Washington Business 2019 Legislative Review & Vote Record | Page 30

2019 legislative review
Budget & Taxation
taxes & budget
ESHB 1109
operating budget
Passed/AWB Opposed
AWB opposed spending levels that would
require major new taxes on business. We
also opposed the maneuver to take a major
new source of taxes on business, the B&O
surcharge for workforce education, and
put that revenue outside of the general
fund, thereby masking the true growth
of budget spending on education and
diverting funds from flowing to the Rainy
Day Fund.
E2SHB 2158
service b&o tax surcharge
Passed/AWB Opposed
AWB’s Clay Hill, center, is joined by Al Carter of Ocean Gold Seafood in Westport and Meredith
Neal, director of the Manufacturing Industrial Council for the South Sound, to testify in support of
HB 1348, to provide business and occupation tax relief for small and mid-sized manufacturers.
Clay Hill: Tax & Fiscal Policy
In odd-numbered years the Legislature writes a two-year operating budget. Owing
to a strong economy, lawmakers had an additional $5.6 billion in revenue over the
previous budget to spend without raising taxes, plus additional reserves. Despite this,
the great debates of the session were around the adequacy of the current tax structure
to pay for all of the spending programs the majority party wanted to implement.
Additionally, the fairness of Washington’s tax code was again much debated, and
ultimately another tax structure study group was formed through a budget proviso
to study alternatives.
Before session, Gov. Jay Inslee proposed an operating budget that would have increased
spending by a staggering 22.3 percent over the previous biennium to $54.6 billion.
The increase would be funded by new B&O taxes on service businesses, higher real
estate excise taxes (REET), and a capital gains income tax. The final budget deal
increases spending by 18.3 percent, one of the highest growth rates in recent decades,
and relies on two of those major tax sources: higher REET and a B&O surcharges on
specified service businesses.
28 association of washington business
AWB opposed this legislation to make
specified service businesses identified
by 43 descriptions drawn from NAICS
codes bear the cost of investments in
higher education and workforce training
programs. Core services like education
should be paid for from a broad tax base,
and be accounted for in the general fund,
not “dedicated accounts.” This legislation
increases taxes by about $800 million over
four years on service businesses in a time
of robust natural revenue growth.
E2SHB 2158 AMD 134
taxpayer fairness
Failed/AWB Supported
AWB supported an amendment to the
service B&O surcharge bill to eliminate
t wo ver y ugly ta x administ rat ion
provisions in the bill. One provision turns
existing law on its head by directing that
all ambig uity in whether the new tax
applies to a certain business should be
construed in favor of imposing the tax.
Another provision creates a new higher