President's Column

Monday, August 10

Welcome to the never-ending legislative session

The 2015 Washington legislative session is one for the history books — finally. The longest session in Washington history felt at times like the session that would never end, and in some ways it is.
That’s because many of the big issues lawmakers debated this year will be right back on the table again next year, either in the Legislature or at the ballot box.

We know that issues like education funding, tax structure, climate policy and minimum wage, to name a few, aren’t going away.

Even so, the 2015 session led to some positive outcomes.

Lawmakers increased K-12 spending by $1.3 billion, they actually reduced college tuition and they did it without a major tax increase. In addition, proposals to enact costly cap-and-trade energy taxes and a capital gains tax failed to gain traction.

But the challenges are only going to increase in 2016, starting with education funding and taxes.
Despite the big increases in education funding over the last few years, lawmakers still aren’t finished addressing the McCleary court decision. That means they will face continued pressure to find more money for schools. On top of that, they will need to address Initiative 1351, the unfunded class-size measure narrowly approved by voters.

This will no doubt lead to more talk about things like levy reform, enacting a capital gains tax and even overhauling Washington’s tax system — a topic that seems to come up every few years but never seems to result in an actual overhaul.

For employers, any discussion about Washington’s tax system must begin and end with the issue of competitiveness. How does the structure of our current system affect the competitiveness of Washington employers?

We know that Washington fares well in some rankings of state business climates because we lack a state income tax. We also know that employers currently shoulder more of the tax burden than employers in most other states — about 54 percent of all state and local taxes are paid by businesses.
Would a restructured tax system raise or lower that number? Would it make it more or less difficult for employers to grow here?

There are no easy answers to these questions, no obvious solutions that will appeal to everyone. If it was easy, we would have done it by now.

But there are some things that we know in general about the business climate, the biggest one being that costs matter. Employers weigh all sorts of factors when they make decisions about where to locate or expand, including access to a skilled workforce, education and quality of life.

But they can’t ignore cost.

As the debates that dominated 2015 spill into 2016, AWB will be there to remind policy makers of this simple truth.

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