Our primary goal during the 2012 legislative sessions was once again to prevent the passage of bills that would have increased the tax or regulatory burden on the agricultural industry. Because of the makeup of the Legislature, the past few years have been a defensive battle rather than an opportunity to implement new and improved ideas to help
Before the session even began, Gov. Chris Gregoire proposed a half-cent increase in the sales tax to help balance the state budget. The budget writers for the majority Democrats in the House and Senate developed budgets that used gimmicks rather than real reforms to reduce spending. Instead, they proposed a number of bills to increase revenue by eliminating existing B&O tax exemptions for business. These bills included the B&O tax exemptions created explicitly by knowledgeable legislators to help keep Washington agriculture competitive.
We were able to fend off these tax increase attempts, and the operating budget passed with no tax increases on ag. Sadly a compromise budget passed without implementation of broad, sweeping spending reforms and other cost-cutting measures that are sorely needed. Some small improvements were made. A bill requiring budget writers to consider the longterm costs associated with their spending decisions passed. SB 6636 will require future state budgets to be balanced over a four-year period, rather than just the current two years. This new requirement will eliminate the use of accounting gimmicks that push costs into the next biennium.
The Legislature also passed SB 6378 that will save the state $1.3 billion over the next 25 years by reducing early retirement benefits for state employees hired after April 2013. For instance, an existing 30-year state employee can now retire at age 55 and receive an 80 percent monthly benefit. Under SB 6378 this will be reduced to a 50 percent monthly benefit.
In the final hours of action during the first and second special sessions, House and Senate leadership introduced and passed a new bill containing many pro-business, pro-ag items we had been lobbying for since January. However, SB 6635 was purposely structured to pit one industry against another. The bill provided real tax benefits to agriculture by maintaining the existing B&O tax exemption for dairy, fruit and vegetable, and shellfish processors (an annual $7 million savings) and by extending the leasehold excise tax exemption at port facilities (an annual $5 million savings). The bill also eliminated the existing B&O tax deduction on interest from residential first mortgages received by financial institutions operating in more than 10 states. This provision targeted large banks with a $15 million per year tax. This tactic took a destructive approach to politics because it was designed solely for the purpose of dividing the state’s business community. These kinds of political games are damaging and do not benefit the people of the state.
The bottom line is that political and philosophical change is desperately needed in Olympia – both within the Legislature and with the governor’s office. We are unable to focus our energy on the creation of new laws and policies that will make it easier for businesses to flourish when all our time is dedicated to fighting off bad or destructive laws and regulations. If Washington is ever going to turn the corner, a dramatic change in Olympia must happen. The elections this year mark the best opportunity for change we have seen in nearly three decades.
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