy said. “You do your due diligence.”

=> Read more!

Our D.C. correspondent Les Blumenthal is tracking Washington's piece of the stimulus pie. According to federal estimates, the compromise $789.5 billion stimulus bill would:

• Create or save 75,000 jobs in Washington state.

• Send half a billion dollars to Washington for highway, road and bridge construction, $175 million for transit projects and $2.06 billion to help bolster the Medicaid program.

• Provide 2.4 million Washington residents with a tax break

• Provide an extra $100 in unemployment benefits to more than 400,000 people.

Here's an administration estimate of where the jobs would be created, by Congressional district. South Sound's primary districts (6th, 8th and 9th) stand to get more than 25,000 jobs.

The Pierce County Council today is meeting at the Alderbrook Resort & Spa on Hood Canal for its annual retreat. The topic: budget, budget, budget.

Just a month into 2009, the county already faces an $8 million budget hole. The main reason: lagging sales tax and interest income collections.

County Executive Pat McCarthy, who also is here for the day, has recommended cuts for numerous departments. The sheriff’s and corrections departments will take hits of less than 1 percent. Other departments – including the executive’s office and council – are slated for cuts of 3 percent.

The council will take up those cuts soon. But that may just be the start. From the drift of this morning’s discussion, it seems the budget hole is likely to get bigger. January sales tax money is down about 12 percent from a year ago.

The budget discussions will continue all day. The council retreat began yesterday afternoon and will continue through Friday morning.

For the record, the retreat cost $6,147.96. Council spokesman Brad Chatfield said the council considered cancelling the retreat to save money. But it would have forfeited about $3,500 to break the Alderbrook contract, signed last March.

Update: Council Chairman Roger Bush notes that council members paid for their own rooms at the retreat.

I'm filing this report from home. Despite the flu shot I got in November, I got knocked down by the usual legislative session bug.

But I talked to Sen. Derek Kilmer yesterday to get the skinny on his bill, which is racing through the Senate. He introduced it on Monday.

The Senate is scheduled to start work at 8 a.m. today and pass two bills. Here's the draft of a story I was writing for today's blog and tomorrows print edition of the paper.

UPDATE: Senate did pass both and since they changed the unemployment benefit bill, it and the Senate bill will go to the House.)

The Washington Senate on Thursday approved a $45 hike in
unemployment checks and a tax break as high as $4,000 for each job
created by small companies, then sent both bills to the House and, eventually, on to the governor.

The minimum unemployment check, starting in May, will be $200 a week.
That maximum will rise to $586. Gov. Chris Gregoire is expected to sign House Bill 1906 into law since she proposed the increases in her inaugural address last month.

The second measure, Senate Bill 5899, sponsored by Sen. Derek Kilmer, D-Gig Harbor, would give small businesses an incentive to create jobs and offer employees health care coverage by giving them a break on their business and occupation taxes.

Companies with 10 or fewer workers could cut $2,000 off their state
business and occupation taxes if they created a job whose salary and benefits are less than $40,000 a year. Pay and benefits combined also would have to be at least 150 percent of minimum wage and the employer would have to offer the worker a health plan.

For jobs whose pay and benefits are greater than $40,000 a year, the tax
credit would be $4,000.

=> Read more!

Officials at the Point Defiance Zoo & Aquarium have seen a ray of sunshine cutting through the gloomy economic news.

Due to the drop in sale tax revenue that supports the zoo, the park decided to close its doors on Tuesdays and Wednesdays during the winter.

But, that hasn't kept visitors away -- a combination of nice weather and folks seeking economical family fun is likely behind the increase in attendance this January over last year.

Zoo spokeswoman Whitney DalBalcon sent me these figures this morning:

More than 15,280 people visited Point Defiance Zoo & Aquarium in January 2009, a 24 percent increase over January 2008 and the highest January attendance on record in our history.

Attendance
January 2009: 15,283
January 2008: 12,280