Morning Fizz

AWB Rep: "Legislature Should Avoid Establishing Specific Economic Development Metrics to Measure Progress."

Caffeinated News featuring reviewing and clarifying tax breaks.

By Morning Fizz November 11, 2014


1. Year after year, the bipartisan Joint Legislative Audit Review Committee (JLARC)—a task force of legislators that evaluates tax breaks—has issued report after report recommending by default that hundreds of millions of dollars worth in tax breaks stay on the books despite their own assessments that many of the breaks need to be "reviewed and clarified."

What's been most frustrating about these regular reports is that they've simultaneously offered no hint of how to "review and clarify" the tax breaks because neither the legislature's original rationale for the tax break nor measures to judge whether the tax breaks are actually working have been clear. 

The latest JLARC report released yesterday—a review of 24 tax breaks—is different.

This time, of the 20 tax breaks they call out to "review and clarify," they've added some specific instructions. For example on a $238.5 million aerospace industry tax break (no not that aerospace industry break, but an earlier Boeing tax break), the report states (bold mine):

Review & clarify: Because providing additional detail in the tax preference performance statement such as a measure of the desired increase in jobs would facilitate future reviews of these preferences. 

In other words, JLARC is asking the proponents of the break to do exactly what proponents of budget line items have to do every budgeting cycle—like social service advocates desperately testifying in favor of low-income housing subsidies: Justify allocating state revenue.

Win one for liberal state house finance chair Rep. Reuven Carlyle (D-36, Queen Anne) who's been advocating for this sort of parity between spending state money on budget line items and losing state money on revenue exemptions (such as the aforementioned $238.5 million lost in the upcoming biennium thanks to a "preferential B&O tax rate" for manufacturers of aerospace parts) for years

Rep. Carlyle—along with former state Sen. Rodney Tom (D-48, Medina)—finally passed legislation  in 2013 demanding this exact kind of scrutiny of tax breaks calling for "legislative intent language, metrics, and data to facilitate the review of the preference ... " 

And lose one, evidently, for the Association of Washington Business, Olympia's business lobby. AWB tax policy analyst Ron Bueing, a member of the JLARC oversight commission, dissented, issuing a lone minority report against the JLARC recommendation for more concrete scrutiny. 

Bueing stated (bolds mine):  

The Legislature should avoid establishing specific economic development metrics to measure progress towards public policy objectives and ensure that reporting mechanisms are targeted and reasonable. The Legislature should revise its definition of “tax preferences” to avoid labeling anomalies under a gross receipts tax as preferences. … In an ever evolving marketplace, technological change, market forces and economic trends make it virtually impossible to establish specific economic development metrics.

 The same specific economic metric cannot reasonably be used to measure the effectiveness of job creation in a growing economy as is used in a recessionary economy. Yet it is impossible for the Legislature to accurately measure the future course of the economy. Instead, rigorous economic analysis is necessary to reasonably and accurately measure the benefit of an incentive. Simplistic, specific economic metrics make the process of measuring progress much easier, but at the expense of creating any useful analysis.

2.  The Republicans did a lot of Seattle bashing in this year's legislative elections—like this mailer in the 35th Legislative District (Mason, Kitsap, and Thurston Counties). 

 

And now that the GOP has picked up a senate seat and four house seats, the anti-Seattle gloating begins.

State Rep. J.T. Wilcox (R-2, Yelm) posted this comment on Facebook yesterday.

Last year's version of making sure policy worked in every region of the state included the legislature's refusal to give King County the option of voting on local taxes for Metro bus service. 

 

 

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