Washington Business Fall 2018 | Legislative Review & Vote Record | Page 7

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A Mixed Record
Gary Chandler
AWB Vice President, Government Affairs
The 2018 legislative session wasn’t bad for employers, but it could’ve been a lot better if lawmakers had found a way
to deliver on tax relief for manufacturers and support for broadband development in rural Washington.
It wasn’t a bad session. Lawmakers passed a supplemental State tax revenue has grown tremendously over the last 10
state budget that moved up full funding of teacher salaries, years, making the need for a new tax questionable at best.
satisfying the requirements of the McCleary court decision. Since 2003, state tax revenue has increased by $18 billion
And they did it on time and without raising taxes. thanks to a growing economy, rising from $25.6 billion to
They also passed a capital budget and a fix for the $43.7 billion.
so-called Hirst state Supreme Court decision that was There are reasons to believe a capital gains tax could
hampering development in rural Washington, resolving hurt Washington’s competitiveness, too. Washington is
two big pieces of unfinished work from the record-setting an expensive place to do business, but the lack of an
2017 legislative session. income tax is one of the few advantages we can offer
But it wasn’t a great session, either. Lawmakers missed compared to other states. Giving up that advantage
an opportunity to lower the business and occupation tax would not help retain existing business or recruit new
rate for all manufacturers, making this the second straight employers to the state.
year where they came close to giving manufacturers Backers of a capital gains tax claimed it would only
needed support, but ultimately failed to do so. target the wealthy, but we argued that it would also hit
And despite talking about the need to support rural small-business owners who are depending on the sale of
communities, lawmakers failed to pass rural broadband their business to one day help fund their retirement. These
legislation that would help students and entrepreneurs are entrepreneurs who have worked their whole career to
succeed in every corner of Washington. build value in their business.
All of this was just a prelude to the 2019 legislative Another piece of good news: Lawmakers kept in place
session, when lawmakers will be tasked with drafting a the four-year balanced budget requirement. This is one
new two-year budget. In other words, this was the easy of the best things to come out of the closely divided
year. They were tweaking the budget rather than writing government in the last several years, but we were hearing
one from scratch, and they were doing it with the benefit lawmakers might back away from it this year. The
of higher-than-expected tax revenue. requirement, passed in 2012, forces legislators to take a
As long as the Legislature remains closely divided longer view of the budget.
between Democrats and Republicans, the parties are forced That’s a good thing, and it’s one reason why the 2018
to reach consensus, which is usually a good thing when it session adjourned on time. That won’t be easy to duplicate
comes to taxes and spending. next year.
We saw that again this year as lawmakers adjourned When lawmakers reconvene in January, they will be
without raising taxes. Democrats, who gained a slim facing a long to-do list that includes important pieces
majority in the Senate this year giving them control of the of unfinished business from 2018, including supporting
House, Senate and Governor’s Office, talked about several manufacturers and boosting rural job development. And
new taxes, including a capital gains tax. we know they will face continued pressure to raise taxes,
The employer community pushed back against the idea, jeopardizing Washington’s competitiveness.
and thankfully it wasn’t part of the final budget agreement. Expect a long session in 2019.
special edition 2018
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