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April 4, 2013

Dear Friends and Neighbors,

First off this week, I’d like to congratulate our local Team Mean Machine on their victory at the Autodesk Oregon regional early last month. After putting more than 2,100 hours of hard work into the design and fabrication of their robots, they not only took first place in the competition but also took home the Quality Award. Team Mean Machine will be competing in the Eastern Washington Regional in the next couple days and also the World Championship robotics competition in St. Louis, Missouri from April 23rd-27th.

We are entering the final four weeks of the 2013 legislative session. It was a busy week in the Capitol as the Senate Majority Coalition rolled out their budget. Transportation budgets were also released this week.  The Legislature is pulled in all directions as competing interests attempt to influence the budget process.  By now, you have read about the many shortcomings in the budget document released by Washington Gov. Jay Inslee.

As you know, I have a fundamental belief that government at all levels must live within its means.  Economically speaking, we are in the worst of times.  That Gov. Inslee thinks more taxes and higher fees are needed right now is unconscionable.

Gov. Inslee’s Budget Priorities:

The new governor rolled out budget priorities that includes $1.2 billion in new revenue (i.e. tax increases), $788.1 million in spending reductions, and $578.8 million in fund transfers and shifts. In addition, the Governor proposes increasing tuition at four-year institutions by 5 percent.  His proposal also extends dozens of taxes that were supposed to be temporary, expands a few new taxes and ends several tax incentives for businesses.  Here are the details.:

Ending Sales Tax Exemptions Will Hurt Retail In Clark County:

As soon as the governor’s budget proposal became public, the emails began to stream into my office.  I appreciate hearing from constituents responding to Jay Inslee’s budget that aims to take $1.2 billion out of our local economy.  The first email was from a Clark County business owner who operates a local motorcycle shop.  He said that if Inslee’s plan to end the sales tax exemption on Oregon residents becomes law, it will kill his business because 50% of his sales are to Oregon residents.  He finished his email by saying “it is crazy to think an Oregon resident will buy anything in Washington if they can buy it in Oregon tax free.”  I agree with this business owner.  Border counties like Clark will take a huge hit to our local economy.  More jobs will be lost at a time when we should be creating an environment to encourage private sector job growth.

Ending Exemptions on Port Leaseholds Will Cost Taxpayers:

I also heard from David Ripp, the Executive Director at our local Port of Camas-Washougal. Dave is very concerned about Inslee’s plan to end a tax exemption on the long-term rental of commercial land and buildings.  Every port in the state of Washington that leases land or buildings should be concerned about this line item in the governor’s proposed budget.  The Port of Camas-Washougal has a 350-slip marina and a 79-hangar airport.  These two assets equate to about  percent of our local Port’s lease revenue.   It is very likely this proposed business and occupation (B&O) tax exemption repeal on long-term leasing of real estate could have a significant impact on our Port’s ability to maintain high occupancy rates and current revenue sources.

I agree with the C-W Port’s position that this repeal will not only effect the overall strategic goal of creating jobs through economic development and recreation, it will also have long-lasting negative consequence on public industrial parks, marinas and airports throughout the state.

Citizens and Businesses Upset with New Beer Tax and Extensions:

Several constituents emailed with concerns about the governor’s plan to extend the “temporary” 50-cent beer tax and the addition of a new $15.50 barrel tax on Washington micro-breweries.  The tax on a barrel of beer in Washington is $23.58 compared to $2.60 a barrel in Oregon.  This regressive tax hurts our southwest Washington businesses that are trying to compete in Oregon.  At a time when cities like Washougal are working to attract these new businesses which, bring in outside tourism dollars, this is not the time to add more taxes.

Governor’s Proposed Budget Will Hurt High Tech Industries in Clark County:

Perhaps the biggest job-killing component of Gov. Inslee’s proposed budget is the repeal of the B&O tax exemption for semiconductor industries and software companies.  When Camas city leaders are aggressively courting Wafer Tech to expand its operations at their Camas plant, this proposal could not have been any more poorly timed.  Lisa Nisenfeld, President of Columbia River Economic Development Council, points out the governor has exempted Puget Sound industries including Boeing and Microsoft from his tax proposals, yet he is willing to harm many of the local high-tech companies in Clark County and most other parts of the state.

Gov. Inslee’s Proposed B&O Tax Increases:

I also heard from Clark County business owners who operate independent insurance agencies.  Under Inslee’s plan they will see sharp increases in their B&O taxes without any way to alter policy premiums in order to recoup these added costs.  Add to that double digit increases on medical insurance premiums for their employees.

Here is a list of all the ‘TEMPORARY’ taxes Inslee wants to be made permanent:

50-cent beer tax, and expanding it to microbreweries ($127 million)
0.3 percent B&O tax on service businesses ($534 million), including:

• architects
• barbers and beauty shop owners
• chiropractors
• dentists
• janitors
• music teachers
• physicians
• real estate agents
• school bus operators
• veterinarians

Here is a list of tax incentives that Inslee wants to repeal:

1. Vehicle trade-ins tax incentive when purchasing a new car; Inslee’s proposal will hurt new car dealers because the trade-in tax allowance will be limited to the first $10,000.
2. Repeal of local sales tax exemption on residential phone service.
3. Repeal sales tax exemption on companies who design custom computer software.
4. Repeal B&O tax breaks up to 25% on most state businesses that were given lower rates in order to locate or expand in Washington. This is a huge job-killer.
5. Repeal tax exemption on non-residents who shop in Washington; this will hurt retail sales in border counties like Clark.
6. Repeal bottled water sales tax.  What’s next, a sales tax on food?
7. Limit the use tax exemption on Washington’s oil refineries; this proposal will cost us jobs in this state and hurt local companies like Vancouver Oil.
8. Quadruples the B&O tax rate on wholesalers and resellers of prescription drugs.  This increases costs on Washington drug stores and will ultimately hurt our senior citizens who take prescription medicines.
9. Adds a new B&O tax on long-term rental of commercial land/buildings at our ports, on mini-storage facilities, commercial real estate and apartments.
10. Redefines B&O tax exemptions and retail sales tax for WA aerospace industries; this protects Boeing and other aerospace industries from Inslee’s new taxes.
11. Repeals retail sales tax and use tax exemptions on property bought at farm auctions. This will hurt our farm families who are already suffering in this horrible economy.

I believe we can and should balance the budget without raising taxes. Though I agree with some of the governor’s priorities, most notably K-12 education, I do not agree with the way he proposes to fund education. House Republicans have proposed a fund education first budget to ensure the paramount duty of the state is funded before any other priorities. This would take the politics out of the classroom and ensure classrooms receive our first dollar.

The most recent economic and revenue update for Washington state shows we have a fragile economy. Raising taxes only leads to uncertainty for employers thinking of locating or expanding in Washington. Getting Washington working not only increases tax collections, it helps struggling individuals and families. A working Washington means prosperity for families and a government that helps young people succeed, supports healthy commerce, protects people from crime and is accountable to its taxpayers.

“Stop CRC Funding Now” HB 2025 Legislation Introduced:

For the past few weeks, I have been working on a bill designed to immediately halt funding on the Columbia River Crossing.  The one page bill is fairly simple and has three sections. Please contact members of the House and Senate Transportation Committees and urge them to move this bill forward without delay.  It will be introduced in the House on April 4th.

I introduced House Bill 2025 to halt spending on the controversial mega project known as the Columbia River Crossing (CRC). Section one of Pike’s bill states the CRC design in not acceptable for a variety of reasons, including:

• the US Coast Guard has not approved the current design due to a lack of clearance for current and future river traffic;
• light rail will add nearly $1 billion to the price tag;
• and the current design does not relieve congestion.

The intent of this bill is that no further funds be spent on the current design. This bill specifically prohibits the Washington State Department (WSDOT) of Transportation from spending any additional funds towards the CRC project based on the January 7, 2011 record of decision.

HB 2025 also directs WSDOT to prepare a new design alternative that includes a clearance height that accommodates current and future river users and includes a third bridge in addition to I-5 and I-205.  The bill also specifies the new design must not include light rail, must add general lane capacity between the two states and must improve overall congestion and commute times.

I added in an emergency clause that forces the bill to take effect immediately upon adoption.

As always, it is an honor to serve as your state representative. Please contact me if you have any questions or concerns.

Sincerely,

Liz Pike
"Protecting life, liberty and the pursuit of happiness!"