Panel hears arguments on tax-break reports

Measure would require tally of exemptions' value
 

BY BRAD SHANNON
THE OLYMPIAN February 14, 2007

A legislative committee heard arguments Tuesday for why the governor's budget proposals should have to spell out costs of tax breaks built into the spending plans.

Dubbed a tax expenditures report, the tax-break tallies would bring to light the real value of tax breaks that often are hidden in budgets, advocates said during a hearing before the House Finance Committee.

Critics, including Republicans, raised questions whether the bill, which costs $130,000 to implement, duplicates work by other committees reviewing tax breaks.

"The purpose of this bill is to illuminate for policymakers the fiscal effect of our decisions," Rep. Sharon Tomiko Santos, the Seattle Democrat sponsoring House Bill 1827, told committee members. She said the value is in seeing the cumulative effect of multiple tax-break decisions.

"This is really about real-time budgeting, the ability to understand fully the amount each tax expenditure really is costing," added Barbara Flye, executive director for the Washington Tax Fairness Coalition, which endorses the concept. "It really is about making sound fiscal policy."

Barbara Bush of the League of Women Voters of Washington also noted that the state already has more than 500 tax breaks on the books, and more than 250 bills have been introduced in the 2007 Legislature that could lower taxes or create further exemptions.

Republicans on the committee led by Rep. Ed Orcutt of Kalama said HB 1827 might duplicate work already being done by the Washington state Tax Preferences Commission.

That relatively new commission has begun reviewing the state's tax exemptions on a rotating basis to determine whether tax breaks are producing jobs or other benefits its sponsors had claimed for them.

Amber Carter of the Association of Washington Business said her organization opposes this bill, just as it opposed past versions of the bill.

The bill creates "a one-sided report on the impacts of the budget," Carter said. "The legislation as drafted does not fully take into account the benefits of tax exemptions. … It doesn't look at the benefit of increasing jobs."

Nonetheless, Carter said her group could support the bill if it were limited "to just a two-year report" that might complement other studies and evaluations of tax breaks.

Rep. Steve Conway, D-Tacoma, pointed out that Oregon has a report like what the bill calls for.

And others cited a report by the left-leaning Economic Opportunity Institute in Seattle that showed 61 new or expanded tax breaks approved by the Washington Legislature in 2004, 2005 and 2006, which lowered state tax revenues by $305.4 million during the 2005-07 budget cycle and local governments another and $62.1 million. Those figures grow to $474 million in state and $89 million local-government revenue reductions in the 2007-09 cycle.

Asked when he might bring the bill up for a vote, Rep. Ross Hunter, the Medina Democrat who chairs the Finance Committee, said he is not sure how he will handle it. He said he first wants to make sure the measure does not duplicate work already being done by the Washington state Tax Preferences Commission.

HB 1827 has 16 sponsors, led by Santos and three Republicans, including Roy Rep. Tom Campbell. Olympia Democratic Reps. Sam Hunt and Brendan Williams also signed onto the measure.