Tax Exemptions Run Amok in Olympia

Over the last three years Washington State legislators has passed 61 measures to extend or create new tax exemptions. These exemptions have removed almost a half billion dollars from the 2007 – 2008 biennial budget.

The Economic Opportunity Institute has documented what has happened in a detailed report they issued last year, entitled “Adding up: New Tax Breaks in Washington 2004-2006″

These exemptions are really expenditures and represent a loss from potential revenue available for use by the Legislature in preparing the current budget for the state. Yet the exemptions do not appear as expenditures or potential revenue anywhere in the current budget process.

Once every 4 years a separate report is issued, independent of the budget documents, as if these exemptions do not exist as potential revenue for consideration in determining budget priorities.

Last year when I asked former House Finance Committee Chair Jim McIntire if he knew of any tax exemption that the Washington State Legislature had repealed in the last legislative session he sheepishly said no. Unfortunately most legislators don’t view these special interest tax exemptions as expenditures and potential sources of revenue that the Legislature should consider when preparing a new budget.

Rep. Sharon Tomiko Santos is proposing to change that. She is the prime sponsor of HB 1827. The bill is very simple. It says that, as part of the budget process, a report of the current tax exemptions and their costs must be included along with the state budget.

It is an important step to hold the legislators accountable for their decisions regarding giving tax exemptions and their impact on the state budget. Passing HB 1827 would represent an important step in opening up the budget process to more public scrutiny and would give taxpayers a better understanding of where expenditures are being made, especially as regards special interest tax exemptions which remove revenue from other needs like health care for children or education.

Senator Pridemore has introduced the same legislation in the Washington State Senate as SB 6054.

The Washington State Tax Fairness Coalition has made this legislation one of their top priorities in this legislative session. They have set up a web page where you can easily contact your legislators to let them know this is something you also think needs to be passed. Click here to go to their page now.