Afternoon Jolt

Today's Loser: Mark Johnson, Lobbyist for the Washington Retail Association

Poor Mr. Johnson. He was just doing his job trying to defend a sales tax break for retailers in border counties like Clark County where non-resident shoppers get an exemption from the state's sales tax, and he runs into the new house finance chair, Rep. Reuven Carlyle (D-36, Queen Anne), who happens to be obsessed with "metrics" and "analytics"—not just anecdotal evidence.

Lefties have proposed getting rid of the out-of-state sales tax exemption, which would bring in $61 million this biennium, and using the money to fund a working families tax rebate for poor families that get the federal earned income tax credit, but don't get a similar rebate from the state because there's no income tax here. The proposal is being sponsored by Rep. Chris Reykdal (D-22, Tumwater). About 400,000 working families in the state would qualify for the rebate—getting 3.5 percent of their EITC refund or $50 a year, whichever is higher. (The average rebate would be about $70 a year.)

The difference between covering the cost to the state of the tax rebate for the working poor and getting the out-of-state sales tax money: $24 million net gain this biennium. And advocates for the proposal, such as Kim Justice from the Washington State Budget and Policy Center, who testified this morning, point out that eliminating the exemption would keep the money in Washington state's economy rather than Oregon's.

However, WRA's Johnson, testifying against the proposal at today's hearing, said: "Let there be no mistake about this, this will cost Washington state jobs, particularly along the border counties that are most impacted by this."

Rep. Reuven Carlyle/image courtesy TVW

Enter Carlyle, who in addition being obsessed with metrics and analytics is also obsessed with defending Seattle: "Mark, just out of curiosity, you made a categorical statement that closing the out-of-state exemption would cost jobs. [But] the largest county by far with respect to the out of state exemption is King County. King County is driven in large part, in terms of out of state guests, is driven by the hotels, tourism, and conventions. So when you make a very categorical statement that it would cost jobs, what are the actual metrics that you're basing that statement upon?"

"What are the actual metrics that you're basing that statement upon?"—Rep. Carlyle

Carlyle's point, which is backed up by the Joint Legislative Audit Review Committee's report on tax breaks, is that most of the jobs related to out-of-state spending are in King County, not Clark County. (See page 227 of the JLARC report.)

Johnson evidently didn't get the memo on Carlyle ... or even hear his question ... and proceeded: "Let me give you some anecdotal information..." (whoops!) and went on to say he'd heard  something, "I found very interesting," speculating that tourists wouldn't buy expensive jewelry anymore.

Carlyle again: "I appreciate that. I really do. But it's a categorical statement that it would cost jobs. I'm just kind of curious if there's any actual data and any analytics with respect to the out-of-state-sales tax specifically on that question.

"I mean, as a general statement, we're very sensitive to the border areas and the nuance of that, but given that the vast majority of the actual dollars come out of King County ... we have to ask—should we have a statewide policy that's letting tens of millions of dollars that are not associated with that border area be driven by those very small businesses that have a particular issue?"

Carlyle's point is that tourists aren't going to stop coming to Seattle—sales tax exemption or not. And those Seattle businesses are the ones who will largely end up footing the bill to fund the working families tax rebate anyway.

Score one for Seattle. Ending tax breaks. And helping working families. Oh, and facts too. (Or to use Carlyle's favorite lingo—"metrics.")

Watch the interrogation here; it's about a ten minute clip to catch the whole back and forth.

One Jolt against the proposal, though. Rep. Cary Condotta (R-12, E. Wenatchee) pointed out that while the proposal for killing the exemption and funding the working families rebate showed a net gain of $24 million this biennium, it came up short by $5.5 million in the next biennium.

The bill isn't likely to get out of committee this week for fiscal cutoff, but as a budgeting bill, it's likely to stick around during the end-of-session budget battles.