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Home » B&O tax relief plan for manufacturers fails

B&O tax relief plan for manufacturers fails

March 14, 2018
John Stang

Maybe the second time will be the charm.

A bill that would have provided tax relief to Franklin County manufacturers died during the last week of the 2018 legislative session. 

Now, Mid-Columbia legislators — all Republicans — will have a chance to persuade Democratic legislators have modify the bill next year to make sure the Benton County also gets that benefit.

The business and occupation, or B&O, tax on manufacturers is important in both counties as there are 7,733 manufacturing jobs through 236 manufacturers, according to 2016 state Employment Security Department statistics.

The bill did not survive the final behind-the-scenes negotiations between the Senate Democrats and House Democrats, said the budget negotiators for those caucuses. 

Since Republicans are the minority parties in both chambers, they had no say in the March talks to tweak the state’s 2017-19 biennial budget.

Kris Johnson, president of the Association of Washington Business, called the inaction a missed opportunity not to do more to address Washington’s urban-rural economic divide.

“This is especially disappointing considering the widespread recognition among lawmakers about the need to boost the economy in rural Washington and the extraordinary growth in state revenue that made the tax relief feasible,” he said in a statement.

Rep. Mike Chapman, D-Port Angeles, one of the bill’s sponsors, wanted to gradually trim the B&O taxes for rural manufacturers from 2019 to 2024. The bill applies to “rural” counties with a pollution density of less than 100 people per square mile.

“These are good jobs and need to be saved,” he said. 

Chapman said he got the idea for the bill at Association of Washington business meetings in Moses Lake and Olympia.

His bill targeted rural manufacturers because non-urban areas have not been as prosperous in Washington’s economic rebound as the metro regions have been, Chapman said. 

Unemployment in rural areas usually averages about 2 percent above urban regions, he said. He left the cities out of the proposed change in B&O tax changes because adding them would create too big of a shortfall in the state’s overall budget.

Of interest to Benton and Franklin counties is the 100-people-per-square-mile part of the bill.

Franklin County has 1,264 square miles. Its 2010 population in the U.S. Census of 78,173 equals a density of 62 people per square mile. Its estimated 2016 population of 90,160 results in a density of 72 people per sure mile.

However, 1,760-square-mile Benton County added too many people this decade to qualify. Its federal census figure for 2010 was 175,171 for a population density of 93 people per square mile. But the 2016 census estimate for Benton County was 193,688, translating to 110 people per square mile.

Under the Chapman bill, the current B&O tax rate of 0.484 percent would have remained until Dec. 31. Then the tax rate would have dropped gradually each year to 0.2904 percent by 2024. 

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