Archive for tax

Legislative Year in Review

By | March 24, 2014 | 0 Comments

On this special one-hour edition of “Legislative Year in Review,” we recap the highlights from the 2014 session — from opening day to Sine Die. The show includes debate over issues such as the Dream Act, minimum wage, gun control, abortion insurance bill, death penalty, mental health, teacher evaluations, taxing e-cigarettes and the supplemental budget. Plus, a quick wrap-up of several of the bills that passed this year. Watch the show below:

On ‘Legislative Review:’ Cough syrup abuse, faith healing and a fuel tax break

By | February 7, 2014 | 0 Comments

On Thursday’s edition of “Legislative Review,” we have details about a bill that would make it harder for anyone under the age of 18 to buy cough syrup. Experts say kids are drinking of certain types of cough syrup to get high. Store clerks would be required to check IDs for anyone buying the cold medicine.

We also have highlights from a discussion about a bill that deals with faith healing. It was brought in response to the case of Zachery Swezey, who was 17 when he died of a ruptured appendix. His parents prayed for him to heal instead of taking him to an emergency room.

Plus, details about a bill that would close a fuel tax break to pay for schools. Watch the show below:

 

Categories: Criminal Justice, tax

Eyman initiative demands constitutional amendment vote on tax hikes

By | January 6, 2014 | 0 Comments

Initiative activist Tim Eyman proposed a new voter initiative Monday that would cut $1 billion a year from the state budget unless the Legislature sends voters a constitutional amendment that would require a two-thirds vote to raise taxes.

The Washington Supreme Court ruled last year that the two-thirds “supermajority” requirement violates the state constitution because a bill requires a simple majority vote of the Legislature to pass. The high court said a constitutional amendment would be necessary to implement the two-thirds requirement.

If voters approve Eyman’s initiative, the proposal would cut the state’s sales tax from 6.5 percent to 5.5 percent, or about $1 billion dollars a year, unless the Legislature puts a two-thirds constitutional amendment on the ballot by April 2015. If the constitutional amendment reaches voters by April 2015, the sales tax reduction never will go into effect.

“Our initiative gives the Legislature an impossible-to-ignore financial incentive to let us vote. It’s elegant, legal, and easy to explain,” Eyman said in a press release.

Eyman’s initiative was among six filed at the Secretary of State’s office Monday. Other initiatives filed Monday include:

  • Two other Eyman-sponsored  initiatives, including one that would restore $30 car tabs and eliminate cameras used for issuing tickets for speeding and red-light violations, and another that would outlaw such cameras unless approved by voters;
  • Two medical cannabis initiatives that would create legal protections for patients with prescriptions for medical marijuana;
  • An initiative that would show state support for a U.S. Constitutional amendment to prevent corporations from being considered citizens.

The full text of the initiatives filed Monday are available on the Secretary of State’s website.

Initiative sponsors have until July 3 to submit 246,372 valid signatures from registered Washington voters before they would appear statewide in the November general election.

House committee approves Boeing tax incentives, 10-3

By | November 8, 2013 | 0 Comments

The House Finance Committee voted 10-3 Friday to approve a measure that will give Boeing billions in tax breaks through 2040.

The bill is part of a deal to guarantee that Boeing will build its new 777X airplane and wings in Washington state.

Republican Rep. Cary Condotta voted against the bill, saying that the Legislature was “circumventing the process” by passing the measure so quickly. Special session started on Thursday and lawmakers expect a floor vote on the bill by Saturday.

Condotta said there’s a larger problem with the state’s business climate that isn’t being addressed.

Boeing can “snap its fingers” and get legislation approved in 24 hours, Condotta said, but there’s been “little progress for small businesses” over the last decade.

Rep. Brandon Vick, R-Vancouver, also voted against the bill, saying his caucus felt “blindsided” by the special session and legislation. (more…)

Categories: tax, TVW, WA House
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On TVW this week: Discussion about Washington’s tax structure, mental health and prison populations

By | October 7, 2013 | 0 Comments

Here’s a look at what will be airing on TVW this week. We’ll update this post when new events are added.

Monday at 1:30 p.m.: TVW will be live on television and the web with the House Finance Committee. They’re holding a work session to compare Washington’s tax structure to other states. Washington state relies heavily on sales and excise taxes, and it does not have an income tax. Watch the webcast at this link.

Tuesday at 9 a.m.: TVW will air the oral arguments for three Supreme Court cases at 9 a.m., 10 a.m. and 1:30 p.m.

Tuesday at 1:30 p.m.: TVW will live webcast the Senate Law and Justice Committee, which is scheduled to discuss the “medical necessity defense” for people who use medical marijuana. Watch the webcast here.

Wednesday at 9:30 a.m.: TVW will live webcast the Washington State Board of Health meeting from 9:30 a.m. to 2:30 p.m. Watch the live webcast here.

Wednesday at 1 p.m.: TVW willl live webcast a public hearing on a proposed coal export terminal at the former Reynolds Aluminum smelter near Longview. Watch the live webcast here.

Wednesday at 7 & 10 p.m.: On The Impact this week, host Anita Kissee looks at the renewed push to ensure children are provided legal representation in certain family court cases. Plus, an update on wolf recovery in Washington and changes to rules that allow people to kill wolves during attacks.

Thursday at 9:30 a.m.: TVW will be live on television and the web with the House Appropriations Committee. They’re holding a work session to get an update on mental health programs. They’ll also discuss prison population statistics and “lean management” savings. Watch the webcast at this link.

Thursday at 7 & 10 p.m.: Inside Olympia host Austin Jenkins interviews state Schools Superintendent Randy Dorn and Charter School Commission Chair Steve Sundquist.

Friday at 9 p.m.: TVW’s documentary on GMO labels will air at 9 p.m. on Friday, Saturday and Sunday. “Washington’s Food Fight” examines the debate over Initiative 522, which would require labels on genetically engineered food sold in Washington state. The documentary is also available online here.

Categories: GMO, Healthcare, Marijuana, tax, TVW

Transportation tax package fails to pass House

By | June 26, 2013 | 0 Comments

A proposal to raise the state’s gas tax by 10.5 cents failed to pass the House by one vote on Wednesday.

A bill needs 50 votes to pass. The vote was at 49-41, but then a supporter — Democratic Rep. Marko Liias — changed his vote to a “no” so that he could make a motion to reconsider the bill. Only a representative from the “prevailing side” can bring up a bill for reconsideration.

The final vote was 48-42. Seven members were excused, including Democratic Rep. Dean Takko, who is said to be traveling in Asia.

“Now we know who is opposed,” Liias said after the vote. “We know who we need to talk to.”

During debate over the bill, transportation chair Rep. Judy Clibborn said the $10 billion transportation package would create more than 100,000 jobs.

“It’s a jobs package in a big way,” she said.

The package included more than $3 billion for major projects such as the Columbia River Crossing bridge, as well as $1 billion for the maintenance of bridges and highways.

“I really am disappointed,” Clibborn said after the vote.

Several Republicans spoke in opposition to the revenue package during floor debate.

Rep. Ed Orcutt, R-Kalama, said that the state would be raising gas taxes on Washington residents during peak travel season.

The proposal would have raised the state’s gas tax by 6 cents in August. The next increase would take place in the summer of 2014.

The only Republican to join with Democrats in voting in favor of the package was Rep. Hans Zeiger. Democrats who voted “no” included Representatives Brian Blake, Hans Dunshee, Kathy Haigh, Chris Hurst, Monica Stonier and Kevin Van De Wege.

Liias made a motion to reconsider the revenue package just before the House adjourned for the day. It is scheduled to return at 10 a.m. Thursday.

Gov. Jay Inslee has previously said he wants the state to adopt a transportation package before the end of session. Inslee’s spokesman David Postman said after the vote: “This is not over.”

Categories: tax, transportation

House debates amendments to transportation tax package

By | June 25, 2013 | 0 Comments

The House debated amendments Tuesday on a transportation revenue package that would raise the gas tax by 10.5 cents a gallon to pay for major projects, such as the Columbia River Crossing and State Route 167/509.

It would also provide funding for public transit, ferries, bicycle and walking paths, bridge preservation and other projects.

Many Republicans oppose light rail on the Columbia River Crossing. Rep. Paul Harris, R-Vancouver, introduced an amendment that would remove light rail from the bridge.

“Clark County is not clamoring this project,” Harris said.

Urging a no vote on the amendment, Democratic Rep. Sharon Wylie said that businesses won’t relocate to Vancouver because “they think we’re ridiculous for not connecting to light rail.”

The amendment to remove light rail failed. Another amendment that would have sent the tax package to the ballot for a vote of the people also narrowly failed, 46-45.

The House did not vote on the final bill, instead deferring it for later.

Meanwhile, there’s no announcement of a budget deal as of 5 p.m. Tuesday.

Categories: tax, transportation

House approves estate tax bill in first floor debate of 30-day special session

By | May 30, 2013 | 0 Comments

The House voted 51-40 on Thursday to make changes to the estate tax for married couples in response to a state Supreme Court ruling. The vote was the first floor action during the 30-day special session, which is more than half over.

The Legislature adopted a state estate tax in 2005. But a Supreme Court ruling last year found that married couples who used a certain type of trust before 2005 to transfer assets from one spouse to a surviving spouse did not have to pay the tax.

Supporters of the bill say the Supreme Court decision created a loophole that allows married couples to avoid paying the tax while unmarried individuals must pay it.

Officials estimate the ruling could cost the state $160 million over the next two years.

Rep. Reuven Carlyle, D-Seattle, called the bill a “simple, modest fix” that will bring “fairness and parity” to estate tax law. “Most states ask those with estates over two or three million dollars to contribute to education,” he said.

Speaking in opposition, Rep. Terry Nealey, R-Dayton, said the high court could decide the bill is unconstitutional and the state would have to pay back the estate tax, plus legal fees.

Republican Rep. Ed Orcutt also asked for a no vote, saying it’s unfair to retroactively change the rules. “There are small business owners caught up in this,” he said. “People who have assets, but little liquid capital which tripped them over the threshold and forced them to pay.”

The measure now heads to the Senate.

Categories: tax

Estate tax bill passes out of committee

By | May 29, 2013 | 0 Comments

The House Finance Committee voted 8-3 on Wednesday to pass a bill that supporters say fixes a “loophole” in Washington’s estate tax law that allows married couples to skip out on paying an estate tax.

Supporters of House Bill 2064 say it would close a loophole created by the state Supreme Court’s “Bracken Decision.” The decision allows married couples to use a certain type of trust to transfer assets without paying taxes when one spouse dies and passes the estate to the surviving spouse.

As a result of the decision, the state can no longer collect estate taxes on the trust once the surviving spouse dies.

Rep. Timm Ormsby, D-Spokane, told the committee that was not the intent of the estate tax law when it was originally passed by the Legislature. He said that money was earmarked for education.

“There was agreement that we were going to use money from high-value estates to pay for the education of kids,” he said.

Ormsby said it’s also unfair. “Those in a marital trust are given an advantage over those who are single,” he said.

(more…)

Categories: tax

House committee set to hear estate tax bill

By | May 28, 2013 | 0 Comments

The House Finance Committee is scheduled to consider a bill on Wednesday that would make changes to the state’s estate tax for married couples.

House Bill 2064 aims to get around what’s commonly called the Bracken Decision — a state Supreme Court ruling that allows a spouse to transfer assets to a surviving spouse without paying taxes if they’re using a certain type of trust, known as a Qualified Terminable Interest Property trust.

As a result of the court decision, the state can no longer collect estate taxes on the trust when the surviving spouse dies. Lawmakers estimate that the decision could cost the state $160 million dollars over the next two years. According to the The Seattle Times, the state Department of Revenue will begin issuing tax refund checks in June worth about $40 million dollars because the decision.

The bill says the ruling “creates an inequity never intended by the Legislature” because unmarried individuals still have to pay the tax. It would change the definition of taxable estates to include the trusts, and it would apply retroactively to those who died on or after May 17, 2005.

TVW will air the hearing at 10 a.m. Wednesday, the 17th day of special session. The panel is scheduled to hold a public hearing on the bill and vote on it in executive session.

Rep. Reuven Carlyle, D-Seattle, said on Twitter the committee plans to pass the bill on Wednesday to “enable floor action” on the measure on Thursday.

Categories: Budget, tax

House committee approves revised tax package

By | April 23, 2013 | 0 Comments

A proposal calling for $900 million in tax increases was approved by Democrats in the House Finance Committee on Tuesday.

Supporters say the tax package is necessary to funnel more money into the state’s public schools, but Republicans who voted against the measure say the plan will hurt businesses and the state’s economy.

House Bill 2038 passed on an 8-5 vote along party lines. The measure ends certain business tax exemptions and extends some taxes set to expire this year. Parts of the original proposal were dropped, including tax extensions on the beer industry, janitors, insurance agents and stevedores.

“Asking everyone to contribute to our quality of life, our quality of education for 1 million students in every community in our state is hard work. It’s tough to do. Closing just a few is hard, but investing in education is essential,” said committee chair Reuven Carlyle (D-Seattle).

Republicans in the committee said the Legislature does not need new taxes to meet a court mandate to fully fund the state’s education system.

“We don’t need new taxes to balance our budget,” said Rep. Ed Orcutt (R-Kalama). “We’ve got plenty of money for education. If there is any courage needed, it’s the courage to fund education first and to say no to some other people.”

The tax measure will now head to the House floor for a vote.

Categories: tax, WA House

Eyman proposes new initiative to limit tax increases to one year

By | April 22, 2013 | 0 Comments

Voter initiative activist Tim Eyman released plans Monday for another attempt to require a two-thirds majority for the Legislature to raise taxes. This time he wants to change the state’s constitution.

In February the Washington State Supreme Court ruled in a 6-3 decision that initiative 1185, which required the Legislature to have a two-thirds supermajority to implement any new tax hikes, was unconstitutional.

“When we tried to do it with 1185, they said we would need to make an amendment to the constitution to make it happen. So that’s what we’re doing,” Eyman said Monday.

Under the proposal, sent in an email to the governor, legislators and Eyman supporters throughout the state, the new initiative would mandate:

  •  Advisory votes every November asking voters if they support a two-thirds majority to raise taxes as a constitutional amendment.
  • Any new tax increases the Legislature adopts would be limited to one year.
  • Voters’ pamphlets would be required to include information about the governor’s and legislators’ voting records on tax increases under their picture.

The initiative also includes an escape clause to nullify these three policies if state legislators put a two-thirds constitutional amendment on the ballot for voters to decide on.

Eyman said he expects the difficulty of getting the more than 300,000 signatures required to get the proposal on a ballot by November will likely depend a great deal on what legislators do at the end of the current session.

“If they go nuts with tax increases over the next couple weeks, that will probably make it easier,” Eyman said. “If you don’t want the beehive to get upset, don’t kick it.”

Categories: Public Policy, tax
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GOP leaders skeptical of Inslee’s plan to close tax breaks

By | March 14, 2013 | 0 Comments

Republican leaders expressed skepticism this week over a plan being floated by Gov. Jay Inslee to shut down certain tax incentives to help pay for a State Supreme Court mandate to increase education funding.

During an interview with TVW on Wednesday, Inslee said he plans to roll out proposals to close certain tax breaks.

Majority Coalition Leader Sen. Rodney Tom (D-Medina) said the eventual impact on the budget would be minimal.

“In conversations with the governor, he’ll come out with a number such as a $1 billion. I remember when there was 32 Democrats in our caucus and we came out with that same song and dance, but at the end of the day it was a pretty minimal number,” Tom said during a press conference Wednesday.

Inslee said during the interview that closing “illicit, unwarranted, obsolete, unfair corporate loopholes” is favorable to placing more of a tax burden on “regular consumers and people going to work.”

House Republican Leader Richard DeBolt (R-Chehalis) says the real problem lies in the state’s tax and regulatory system, which scares business away.

“Don’t forget tax exemptions are put in place because businesses find our climate not competitive with other states,” Debolt said. “Our caucus has proposed rolling some of these exemptions off. We have not been afraid of it, especially when they don’t function the way they are supposed to. But if we really want to do something about exemptions, all we have to do is correct the regressive environment we have.”

Inslee’s office has not released any specifics about which exemptions might be on the chopping block.

The Legislature is tasked with closing a budget shortfall, which grew to $1.3 billion Thursday after new numbers were released by the Washington State Caseload Forecast Council. That does not count additional money lawmakers must find to meet last year’s McCleary decision. Some say that will take another $1 billion for a down payment on fully funding education.

New state revenue forecast numbers will be released next week.

Categories: tax

Two-thirds ruling, Hanford leaks and housing vouchers on ‘Legislative Review’

By | March 1, 2013 | 0 Comments

Here’s our recap of Thursday’s legislative activities on “Legislative Review” — including the Washington Supreme Court ruling that the two-thirds supermajority requirement to raise taxes is unconstitutional. We also have highlights from a Senate work session about the Hanford nuclear leaks, and debate over a bill that would make some changes to a program that provides housing vouchers to recently released sex offenders.

Categories: Courts, Criminal Justice, tax

State Supreme Court strikes down ‘supermajority’ vote for raising taxes

By | February 28, 2013 | 0 Comments

The State Supreme Court has struck down an initiative passed by voters that requires a two-thirds “supermajority” vote of the Legislature in order to raise taxes.

In a 6-3 decision issued on Thursday, the court said the requirement violates the state constitution. The court said the constitution makes clear a bill becomes law when it is passed by a simple majority of the Legislature.

In the majority opinion, the court wrote:

Our holding today is not a judgment on the wisdom of requiring a supermajority for the passage of tax legislation. Such judgment is left to the legislative branch of our government  Should the people and the legislature still wish to require a supermajority vote for tax legislation, they must do so through  constitutional amendment, not through legislation. 

Thursday’s decision comes after a group of education advocates and state lawmakers brought a lawsuit against the 2010 two-thirds initiative. After a Seattle judge ruled the initiative violated the state constitution, it was appealed to the state Supreme Court. The court heard oral arguments in September.

Voters have passed initiatives requiring a two-thirds “supermajority” vote of the Legislature in order to raise taxes several times over the last decade, including Initiative 1185 last November.  The Legislature has been able to suspend those rules and pass taxes with a simple majority.

Gov. Jay Inslee released a statement saying the state Supreme Court “did the right thing” in issuing the ruling.

“The supermajority requirement gave a legislative minority the power to squelch ideas even when those ideas had majority support. That is inconsistent with our fundamental form of representative democracy,” Inslee said.

Rep. Laurie Jinkins (D-Tacoma) was one of the plaintiffs in the lawsuit. She said at a press conference Thursday that the ruling gives the state more options to fund education, citing an idea last year that would have funded all-day kindergarten by ending a tax break for out-of-state shoppers.

“We weren’t able to do that because it required a two-thirds majority. So I think it definitely puts a lot of those things on the table — a real discussion,” Jinkins said.

During a press conference called by Senate Republicans, Sen. Don Benton (R-Vancouver) said the voters had made their position clear at the poll five times and the court’s decision overruled their will.

“Their messages is they don’t trust their legislators to keep taxes in check with a simple majority. They want to make darn sure that it is absolutely the last resort,” he said. “The citizens want a two-thirds majority on taxes increases because they want this legislature to look at other options other than the easiest one.”

Republican lawmakers have introduced a bill in recent weeks that would amend the state constitution to make the two-thirds majority requirement permanent. Any amendment to the constitution would itself require a two-thirds vote of both houses.

Sen. Benton said the bill has the support of all 25 members of the Senate Majority caucus, which includes two Democrats. It passed out of the Senate Ways and Means Committee on Thursday, and Benton said he expects it to get a floor vote within a few days.

“We are absolutely committed. The question is, do we have eight Democrats on the other side that will support the will of their citizens? That’s the issue facing the state Senate,” Benton said.

A constitutional amendment is unlikely to pass in the Democratic-controlled House. Rep. Jamie Pedersen (D-Seattle) said Thursday he would be open to having a “rich discussion” about putting some limitations on raising taxes, but opposes a constitutional amendment.

Rep. Gary Alexander (R-Olympia), the House Republican budget writer, called the ruling “extremely unfortunate” for the state’s taxpayers.

“I urge the majority party in the House to join with House Republicans to adopt a new constitutional amendment so that we can, once and for all, put this issue to rest and get on with responsible governing,” he said in a news release.

Categories: Courts, tax

House Democrats release $10 billion transportation plan

By | February 20, 2013 | 0 Comments

House Democrats unveiled a $10 billion transportation package on Wednesday that would be fueled by an increase in the gasoline tax and an increase on car tab fees.

The proposal would increase the state gas tax by 10 cents (2 cents a year over five years) and make car tab rates equal to 0.7 percent of the vehicle’s value. The proposal would also add a $25 fee on sales of bicycles over $500.

“Gas tax is about the only revenue stream you have right now,” Rep. Judy Clibborn (D-Mercer Island) said during a press conference Wednesday. “If we don’t have an investment for the jobs and economic vitality I think at some point there is a cost to not doing the gas tax.”

Washington’s gas tax currently ranks the ninth-highest in the nation. The proposal would eventually raise it to 47.5 cents per gallon.

The package identifies new or continued projects and targeted investments into the state’s transportation system, including improvements to State Route 167, funding for the Interstate 5 Columbia River crossing and the state ferry system.

House Republicans, who have been wary of any new tax proposals, were quick to criticize the new plan.

“House Republicans understand there are maintenance demands and new projects needed in the future,” Rep. Ed Orcutt (R-Kalama) said in a news release. “But any debate on transportation must begin with reforms, not tax increases on struggling workers and families, and not new project lists to entice votes in the Legislature.”

Gov. Jay Inslee released a statement saying transportation is “vital to the environmental and economic health” of the state.

“We can’t afford to not take action and this is a job I expect the Legislature to accomplish. I’ll be working with legislators on both sides of the aisle to craft a package that they can send to my desk for approval,” Inslee said.

Categories: economy, tax, transportation

Distributors, small business owners divided over liquor bill

By | January 24, 2013 | 0 Comments

Photo from Wikimedia Commons

The players in the state’s liquor business – both big and small – were in Olympia on Thursday to begin a debate about proposed changes to the liquor privatization law.

House Bill 1161 would lift a 17 percent fee retailers are required to pay on gross hard liquor sales. Distributors aren’t required to pay the tax.

Business owners who took over old state liquor stores last June say the state started taxing them out of business when the new fees were imposed.

“We are left in a market where we cannot compete with distributors who have stolen all of our business,” said Julie Granas, a liquor store owner from Leavenworth.

Restaurant owners argue the system limits their buying options, increasing operating and consumer costs.

“When I make my fresh meatballs every week, I can buy tomatoes from whoever gives me the best price and the best tomatoes,” said Monique Trudnowski, owner of  Adriadic resturaunt in Tacoma. ”That’s why I’m still in business after five years.  If I don’t have that same opportunity with my liquor and spirits, I anticipate I may close.”

Distributors say they invested heavily in their businesses after voters passed Initiative 1183 and their profits would suffer under the proposed bill.

“Our concern with this bill is the fact that these distributors… have paid huge sums of money in order to be distributors in this state,” said Michael Gonzales, a representative for the wine and spirits industry in King and Pierce Counties. ”This bill looks like it would also allow Costco to be a distributor, but not be on the same playing field, not paying the same fees in order to distribute to bars and restaurants.”

The bill’s sponsor, Rep. Ross Hunter (D-Medina), said the legislation made practical sense and was surprised at the overflow crowd at the Government Accountability and Oversight Committee hearing.

“It’s a relatively simple bill. We are trying to have a fair application of taxes. The consistency is the issue, not the amount of tax,” Hunter said.

The bill would also ease restrictions on the number of transactions and amount of liquor that can be purchased.

 

Categories: tax

Public hearings set for workers’ comp rate

By | September 18, 2012 | 0 Comments

The state Department of Labor and Industries announced earlier this week that workers’ compensation rates won’t be going up next year — a move widely cheered by the business community. We’ll have more on the surprising decision on this week’s edition of The Impact, including an interview with director Judy Schurke. It will air Wednesday at 7 & 10 p.m.

The department is holding six public hearings before announcing the final rate in December. Here’s the full list:

Tukwila, Oct. 23, 10 a.m., L&I office.
Bellingham, Oct. 23, 1 p.m., Public Library Lecture Room.
Spokane, Oct. 24, 10 a.m., CenterPlace Event Center.
Richland, Oct. 25, 10 a.m., Community Center Activity Room.
Tumwater, Oct. 26, 10 a.m., L&I Auditorium.
Vancouver, Oct. 29, 10 a.m., Red Lion at the Quay, Quayside Portside Room.

And if you still want to know more about workers’ comp, here’s an impressive little video created by the Department of Labor and Industries (kudos to the artist): (more…)

Categories: tax

State plans to keep workers’ compensation rates flat in 2013

By | September 17, 2012 | 0 Comments

Workers’ compensation rates likely won’t go up next year, a result of higher-than-expected savings from major reform legislation passed in 2011.

The state Department of Labor & Industries said today those reforms will save the agency $1.5 billion over the next four years, $300 million more than expected.

“Had the governor and the legislature not adopted the 2011 reforms, I wouldn’t be making this proposal today,” department director Judy Schurke said in a press release. The final rate will be announced in December.

By keeping the rate flat, the department said it expects to be able to put an extra $82 million into reserves.

The news came as a surprise to some expecting a rate increase as high as 19 percent. Earlier this summer, the department proposed two dozen scenarios that would rebuild the reserve fund through various rate increases.

Schurke said at today’s meeting of the Workers Compensation Advisory Committee that some of the department’s proposals were “construed as a 19 percent increase.”

But, Schurke said, “that was never intended to be the department’s proposal.”

With the $82 million boost, the department’s reserves are expected to be at $682 million by the end of the year — a number that Schurke said is “critically low by industry standards.” It puts the reserves below 6 percent of liabilities, and Schurke said she aims to raise that to 14 percent within the next ten years.

The state-run workers’ compensation program provides insurance to employees injured on the job, covering medical costs and lost wages.

Both the business owner and worker pay into the system, with hourly rates that vary depending on the field. For example, those in the construction industry pay an average of $1.91 an hour per employee, while rates in the clerical sector are about 20 cents an hour.

“I’m very relieved,” said Bob Kagy, president of ABC Printing in Lacey. His printing shop employs 18 people, and workers’ compensation costs about 93 cents an hour per employee.

Still, Kagy said he would like to the see the system privatized, like it is in Oregon and 46 other states. He said Washington’s workers’ compensation system puts him at a competitive disadvantage compared to printers in neighboring states and online.

Categories: tax

Happy tax day: Round-up of new changes to the state’s tax policy

By | April 17, 2012 | 0 Comments

In honor of tax day, I thought it would be worthwhile to take a look a few tax changes the Legislature adopted this year. Gov. Chris Gregoire floated the idea of a temporary half-cent sales tax as a solution to the budget shortfall last year. That idea failed to gain support, as did another proposal she suggested which would have streamlined B&O taxes, or business and occupation taxes.

Here’s a look at some tax changes that did pass:

Local sales tax collections
This was the $238 million solution that helped break the logjam over the budget. It’s been widely called an “accounting maneuver,” but it basically works like this: The state collects sales tax revenue, which lands in the general fund. A share of that money belongs to local cities, counties and other agencies. Currently, their share is transferred to a separate account every day and then redistributed at the end of the month.

Under the new legislation, the money allotted for local governments will stay in the general fund about a month longer. They will still get their distributions at the usual time, but it gives the state a boost in its monthly cash flow. During floor debate on the issue, lead Democratic budget writer Rep. Ross Hunter said it is a way to “modernize” the way the state manages its money. It easily passed the House and Senate, and is awaiting the Governor’s signature.

Roll-your-own cigarettes
Washington state has the fifth highest cigarette tax in the nation, at $3.025 per pack. That means smokers in the state can expect to pay as much as $9 for a pack of cigarettes at the store, but some have found a way around that by using roll-your-own cigarette machines. Customers buy the tobacco and papers, then put it in a roll-your-own cigarette machine found in 65 stores statewide. In about 10 to 20 minutes, they’ve got rolled cigarettes for half the price.

New legislation expands the definition of cigarettes to include roll-your-own, and they will be taxed at the same rate as prepackaged cigarettes starting July 1st. The bill drew heavily debate in the Legislature, but ultimately passed. Opponents said it would put stores out of business and devastate small business owners, who paid about $30,000 apiece for the roll-your-own machines. Supporters say it will deter smoking, which improves public health while also bringing in an estimated $12 million in new revenue – a number that could change depending on how consumers react.

Eliminate tax deduction for big banks
Washington state doesn’t charge taxes on the interest that banks earn on loans for first mortgages. The Legislature voted to end that tax deduction starting July 1st for big banks that operate in more than 10 states. The change is expected to bring in about $15 million a year.

New tax breaks
While banks lost a tax deduction, other businesses got new or extended tax breaks. In an effort to attract more film and TV production companies to the state, the Legislature revived the Motion Picture Competitiveness Program, which expired last July. It gives filmmakers a 30 percent rebate off the money they spend in the state on hiring local crews and other expenses.

Also, craft distilleries that make and bottle their own spirits will get an exemption from paying a retail license fee of 17 percent on bottles they sell in tasting rooms. Businesses that operate processing facilities for fruits, vegetables, dairy and seafood will get an extension of a B&O tax exemption until 2015.

Categories: tax
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