Lawmakers stress tax relief, infrastructure to boost rural Washington
AWB’s two-day policy conference highlighted many challenges, and potential answers, to creating a more even economic recovery in all 39 Washington counties. Experts addressed housing, the workforce, new federal incentives and more on Friday. But the day ended on familiar ground with remarks by state Sen. John Braun, R-Centralia.
“What we need to do is what we did two years ago, which is lower the manufacturing rate for everyone,” Braun said during a panel discussion among state lawmakers. That includes lowering the business and occupation tax rate for rural and urban manufacturers. He referred to a bill that would have accomplished that in the 2017 Legislature, but was vetoed by the governor.
“We need to go back and say that was a good move for the state of Washington,” Braun said. “It helps our rural communities, it helps our urban communities, it helps Washington, and that’s what we ought to do.”
State Rep. Mike Chapman, D-Port Angeles, advocated for an extension of the pulp and paper tax credit. He said there’s a mill in Port Angeles looking at a $1 billion investment that would create 200 family-wage jobs.
“That incentive needs to be extended,” Chapman said. He also advocated for a tax credit for manufacturers.
“If you look around at what’s happened around our state, as our economy’s improved virtually every sector has come back to pre-recession levels except manufacturing,” he said.
State Sen. Marko Liias, D-Lynwood, emphasized partnerships between the private sector and the government to create workable solutions. He used the Puget Sound’s housing shortage and affordability problems as one example. The region is about 200,000 housing units short, he said. The government can’t build that many units, but the private sector can.
“I think structuring incentives, whether it’s in clean energy, clean jobs, or whether it’s in broadband or whether it’s in housing, we can partner with the private sector to drive investment in ways that benefit both urban and rural communities,” Liias said.
House Minority Leader J.T. Wilcox, R-Yelm, noted some people buy homes that are still affordable in bedroom communities, but this requires them to live a life where they’re on the road three or four hours a day. To address quality of life and economic success, he said, there’s a need to equip small towns with the infrastructure tools and educated workforce so people can start living close to where their jobs are.
“We have been nibbling around the edges of this problem for as long as I ‘ve been in the Legislature,” he said. He also believes there is a sincere bipartisan desire to fix it.
“We need to drive a lot of infrastructure investment out to these places,” Wilcox said. “We need to provide big incentives and we need to provide big financing opportunities, not tiny little marginal measures. That’s the only way we’re going to accomplish anything.”
The second day of AWB’s summit began with updates on how two key state agencies are working to improve economic opportunities in rural communities.
State Commissioner of Public Lands Hilary Franz highlighted her agency’s Rural Communities Partnership Initiative, launched in 2017. This is an effort to create partnerships between the state Department of Natural Resources, which oversees significant land and timber resources, and rural communities on job-creation projects. To date, her agency has received 120 proposals from communities interested in partnerships with the state. Land is one of the key equations to economic development, no matter what industry, she added.
“We believe given the breadth of land, and the diversity for its utility, that we are a significant component of rural economic development, especially because a majority of that land is in rural areas,” Franz said.
Examples of current projects include reopening a hardwood mill in Pacific County, building a derelict vessel deconstruction facility at the Port of Ilwaco, and a partnership with Kalama-area schools to help kids learn forest management.
The state Department of Commerce has been focused on helping rural Washington too. Director Brian Bonlender said the agency’s mission has changed in recent years, from growing jobs to strengthening communities.
“That has helped us focus on economic development on those communities that most need it, which of course are rural communities and underserved communities,” he said.
Bonlender also highlighted the success of his agency’s Economic Gardening program, which connects successful companies with a network of experts to help them grow faster. The program has mostly helped rural companies, he added. To date, the effort has helped 26 companies facilitate $14 million in new sales, create 47 jobs and retain 358 jobs. He also encouraged interested employers to contact him or his staff if they’re interested.
New opportunities at the federal level were the next topic of discussion. Sarah Lee from the Department of Commerce moderated a panel on Opportunity Zones, which were created in the federal Tax Cuts and Jobs Act of 2017.
The concept is still relatively new and coming together, since the law was passed in Dec. 2017. Essentially, Opportunity Zones are designed to spur economic development in distressed communities by providing tax benefits to investors, the Internal Revenue Service reports. For example, an investor could sell real estate or stocks, and reinvest the money in an Opportunity Zone – and defer paying tax on capital gains, at least for awhile.
Governors around the country have designated some low-income census tracts as Opportunity Zones. There are 139 in Washington, including many in rural areas and a few in the Longview area.
Cowlitz County Commissioner and panelist Dennis Weber said several economic development projects there have run into permitting problems in recent years. However, he’s hopeful the area will see new investment as a result of the new Opportunity Zone designation.
“We’re absolutely thrilled that the Opportunity Zones will give investors an even greater incentive to invest in Cowlitz County,” Weber said. “…For all of those with capital gains waiting to find a home -- Bring them on. We’re ready for you.”
Ellensburg Mayor Bruce Tabb noted that economic development is often focused on creating new businesses, and urged the audience to learn more about Opportunity Zones.
“This is a mechanism and a tool potentially for the creation of affordable housing,” Tabb said. “…I don’t believe there’s a community in this state that’s not at this point grappling with affordable housing.”
Friday included an entire panel devoted to housing challenges in rural communities. The takeaway from this panel was that it’s more than just a Seattle problem.
Steve Maher of the planning group Our Valley, Our Future said a recent survey in the Wenatchee community showed that 45 percent of respondents thought about moving because of housing.
“That’s a huge red flag for any community,” he said.
The community needs about 2,000 more apartments in an area where most builders are focused on building 10 or 20 three-or four-bedroom homes each year. The result is some nurses and teachers end up living in hotels for months, prices are up, and rental vacancies are at 1 or 2 percent.
However, one positive development includes the creation of a new liaison to help developers and builders navigate the permitting process with local governments in the area, he said.
The workforce panel highlighted an overlooked partner to improving the quality of life and access to new opportunities in rural communities.
There are 349 libraries in Washington, Elizabeth Iaukea of the Washington State Library said.
“That makes us very local, and in many cases, very rural,” she said.
Washington’s libraries provided broad support during to many in the last recession, she said, serving as a place where people could use computers, printers, create resumes and fill out job applications online.
“Most of all, they used our expert staff to help with those skills,” Iaukea said.
In recent years the state has recognized the power of libraries to connect people with workforce skills such as certifications in Microsoft Office, which is the most requested job skill across all occupations and employers, she added.
Overall, Washington libraries are the places that host lifelong learners.
“That’s the business that libraries have been in from the get-go,” Iaukea said.
The federal affairs panel touched on transportation, the lack of a current federal Farm Bill, and the impact of tariffs on Washington businesses.
The aluminum tariffs have an impact on Washington wine producers that use aluminum in the capsules that are part of the packaging, for example. Steve Sudol of Ste. Michelle Wine Estates said his company produces about 8 to 10 million cases of wine a year, which could be as many as 120 million bottles of wine – or 120 million capsules.
“Any change to pricing has a huge effect on our bottom line,” he said.
Meanwhile, other Washington farmers are feeling the stress of tariffs on apples and cherries, for example. About half of the company’s cherry buyers stopped buying period because of concerns about political events, Jeff Webb of Domex Superfresh Growers said. Uncertainty was a theme throughout his remarks.
“The biggest problem is the hesitancy of your buyer,” Webb said. “They don’t know what’s going to happen so don’t buy, they just kind of wait it out.”
AWB’s Gary Chandler closed the legislative panel — and the event — with a passionate plea to support rural communities. He said he first ran for the Grant County Commission to work on economic development, so his kids and grandkids wouldn’t leave home. He said we’ve got to quit bleeding the brain trust of talent from the rural areas, and sending them to the central Puget Sound.
“We’ve got to give them an opportunity to be able to stay home, go off to college – go to community college first – come back, and have a job in the rural areas,” he said.
He ended his remarks by thanking the employers and policymakers who came.
“Let’s work together, and let’s bring the rural economy back,” he said.