Legislature missed unique opportunity for real tax relief

Despite a mountain of money and bipartisan proposals to ease the state’s tax burden, legislators this year sidestepped their chance to provide Washington families and employers with meaningful, broad-based tax relief.

Budget-writers in Olympia had a record budget surplus, providing the perfect opportunity to help ease the burden on employers and taxpayers across the state. In mid-February, state officials released the latest economic forecast and it showed revenue up again, this time to the tune of $2.8 billion. That was on top of multiple previous forecasts showing strong growth.

Between the surging state treasury and a $2.1 billion drop in the cost of continuing services, lawmakers had a roughly $14 billion surplus to work with as they entered the final days of the legislative session, not counting billions in one-time federal relief funds and state reserves.

All of this meant there was never a better time for budget-writers to be champions for the economy and to provide needed tax relief and support for Washington employers and employees as they face dramatic increases in the cost of gas and rising inflation throughout the economy.

We’ve seen lawmakers in other states – both Democrats and Republicans – when presented with big budget surpluses, adopt a variety of tax cuts, so it’s especially disappointing that our lawmakers in Washington were so intensely focused on spending and couldn’t find a way to give back some of the surplus to allow employers to reinvest in their businesses and create jobs.

The website Stateline reported that in Illinois, Democratic Gov. J.B. Pritzker wanted to freeze the gas tax for a year, suspend grocery taxes for a year and give property owners a refund up to $300. Lawmakers in New York, Maryland, South Carolina, Mississippi, Connecticut, New Mexico and Iowa, to name a few others, were also debating various forms of tax cuts.

Here in Washington, lawmakers introduced tax relief bills this year. The proposals include Senate Bill 5957, which would have cut the business and occupation (B&O) tax for manufacturers roughly in half. Given unanimous passage last year of a bill calling on the state to double the manufacturing sector in Washington in 10 years, it would have been an especially timely move.

“Now is the year to do it,” said the bill’s sponsor Sen. Mark Mullet, D-Issaquah.

Other tax relief proposals include Senate Bill 5932, would have reduced the state’s sales tax by a full 1%, and Senate Bill 5769, which would have eliminated the B&O tax for manufacturing, repealed the capital gains tax and offered significant property tax relief.

While it’s true that the last two years have been good times for the state treasury and for some businesses, that’s by no means a universal experience. Some employers — especially small businesses — have experienced severe hardship. While some are recovering, they haven’t recovered.

One of the few bright spots of the last two years is how well the state budget has fared during this time. This means that lawmakers had a unique opportunity to use a portion of the state’s surplus to help those who have been hardest hit and to make smart investments that would have positioned the economy to really take off.

Going into this year’s legislative session, Washington was on a three-year taxing streak that saw lawmakers raise 22 different taxes that will generate $40 billion over 10 years.  

It’s hard to imagine a better opportunity ahead than we had this legislative session to give something back to taxpayers and to be champions for the economy.

Lawmakers had a chance to be champions for the economy. The opportunity was right in front of them, but unfortunately, they let it pass.

Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association.

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