washington business
It should’ ve been easy. A year earlier, lawmakers came to agreement on a plan to reduce the B & O tax burden for manufacturers by 40 percent. They included that B & O tax relief as part of the final budget agreement, and it passed with a strong bipartisan majority of both the House and Senate.
Unfortunately, Gov. Jay Inslee vetoed the B & O part of the budget a week later, saying it did not go through the proper process. Although lawmakers approved the reduction as part of the budget agreement, it did not receive a separate hearing before a legislative committee, he said.
This year, lawmakers addressed that issue by introducing B & O tax relief bills during the session and holding hearings on the proposed legislation.
But this time, it ran into a new roadblock: Washington’ s growing urban-rural economic divide.
Tax relief for manufacturers and the state’ s urban-rural economic divide are two of the most important issues currently facing Washington employers and policymakers. Unfortunately, they became intertwined in a way that’ s not helpful to either issue.
House Bill 2947, co-sponsored by Reps. Mike Chapman, D-Port Angeles, and Jacquelin Maycumber, R-Republic, ended up being drafted to provide help for manufacturers only in parts of the state, while excluding manufacturers in other parts.
Proponents of the limited relief said they wanted to assist manufacturers in rural areas, and they credited AWB’ s Rural Jobs Summit, held last October, as the impetus.
But the bill would’ ve lowered the B & O rate for manufacturers in 30 of Washington’ s 39 counties, leaving out not only urban areas, but also many counties that consist largely of rural areas, such as Kitsap and Benton. This year’ s proposal would have helped an estimated 3,500 manufacturers, whereas the plan approved last year— but later vetoed— would have applied to approximately 12,500 manufacturers.
Rep. Jacquelin Maycumber, R-Republic, and Rep. Mike Chapman, D-Port Angeles, testify on their business and occupation manufacturing tax relief bill during a hearing of the House Finance Committee on Feb. 16.
“ It’ s time to let all manufacturers win.”
— AWB President Kris Johnson
And, as AWB and others pointed out, manufacturers are struggling statewide, including in urban areas. Yes, rural Washington needs more jobs. But manufacturing employment is down 14.2 percent in Washington since 2000, with higher job loss coming in urban areas.
“ If you’ re looking at this strategically for manufacturing, you need to do the entire sector,” Dave Gering, executive director of the Manufacturing Industrial Council, told lawmakers.
Washington’ s manufacturing sector is worth supporting. It provides great-paying jobs that build strong communities.
Already, some sectors are paying a reduced B & O tax rate. As it is, just 40 percent of B & O tax revenue from manufacturers comes from employers that are taxed at the full rate. It only makes sense to extend the same opportunity to all manufacturers, in all sectors and all parts of the state.
AWB will bring that message to lawmakers once again in 2019. Here’ s hoping the third time’ s the charm. special edition 2018 9