Help end Tim Eyman’s use of our ballots to promote his business!

Tax Sanity.org


 Why is Washington State  allowing Tim Eyman to have access to our ballots to do anti tax push polls done under the guise of so called “tax advisory votes”? 

These advisory votes are really free advertising, paid for by Washington State taxpayers, to express opposition against the Washington State Legislature raising revenue or repealing outdated tax exemptions. The ballot language was written by Tim Eyman, not Attorney General Bob Ferguson who writes all other ballot title language.
 
Its time to end this abuse of using our ballot and taxpayer money to subsidize the profit interests of an anti-tax initiative business run by Tim Eyman. 

Please contact your Legislators today to help pass Senator Patty Kuderer’s SB 5224. It’s stuck in House Rules. The deadline to pass bills is April 17th. Urge your Representatives to pull SB 5224 from the Rules Committee to the House floor for a vote! Click on the link below to send them an email now Thanks.

Contact your Legislators
Action Network

or you can click on this Legislative link:
comment on SB 5224

Urge WA House Finance Committee Members vote HB 1703 – Tax Exemption Transparency and Accountability Act Out of Committee to Rules

“When we adopt our biennial budgets, we should proactively consider the exemptions and preferences as tax expenditures and require re-adoption if they have never been reviewed or have no sunset date. Why should these “tax expenditures” live on forever? No other expenditure lives on without re-adoption in the budget?” Representative Gerry Pollet – prime sponsor of HB 1703

Your help is needed to get HB 1703 passed by the Washington State legislature. Here is how you can help:

  • Email and/or call Democratic House Finance Committee members listed below urging they vote HB 1703 out of the Washington State House Finance Committee to House Rules. The House Finance Committee Chair is Gael Tarleton. Noel Frame is the lead on this bill in the Finance Committee.
  • Also urge your own Legislators to support HB 1703. Click on this link to HB 1703 and click on “comment on this bill” to urge your legislators to pass this bill.
Representative Phone Email
Noel Frame (360) 786-7814 Noel.Frame@leg.wa.gov
Nicole Macri (360) 786-7826 Nicole.Macri@leg.wa.gov
Tina Orwall (360) 786-7834 Tina.Orwall@leg.wa.gov
Gael Tarleton (360) 786-7860 Gael.Tarleton@leg.wa.gov
Amy Walen (360) 786-7848 Amy.Walen@leg.wa.gov
Sharon Wylie (360) 786-7924 Sharon.Wylie@leg.wa.gov
Mike Chapman (360) 786-7916 Mike.Chapman@leg.wa.gov
Larry Springer (360) 786-7822 Larry.Springer@leg.wa.gov
Jeff Morris (360) 786-7970 Jeff.Morris@leg.wa.gov

Its time to end tax exemptions as off budget spending

  • Our state gives away more revenue as tax exemptions than it collects from the same tax base.
  • 89% of Washington State’s tax exemptions have no sunset provision.
  • Of the 694 tax exemptions listed by the Dept. of Revenue in 2016 some 450 are discretionary.
  • These discretionary tax exemptions were projected by the Dept. of Revenue in 2017 to 2019 to total $54 billion with about $30 billion as “potential revenue gains”

What HB 1703 does:

  • The Department of Revenue Report on all tax exemptions and their fiscal impact would be updated every 2 years instead of 4 years.
  • Any tax exemption that has NO sunset and reduces revenues by over $50,000/year or $100,000/biennium would appear in the budget documents and have to be proactively reauthorized as part of the budget or it would sunset.
  • If the Legislature has taken no action on reviewing and clarifying or adding a sunset on a tax exemption which the Joint Legislative Audit and Review Committee and Citizens Commission on Tax Preferences have recommended to be ended or clarified, and the tax exemption reduces revenues by over $50,000/year or $100,000/biennium, then the exemption would appear in the budget documents and require re-adoption in the budget or it would sunset.

Who are the 38 sponsors of HB 1703?

PolletPaulTarletonValdezGregersonOrwallStanfordRyuSantosDoglioPettigrewThaiKlobaWylieGoodmanBergquistSennPeterson
FitzgibbonRiccelliLekanoffTharingerJinkinsFrameMeadRamos, AppletonFeyDolanWalenMacriCallanKirbyOrtiz-SelfPellicciottiCodyOrmsbyHudgins

F

Contact stevezemke@taxsanity.org for more details

www.taxsanity.org

Tax Sanity– facebook

Washington State Senate passes SB 5442 to end Eyman’s push poll advisory votes

Eliminating Eyman’s push poll tax advisory votes from the ballot

Testimony in support of SB 5224 – concerning advisory votes

Washington State House Committee on State Government & Tribal Relations

Steve Zemke – Tax Sanity           March 11, 2019

The Washington State Ballot for the last ten years has been cluttered with nonbinding push poll questions on tax measures passed by the Legislature.

These so called “tax advisory” questions” were put there as part of Tim Eyman’s Initiative 960 as an attempt to increase public resentment to any “tax” measures despite their benefit to  the larger public. The ballot title for each is basically written as an anti-tax push poll based on Eyman’s ballot title language in Initiative 960 that stipulated the polling question wording.

They carry no Legislative weight as they only record voters’ opinions. They are like a public opinion poll paid for by taxpayers. But Eyman tries to use them to build public opposition to funding public services by wording them such that voters will be inclined to respond negatively to any tax increase. Under Eyman’s definition of tax increases he also includes any efforts by the Legislature to repeal any tax exemptions or tax expenditures even if they are no longer needed or are no longer meeting the state priorities of government.

Deciphering Eyman’s ballot title language is very tricky and confusing to voters. They seem purposely written to try to get voters to vote to repeal any tax increase passed by the Legislature.   And unlike initiatives, the writeup on these so-called tax advisory votes in the voter’s pamphlet contain no explanatory statement, no pro and con statements, and no fiscal impact statement.

In fact, the State Attorney General has no real ability to even try to fairly explain the issue in the ballot title since Eyman’s initiative 960 required that the ballot title be worded as he wrote it:

The legislature imposed, without a vote of the people, (identification of tax and description of increase), costing (most up-to-date ten-year cost projection, expressed in dollars and rounded to the nearest million) in its first ten years, for government spending. This tax increase should be:
Repealed . . .[ ]
Maintained . . .[ ]

Please end this waste of taxpayer dollars to promote Tim Eyman’s anti-tax propaganda and misuse of the public ballot to further his self-serving anti-tax initiative promotion business. Vote to move SB 5224 out of committee to Rules and to the House floor for passage by the full House. Push polls to promote a private business deserve no place on Washington State’s ballot.

Tax Sanity note 3/13/2019 – Patty Kudder’s SB 5224 has had a hearing in the House and needs to be voted out of committee to Rules. Please click on this link to the legislative website for SB 5224 and urge your House Representatives to pass this bill by clicking on the “comment on this bill” button. Thanks.

HB 1703 – Tax Exemption and Accountability Act – Tax Sanity Testimony before House Finance Committee

Testimony in support of HB 1703 – the Tax Exemption Transparency and Accountability Act (2019)

Washington State House Finance Committee, Feb 26, 2019 Testimony by Steve Zemke – Director – Tax Sanity

 Thank you for this opportunity to testify on this legislation.

This is the sixth year this bill has been before you and each year it picks up additional support. This year HB 1703 has the support of 38 House members.

Legislation to create a Tax Expenditure Budget has been increasingly supported by numerous groups in our state over the last few years, including the Washington State Budget and Policy Center, the Washington State Democratic Party, the Washington Education Association, SEIU 775, Northwest Progressive Institute, Washington Federation of State Employees, Faith Action Network, Washington State Labor Council , Puget Sound Advocates for Retirement Action, League of Women Voters and others

Why are these groups supporting this legislation? Because they believe that a system of tax expenditures that gives away more in revenue from the tax base than it collects is a broken system.  They believe that tax exemptions need transparency and accountability and fairness. That does not exist now.

Tax Exemptions, preferences, deductions, credits, and deferrals are off budget expenditures. They lack the transparency and accountability that exists for other expenditures the state makes as part of the biennial budget process. According to the Department of Revenue’s latest Report – the 2016 Tax Exemption Report for the 2015 to 2017 biennium, they projected that while the state would collect some $7.4 billion in B&O taxes, they would exempt from the same tax base some $11.4 billion. This gap has widened since the last biennium.

Including the rest of the tax exemptions in their report, the Department of Revenue projected that off budget tax expenditures would total almost $40 billion while only collecting revenue totaling some $32.6 billion.

Of the 694 tax exemptions in that report about 450 are discretionary.  The Department of Revenue projected that in the 2017 to 2019 Biennium that of the $54 billion in projected tax expenditures, some $30 billion would fall into “potential revenue gains”. 

 This legislation does not mandate wholesale repeal of tax expenditures.  It asks for accountability and transparency and biennial review and gives the legislature the ability to act to end exemptions if they do not meet the priorities of government the same as expenditures in the regular biennial operating appropriations budget must.

Concern about the current system includes a quickly dated Tax Exemption report by the Department of Revenue that is only updated once every 4 years.  Most other states in the country update their report every 2 years or less. California updates their Tax Expenditure report every year.

Companies like Microsoft, Starbucks, Expedia, Adobe and Boeing all must report to their stockholders every year and issue quarterly profit and loss statements.  Their financial statements are scrutinized by their stockholders. It does not make sense that Washington State only updates its Tax Exemption Report every 4 years. It will next be updated in 2020. It should at a minimum be updated every two years just as the state biennial budget is.

Only 73 of the 694 listed exemptions in the 2016 Washington Tax Exemption Report have sunset provisions. This means 89% of the tax expenditures have no sunset provision and never require the Washington State Legislature to ever vote on them again. Meanwhile all expenditures in the regular operating appropriations budget are scrutinized and voted on every 2 years with adjustment made in the 2nd year of the biennium.

Also in the 2016 Washington Tax Exemption Report, 54 exemptions are listed as “unable to disclose” the amount of revenue involved.  Businesses and other entities are benefiting from state tax law in getting exemptions and lower or no taxes. The public has a right to know the value of these exemptions and who is receiving them,

The public has a right to know that these exemptions are creating jobs or providing valuable services to Washington State citizens just as they expect expenditures in the regular budget appropriations bill to produce.

 We require that accountability in the regular budget appropriations process – we don’t say we’re spending state revenue, but the public doesn’t have the right to know because the recipient doesn’t want us to know what they are getting.

With the current lack of accountability and transparency and sound fiscal review and evaluation as to whether current tax expenditures meet the state priorities of government and have clear measurable objectives as to their effectiveness in meeting state needs, taxpayers and citizens in this state increasingly believe state government and the legislature are not doing their job.

 Please step up and vote to fix this broken tax expenditure system that severely lacks needed transparency, accountability and sound fiscal management of our total state budget.

Steve Zemke Director Tax Sanity SteveZemke@TaxSanity.org www.taxsanity.org

steve@taxsanity.org

HB 1703 – Tax Exemption Transparency and Accountability Act Hearing in House Finance Committee Feb. 26, 2019

HB 1703 Hearing  in House Finance Committee

Tuesday 2/26/19 at 8 AM in John L O’Brien Building

Executive session to vote bill out of committee Wed. 2/27/2019

Your help is needed to get HB 1703 passed by the Washington State legislature. Here is how you can help:

  • Go to HB 1703 and click on “comment on this bill” to urge your legislators to pass this bill.
  • Share this post on facebook, twitter and other social media.
  • Email and/or call Democratic House Finance Committee members listed below urging they vote HB 1703 out of committee.
RepresentativePhoneEmail
Noel Frame(360) 786-7814Noel.Frame@leg.wa.gov
Nicole Macri(360) 786-7826 Nicole.Macri@leg.wa.gov
Tina Orwall(360) 786-7834 Tina.Orwall@leg.wa.gov
Gael Tarleton(360) 786-7860 Gael.Tarleton@leg.wa.gov
Amy Walen(360) 786-7848 Amy.Walen@leg.wa.gov
Sharon Wylie(360) 786-7924 Sharon.Wylie@leg.wa.gov
Mike Chapman(360) 786-7916 Mike.Chapman@leg.wa.gov
Larry Springer(360) 786-7822 Larry.Springer@leg.wa.gov
Jeff Morris(360) 786-7970 Jeff.Morris@leg.wa.gov

Its time to end tax exemptions as off budget spending

Our state gives away more revenue as tax exemptions than it collects from the same tax base.

89% of Washington State’s tax exemptions have no sunset provision.

Of the 694 tax exemptions listed by the Dept. of Revenue in 2016 some 450 are discretionary.

These discretionary tax exemptions were projected by the Dept. of Revenue in 2017 to 2019 to total $54 billion with about $30 billion as “potential revenue gains”

When we adopt our biennial budgets, we should proactively consider the exemptions and preferences as tax expenditures and require re-adoption if they have never been reviewed or have no sunset date. Why should these “tax expenditures” live on forever? No other expenditure lives on without re-adoption in the budget?

What HB 1703 does:

  • The Department of Revenue Report on all tax exemptions and their fiscal impact would be updated every 2 years instead of 4 years.
  • Any tax exemption that has NO sunset and reduces revenues by over $50,000/year or $100,000/biennium would appear in the budget documents and have to be proactively reauthorized as part of the budget or it would sunset.
  • If the Legislature has taken no action on reviewing and clarifying or adding a sunset on a tax exemption which the Joint Legislative Audit and Review Committee and Citizens Commission on Tax Preferences have recommended to be ended or clarified, and the tax exemption reduces revenues by over $50,000/year or $100,000/biennium, then the exemption would appear in the budget documents and require re-adoption in the budget or it would sunset.

Sponsors: PolletPaulTarletonValdezGregersonOrwallStanfordRyuSantosDoglioPettigrewThaiKlobaWylieGoodmanBergquistSennPetersonFitzgibbonRiccelliLekanoffTharingerJinkinsFrameMeadRamosAppletonFeyDolanWalenMacriCallanKirbyOrtiz-SelfPellicciottiCodyOrmsbyHudgins

  • Contact stevezemke@taxsanity.org for more details.

HB 1703 – Tax Exemption Transparency and Accountability Bill Introduced in 2019 WA Legislative Session


HB 1703 – 2019 Tax Exemption Transparency and Accountability Act

Update: Hearing on HB 1703 in House Finance Committee

Tuesday 2/26/19 at 8 AM in John L O’Brien Building

It’s Time to End Tax Exemptions as Off Budget Spending!

Our state gives away more revenue as tax exemptions than it collects from the same tax base.

89% of Washington State’s tax exemptions have no sunset provision.

Of the 694 tax exemptions listed by the Dept. of Revenue in 2016 some 450 are discretionary.

These discretionary tax exemptions were projected by the Dept. of Revenue in 2017 to 2019 to total $54 billion with about $30 billion as “potential revenue gains”

When we adopt our biennial budgets, we should proactively consider the exemptions and preferences as tax expenditures and require re-adoption if they have never been reviewed or have no sunset date. Why should these “tax expenditures” live on forever? No other expenditure lives on without re-adoption in the budget?

What HB 1703 does:

  • The Department of Revenue Report on all tax exemptions and their fiscal impact would be updated every 2 years instead of 4 years.
  • Any tax exemption that has NO sunset and reduces revenues by over $50,000/year or $100,000/biennium would appear in the budget documents and have to be proactively reauthorized as part of the budget or it would sunset.
  • If the Legislature has taken no action on reviewing and clarifying or adding a sunset on a tax exemption which the Joint Legislative Audit and Review Committee and Citizens Commission on Tax Preferences have recommended to be ended or clarified, and the tax exemption reduces revenues by over $50,000/year or $100,000/biennium, then the exemption would appear in the budget documents and require re-adoption in the budget or it would sunset.

Sponsors: PolletPaulTarletonValdezGregersonOrwallStanfordRyuSantosDoglioPettigrewThaiKlobaWylieGoodmanBergquistSennPetersonFitzgibbonRiccelliLekanoffTharingerJinkinsFrameMeadRamosAppletonFeyDolanWalenMacriCallanKirbyOrtiz-SelfPellicciottiCodyOrmsbyHudgins

You can help!

  • Go to HB 1703 and clicking on “comment on this bill” to urge your legislators to pass this bill. Urge the House Finance Committee to move this bill out of committee.
  • Email and/or call Democratic House Finance Committee members urging their support.
  • Contact stevezemke@taxsanity.org for more details.
RepresentativePhoneEmail
Noel Frame(360) 786-7814Noel.Frame@leg.wa.gov
Nicole Macri(360) 786-7826 Nicole.Macri@leg.wa.gov
Tina Orwall(360) 786-7834 Tina.Orwall@leg.wa.gov
Gael Tarleton(360) 786-7860 Gael.Tarleton@leg.wa.gov
Amy Walen(360) 786-7848 Amy.Walen@leg.wa.gov
Sharon Wylie(360) 786-7924 Sharon.Wylie@leg.wa.gov
Mike Chapman(360) 786-7916 Mike.Chapman@leg.wa.gov
Larry Springer(360) 786-7822 Larry.Springer@leg.wa.gov
Jeff Morris(360) 786-7970 Jeff.Morris@leg.wa.gov

Action Alert on ESSB 5513 to Increase Tax Exemption Transparency and Accountability

Action Alert on WA ESSB 5513 to Increase Tax Exemption Transparency and Accountability.

ESSB 5513 on Tax Exemption Transparency and Accountability was passed last week by the Senate on a 47/0 vote. It is now in the House.

Your help is needed now.  Please contact your LD State Representatives to urge support for ESSB 5513 bill.  To contact your own Representatives and leave a comment click on this link ESSB 5513 Washington State Legislature website at www.leg.wa.gov , click on “find a bill”, type in 5513, and on the bill page click on the link “comment on this bill”

Also contact Rep. Larry Springer on the House Finance Committee and urge he support this bill without amendments to weaken it.  His e-mail is larry.springer@leg.wa.gov

ESSB 5513 would  take a significant step forward in providing more updated and current information to the Governor, the Washington State Legislature and the Public regarding Tax Expenditures aka Tax Preferences. The Senate Bill Report on ESSB 5513 has a good summary of what the substitute bill does:

Summary of Engrossed First Substitute Bill: 

The DOR Tax Exemption Report (Report) is updated every two years instead of every four years. The Report must include recommendations by JLARC and the Commission if the tax preference has been reviewed. 

The November budget outlook materials must include the projected fiscal impact of discretionary tax preferences in the current biennium and subsequent biennium. The summary must separate discretionary tax preferences by category—business incentive, agriculture, nonprofit, etc.—as provided in the DOR Report.

The Governor’s budget documents must include a detailed listing of discretionary tax preferences and the listing must be included on the websites of the Office of Financial Management, Economic Revenue and Forecast Council, and Office of the Governor. The listing must provide the following information:

-a brief description of each discretionary tax preference;

-prior and future estimated fiscal impacts for each discretionary tax preference; 

-the stated public policy objective, if any, of the discretionary tax preference; 

-and any recommendations by JLARC and the Commission with regarding to continuing, modifying, or eliminating the discretionary tax preference. 

Discretionary tax preference is defined to be a tax credit, exemption, deduction, or preferential tax rate, which is not required by the state constitution, United States Constitution, or federal law. ”

www.Taxsanity.org   like on facebook –  Tax Sanity Steve Zemke – Director

Testimony on ESSB 5513 before WA House Finance Committee

Comments to House Finance Committee on ESSB 5513  Feb. 22, 2018

Steve Zemke Director – Tax Sanity

Tax Sanity recommends passage of ESSB 5513. Updating the Department of Revenue’s Tax Exemption Report every two years instead of four years is important to have this information available for writing the state’s biennial operating budget. It will help to increase transparency and accountability of tax expenditures.

This bill is in line with the recommendations of the National Conference of State Legislatures which wrote in a 2014 document entitled “Tax Expenditure Budgets and Reports; Best Practices” that:

“To ensure that policymakers and the public have a full understanding of deviations from “normal” tax policy and the impact of those deviations on state revenues, there should be a protocol, codified in statute, which specifies that tax expenditure reports should:

  1. Be easily accessible and available on-line
  2. Be completed in time for budget and policy decisions.”

They further outline specifically what should be in the report.

More information is no guarantee, however, that the Legislature or a Governor will be more accountable in using this information for the public welfare and benefit.  They also wrote:

“While better tax expenditure budgets and reports are a critical first step, the data in these reports must be reviewed and evaluated in order to produce better public policy making. Here, too, there are some “best practices.”

Tax expenditures should be an integral part of the state’s budgeting process, subject to a comparable regular review and approval process as other expenditures. All tax expenditures should be reviewed regularly …

Evaluations should be based on measurable goals and draw clear conclusions on the effectiveness of the tax expenditures. …

The Governor and appropriate legislative committees should review the reports to determine whether tax expenditures should be continued, modified or eliminated. This should be part of the state’s normal budgeting process.”

This is what was proposed in HB 1500, SB 5513. This substitute bill ESSB 5513 takes another step toward more transparency and accountability but the responsibility remains on the Governor and the Legislature to use this information in its budget deliberations to consider the best use of our state tax revenue in both expenditures in the operating budget and off budget tax expenditures known as tax preferences in this state.

Washington State currently expends more revenue through its tax exemption system that it collects as revenue for the general operating budget. Ninety per cent of the tax exemptions have no sunset provisions. This is a broken system and needs to change.

ESSB 5513 passes WA State Senate Unanimously. Now Awaits a House Vote

The Washington State Senate passed ESSB 5513 by a 47/0 Vote on Feb. 13, 2018. The bill has been sent to the House for a vote..ESSB 5513 is a substitute bill that has removed the provision that discretionary tax exemptions must be voted on as part of the biennial budget process every two years. It is still a significant step in trying to make Washington State’s almost 700 tax exemptions more transparent and accountable.  ESSB 5513 would require the Washington State Department of Revenue to update its Tax Exemption Report every 2 years instead of 4 years. The Governor’s Budget forecast documents must include a listing of all discretionary tax exemptions (some 450) and their fiscal impact on the proposed state budget in terms of potential revenue not collected.

Here is a summary of the ESSB 5513 as reported by the Senate Ways and Means Committee:

Summary of Engrossed First Substitute Bill:

The DOR Tax Exemption Report (Report) is updated every two years instead of every four years. The Report must include recommendations by JLARC and the Commission if the tax preference has been reviewed.

The November budget outlook materials must include the projected fiscal impact of
discretionary tax preferences in the current biennium and subsequent biennium. The
summary must separate discretionary tax preferences by category—business incentive, agriculture, nonprofit, etc.—as provided in the DOR Report.

The Governor’s budget documents must include a detailed listing of discretionary tax preferences and the listing must be included on the websites of the Office of Financial Management, Economic Revenue and Forecast Council, and Office of the Governor. The listing must provide the following information:
– a brief description of each discretionary tax preference;
prior and future estimated fiscal impacts for each discretionary tax preference;
– the stated public policy objective, if any, of the discretionary tax preference; and
– any recommendations by JLARC and the Commission with regarding to continuing,modifying, or eliminating the discretionary tax preference.

Discretionary tax preference is defined to be a tax credit, exemption, deduction, or
preferential tax rate, which is not required by the state constitution, United States
Constitution, or federal law.:

ESSB 5513 is scheduled for a hearing in the House Finance Committee on Thursday Feb. 22nd, 2018 at 3:30 PM. If you can not attend to testify, please call or send e-mails to the legislators in the House.Finance Committee, urging them to vote this bill out of committee so that the full House can vote on it. also contact your own Legislators. The remaining session is short. Do not assume your Representatives know about this bill or that it will pass in the flurry of bills demanding attention at the end of the session. Please help by contacting  Legislators today. Thanks.

 

Committee Members

Representative e-mail Phone
Lytton, Kristine (D)
Chair
kristine.lytton@leg.wa.gov (360) 786-7800
Frame, Noel (D)
Vice Chair
noel.frame@leg.wa.gov (360) 786-7814
Nealey, Terry (R)
Ranking Minority Member
terry.nealey@leg.wa.gov (360) 786-7828
Orcutt, Ed (R)
Asst Ranking Minority Member
ed.orcutt@leg.wa.gov (360) 786-7990
Condotta, Cary (R) cary.cordotta@leg.wa.gov (360) 786-7954
Dolan, Laurie (D) laurie.dolan@lwg.wa.gov (360) 786-7940
Pollet, Gerry (D) gerry.pollet@leg.wa.gov (360) 786-7886
Springer, Larry (D) larry.springer@leg.wa.gov (360) 786-7822
Stokesbary, Drew (R) drew.stokesberry@leg.wa.gov (360) 786-7846
Wilcox, J.T. (R) jt.wilcox@leg.wa.gov (360) 786-7912
Wylie, Sharon (D) sharon.wylie@leg.wa.gov (360) 786-7924

You can also leave messages for your own Legislators by going  to the bill page for  ESSB 5513 and looking  to the right on the page you will see a box to “comment on this bill”  Thank your Senator for voting to pass this bill  (It was a 47/0 vote) and urge your two House members to vote to pass this bill.  Thanks

WA SB 5513 – the Tax Exemption Transparency and Accountability Act

Testimony in support of SB 5513 – the Tax Exemption Transparency and Accountability Act

Washington State Senate Ways and Means Committee, Jan. 18, 2018

Steve Zemke – Tax Sanity

 Thank you for this opportunity to testify on this legislation.

This is the fifth year this bill has been before you and each year it picks up additional support.  Senate SB 5513 has 14 sponsors and its companion bill in the House HB 1500 has 33 sponsors. This is almost one third of our state Legislators.  

 Legislation to create a Tax Expenditure Budget has been increasingly supported by numerous groups in our state, including the Washington State Budget and Policy Center, All in for Washington,   Washington State Labor Council,  League of Women Voters of Washington, Washington’s Paramount Duty,  Washington State Democratic Party,  Washington Education Association, SEIU 775, Northwest Progressive Institute, Washington Federation of State Employees, Washington State Council of Firefighters,  Faith Action Network, Puget Sound Advocates for Retirement Action, and others.

 Why are these groups supporting this legislation? Because they believe that a system of tax expenditures that gives away more in revenue from the tax base than it collects is a broken system.  They believe that tax exemptions need transparency and accountability and fairness. That does not exist now.

 Tax Exemptions, preferences, deductions, credits, and deferrals are off budget expenditures. They lack the transparency and accountably that exists for other expenditures the state makes as part of the biennial budget process. According to the Department of Revenue’s projection in their 2016 Tax Exemption Report for the 2015 to 2017 biennium they projected that while the state would collect some $7.4 billion in B&O taxes, they would exempt from the same tax base some $11.4 billion. This gap has widened since the last biennium.

Including the rest of the tax exemptions in their report, the Department of Revenue projected that off budget tax expenditures would total almost $40 billion while only collecting revenue totaling some $32.6 billion.

Of the 694 tax exemptions in that report about 450 are discretionary.  The Department of Revenue projected that in the 2017 to 2019 Biennium that of the $54 billion in projected tax expenditures, some $30 billion would fall into “potential revenue gains”. 

  This legislation does not mandate wholesale repeal of tax expenditures.  It asks for accountability and transparency and biennial review and gives the legislature the ability to act to end exemptions if they do not meet the priorities of government the same as expenditures in the regular biennial operating appropriations budget must.

 Concern about the current system includes a quickly dated Tax Exemption report by the Department of Revenue that is only updated once every 4 years.  Most other states in the country update their report every 2 years or less. California updates their Tax Expenditure report every year.

Companies like Microsoft, Starbucks, Expedia, Adobe and Boeing all must report to their stockholders every year and issue quarterly profit and loss statements.  Their financial statements are scrutinized by their stockholders. It does not make sense that Washington State only updates its Tax Exemption Report every 4 years. It will next be updated in 2020. It should at a minimum be updated two years just as the state biennial budget is..

Only 73 of the 694 listed exemptions in the 2016 Tax Exemption Report have sunset provisions. This means 89% of the tax expenditures have no sunset provision and never require the Washington State legislature to ever vote on them again. Meanwhile all expenditures in the regular operating appropriations budget are scrutinized and voted on every 2 years with adjustment made in the 2nd year of the biennium.

 Also in the Tax exemption report, 54 exemptions are listed as “unable to disclose” the amount of revenue involved.  Businesses and other entities are benefiting from state tax law in getting exemptions and lower or no taxes. The public has a right to know the value of these exemptions. 

 The public has a right to know that these exemptions are creating jobs or providing valuable services to Washington State citizens just as they expect expenditures in the regular budget appropriations bill to produce.

  We require that accountability in the regular budget appropriations process – we don’t say we’re spending state revenue but the public doesn’t have the right to know because the recipient doesn’t want us to know what they are getting.

 With the current lack of accountability and transparency and sound fiscal review and evaluation as to whether current tax expenditures meet the state priorities of government and have clear measurable objectives as to their effectiveness in meeting state needs, taxpayers and citizens in this state increasingly believe state government and the legislature are not doing their job.

Please step up and vote to fix this broken tax expenditure system that severely lacks needed transparency, accountability and sound fiscal management of our total state budget.

 Steve Zemke

 Director Tax Sanity

steve@taxsanity.org

www.taxsanity.org