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Thursday, December 7, 2023
Dec. 7, 2023

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Sales tax exemption survives in Washington budget plan

Business leaders feared it would harm Clark County retailers

By , Columbian Assistant Metro Editor

As details of a state budget deal emerged Thursday, it appeared Southwest Washington business leaders could breathe a sigh of relief.

Under the budget agreement, which remains to be voted on, Oregonians still won’t have to pay sales tax when they shop on the Washington side of the Columbia River, state Rep. Jim Moeller, D-Vancouver, said Thursday. This year, lawmakers mulled whether to make Oregonians pay the tax, with the understanding that they could apply online for a tax refund later. Business leaders said making any changes to the exemption would harm retailers in Clark County.

After learning the budget news, Greater Vancouver Chamber of Commerce president Kelly Parker said she was “excited” and “very relieved.”

“I’m very grateful to our delegation in Clark County from the 17th and 18th districts who were steadfast in their dedication” to protecting the exemption, Parker said. “It was just a matter of helping the majority of legislators understand that while it looked good on paper, it didn’t translate into real savings for the state of Washington.”

Vancouver niche businesses — such as furniture shops and art galleries — get 25 to 40 percent of their business from Oregon shoppers, Parker has said. She estimated that changing the exemption rules would have resulted in 15- to 30-percent reductions in business for some retailers.

Oregon shoppers are not used to having to pay a sales tax, Parker said. They also have plenty of shopping choices in Portland.

“Oregon consumers don’t have to come up here and won’t pay a sales tax,” she said. If Oregonians avoid shopping in Washington, then Washington state won’t see the increase in revenue expected from eliminating the exemption, she added.

Under Washington law, shoppers from other states or Canadian provinces are exempt from paying retail sales tax if they live somewhere with a sales tax of 3 percent or less. Qualifying states include Oregon, Montana and Alaska.

Parker said Southwest Washington retailers were more nervous about losing the sales tax exemption this year than they were during previous legislative sessions, when there was a requirement that any tax increases must pass with a two-thirds supermajority vote in the Legislature. The state Supreme Court shot down that rule this year.

In the past, “we felt fairly safe, but this year with the budget shortfall and only needing a simple majority, I didn’t really know how it would turn out.”

Extra costs for schools

State lawmakers are working to pass the operating budget by Sunday, the deadline to prevent a shutdown of many state services.

For some educators trying to plan their next school year, however, the budget agreement will still come too late.

Earlier this month, Vancouver Public Schools Superintendent Steven Webb warned state lawmakers that if they didn’t pass a budget soon, it would cost the school an estimated $78,000 to call school officials back to the office to figure out their district’s budget and staffing plans. Those duties are usually done by now, but they couldn’t be completed without knowing how much their district would receive in state funding.

The roughly $78,000 in extra costs is the equivalent of one full-time teacher, Webb said.

That warning has now become a reality, Webb said in a statement made to The Columbian on Thursday. He said education officials will be back to work on Monday because educators still don’t have enough state budget details to do anything significant. Principals were supposed to finish working at the end of this week.

“Typically, it takes several days after a consensus budget is announced for school districts to receive the detail they need to complete their own budget and staffing plans,” Webb said. “Due to the extended deliberations of the Legislature, we now must call principals and other staff members back on duty in early July to do this work, which will be an added local expense, not only for Vancouver Public Schools, but I suspect for all 295 school districts in the state.”

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Columbian Assistant Metro Editor