This week, I want to focus on jobs and careers, the economy and the governor’s tax proposals unveiled yesterday, Thursday, March 28.
“First, do no harm” – this should be the Legislature’s mission. Even the threat of new and higher taxes creates uncertainty in our economy and hurts job creation. A basic need for Washingtonians is an income source – a job – so they can support themselves, their families and pay taxes. When we add additional tax burdens to our job creators, it’s like a dark cloud over robust growth, so we have to be cautious about how we move forward.
Below is a brief overview of some job-creation ideas and the governor’s tax plan, which I hope is informative. Please feel free to call me with questions, comments and ideas.
In service to you,
Jobs and economy
The statewide average unemployment rate is 8.2 percent, not seasonally adjusted. In the 9th Legislative District our unemployment rates by county are:
- Spokane – 10 percent
- Whitman – 6.4 percent
- Garfield – 10.7 percent
- Asotin – 8.0 percent
- Adams – 12.6 percent
- Franklin – 12.5 percent
While some of the numbers look better than the state average, we have a lot of people looking for work. I believe the job of the Legislature is to create policies that cut red tape, streamline permitting and encourage our employers to invest in their workforce. I support policies that will begin to address our high rates of unemployment around Washington. You can read about those solutions here: http://houserepublicans.wa.gov/our-solutions/jobs-economy/.
Finally, one of the key indicators of a strong economy is construction/housing. Our home builders are beginning to see a real resurgence of activity. Many of us have seen the presentation given by Elliot Eisenberg, Ph. D and former lead economist for the National Homebuilders Association – how the construction of one home creates two to three permanent jobs plus many more during site preparation, construction, finishing, interior design and landscaping. Dr. Eisenberg says the industry needs to do a better job of communicating the positive impact it has on our economy. Just this week, he pointed out good news:
Between 1998 and 2002, before the housing market went haywire, total housing starts averaged 1.65 million units and the population of the US averaged 282 million persons. Over the next five years the U.S. population will average about 320 million. As a result, I expect housing starts to steadily rise to a plateau of about 1.725 million units. Absent increasing bank regulations, starts would be expected to exceed 1.825 million.
We have less than one month left in this legislative session. My hope is the Legislature will find common ground on policies that will put people back to work and strengthen our economy from the bottom up.
Governor’s budget priorities released
Before I give you a short breakdown of the governor’s priorities he released yesterday, here are some things to keep in mind:
- State revenues are expected to grow 6.6 percent between the 2011-13 and 2013-15 budget cycles without tax increases. This equals roughly $2 billion more in state tax collections each budget cycle – again, without new taxes.
- Washington personal income (inflation adjusted) growth is forecast to be lower — about 2.3 percent. “This reflects the fact that January 1, there was an increase in payroll taxes. The sequester has an impact,” according to the State Chief Economist Steve Lerch.
The governor does not fund education first, as the priority the state Supreme Court and our state constitution tells us it is, but rather funds everything else first and is relying on the following tax increases to fund the McCleary enhancements:
- Making permanent the 0.3 percent business and occupation (B&O) tax surcharge: $534.0 million
- Making permanent the 50-cent beer tax, and extending it to small brewers: $127.6 million
- Limiting vehicle trade-in exemption to first $10,000 value: $94.8 million
- Repealing sales tax exemption for local residential telephone service (HB 1971): $83.2 million
- Extending sales tax to custom computer software: $78.5 million
- Increases B&O tax rates for most industries by 25 percent: $66.2 million
- Instates a sales tax for non-residents shopping in Washington state: $63.7 million
- Increases sales tax on bottled water: $51.5 million
- Increases use tax for extracted fuel, except hog fuel: $40.8 million
- Increases the tax rate for resellers of prescription drugs: $29.0 million
- Increases B&O tax for long-term rental of commercial real estate: $27.8 million
- Increases taxes for import commerce: $24.1 million
- Increases sales tax for farm action purchases: $5.6 million
The governor’s tax plan totals $1.2 billion! As I noted earlier, these new, extended and/or expanded taxes touch all of us – consumers, job creators, small, medium and large business owners. You may think that some of these don’t sound too bad, but please remember that our revenue is increasing 6.6 percent, which is an additional $2 billion, plus we expect to realize a significant savings (in the hundreds of millions of dollars) due to federal government-funded Medicaid expansion.
Like our families and businesses back home in the 9th District, the Legislature needs to adopt a budget at the state level that lives within the growing revenue the state is collecting. Our budget lead and ranking member of the House Appropriations Committee Representative Gary Alexander will do just that, while addressing the state Supreme Court mandate that we fund public education and relieve local property taxpayers of big levies. I will forward more details on his plan soon. We can fund our priorities, including K-12 education, without tax increases. I hope to hear from you regarding your ideas and suggestions as we wrestle with budget preparation and negotiations over the next four weeks.
Another week of visitors
We welcomed our 9th District conservation district commissioners and staff in Olympia this week. The Washington State Conservation Commission and conservation districts are the service delivery system for conservation work in our state. This critical system is built on nearly a century of trust and accomplishment between private landowners and local districts. Together, they balance the demands of working lands and the needs of our natural resources. Pictured below is my discussion with conservation district representatives from Whitman, Spokane, Asotin and Franklin counties.
Watch my video update on jobs and the economy (just click on the update below)