By Mike Richards -The Lens
A Senate bill making its way through the Washington State Legislature aims to attract more manufacturing companies to move to the state and incentivize those and any existing businesses to remain and build their projects within Washington. SB 5642, which would offer tax deferrals for eligible manufacturing projects to be reinvested into job training programs, was voted out of committee this week and sent to Rules.
Proponents of the bill argue the money would be well-spent. According to the National Association of Manufacturers’ website, manufacturing has the highest multiplier effect of any sector, at a $1.81 economic return per dollar invested nationally.
Prime sponsor is Senate Majority Deputy Leader Sharon Brown (R-8), and cosponsors include State Sens. Curtis King (R-14), Mark Miloscia (R-30), and President Pro Tempore Tim Sheldon (D-35).
Brown: Creating ‘A Level Playing Field’
At a March 30 public hearing in the Senate Ways and Means Committee, Brown told members, “What I love about this bill is it gets the state out of the business of picking winners and losers, it allows all of the manufacturers to compete for these projects on a level playing field.”
“The pilot was so successful last year that it closed within a couple months and we had projects, three of them on this side of the state, two on the eastern side of the state and we were asked to bring the project back because of its success,” she added.
The legislature in 2015 established the Invest in Washington pilot program, which offered a sales and use tax deferral for construction costs for five manufacturing facilities in Spokane, Benton, Pierce, and Snohomish Counties, which had two.
According to the bill report, the program was “established to evaluate the effectiveness of providing a tax incentive for businesses that invest in manufacturing facilities and equipment and reinvest those tax savings in employee training programs.”
After the completion of the project, deferral recipients had five years to begin repaying the taxes, finishing before the ten-year mark. Those taxes were then deposited in the Invest in Washington Account, managed by the State Board for Community and Technical Colleges.
According to the report, the collected funds were required to support state-approved apprenticeship programs in manufacturing or production, and advance job skills and customized job training programs, and workforce professional development.
SB 5642 would make the deferral program permanent. Under the substitute version, two projects per year would be eligible, one in eastern Washington and one in western Washington, and the program would begin on January 1, 2018.
Encouraging Manufacturers To Remain
During the bill’s first public hearing in that committee Brown said, “The genesis for this bill came because I was getting exasperated of listening to a lot of requests for B&O tax exemptions” and she “absolutely loved” the idea of a pilot program for the entire state.
“We had manufacturers across the entire state that were able to avail themselves of this program…we had manufacturers that were getting ready to leave this state that wrote to me that ‘you know what, because of this program we are now going to stay here, we’re going to build our manufacturing facility here,” she added.