Press Release

Thursday, December 13

AWB statement on governor’s proposed 2019-21 state budget

Focus should be on maintaining economic growth, expanding it to rural communities and preparing for a rainy day, not raising billions in new taxes

OLYMPIA — The Association of Washington Business, Washington’s oldest and largest business association representing small, medium and large employers, issued the following statement Thursday from President Kris Johnson regarding Gov. Jay Inslee’s proposed 2019-21 state budget:

“Washington’s tax revenues have grown substantially since the end of the recession, going from $31.3 billion in 2011-13 to more than $50 billion today. That’s an incredible growth spurt, and yet we heard today from the governor that it’s not enough. He’s proposing $3.7 billion in new and additional taxes, bringing the two-year state budget to $54.4 billion.

“We’re concerned that raising $3.7 billion in new and additional taxes, on top of the growth that’s already occurring, risks derailing Washington’s strong economy. Our focus should be on maintaining Washington’s robust economy, expanding it into the rural parts of the state that have been left out, creating opportunity for all Washingtonians, and making smart choices that prepare us for the next inevitable downturn, not looking for new ways to tax employers that are helping to fuel our growth.

“Washington employers understand the pressures on the state budget and the competing demands for funding for areas including education, mental health and transportation. We appreciate the governor’s highlighting of issues such as broadband internet access and affordable housing, but we’re concerned about the unintended consequences these major tax increases could bring about for Washington’s employers and families.

  • Capital gains tax: The governor’s proposed 9 percent capital gains tax proposal is the largest of eight such proposals we’ve seen since 2013. If adopted, it would not only remove one of Washington’s competitive advantages as a state without a capital gains tax, but it would give Washington the fourth-highest capital gains tax in the country. No other state taxes capital gains separately from individual income. Like the previous proposals, it purports to target only the wealthy, yet it would hit hard-working small-business owners when they go to sell their business. For many small-business owners, the equity built in their business over decades of work represents their retirement plan. We also know from experience in other states that it’s a volatile source of revenue that can’t be relied on during downturns.

  • Dams: Helping the endangered southern resident orca population recover is priority, but any talk of removing dams on the Snake River should be a concern. The Columbia-Snake River System is a source of clean, renewable hydropower and one of the key competitive advantages for our region. Removing dams on the Snake River would have only a marginal impact on the salmon available to orcas, but it would take away a reliable source of clean energy, put more trucks on the highways, and threaten Washington’s economy, particularly east of the Cascades. In addition, the federal government is currently working with the state on an environmental impact statement, making the governor’s proposal to spend $750,000 on another evaluation unnecessary.

  • B&O tax: The governor’s proposal to raise the B&O tax on service businesses by 67 percent is significantly larger than previous proposals from House lawmakers and it would hurt employers throughout the state. It would hit rural areas especially hard as service industries are often among the few bright spots in a small town’s economy.

“In addition to proposing $3.7 billion in new taxes, the governor’s budget would reduce the amount of state reserves from $3 billion to $2.8 billion, leaving the state less prepared for a slowdown in the economy. This is the time to build reserves, not draw them down.

“We understand the governor’s budget proposal is a starting point and that other ideas will emerge during the legislative session that begins next month. We look forward to working with the governor and lawmakers to find ways to meet the needs of the state while continuing to grow the economy and create jobs and opportunity in every corner of Washington.”

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