Clark County would qualify as one of 19 “distressed counties” where certain businesses would be eligible for significant sales tax breaks under a proposal floated by Gov. Chris Gregoire last week.
As part of her 10-point jobs-creation program, the governor proposes to change an existing program that benefits the state’s rural counties and direct its benefits instead to counties with the state’s highest unemployment rates — including Clark.
Legislation to implement the change was introduced late Tuesday.
Under the governor’s proposal, “distressed counties” would be defined as those with an unemployment rate 20 percent higher than the statewide rate. That rate is based on a three-year average the Employment Security Department publishes every April.
State figures for 2009 indicate that 19 of the state’s 39 counties would qualify this year. Besides Clark, they are Adams, Clallam, Columbia, Cowlitz, Ferry, Franklin, Grant, Grays Harbor, Klickitat, Lewis, Mason, Okanogan, Pacific, Pend Oreille, Skamania, Stevens, Wahkiakum and Yakima.
Clark County’s unemployment rate hovered at just under 14 percent in November. December figures are due out today.
Distressed counties would be eligible for a program that defers state and local sales taxes for manufacturing and computer-related businesses, research and development laboratories and commercial testing facilities. Sales taxes would be waived on construction and equipment costs for businesses that qualify.
Under current law, those tax breaks are available in 32 rural counties in Washington as well as in a few “community empowerment zones” around the state. “Rural” counties are defined as those with fewer than 100 people per square mile, those smaller than 225 square miles, and those with designated community empowerment zones. Clark County is not eligible for the current program.
Bart Phillips, executive director of the Columbia River Economic Development Council, said the tax break “would be of huge benefit for us. We have a high concentration of manufacturers. We have some existing clients that would benefit.” He declined to be specific.
Phillips also praised other parts of Gregoire’s jobs plan, including a proposal that would give small businesses a $2,000 tax credit for each new employee they hire and keep on the payroll for a year.
“It’s exactly what needs to happen to jump start the economy and bring us out of recession,” he said. “We have companies that are hesitant to make investments. I do believe the economy is recovering. It’s the job recovery that is lagging.”
Phillips said he would urge lawmakers from Southwest Washington to support the governor’s jobs plan.
Gregoire says her overall plan, a combination of capital investments and financial incentives, could create as many as 40,000 jobs in Washington over the next three years. She urged legislators to enact it in spite of the state’s $2.6 billion budget deficit.
“Despite our budget constraints, I believe we can and must encourage employers to start hiring and capitalize on new opportunities,” she said at an economic forecast conference in Seattle Jan. 14. “We need to think creatively and act swiftly.”
Mike Gowrylow, a spokesman for the Washington Department of Revenue, said the new distressed counties program would cost the state $4.4 million in revenue and local governments about $1.4 million in revenue for the fiscal year that begins July 1. The cost to the state in foregone revenue would rise to $12 million in the 2011-13 biennium.
Gowrylow said the current rural counties program, if extended, would cost far more: about $25.4 million to the state and $8 million to local governments in 2010-11.
“The costs will be less because fewer counties would be covered,” he said. “The program proposed by the governor is much more targeted than the current program.”
