Legislature Oks $400 Million Business Tax Break Opponents Say Measure Creates Risk Of Depleting Unemployment Funds

A $400 million tax break for business cleared the Legislature on Wednesday amid optimism that Gov. Mike Lowry will sign it.

The bill, which contains the biggest single business tax cut of the 1995 session, won passage in the Republican-dominated House after clearing the Democratic Senate last week by a huge majority. The House vote was 68-29.

“This is a major bill for business. Hopefully, it will help stimulate some business,” said House Speaker Clyde Ballard, R-East Wenatchee.

Foes blasted the measure.

“Today we’re going to take ($400 million) and give it over to business” and risk not having enough money to cover unemployed workers, said Rep. Steve Conway, D-Tacoma.

Lowry “will take a close look at the bill. He doesn’t want to cut the rate so much as to endanger the funds used to pay unemployed workers,” said his press aide, Jordan Dey. Several lawmakers from both parties said they did not expect Lowry to veto the measure, given the heavy support in both chambers, enough to override any veto.

Backers said it was time to cut the unemployment compensation tax rate because the unemployment insurance fund of about $1.45 billion is hundreds of millions of dollars larger than needed to cover claims.

Opponents, however, argued that with thousands more layoffs expected at The Boeing Co. and an uncertain economic climate, it would be foolish to cut the tax.

State law requires employers to pay contributions that are a percentage of their taxable payrolls. These contributions are held in trust to pay benefits to unemployed workers.

An employer’s contribution rate is determined by a statutory tax formula, which would be adjusted down, having the effect of transferring about $400 million from the trust fund to business bank accounts this year and next.

Last year, the fund paid out more than $1 billion to about 200,000 workers, said Dale Ziegler, a spokesman for the Department of Employment Security. Jobless checks range from $73 to $343 a week.