State tax, workforce housing solutions and more explored at Policy Summit
CLE ELUM – A leading national tax expert told Washington employers on Wednesday that the state’s business and occupation tax is inefficient, picks winners and losers and state government relies too much on it.
And the so-called B & O tax raises a lot more money for the state than corporate income taxes do for other states, Jared Walczak of the Tax Foundation said during an afternoon panel discussion at AWB’s 2018 Policy Summit.
The panel, “Taxes – How Does Washington Compare to Other States?” was one of many lively discussions Wednesday at AWB’s annual public policy gathering.
Washington is among a handful of states across the country that does not have a state income tax or state corporate income tax, which many economic development officials see as a competitive advantage. Some critics are pushing for changes to the state tax system. The panel was asked by one attendee for examples of states that are getting it right.
Indiana, Utah and North Carolina are good examples, Walczak said.
“They have relatively low rates because they have very broad bases,” he said. “They don’t have a lot of picking winners and losers within the tax code…I would be looking at how states made their tax codes more neutral.”
However, taxes are just one part of a much larger picture businesses consider when relocating or expanding in Washington, said Allison Clark of the Washington state Department of Commerce.
The state’s advantages are many, she said: A great workforce, outstanding natural resources, clean and inexpensive power, and state incentives for companies that can be applied strategically.
“I would certainly say if we were to expand any number of those types of incentives that are either sector-based or location-based, that could be quite strategic in growing either sectors or industries in certain areas of the state,” she said.
Paid Sick Leave and Paid Family and Medical LeaveEmployers are working to understand the requirements of two new leave programs that impact most businesses in Washington, including paid sick leave and paid family and medical leave.
The state will allow businesses to seek a waiver from both programs, as long as they meet or exceed the requirements of the new laws. Schweitzer Engineering Laboratories in Pullman will be applying for waivers from both programs, and offering the same benefits to all employees across the country, SEL’s Kelly Fukai said.
“We’re offering a more robust benefit package…and we’re looking forward to communicating that to our employees,” she said in a panel moderate by AWB’s Bob Battles.
Meanwhile, one Spokane employer shared a response that likely applies to many businesses across the state: “For us, we’re still in the figuring it out, researching stage,” Laura Lawton of Lawton Printing said.
But state officials and AWB’s government relations team are ready to help, and they encouraged employers to reach out and connect.
“What we need most is questions,” policy analyst Jason Barrett of the state Employment Security Department said.
Chances are, if you have a question, someone else might have it as well, said Allison Drake of the state Labor & Industries Department, which manages the paid sick leave program.
“We would rather have a conversation with employers on the front end than as an enforcement conversation on the back end,” Drake said.
The sick leave program is in effect now. Premiums for the paid family leave program will be collected on Jan. 1, 2019, and employees can take the leave on Jan. 1, 2020.
To learn more, contact AWB’s Bob Battles at 360.943.1600 or BobB@awb.org.
Economic UpdateFinancial advisers from D.A. Davidson Companies offered an update on the state and national economy.
The big picture at the national level includes increased corporate earnings from federal tax reform; higher small business optimism from deregulation; and a possible stimulus waiting in the wings from a proposed $1 trillion infrastructure package.
“We don’t know if this is going to come to pass, but certainly that would be an additional boost to consider,” Chief Investment Officers Ed Crotty said of the possible infrastructure spending.
There’s good news in Washington, too. The state had a gross domestic product of $507 billion in 2017, and the 4.4 percent growth rate led the nation, research analyst Brent Williams said. Market value for major Washington companies like Microsoft has increased, and Seattle continues to lead the U.S. in the number of tower cranes working on new buildings, he added.
But tariffs and trade policy does present risks to the economy, and more so for Washington, which is more exposed as a coastal state. Exports made up more than 15 percent of the state’s gross domestic product in 2017, Williams said.
Mayor PanelThe mayors of Wenatchee, Spokane and Bremerton updated attendees on issues facing their community, including a lack of affordable housing for the workforce, including teachers and nurses.
“If you really want to retain your best and brightest, and you want to recruit these companies to our town, housing, housing and housing,” Wenatchee Mayor Frank Kuntz said. He said he’s recruiting housing developers in an effort to solve the problem.
Bremerton Mayor Greg Wheeler said his town has 22,000 stable jobs with the Navy, but officials are working to create a second strong employer to create a more sustainable economy.
Housing prices have risen in Bremerton also. The city is connected to downtown Seattle with a fast 30-minute ferry now.
“I do want to say, I’m not interested in being a bedroom community of Seattle,” Wheeler said.
Meanwhile, Spokane Mayor David Condon just launched a new marketing campaign that targets young professionals in the Interstate 5 corridor. Spokane has more affordable housing, a 20-minute commute, and great access to the outdoors, among other amenities. CNBC recently ranked Spokane No. 9 in boomtowns across the U.S.
“We have been focusing in three key areas: Being smarter, healthier and safer. And as we look at that…it really is exciting to see some of that come to fruition,” Condon said.
AWB’s Policy Summit wraps up Thursday.