A coalition of Washington mayors is urging lawmakers to refrain from heaping more taxes onto the state’s businesses.
Auburn Mayor Nancy Backus said at a March 28 press conference that certain proposed tax measures would work to destabilize the state’s economy. That, she said, could lead to lasting, negative effects on the region’s economic competitiveness and fiscal health.
Backus noted two Democrat-backed revenue ideas, specifically: a proposed payroll excise tax and an increased business and occupation (B&O) tax on large companies. Such ideas would impact thousands of businesses statewide, including Auburn, she noted.
“These taxes will make attracting great jobs much harder,” Backus continued, “not only in Auburn, but in other cities across the state.”
Backus was among 11 mayors and one deputy mayor who signed a March 28 letter urging lawmakers to skip the business-related taxes. Other city leaders who lent their signatures included the mayors of Federal Way, Renton and Kirkland.
Washington is grappling with a projected budget shortfall ranging from $12 billion to $16 billion. Democratic lawmakers argue that an all-cuts, no-new-revenue budget would be devastating for the state’s residents. Their Republican counterparts, meanwhile, insist the gap can be closed without enacting tax hikes.
While some mayors have asked lawmakers to avoid certain new taxes, a separate coalition of local elected officials has urged state leaders to adopt progressive revenue streams.
Gov. Bob Ferguson has indicated that he views imposing more taxes as a last resort. It’s a position with which Backus agrees, given that businesses “are already feeling tax fatigue,” she said.
“Many of our largest businesses in the White River Valley are warehouses,” Backus said. “And with increasing costs, it’s becoming more financially reasonable for them to move out of the state altogether to avoid the high business taxes.”
House Democrats have said a proposed 1 percent business and occupation tax surcharge would apply only to the wealthiest corporations, or some 400 businesses statewide. But Bellevue Mayor Lynne Robinson said Friday that the measure would pertain to 39 of that city’s businesses.
If enacted, Robinson said, the proposed tax could be devastating to the Bellevue community and the region’s broader innovation ecosystem.
Senate Democrats recently proposed removing the cap on employer payroll taxes, similar to the so-called JumpStart tax in the city of Seattle. Since JumpStart took effect, however, Amazon shifted 12,000 Emerald City-based jobs to Bellevue, according to The Seattle Times.
Joe Fain, Bellevue Chamber’s CEO and president, used to be a state budget writer, having served as a Republican state senator from 2011 to 2019. He told McClatchy on Friday that he appreciates the challenging task ahead of lawmakers as they brainstorm how to balance the budget.
Still, Fain believes that Democrats’ tax proposals would harm revenue in the long run.
“As we work with our legislators to try to find a better solution, we just want to plant that flag, the city community, the business community, and say we really do need to find another way, because this crisis is existential,” he said.
Fain also warned of an exodus of good, family-wage jobs. Some states — Texas, Nevada, the Carolinas — are working to attract such jobs, which are starting to shrink in Washington, he said.
Auburn’s Backus said when larger employers move out of the region, there is a trickle-down effect; smaller establishments would also lose customers and could potentially have to shutter, she argued, harming the community’s overall economic health.
Such legislative proposals wouldn’t only affect wealthy businesses, she said.
“The fact is, it impacts every one of us on a daily basis, and if those large employers move out of our state because of this, we don’t get them back,” Backus said. “We don’t get a second chance.”
The other side
Another set of local leaders is asking lawmakers to pass new revenue measures.
Last week, 68 elected officials sent an open letter petitioning state lawmakers to mend Washington’s regressive tax code. Leaders who lent their signatures include Olympia City Council member Clark Gilman; Pierce County Executive Ryan Mello and Council member Jani Hitchen; four Tacoma City Council members and four Thurston County commissioners.
The letter notes that while Washington’s population has increased significantly, not enough revenue is being collected for crucial investments in housing and human services, infrastructure, and public health and safety.
The 68 leaders asked lawmakers to consider all new sources of revenue, including a proposal to lift the 1 percent property tax cap. They also support a suggested financial intangibles tax, also called the wealth tax, plus B&O- and payroll tax-related proposals, among others.
Letter-writers argued that the state’s tax code is “outdated and inequitable,” not having been meaningfully updated in 100 years.
Passing near- and long-term solutions would ensure that all Washingtonians are cared for and receive vital services, they wrote.
“Ask the wealthy few and profitable corporations to pay more in taxes,” per the letter. “Those who have done well in Washington should do right by Washington.”
