State lawmakers behind a bipartisan proposal to reduce the business and occupation (B&O) tax rate for manufacturers say they want to help rural Washington catch up with the rest of the state and boost the state’s struggling manufacturing sector. But some legislators say the legislation’s definition doesn’t match what one would normally consider “rural.”
“Being on one side or the other of the White River, or the crest of the Cascades does not define rural,” Rep. Drew Stokesbary (R-31) remarked. “I would challenge any of you to come back to my district and tell me that I do not represent rural areas.”
His district includes Carbonado, a town of 700 people with a dilapidated, century-old sewage system made of clay. “That is not an urban problem, that is a rural problem,” he said.
House Minority Floor Leader J.T. Wilcox (R-2) made a similar comment. “My whole district is left behind in this bill. I live on a 1500-acre farm down a half mile gravel road, and imagine my surprise to find it’s not rural. I represent nothing but small towns.”
HB 2992 gradually lowers the B&O manufacturing tax rate from 0.484 to 0.2904 percent by 2024. If by then the aggregate unemployment rate in rural counties is no greater than 1.5 percent higher than the rate in urban counties, then the Joint Legislative Audit and Review Committee is directed to recommend extending the expiration date.
HB 2992’s prime sponsor is Assistant Majority Whip Mike Chapman (D-24), who introduced the bill Feb. 16 with two Republican cosponsors. The bill is a variation of a statewide proposal included last year in the 2017-19 operating budget and eventually vetoed by Governor Jay Inslee. Chapman’s bill has drawn support from other House Democrats who favor its restricted application and finite timeline.
“It’s no news to anyone here that I represent one of the most urban districts in the state of Washington that is enjoying a tremendous amount of prosperity now,” Finance Vice Chair Noel Frame (D-36) told colleagues at the Feb. 19 meeting. “We’d love to see the rest of Washington to do as well as the greater Seattle King County area is doing. It’s a better bill than last year because it is targeted, it is aimed at rural Washington, it is transparent.
“Frankly there’s a lot of folks in rural Washington that don’t have access to jobs right now,” she added. “The dignity of work is a really important part I think of anybody’s life experience and being a fully participating member of our civic society.”
Also in favor of the bill was Rep. Gerry Pollet (D-46), who said “by targeting this and making sure that it is actually performing to create jobs, I think this is a sensible investment in the state of Washington.”
But panel members like Stokesbary argued the bill excludes parts of counties that are rural but under the definition are swept under too broad a brush. The bill language defines rural as a county that has either a population density of less than 100 persons per square mile, or is smaller than 225 square miles and has a population no greater than 100,000.
Although the city of Enumclaw is classified urban and in an urban county (King), Stokesbary said that its three largest employers are city itself, the Enumclaw School District and St. Elizabeth Hospital. “That is what life looks like in rural areas.”
Rep. Ed Orcutt (R-20) unsuccessfully proposed an amendment to add more of these areas, saying it would help reduce the strain on urban infrastructure. “We’re trying to do some work…in south Thurston county…where we’re trying to do an agricultural business park…trying to get more and more of the processing done in the rural areas. There are other areas in Pierce and King and Snohomish that would benefit from this.”
He added: “Quite frankly the cities would actually benefit a little bit from this too, because if we can get some manufacturing facilities out in those rural area, maybe we’ll reduce the number of people who have to commute in the city and we can take some of the stress off of our roads.”
One Republican who voted in favor of it was Rep. Cary Condotta (R-12) though he remarked, “I just wish it was a winner for everybody in the state of Washington.”
Another bill that would apply the tax reduction statewide is HB 2393, introduced by Rep. Brandon Vick (R-18). In the Senate, similar legislation was introduced by Sen. Michael Baumgartner (R-6) via SB 6542. Neither has received public hearings.
HB 2992 has yet to be referred to its next committee.