Washington’s Gregoire Proposes 0.5% Sales-Tax Increase to Bridge Deficit

Washington Governor Christine Gregoire, seeking to close a $2 billion budget deficit, asked the Legislature to let voters decide on a 0.5 percentage point increase in the state sales tax to 7 percent.

Gregoire, a 64-year-old Democrat, said the increase would raise $494 million through June 30, 2013, and expire July 1, 2015, helping to avoid a shortened school year, preventing further reductions in state support of colleges.

The proposal, part of a broader effort to fill the budget deficit as revenue trails initial forecasts, comes a year after Washington voters rejected a bid to impose an income tax on its wealthiest residents. Bill Gates Sr., father of Microsoft Corp. (MSFT)’s co-founder, was a leading advocate for the proposal to tax the adjusted gross income of individuals earning more than $200,000 and couples earning more than $400,000.

“After three years of cutting, now is the time to invest in a better future for all Washingtonians -- for all of us to take responsibility and, yes, spend a half-penny more,” Gregoire said in a statement.

The budget Gregoire presented today would cut more than $500 million from education, $690 million from human services including food aid and $72 million from the Corrections Department. Gregoire said she has made $10.5 billion in budget reductions in the past three years.

To contact the reporter on this story: Peter Robison in Seattle at robison@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net