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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Baumgartner: Cowan TV ad misleading

A new TV attack ad by Democratic state Senate challenger Rich Cowan inaccurately portrays Republican incumbent Michael Baumgartner’s voting record on tax breaks.

The ad, which began airing on Spokane television stations late last week, correctly notes that state law contains hundreds of “wasteful tax loopholes benefiting out-of-state corporations.” It also is fair to say that Baumgartner supported extending tax breaks for private jet owners and producers of hog fuel in 2013.

But the ad incorrectly suggests he’s never supported eliminating a tax break.

Senate roll call records show Baumgartner voted in 2012 to end a business and occupation tax break for some out-of-state banks and mortgage lenders.

The legislation called for narrowing a tax break that enabled financial institutions to avoid paying B&O taxes on revenue earned from interest charged for residential mortgages. Under the bill, financial institutions that operate in 10 or more states lost the tax break, which boosted state tax collections by about $15 million a year beginning in 2013.

“It says I’ve never voted to get rid of a single tax break, but I have,” Baumgartner said Monday.

But the Cowan campaign stood by the ad, saying that while some institutions may have lost their eligibility for the tax break, the underlying benefit was simply narrowed – not eliminated – and is being used by other lenders. It also noted that Baumgartner has voted to extend numerous breaks for industries and corporations that have contributed to his campaign.

Meanwhile, the Baumgartner campaign filed a complaint Monday with the state Public Disclosure Commission, which oversees compliance with campaign advertising requirements.

Baumgartner argues that it and other Cowan broadcast ads fail to follow state law requiring audio description of the candidate’s partisan preference. A similar complaint against a pair of earlier Cowan TV ads was filed just before the August primary, too.

Cowan’s campaign manager, Alex Clardy, disputes assertions that it violates state law, saying the ads include on-screen written messages identifying Cowan as a Democrat, which he said complies with rules for advertising aired by the candidate directly.

“We believe that the complainant is confusing a candidate’s own political advertising with that of independent expenditures or electioneering communications – a category in which our television advertisement would not fit,” Clardy said.

Baumgartner also called the ad hypocritical because Cowan’s movie studio, North by Northwest, is registered in Nevada and is among the largest beneficiaries of Washington state tax breaks for movie and TV productions here.

“He’s complaining about tax loopholes for out-of-state businesses and all the jobs he creates are based on a tax subsidy and he is registered out of state,” Baumgartner said.

Clardy said North by Northwest studio, which Cowan co-founded in 1990, is headquartered in Spokane and primarily operates out of Washington but that it’s common for companies to register in other states where they operate. He said the company registered in Nevada when trying to land a project there and noted that it also is registered in Alabama for similar reasons.

Cowan has dismissed criticism over his use of tax breaks to lure Hollywood productions to Spokane by noting that a legislative panel concluded the film tax preferences provide a net economic benefit to the state and that Baumgartner voted to reauthorize the incentives. He also notes that most states and several countries offer tax incentives because they know that the film industry pays good wages and want to lure away the jobs.