Lawmakers need to target useless tax breaks

The OlympianApril 17, 2013 

The state operating budget released late last week by the House Democratic Caucus is far superior to the one placed on the table earlier by the Republican-controlled Senate Majority Coalition Caucus.

Neither will survive in its entirety as budget negotiations begin in earnest with less than two weeks left to go in the regular, 105-day legislative session.

But lawmakers would be well-served to embrace more pages in the House budgetary playbook for 2013-15 than the Senate one.

The House budget invests some $1.3 billion over the next two fiscal years to start meeting the demands of the state Supreme Court’s McCleary decision, putting the state on a sensible pathway to fully fund K-12 education.

The House approach to this daunting task tackles head-on a festering budgetary sore — the ever-growing number of tax exemptions approved by past legislators.

In the 1960s, there were roughly 150 tax breaks on the books. Today the number of tax giveaways sits at 640, representing lost revenue that totals up to some $10.4 billion per biennium, or almost one-third of the overall state operating budget.

It’s time to start holding tax breaks to the same level of scrutiny that is applied to other areas of the state budget. At the very least, tax exemptions need to have a sunset date to allow for proper review. And any tax break allowed to stay on the books should adhere to clear policy targets so the public and lawmakers can assess if it’s fulfilling its stated goal.

The House budget proposal sets the wheels in motion for much-needed reform of the state tax code. It is a modest step in the right direction — not a radical overhaul. A mere 15 tax breaks would be eliminated under the House plan, less than 2 percent of the total.

But the repeal of preferential business and occupation, sales and fuel taxes in a few targeted areas is enough to raise $863 million earmarked for K-12 education.

In contrast, the Senate budget does nothing to stop the tax-break bleeding. Instead, it adds 13 new ones. Meanwhile, Gov. Jay Inslee’s budget proposal is a bit of add and subtract — eliminate 11, but add four new ones.

Budget negotiators need to move down the pathway created by the House. Extending tax breaks to a variety of businesses and industries has become the state’s version of federal pork barrel politics. It is not sustainable in tough economic times and few of the tax exemptions have been the economic stimulators their proponents claimed they would be.

The House and Senate budgets are miles apart. The likelihood of state lawmakers closing the political and budgetary divide without a special session is shaky at best. But one way to get the compromise ball rolling in a meaningful way is to surgically eliminate those tax breaks that have done little or nothing to create jobs and stimulate the economy. Invest that money in our children’s education and in a brighter economic future for those soon to enter a rapidly changing work force.

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