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Originally published Sunday, November 25, 2012 at 6:20 PM

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Gregoire works to broker tax agreement affecting online sales

As her second term winds down, Gov. Chris Gregoire is working to build support for a congressional plan that would allow states to collect sales tax from online retailers based elsewhere.

The Associated Press

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OLYMPIA. — Gov. Chris Gregoire's time in office may be best remembered for the major deals she helped broker, often in late-night bargaining sessions in which negotiators were ordered to find a resolution.

Now the Democrat, two months away from leaving state government, is looking to finalize one more big agreement.

Over the past year, Gregoire has been working to build support for a congressional plan that would allow states to collect sales tax from online retailers based elsewhere. Similar efforts in Congress over the past decade have failed, even as online sales have become more common.

Gregoire said the current lame-duck Congress is perhaps the best time to pass the measure, with some Republican governors and lawmakers signaling their support. She said the issue is a matter of fairness, helping states collect taxes that are due and helping local businesses compete on a level playing field with online counterparts.

"I will tell you that our companies in this state are suffering mightily because of this fundamental unfairness," Gregoire said.

A deal would also provide Washington with hundreds of millions of dollars in revenues, helping deal with budget shortfalls in a state dependent on the sales tax.

Gregoire, who is working with Republican Tennessee Gov. Bill Haslam, believes any agreement will have to be part of larger negotiations to avoid the "fiscal cliff" — in which a batch of tax increases and spending cuts are set to take effect in the new year unless Congress acts.

If Congress fails to reach agreement on that issue, she doesn't see a pathway for the online sales-tax measure.

Working with a bipartisan team of senators, Gregoire said she is prepared to testify or do other advocacy work that may be needed on Capitol Hill. She leaves office in January.

Gregoire is no stranger to high-stakes negotiations, as they have come to define her tenure as governor.

Much of her work in recent years has been mediating budget disputes between caucuses in the Legislature, but last year she also spent months behind the scenes trying to negotiate the end of a tense disagreement in Longview between the grain-export company EGT and longshoremen. Both sides praised the governor for ending that conflict, which had involved damaged property and arrests.

Gregoire's negotiating work began before she was governor. In 1998, when she was attorney general, Gregoire helped negotiate a $206 billion settlement between tobacco companies and 46 states.

Since then, she's brokered other major deals: She helped secure a Columbia River water plan that had eluded both sides for decades. She hosted late-night meetings to find a compromise that overhauled the state's workers' compensation system. And she finalized new tribal compacts that allowed a limited expansion of gaming.

Last year, when the Tacoma teachers went on strike at the beginning of the school year, former School Board President Kurt Miller said the gap between the two sides was so wide that he expected a strike that would last a minimum of 20 days.

He said Gregoire immediately stepped in, keeping in constant contact. He would phone Gregoire's office and she would quickly take the call and walk through the scenarios and issues at hand.

When negotiations stalled, Gregoire called both sides to her office. He recalled Gregoire being firm but understanding of the challenge, encouraging both sides to separate, then return to the table with new ideas.

"We were pretty far apart when we walked into her office," Miller said. "And within a few hours we had an agreement."

Gregoire acknowledged that working with Congress offers a different set of challenges, especially when the "fiscal cliff" negotiations are out of her control.

As one of her final jobs as governor, she will propose a new budget plan that will need to fill a $900 million shortfall and dedicate new money to education in response to a court order. The sales-tax plan would provide a major boost to that effort.

"It's one of my top priorities right now," Gregoire said. "We desperately need the money."

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