In a special legislative session dedicated to fixing a budget shortfall, Democrats vowed to take a detour to do something about unemployment in Washington.
A proposed tax break for small businesses that hire new workers was one of the more straightforward ideas for job aid. But it failed to win enough support.
Instead, the centerpiece of lawmakers’ jobs efforts was aid for the beleaguered construction industry, via a November ballot measure to borrow $505 million for school renovation, paid for in part by a tax on bottled water.
Democrats say that and other laws will lead to tens of thousands of jobs. But some ideas fell by the wayside in the monthlong overtime period, including the tax credit, which ran into concerns in the House that its $9 million price tag was too large.
“It’s a relatively expensive way to create jobs,” said Rep. Ross Hunter of Medina, House Democrats’ point man on taxes.
The tax break would have cast a wide net, Hunter said, catching both employers persuaded by the credit to expand their work forces and those who had planned to hire anyway.
House skeptics also took notice of Congress passing a credit of up to $1,000 per worker, signed into law last month.
State Sen. Derek Kilmer said the tax credit he proposed would have only been strengthened by the federal credit. “My argument all along was, ‘Great. It’s additive,’” he said.
The Gig Harbor Democrat’s credit would have offered $2,000 to $4,000 per job to businesses with 20 or fewer workers that met pay and benefits requirements. He said the projected cost to the state didn’t take into account the benefits of job creation.
GOP IDEAS STALL
Washington’s jobless rate ticked up slightly in March to 9.5 percent, the Employment Security Department reported Tuesday.
Republicans say if majority Democrats wanted to help, they could have started by not passing nearly $800 million in new taxes.
Tax rates on the receipts of service businesses such as lawyers, accountants and hairdressers will go up. Lawmakers did double a tax credit for the smallest of those businesses, and Democrats say this year’s already deep $750 million in cuts would have been more painful without the taxes.
Republicans predict the taxes will be a job killer. They add that Democrats should have promoted job growth by reforming unemployment insurance and the workers’ compensation system.
Environmentalists also had an idea for creating jobs: Raise taxes on hazardous substances to finance cleanup of stormwater pollution.
Unions backed the idea as a job engine, but supporters couldn’t find the votes to overcome opposition from the oil industry, which pays the bulk of the tax and complained that raising it would hurt local refineries and drive up gas prices.
“It’s frustrating in light of the strong support from local governments, from labor, from the environmental community for the bill,” said Mo McBroom, policy director for the Washington Environmental Council.
Kilmer and other Democrats said the session should be looked at as a whole for its help to the job market. They noted:
More than $450 million in new capital construction projects, including $30 million for housing. Democrats said they would create 13,000 jobs.
A sales tax exemption for technology companies that build their server farms in rural Washington counties, which legislators hope will draw more of the centers to Eastern Washington.
Authorization for more communities, including Puyallup and Lacey, to use a special financing scheme for infrastructure improvements.
But the most ambitious law allows the energy-efficient upgrades to schools and colleges, which the Legislature approved in contentious votes over GOP opposition just before leaving Olympia.
Supporters call it the Jobs Act and say the bonds will combine with local money to create 30,000 jobs – a number disputed by opponents. Its main backer, Rep. Hans Dunshee, a Snohomish Democrat, called it a modern day version of the New Deal-era Works Progress Administration.
It now goes to Gov. Chris Gregoire, and then requires voter approval because it borrows outside the state’s debt limit.
“We are borrowing against the future for benefits that may or may not happen today,” complained Federal Way Republican Rep. Skip Priest.
If voters approve the bonds, the temporary tax on bottled water that the Legislature passed Monday would become permanent to help pay them off.
Jordan Schrader: 360-786-1826