Locke Proposes Help For State’s Poor Counties But Many Are Skeptical Tax Breaks And Incentives Will Do Any Good
Gov. Gary Locke wants to break down the wall between his state’s “two Washingtons” - the one that’s rich and urban and the other that’s poor and rural.
But he’s hitting snags as critics argue his proposals to help depressed rural areas might actually make the poor poorer.
That frustrates some lawmakers, who contend the criticism is misinformed and comes primarily from the wealthy side of the wall.
Yet, even representatives of the counties Locke is trying to help are skeptical his proposals would do much, if anything, to boost their sagging economies.
“I certainly don’t want to discourage the governor’s package, but I think some of it certainly is not going to help the distressed counties,” Stevens County Commissioner Fran Bessermin said.
“I don’t think there has been a lot of consultation on what the actual needs are and how to go about it.”
Locke has proposed a $30 million package of tax breaks and incentives designed to help lure new industries to the state’s 22 most depressed counties, including Ferry, Pend Oreille and Adams counties. Some areas in Stevens County may be eligible for assistance.
As outlined in bills before House and Senate committees, Locke would offer sales tax deferrals, business and occupational tax credits, and property tax exemptions to new businesses that provide 20 new jobs and represent 4 percent of a county’s appraised value.
“What’s the likelihood of that happening?” Pend Oreille County Commissioner Joel Jacobsen said, citing the 4 percent threshold. “It’s not going to help us.”
If the state really wanted to help, he said, it wouldn’t have passed over Pend Oreille County for a regional Department of Employment Security telephone-answering office that was awarded to Spokane.
The bills also would let counties keep three times more sales tax revenue for use on public projects and would give businesses tax credits if they invest in public facilities. The proposal to let counties keep more sales tax revenue for roads, sewers or other economic development projects is the only part of the bill Jacobsen thinks will help.
“It’s not tons of money, but it’s better than a poke in the eye,” he said.
Jacobsen and other commissioners said the bill ignores their top legislative priority: relief from unfunded state mandates.
Costly state requirements for sending truant children to school, improving 911 emergency dispatching, closing old landfills and a host of other items force counties to cut other services and increase taxes.
“It’s things like that that have been mandated down to us that are killing our economy here,” Ferry County Commissioner Dennis Snook said.
Heavy regulation of the mining and timber industries also is crippling Ferry County’s economy, Snook said.
Parts of Locke’s package originally were designed to help Cowlitz County in its battle with Oregon over who will get a $360 million manufacturing plant.
“We don’t want to just continue to tout the economic success of the I-5 corridor,” Locke said in a Wednesday press conference, surrounded by lawmakers from both parties who support his package.
But Senate and House bills to implement the plan have stalled as lawmakers argue about their cost and effectiveness.
Some Republican leaders point out Washington already has laws on the books that provide incentives to businesses that relocate in troubled areas. Many of those programs still do little to surmount some of the geographic and infrastructure problems in remote areas of Washington.
Business leaders also argue that the proposals are unfair to existing businesses and homeowners, who operate without any special tax breaks. They also fear that Locke’s proposed 15-year exemption from property taxes would cost residents of small counties millions.
Because the bill would award the tax break only to large companies - which in turn would increase impacts to schools, roads and government - existing taxpayers would foot the bill, said Mike Bernard, with the Association of Washington Business.
“Ironically, that means that, for a single project, this bill - which is intended to help distressed areas - would increase property taxes for people and business,” Bernard said.
But supporters from both parties said that without such exemptions, industry will just look elsewhere.
“If we don’t have a property tax exemption as part of our tax exemption, we’re just spinning our wheels because California and Oregon do,” said Rep. Jim Buck, R-Joyce, on the Olympic Peninsula.
He also said he was exasperated that businesses from prosperous cities - including Weyerhaeuser and a Seattle steelmaker - thought it unfair.
“It’s kind of beyond me for someone who has an unemployment rate of 2 to 3 percent to complain when unemployment in my district’s running 8 to 12 percent,” Buck said. “Fair is having a job.”
, DataTimes ILLUSTRATION: Graphic: Highest unemployment rates
MEMO: This sidebar appeared with the story: Tax breaks Under the rural development proposals, new businesses that represent at least 4 percent of an eligible county’s property value and employ 20 or more people at an average wage of 150 percent of the county’s average wage would be: Exempt from sales and use taxes on site preparation, construction and equipment costs for 15 years. Eligible for a business and occupation tax credit of $4,000 per year per job for eight years. Exempt from property taxes for everything except land for 15 years. In addition, businesses that invest in public utilities would be eligible for tax credits to cover 50 percent of those costs. Cities and counties would be able to retain .12 percent of their sales tax revenue for improvements.
This sidebar appeared with the story: Tax breaks Under the rural development proposals, new businesses that represent at least 4 percent of an eligible county’s property value and employ 20 or more people at an average wage of 150 percent of the county’s average wage would be: Exempt from sales and use taxes on site preparation, construction and equipment costs for 15 years. Eligible for a business and occupation tax credit of $4,000 per year per job for eight years. Exempt from property taxes for everything except land for 15 years. In addition, businesses that invest in public utilities would be eligible for tax credits to cover 50 percent of those costs. Cities and counties would be able to retain .12 percent of their sales tax revenue for improvements.