Two House members introduced bills this week that would eliminate the sales tax exemption for out-of-state residents and dedicate anticipated new revenue to restoring cuts in state programs.
Neither bill is likely to find favor with Clark County business owners, who protested so vociferously when former state Rep. Deb Wallace introduced a similar bill in late 2009 that the Vancouver Democrat withdrew the bill a few weeks later.
Local merchants said at the time that business they counted on from across the river would dry up if Oregon residents and Oregon companies faced paying a sales tax on their purchases.
That view hasn’t changed, said Kelly Parker, executive director of the Greater Vancouver Chamber of Commerce, which represents 1,100 Clark County businesses.
“The chamber has steadfastly and consistently opposed these measures because of their adverse impacts on local merchants,” Parker said Thursday. “We have businesses that sell large-ticket items that told us they would be hurt by a change in the law. At this time, in our economy, it would be the worst time to do anything that erodes local businesses.”
House Bill 2078, introduced Tuesday by Rep. Laurie Jinkins, D-Tacoma, would repeal the tax exemption for nonresidents and dedicate the revenue to funding class size reductions in grades 3 through 8. The bill also would significantly narrow a tax deduction for banks and other financial institutions. It has drawn 48 sponsors, including state Rep. Jim Moeller, D-Vancouver.
Moeller has consistently advocated for doing away with the tax break for nonresidents and dedicating the new revenue to shoring up state services.
“Honestly, I think there isn’t any way we can go home without saying we made some effort to raise revenue,” he said Thursday. “We tried to close the most egregious tax exemptions and apply those revenues to things we hold most precious, like education.”
House Bill 2087, introduced Wednesday by Rep. Mary Lou Dickerson, D-Seattle, would repeal the nonresident sales tax exemption and dedicate the additional revenue to funding mental health services. That measure has a total of 44 co-sponsors, none from Clark County.
Dickerson said lawmakers have slashed $85.6 million from mental health funding since 2009 to help deal with budget deficits She said ending the sales tax exemption for nonresidents would generate an estimated $83.7 million, enough to restore nearly all the funding lost since 2009.
“The crisis of untreated mental illness shows in the most painful way why we cannot afford to excuse nonresidents from paying the same sales tax the rest of us pay,” Dickerson said. She noted that Washington is the only state other than New Mexico that requires residents to pay a sales tax but waives the tax for nonresidents.
“These cuts to prevention, early intervention and diversion programs for people living with a mental illness are causing greater homelessness, use of emergency rooms, and an unsupportable burden to the criminal justice system,” Farrell Adrian, president of the Washington chapter of the National Alliance on Mental Illness, said in a statement.
Parker, of the Vancouver Chamber, said she understands the Legislature’s plight. “We respect that the state is looking for every means of revenue it can to support services,” she said. “But as a border community, the chamber believes this would place an unfair burden on our community.”
State lawmakers are scrambling to find revenue to offset the impending cuts. But because any decision to eliminate a tax exemption is considered a tax increase under Initiative 1053, passed by voters in November, passage of such measures would require a two-thirds vote in each legislative chamber or referral to voters.
Moeller said he doesn’t think voters had in mind protecting out-of-state residents from paying the state sales tax when they approved Initiative 1053.
“They voted for it with the understanding it was their taxes they were protecting, not taxes for out-of-state residents or Wall Street banks,” he said. “There isn’t one tax increase proposed on Washingtonians. We haven’t done that, because we quite clearly understood what the voters told us.”
Kathie Durbin: 360-735-4523 or kathie.durbin@columbian.com.
