When businesses are looking for a home in the Inland Northwest, they have options. Spokane has a lot to offer, but it regularly finds itself competing with communities just across the border in Idaho, where the cost and bureaucratic annoyance of doing business is less. A plan to give Spokane and other border communities a leg up called the Point 09 proposal is kicking around the Legislature this year. It deserves passage for the good of the entire state.
The Point 09 plan would allow border communities to retain 0.09% of local sales-and-use taxes to help fund economic development. It wouldn’t increase taxes, only keep up to $11million in Spokane County instead of sending it to state coffers. The proposal has support from Greater Spokane Incorporated and local businesses.
This isn’t a new idea. In fact, it’s really just closing a loophole in state law that already allows most Washington counties to recoup some locally generated taxes for economic development. They can build infrastructure, promote regional business opportunities and otherwise better compete for jobs and industry.
That system dates back to 1997, when the state authorized rural counties to retain 0.04% of the sales tax for economic development. The state increased the rate a couple of times over the years and landed at 0.09% in 2007. Thirty-two of Washington’s 39 counties are eligible to participate.
The seven that aren’t eligible? Five of them are around Seattle and Puget Sound. The other two are Spokane and Clark counties. The latter is the home of Vancouver, just across the Columbia River from Portland. The two were excluded more than 20 years ago because even though they are remote from the Puget Sound hub, they weren’t considered “rural.” SB 5899 and companion bill HB 2494 would allow “border” counties to participate. The challenges they face might differ from the challenges in many rural counties, but that makes them no less real.
For Spokane County, bordering Idaho is especially tough. Idaho has a lower minimum wage, no business-and-occupancy tax, lower property taxes, cheaper fuel prices and fewer employer mandates. With a few million dollars to invest in economic development, the county could make improvements that a prospective employer needs to move or expand here. Maybe it’s an electrical hookup or a rail spur.
This isn’t just about a handout for parochial interests, though. Economic development in Spokane and Clark counties benefits all of Washington. Jobs and businesses generate taxes and help maintain broad-based prosperity that requires less social service support. That’s why the Seattle-based nonprofit Washington Economic Development Association is backing the bill, too.
There’s also something in it for the 32 current eligible counties. The current system is set to expire by 2034. (Some counties would expire sooner because they opted in sooner.) The bills would extend the program to 2045 for everyone. That’s important because though state, regional and national economies are doing well now, many economists forecast a cooldown in coming years. When it arrives, having sustainable and reliable funds to combat it will be crucial to Washington’s rural and border counties.
Letting Spokane and Clark counties keep some of their locally generated state tax dollars would, of course, ever so slightly diminish the amount of money flowing into the state general fund. For Spokane County, $11 million is a lot, especially for Spokane County, but in the grand scheme of a state operating budget that exceeds $52 billion it isn’t any more than a rounding error.
Even so, the bills’ authors know that some lawmakers might worry about an immediate hit to state revenue. They therefore would phase in the change over four years, not reaching 0.09 percent until July 1, 2025.
Lawmakers once recognized that as the Puget Sound economy exploded, there was risk that the rest of the state would be left behind. They wisely gave rural communities a tool to help them compete and bolster the statewide economy in the process. Now it’s time to give that same tool to the two border counties that were left out.
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