New Washington Research Council report kicks off series on manufacturing with examination of tax policy, governor’s veto.

The Washington Research Council has published the first of a series of reports on the state’s manufacturing sector. 

Rebalancing Priorities: The Case for Manufacturing Jobs, Part I” covers the role of manufacturing in Washington’s economy, and discusses Gov. Jay Inslee’s recent veto of a tax reduction for state manufacturing.

Our series on manufacturing will focus on conditions and policies that affect this important economic sector including taxation, education and job training, infrastructure, site availability, and regulatory issues.

We wrote previously about the governor’s controversial veto

The tax relief was part of the end-game negotiations to reach a budget budget deal and prevent a government shutdown.

The WRC report, which we recommend be read in its entirety, places the veto in the larger context of state tax policy, with an emphasis on manufacturing jobs.

Good tax policy should provide sufficient revenue while fostering economic success and prosperity for its citizens. This balancing act between funding government and creating a climate for job growth is a tricky one, with a plethora of interest groups weighing in on one side or the other.

It’s important for us to get this balance right. Cutting taxes for the manufacturing community helps to create new jobs in a growth climate and to protect existing jobs in a downturn. Fostering economic growth creates new tax revenue and contributes to the overall support of govern- ment services.

Looking ahead, the WRC cites reasons for optimism.

Media accounts report Gov. Inslee’s willingness to look at a similar proposal in the future if it was presented in such a manner. Indeed, it’s unfortunate the Senate bill seeking to aid manufacturing did not receive more attention from the executive and legislative branches earlier in the long legislative session. Instead, SSB 5977 surfaced in the fast-moving, dead- line-driven endgame of the protracted 2017–19 budget negotiations. We agree with the governor that a deliberative, transparent process is best for changes in tax policy. This potential boost for manufacturing is well worth a thoughtful reconsideration.

Again, we recommend reading the full report and look forward to Part II. Also, we note that Jason Mercier of the Washington Policy Center has released some of the emails received by Gov. Inslee as he considered the veto.

Among those encouraging the governor to grant the tax relief:

  • Kris Johnson, President & CEO, Association of Washington Business: “As you know, the economy is growing fast in the Seattle area but much of the rest of the state continues to struggle with high unemployment. Lowering the B&O tax rate for general manufacturers will benefit small- and medium-sized manufacturers and help Washington’s rural economy. It will also help Washington manufacturers compete in a global market. As both the state chamber of commerce and the state manufacturing association, AWB understands the competitive challenges facing our members. Washington is a high-cost state for employers with businesses paying 58 percent of all state and local taxes. Providing a measure of relief for some manufacturers ensures that all manufacturers pay the same rate. Manufacturing jobs are worth supporting.”

That’s our segue to note that AWB has placed a special emphasis this year on encouraging manufacturing employment and encouraging rural economic development. Those interested in supporting these efforts should check out the Rural Jobs Summit (October 23-24) and Manufacturing Summit (October 5).