Tag Archives: tax exemptions

End Tax Exemptions as Off Budget Spending by Adding Them to the State Budget

 End Tax Exemptions as Off-Budget Spending

by Adding Them as Tax Expenditures to the State Budget!

Washington State HB 1500 -the Tax Exemption Transparency and Accountability Act of 2017 will have a hearing in the State House Finance Committee on Tues. Jan 31st.  Please attend the hearing or comment on the bill on line at leg.wa.gov.

 Why is HB 1500 needed?

We don’t generally think of them as such but tax exemptions, preferences, deductions, credits and deferrals are off budget expenditures. They lack the accountability and transparency that exists for other expenditures the state makes as part of the biennial budget process.

Taxpayers deserve to know who is receiving these tax exemptions, how much money is involved and for what reason they are given.

According to the Washington State Department of Revenue’s  2016 Tax Exemption Study, while the State expects to collect some $7.4 billion in B&O tax revenue in the current 2015 -2017 biennium, it exempts from collection some $11.4 billion. When sales and use taxes were included with the analysis, the results are similar – the state expects to collect some $18.9 billion in revenue from sales and use tax, while exempting some $16.9 billion in revenue

Washington State has created some 694 tax exemptions over the years. Over 450 of these are discretionary tax exemptions, not required by Federal or State constitutional law. These discretionary tax exemptions will account for over $28.3 billion in B &O and sales/use tax revenue not collected in the current biennium..

Including property tax exemptions the 2016 Department of Revenue Report projects that in total, Washington State will see as off budget tax expenditures almost $40 billion in tax exemptions this biennium while only collecting revenues of $32.6 billion for the Legislature to fund its biennial budget according to the Department of Revenue.

HB 1500 introduced by Rep.Pollet and 32 other sponsors would require the governor to propose and the state legislature to adopt a tax expenditure budget every 2 years as part of the biennial omnibus operating appropriations act. A companion bill, SB 5513 has been introduced in the WA State Senate by Senator David Frockt with 12 other sponsors.

HB 1500 / SB 5513 would give the Washington State Legislature an opportunity to periodically evaluate the need and effectiveness of the state’s tax exemptions in meeting current state needs. They would do this at the same time they are making budget decisions about prioritizing other state expenditures for public services as part of the biennial budget appropriations process.

What would HB 1500 /SB 5513 – the Tax Exemption Transparency and Accountability Act do?

 This measure would require new and existing discretionary tax exemptions to be authorized every two years in a tax expenditure budget. It will add much needed transparency and accountability to the hundreds of exemptions and preferences, along with their cost and how each decision to spend money on an exemption or preference is a choice to expend funds for this purpose with particular beneficiaries.

The tax expenditure budget would detail the fiscal impact, purpose, and effectiveness in meeting the purpose of each tax exemption.

 Tax exemption not included in the tax expenditure budget would expire at the end of the calendar year in which the budget is adopted.

Contact your Legislators at www.leg.wa.org and urge them to support the Tax Exemption Transparency and Accountability Act.

 Action item – Urging your Legislators to pass HB 1500 and companion bill SB 5513 is easy. You can leave them a message by going to leg.wa.gov, entering 1500 or 5513 for the bill number after clicking the bill information link and then clicking on “comment on this bill.” Or call the Legislative hotline at 1-800-562-6000 and leave a message to for your legislators and the Governor to support HB 1500 and SB 5513 to create a tax expenditure budget as part of the biennial budget appropriations process. And be sure to thank your legislators if they are a sponsor of this legislation. Their support is appreciated.

 Legislators sponsoring HB 1500 – Pollet, Farrell, Appleton, Tarleton, Ryu, Wylie, Santos, Marci, Doglio, Jinkins, Orwall, Tharinger, Stonier, Kagi, Fitzgibbon, Kloba, Stanford, Berquist, McBride, Ortiz-Self, Goodman, Dolan, Cody, Pettigrew, Riccelli, Sells, Hudgins, Kirby, Lovick, Frame, Peterson, Ormsby, Pellicciotti

 Legislators sponsoring SB 5513 – Frockt, Hasegawa, Miloscia, Rolfes, Saldana, Keiser, Wellman, Conway, Chase, Billig, Kuderer, Hunt, McCoy

  For more information:

Contact Steve Zemke – Director Tax Sanity, steve@taxsanity.orgwww.taxsanity.org,  

cross posted at TaxSanity.org

Feedback Wanted on Proposed WA Legislative Bill on Tax Expenditure Reform

Changes are needed in the ability of the Washington State Legislature to fund basic services like education and healthcare. The current state budget problems are made more difficult by the lack of flexibility of the Legislature to make decisions by a majority vote as directed by the Washington State Constitution and by a tax expenditure/exemption process that is shielded from legislative oversight by virtue of not being part of the normal budget process.

Many people are frustrated by the current stalemate in the legislative process and want more choices than just throwing up their hands and suffering more cuts in state services and more costs to working families. More options are needed for the voters than just saying we have no real choices.

Accordingly draft legislation has been written that could be a bill in the Legislature with a referendum clause for the voters or that could be a citizens  initiative for the Fall ballot if the Legislature doesn’t act..  The legislation is called  the Washington State Taxpayers Fiscal Reform Act.  You can see a draft copy for comment located here: http://www.majorityrules.org/?attachment_id=814

We are now circulating this draft for public comment and revision. I would appreciate your review of this draft  and any suggested revisions you might have.
The Taxpayers Fiscal Reform Act would:
1.  Allow the Legislature to repeal tax exemptions by a majority vote by repealing the current unconstitutional 2/3 voting requirement.
2. Add tax expenditures into the biennial  budget process.
3.  Require the Legislature to rank all spending, including tax expenditures as high, medium or low priority in meeting state needs.
4.  Require that the Legislature must act to reaffirm all tax expenditures after they have been audited by the state or they will sunset.
5. Limit any authorization or reauthorization of a tax expenditure to 10 years.
Please return all comments on the draft to Steve Zemke at the e-mail address below.
Steve Zemke – Chair
King County Democrats

Why Initiative 1053 needs to be Overturned by the Courts

The 2/3 vote requirement rule for the Washington State Legislature to act on revenue measures  imposed by Tim Eyman’s Initiative 1053 needs to be overturned. Everyone acts as if it is law, including most of the Washington State Legislators, but it is unconstitutional. The issue is before the Washington Court system and needs to be resolved.

I-1053 has created a crisis for our state. It  has limited the options of our state government to address our current  financial crisis. The result is that the state is being forced to continue to cut basic services like education and health care. It is driving the crisis into a downward spiral.

The state has already cut it’s budget by $10 billion and is facing another $2 billion in cuts just to balance its current budget.

The I-1053 campaign is just another example of misguided anti-government legislation that unfortunately has an opposite effect from what many voters thought they were voting on. They bought the rhetoric thinking it was good for the average citizen in this state.

However it was  Big Business and Corporate interests in this state that saw the measure for what it was – another opening to consolidate their power over the State Legislature. Corporations like the Bank of America and BP saw that this so called rule gave them virtual immunity from the threat of seeing their special interest tax exemptions being repealed once Eyman’s definition of a tax increase included repeal of tax exemptions. Voters missed this.

The Legislature over the years has passed special interest tax exemptions with a simple majority vote of 50%. These tax exemptions now exceed revenue from collected taxes. These tax exemptions are really expenditures of state money that if not in place could be used for other purposes like educating our youth and creating jobs. I-1053 has essentially grandfathered existing tax exemptions in permanently. That is because a 2/3 vote in both houses is needed to repeal them. This is almost impossible to do, considering that special interests only need to secure the votes of 17 Legislators out of 147 to stop a revenue measure being passed.

I-1053 also makes it almost impossible to raise any taxes on business. So the State is left with essentially one option to pay its bills and balance the budget – cutting programs.  Unfortunately for Washington residents, cutting means ending services and jobs  that benefit the majority of Washington voters, especially the middle class and working families.

It’s time to take back the Legislature from the special interests and reject the 2/3 voting requirement. There is a basic constitutional issue here.  What has happened is that on revenue issues, I-1053 is saying that if Legislators are for revenue increases or repealing tax exemptions, their vote only counts as half a vote, rather than a full vote, in trying to pass measures. Nothing in the Constitution says that this is the case or that this is allowed.

I-1053 was an initiative, not a constitutional amendment.  You can not change the constitution with an initiative.  The Washington State Constitution says that bills shall be passed by majority votes, not by 2/3 votes. I-1053 is unconstitutional and the courts need to reject it so the state can address it’s financial problems without special interests calling the shots.

The people also need to reject any further measures by Eyman trying to reaffirm I-1053. He will be running another one in 2012.  The reason for this is that for the first two years  after an initiative is passed, it takes a 2/3 vote of the Legislature to amend it. After that it is a majority vote.   By passing another 1053 type initiative, it would extend for two more years the inability of the Legislature to amend the 2/3 vote requirement. Voters need to understand that I-1053 style initiatives requiring a 2/3 vote to pass revenue measures benefits special interests a lot more than the average voter.

It’s time to reject the 2/3 vote requirement and take back the Legislature from the special interests.

Press Release – Balance Budget by Ending Tax Breaks and Raising Revenue


October 27, 2011

CONTACT: Anne Martens



Coalition calls on lawmakers to cut corporate welfare

instead of cutting our jobs and our families

In response to Governor Gregoire’s report on the devastation expected from another $2 billion in state budget cuts, members of the Our Economic Future coalition are asking lawmakers to stand up for Washington families by ending unfair tax breaks and raising revenue. (People affected by the cuts will be available for comment outside the Governor’s office in Olympia between 10am and noon)

“It’s not fair to balance the budget on the backs of the most vulnerable. These cuts hit hardest on those most at risk and set our state down a path of deepening poverty and increased homelessness,” said Rachael Myers (206-442-9455) of the Washington LowIncome Housing Alliance.

“More cuts add insult to injury,” said Jon Gould (206-324-0340 x 19) of the Children’s Alliance. “With 58,000 more children in poverty in our state – enough to fill 2,320 classrooms – these cuts couldn’t come at a worse time for our state’s kids.”

During the last legislative session, the coalition pushed for eliminating tax breaks like the ones that benefit out-of-state banks and private jet owners. Since regular session ended, both an official legislative audit committee and a citizen’s committee agreed that Washington hands out too much corporate welfare in the form of tax breaks, and that many of those loopholes should be closed.

Two-thirds of legislators would have to work together in order to close any tax loopholes. Because such cooperation is considered unlikely, the coalition may ask for a referendum to the people.

“We are the 99 percent,”said Anne Martens, spokesperson for the coalition. “Are tax breaks for big banks more important than our children’s future? Most people would say no.”

Coming on top of the $10 billion that has already been slashed from our public services, this latest round of cuts will have devastating effects on Washington families and on our ability to recover from the recession.

“Child care providers like me make sure that parents can go to work,” said Kathy Yasi, a small business owner and SEIU925 member. “Cutting programs like Working Connections forces parents to give up their jobs and pushes them to rely even more on public programs. It’s backwards.”

While slashing public services appears to save money in the short-run, in fact it adds to the rolls of people who need those services, at a time when both our families and our public services are already overstretched.

“Everyone feels the effects of this economic crisis, but some of our neighbors—particularly children of color–feel it worse. Lawmakers need to take a balanced approach to the state budget, with a plan for revenue, to make sure our families can survive this economic crisis,” said Mr. Gould.

“It’s time to find revenue solutions if we want to make sure that parents can continue to work and rebuild our economy,” said Ms. Yasi.

People all over Washington are finding it harder and harder to get services or support because prior budget cuts have already closed health clinics, raised tuition, and cut off access to job training, environmental protection and public safety. With few good jobs and an economy still designed to benefit special interests, these service cuts are hitting hardest on those least able to afford it.

Peter Sanderson, a community mental health therapist and SEIU1199NW member, agreed. “So many of the youth I see have lost their mental health care already, and many have become homeless after trying to make it on their own. They are trying so hard to create a positive future, but we leave them on the street. In this kind of economy, we should be investing in programs that help people get back on their feet instead of cutting help when they need it most.”

Ms. Myers notes that, “thousands of families are sleeping on the streets every night and people who never thought they’d need help with housing are now facing the reality that they can’t make ends meet.”

Randy Revelle (206-216-2515) of the Washington State Hospital Association adds that, “these cuts will be felt for years to come. People with serious disabilities and mental illnesses will lose their health coverage. People living with diabetes, congestive heart failure, and psychosis will lose coverage for essential medications. Rural areas could lose all access to obstetrical services, ambulances, and inpatient hospital care. The impacts are staggering.”

An additional $2 billion in cuts could mean:

·     Tuition at community colleges and four-year universities goes up even more.

·     More teachers are laid off and Washington moves towards the biggest class sizes in the nation.

·     All community health clinics will be closed.

·     18,000 home care workers lose their jobs, and the elderly and disabled they care for lose their care and their homes.

·     7,400 criminals are put back on the streets with no supervision.

·     55,000 people lose their alcohol and substance prevention treatment.

·     80,000 people lose their mental health, long-term care and disability services.

While ending unfair tax breaks would not fill our gaping budget hole, it would ward off the worst of the cuts and provide sparse public services for the most vulnerable among us.

In order to really invest in schools, colleges, small businesses and public services that support a strong economy, we need to have a serious discussion about raising revenue.


The Our Economic Future Coalition represents more than 150 organizations concerned about deep budget cuts to core services. The Coalition is calling on lawmakers to find a more responsible and balanced approach to closing the current budget gap that includes closing tax loopholes and identifying new sources of revenue. www.oureconomicfuture.org.

It’s Time to Take Back the Legislature!

With the passage of Tim Eyman’s Initiative 1053 last year requiring 2/3 votes of the Legislature to raise revenue, Wall Street interests and their friends were the big winners. Citizens in Washington State were the losers.

The reality is that with the citizen’s help, corporations guaranteed that their special interest loopholes and tax exemptions in Washington State would be continued on and on, without any accountability.  Tax exemptions originally passed with only a majority vote now require a 2/3 vote by both houses of the Legislature to rescind or end. And this is almost impossible to do.

Wall Street and Big Business interests funding the campaign to protect their special interest tax exemptions included JP MORGAN CHASE, BP CORPORATION, BANK OF AMERICA, WELLS FARGO, CONOCO PHILLIPS, US BANK, TESORO COMPANIES INC, AND CHEVERON to name a few.

Why do you think they wanted voters to approve I-1053? It’s an easy answer.

Corporations basically were able to grandfather in their tax exemptions by passage of Initiative 1053. They were able to do this under the camouflage of limiting taxes on average citizens.  The net result is that corporations protected themselves from not just losing their special interest exemptions but it also made it impossible for the Legislature to consider any other revenue coming from these corporations regardless of how much profit they make.

Tax exemptions are expenditures of state money that would otherwise be available to fund basic services like education, health care, transportation or environmental protection. Tax exemptions need to be included in the state budget just the same as other state expenditures. And they need to have a sunset provision so that unless they are voted on to be renewed, they will automatically expire. Sunset provisions could vary from 4 to 8 years.

Tax exemptions should not be a permanent entitlement of special interests and corporations. Their continuation needed to be evaluated and voted on periodically. Their value to the state’s economy should be prioritized under the guidelines of a priorities of government evaluation.. Their continuation should be ranked as high, medium or low priority, the same as other expenditures in the state budget. When it comes time to create a state budget they should be considered the same as any other expenditure, not exempt as they now are.

This evaluation of tax expenditures is a function that the State Auditor could perform the same as is done with other programs. Tax exemptions that no longer perform a valid function for the State and its citizens should be eliminated.

It’s time now for citizens to take back their Legislature from the corporations.  Giving  corporations special rules to prevent their tax exemptions from being repealed by requiring higher voting requirements is contrary to the Washington State Constitution and subverts the citizen’s legislature.. Now is the time to repeal the special treatment the Wall Street interests – the Banks and other Big Corporations – gave themselves under I-1053 and return the Legislature to the people..

We need to go back to the voting system set up by the people for the Legislature by the Washington State Constitution. Passing legislation, including revenue and the state budget should be by a simple majority vote as set in the State Constitution. Requiring a higher number of votes on specific legislation winds up giving a smaller and smaller block of Legislators veto power. That gives Wall Street and Big Businesses and Big Oil power they don’t deserve and diminishes the power of the people to control their government.

It’s time to end Wall Street’s Special Protection.and return the Legislature to the citizens of this state. It’s time to repeal I-1053 and stop the unfair shift of taxation from the wealthy and special interests to the middle class.

Senator Maralyn Chase Advocates Washington State adopt Clawback Provisions

Such a sensible proposal. If tax exemptions to benefit corporations and business interests do not provide a net benefit to Washington State in terms of increasing jobs or retaining jobs, then the tax exemption should be repealed.

As Senator Maralyn Chase mentions, twenty other states currently have some formof clawback provision. It time for Washington State to also do this. We can not afford to be giving gifts to businesses without a net return in value to the state.

Senator Chase notes that tax exemptions shift the tax burden to other businesses that do not get an exemption. If the exemption provides no net benefit to the state and it’s taxpayers, it is unfairly hurting other businesses and hurting the state in its ability to provide other essential services that help in job creation like funding for education and keeping our citizens healthy.

Need to raise $1.7 billion in revenues

Advocates should be loud and assertive about the need to raise revenues. Governor Gregoire has said she would raise only $700 million of the deficit, about one-third in revenues, and balance the rest with cuts to essential services.

The King County Democrats take the position that we should raise two-thirds in revenues and cut one-third in services. The amount of the revenue goal will determine what kind of revenues are considered. It will be less painful to vote for a few large taxes than many small ones.The Governor has said she wants to address tax breaks. I suggest the legislature start with the largest non-performing tax break. That would be Boeing’s 2003 $3.2 billion (over 20 years) for promising 1,200 additional jobs. Instead, last year alone they laid off over 10,000.

The Seattle Times on Sunday Jan. 4th ran an article about other states rescinding their nonperforming tax breaks and demanding refunds, or “clawbacks.” We want to see that here, too. We don’t appreciate being played for fools.

Extending the sales tax to all services, not just professional services, would do the most to fill the deficit gap. It would also be, in effect, progressive tax, since low-income people tend to hire few lawyers, accountants and financial advisers. I’ll bet most moderate-income people would prefer to pay sales tax on haircuts, rather than see 65,000 people lose Basic Health plans. According to the Rebuilding our Economic Future Coalition, a recent poll showed that–after hearing how deep the cuts in services would be–65% of Washingtonians supported increasing revenues.

Legislators should also use this crisis as an opportunity to take needed steps toward an income tax for high-earners, couples making over $500,000. This 1% tax would be constitutional if Washington law defined income as different from property. Sens. Adam Kline and Rosa Franklin’s SJB 8205  addresses this and should be given an early hearing.

Most of all, Democrats should take courage, and note that Seattle passed the Seattle Housing Levy in a time of economic downturn by its biggest margin ever, 68%. Trust the voters to know that you’re doing the right thing.
(This post first appeared as a comment on the Northwest Progressive Institute blog.)

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.