From Washington Senator Mark Schoesler, 
Last month I predicted agriculture likely will experience a net loss from the 2010 legislative session. Unfortunately, the potential for loss has shot up exponentially with the action taken Thursday on Substitute House Bill 3181.
This legislation would almost triple (to 2 percent, from 0.7 percent) the state’s hazardous substance tax, created by the voter-approved Model Toxics Control Act of 1988. It would be a triple hit on farmers and growers, between higher prices for fuel, fertilizer and crop protection products.
How much higher? We’re still trying to sort all that out (the governor’s budget office does not supply detailed breakdowns of the estimated impacts of tax increases). But SHB 3181 is expected to cost taxpayers $683 million over the three fiscal years beginning July 1. It’s the big-ticket item in the list of tax increases the governor proposed Wednesday (along with new taxes on candy, gum, and bottled water, and an increase in the tobacco tax).
Agriculture will feel the impact of this tax increase not only directly but indirectly through things like higher trucking costs. Farmers, growers and ranchers can’t pass their costs along to the consumer in the way that other industries can, either, so this will be a direct hit on the bottom line.
The bill was passed by the House Capital Budget Committee yesterday after it was amended to steer nearly 70 percent of the revenue generated straight into the state general fund through the next year and all of the 2011-13 budget cycle. That’s even more money into the general fund than the original version proposed. The rest is supposed to go toward helping local governments pay for environmental cleanup, particularly pollution in stormwater runoff.
In other words, most of the revenue from tripling this tax won’t be used for the voter-approved purpose – to clean up hazardous waste – but to plug the giant holes in the state treasury ($2.8 billion for the next year, maybe $5 billion in 2011-13) caused primarily by years of overspending.
Yesterday the bill also was amended to take effect May 1 – not July 1, the start of the 2011 fiscal year, or even June 1, as the original version dictated. And it contains the “emergency clause” that prevents a challenge from the people using their power of referendum.
Asked Wednesday how much tripling the MTCA tax might mean at the fuel pump, the governor said it might be three more cents per gallon – but why, she added, would the oil companies pass their costs on down to the consumer and cause pump prices to increase when they are making such profits? That kind of anti-business mindset is all too common around Olympia. She probably can’t imagine how prices of fertilizer and crop protection products could be affected by this tax hike, either.
Some compelling testimony against SHB 3181 was delivered Wednesday by Jim Fitzgerald, executive director of FarWest Agribusiness in Spokane (he’s pictured below, on a separate and more pleasant visit to the Capitol). He was speaking to the House Capital Budget Committee – the committee that proposes spending on public construction projects – which had the bill because the tax will help fund local stormwater projects, which are construction jobs.
Tripling the MTCA tax is liable to drive business out of Washington into other states, Fitzgerald testified, recounting a phone call to an ammonia handler to discuss the proposed increase. And he told committee members that while FarWest is sympathetic to the challenge of dealing with runoff, farmers shouldn’t be stuck with the tab. It’s the malls and streets and parking lots, with so many impervious surfaces, where stormwater concerns originate – not farms.
It was no secret the Legislature’s majority party would be raising taxes this year. I was wondering whether agriculture would be tapped on the shoulder for more money, and now we know how.
The question now is whether, when the regular session ends March 11, will our employers and families be saddled with a collection of so-called “targeted” tax increases like HB 3181 or one big tax increase, like another penny’s worth of sales tax? Or both? The governor wants $605 million in new taxes, and recent history suggests the Legislature will surpass that mark.
The last straw: When she rolled out her “targeted” proposal Wednesday the governor said she doesn’t like the idea of a general sales tax increase because it would hamper the recovery of our state economy. Does she not realize how tripling the MTCA tax will hit the backbone of Washington’s economy not once but in three places?
The revised MTCA tax bill now goes forward for a vote by the entire House. Should it pass, the bill will come to the Senate Ways and Means Committee, on which I serve.
A roundup of ag-related bills
Here’s how bills that came out of the Senate and House agricultural policy committees (with companion legislation, where noted) stood following Tuesday’s cutoff for passing bills from the “house of origin” (Senate acting on Senate bills, House acting on House bills).
Bills that require appropriations or involve taxes and are considered “necessary to implement the budget” may be considered beyond the cutoff.
Substitute Senate Bill 6210 – Agricultural resource lands; not brought up for Senate vote
Senate Bill 6228 – Organic products; not brought up for Senate vote
(companion measure, House Bill 2460, passed House and received hearing Thursday before Senate ag committee)
Senate Bill 6229 – Dairy inspection program; passed Senate, scheduled for House ag committee hearing today (Schoesler bill, companion measure, House Bill 2461, passed House and received hearing Thursday before Senate ag committee)
Senate Bill 6267 – Water right processing; passed Senate, hearing before House ag committee was Thursday
Substitute Senate Bill 6299 – Animal inspection; passed Senate, scheduled for House ag committee hearing today (Schoesler )
Substitute Senate Bill 6341 – Food assistance/dept of agriculture; passed Senate, referred to House General Government Appropriations
Substitute Senate Bill 6343 – Washington food policy forum; passed Senate, scheduled for House ag committee hearing today
Substitute Senate Bill 6520 – William D. Ruckelshaus Center; passed Senate, referred to House Local Government & Housing for hearing Monday
Substitute Senate Bill 6521 – Agriculture impact statement; passed Senate, scheduled for House ag committee hearing today
Senate Bill 6543 – Tree fruit research commission; passed Senate, hearing before House ag committee occurred Thursday (companion measure, House Bill 3095, passed House and received hearing Thursday before Senate ag committee)
Substitute Senate Bill 6556 – Agricultural burning fees; passed Senate, referred to House General Government Appropriations for hearing Tuesday
Senate Bill 6559 – Anaerobic digesters; not brought up for Senate vote
Substitute Senate Bill 6634 – Dairy nutrient management records; passed Senate, hearing before House ag committee was Thursday
Senate Bill 6653 – Farmers market/property tax; not brought up for Senate vote
Senate Bill 6745 – Veterinary technicians; passed Senate, heard by House ag committee today (companion measure, House Bill 2470, passed House, heard by Senate ag committee Thursday)
Substitute Senate Bill 6792 – Driver license/agribusiness; not brought up for Senate vote
Substitute Senate Bill 6794 – Ag landowner incentive programs; not brought up for Senate vote
Substitute Senate Bill 6816 – Farm implement permits; passed by Senate, referred to House transportation committee (Schoesler bill)
Senate Bill 6306 – state licensing of crop-insurance adjusters; passed Senate, passed Wednesday by House committee on insurance, awaiting House vote (Schoesler bill)
Substitute House Bill 1534 – Water well construction; not brought up for House vote
House Bill 2446 – Weed management on Fish & Wildlife land; waiting in House Capital Budget Committee
Substitute House Bill 2485 – Department of Fish & Wildlife land purchases; waiting in House Capital Budget Committee
Substitute House Bill 2509 – DNR/firefighting funds use; waiting in House General Government Appropriations
Substitute House Bill 2541 – Forest products industry; passed House, scheduled for Senate committee hearing Monday (companion measure, Senate Bill 6256, died in committee)
Substitute House Bill 2556 – Financial security, warehouses/grain dealers; passed House, heard Thursday before Senate ag committee (from my Ninth District seatmate, Rep. Susan Fagan)
Second Substitute House Bill 2591 – Water right permits; not brought for House vote
House Bill 2659 – Timber purchase reporting; passed House, Senate committee hearing scheduled Wednesday
Dairy stock watering bill fails to advance
What began as Senate Bill 6803 underwent two revisions in the span of one week to become Second Substitute Senate Bill 6803, with a focus solely on dairies. But it did not reach the full Senate for a vote before the Feb. 16 cutoff.
The failure of 2SSB 6803 means the dairy industry will, along with the rest of the ag industry, have to take its chances with the stock watering lawsuit and the political winds. That’s my preference, as passing the bill would have let the regulators get their noses under the edge of the tent ahead of the lawsuit’s outcome. I think it’s best when agricultural interests are able to stand united.
Update on efforts to reform government and control costs
The fate of our efforts to reform the “workers’ compensation” system – the state-run monopoly that provides industrial insurance and is full of problems – offers a perfect example of what we are up against.
The chairman of the House committee that oversees labor issues flatly said there wouldn’t be time this session to consider changes; his counterpart in the Senate said the same, then proposed a bill to study the issue – as though we don’t know already what the concerns are. Her committee moved the bill forward, but it did not come up for a full Senate before the cutoff.
It turns out that the workers’ comp system is no longer considered solely between employers and workers, with the state acting as insurance agent: the trial lawyers in our state, for whom workers’ comp claims are a gold mine, also have a seat at the negotiating table. I was surprised that fact is being admitted so openly. But it helps explain the lack of action toward reforms.
You may have heard this other bit of news already, as it’s been well-reported in our state’s media: the majority party has just about tossed out the two-thirds legislative vote standard for raising taxes. The Senate majority party passed a bill, the House made one change, and it will be back before us Monday for final agreement.
We knew this move was coming, but that doesn’t make it any easier to stomach. Officially, the two-thirds rule (created by the voters in 2007) will be suspended until after the 2011 legislative session. That will let the majority party use its majority to adopt tax increases and enable a higher level of government spending than is appropriate in light of the state’s revenue situation.
We received a new revenue forecast a week ago that indicates Washington’s economic downturn may be flattening out. That’s encouraging, and if anything it’s a reason to avoid tax increases and the undercutting effect they would have.
George Washington and agriculture
This comes not from “George, Washington” but our nation’s first President, who thought of himself first and foremost as a farmer. It’s in recognition of his birthday on Feb. 22, which was observed Monday of this week as part of the President’s Day holiday:
“It will not be doubted, that with reference either to individual, or National Welfare, Agriculture is of primary importance. In proportion as Nations advance in population, and other circumstances of maturity, this truth becomes more apparent; and renders the cultivation of the Soil more and more, an object of public patronage.”
–George Washington, Eighth Annual Message to Congress, 1796
On the calendar:
Thursday, Feb. 25 – Washington Farm Bureau Labor Conference, Wenatchee Convention Center (for more information click here or phone 360-357-9975 or 1-800-331-3276)
Thursday, Feb. 25 – Beef Day on the Hill, Washington Cattlemen’s Association north steps of the Legislative Building, Olympia; (information: 509/925-9871 or [email protected])
Share Ag Alert! and suggest items for the calendar
If you have a meeting or other newsworthy event to submit for the calendar, or know someone who may want to receive Ag Alert! on a regular basis, please have them contact my legislative assistant Krista Winters at [email protected] or phone my Olympia office (1-800-562-6000 or 360-786-7620). To receive Ag Alert! please provide an e-mail address and residential address. Thanks.