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Gov. Gregoire's 'sin tax' proposals not playing well in Bellevue

Top: Gov. Christine Gregoire. Bottom: Rep. Ross Hunter. - Courtesy photos
Top: Gov. Christine Gregoire. Bottom: Rep. Ross Hunter.
— image credit: Courtesy photos

Gov. Christine Gregoire isn’t getting much support in Bellevue for the tax on soda and bottled water she proposed to help close the state's $2.8 billion budget deficit.

That’s because the district is home to a “hulking big bottling plant,” to borrow a phrase used by Rep. Ross Hunter, of Medina.

Hunter said he won’t back the tax, in part, because of the potential impacts it would have on the Coca Cola bottling facility in Bellevue.

“There’s a lot of good family-wage jobs that will be lost,” he said. “That obviously factors in. I also just think it’s stupid.”

Hunter said he can understand how the governor would want “sin taxes” on items like cigarettes, which cause cancer. But he doesn’t like the idea of punishing consumers for products that can lead to obesity, like candy and soda.

There’s another reason Hunter won’t get behind Gregoire’s proposal:

“The pop guys will pour $10 million into a campaign in November to repeal it and win,” he said. “I don’t need to make those kinds of enemies.”

House Democrats on Monday proposed a compromise plan that would remove the sales-tax exemption on water rather than adding new excise taxes to both bottled water and soda.

The Washington Beverage Association said it will not oppose the plan.

"It's not something we would love, and neither would the consumers, but in the scheme of things, it's a more reasonable approach to the budget woes," said Tim Martin, president of the association.

Coca Cola recently stepped up efforts to fight the governor’s proposal, holding a press conference at its Bellevue bottling facility on Friday to talk about how the plan would impact the regional economy.

Gregoire’s proposal includes an excise tax of 5 cents for every 12 ounces of carbonated beverage with the goal of raising $93.6 million during the current biennium.

The governor’s plan would also require bottlers to pay 1 cent per ounce on bottled water, generating $34.7 million during the biennium.

Coca Cola estimates the tax will increase the price of soft drinks by up to 30 percent, while raising the cost of a case of bottled water by more than 100 percent.

The House proposal would raise the price of bottled water in accordance with sales tax rates, which total 9.5 percent in Bellevue.

Bob Slack, vice president of Coca Cola Bottling Company of Washington, said the governor's proposed tax would create a wide-ranging ripple effect, impacting everyone from suppliers and bottlers to convenience store owners and consumers.

“This is about jobs in our state and consumers who simply cannot afford higher prices,” Slack said. “We already have a 9.5-percent unemployment rate in Washington. Let’s find ways to keep jobs in our home state.”

The beverage industry in Washington directly employs over 3,000 workers, as well as another 17,000 in affiliated businesses, according to Slack.

The industry also has a total economic impact for the state of $8.6 billion, Slack said.

The Coke bottling plant in Bellevue reduced its workforce by 10 percent in 2008, and saw a decline in volume of 4 percent last year.

In addition, Slack claims 2010 has not been as promising as his company had hoped.

“We are faced with some tough choices if the economy doesn’t turn around quickly,” he said. “If we were to have this tax imposed, we would most likely need to reduce our workforce by 25 to 30 percent.”

Coca Cola Bottling Company of Washington employs over 1,000 workers.

Slack said the governor's proposed tax unfairly targets the bottling industry.

Gregoire spokeswoman Karina Shagren said the governor "didn't target anything – everything was on the table," and that the governor eventually settled on items like soda, bottled water and cigarettes because they are "discretionary purchases."

Joining Coca Cola in the fight against Gregoire’s proposal on Friday were Tom Cheddar, general manager for the Western Container packaging company; and Michael Chey, a member of the Korean Grocers Association and owner of two convenience stores in the Puget Sound region.

Both said they oppose the governor’s proposal.

“For many, this excise tax could just place bottled water and soda out of reach, Cheddar said. “The impact doesn’t just stop here at the bottlers, it’s going to have far-reaching effects.”

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