The health of Washington state’s manufacturing sector is a bellwether for the strength of our overall economy, and a key driver of economic opportunity for families in every city and small town across the state.
We were reminded of that last fall when the Association of Washington Business (AWB) embarked on our first-ever Manufacturing Week tour. Our team of staff along with legislators, chamber leaders and others crisscrossed the state for six days, visiting nearly 70 manufacturing operations in two custom-wrapped buses.
What struck us most is the diversity of Washington manufacturing sector – from top-of-the-line woolen textiles to the world’s largest hydraulic lifts. But, what left an indelible impression on our team is the pride Washington’s manufacturers and their employees take in making products that are second to none and that are shipped around the world.
The sector is vital to the state. Manufacturing jobs support families with livable wages and benefits and they grow the local economy and tax base to ensure funding for critical services.
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Along with all that positive news, is the reality is the sector needs some support.
Since 2000, Washington has lost more than 50,000 manufacturing jobs, the majority of which are not in the aerospace sector.
Lawmakers rightly recognized the need to rebuild the manufacturing job base last year when they passed a bipartisan measure with overwhelming support to lower the business and occupation (B&O) tax rate for manufacturers, making the tax rate uniform across the state. Unfortunately, the tax relief was removed from the final budget before it could take effect.
The good news is lawmakers are currently considering bills that would reinstate the uniform B&O tax relief. It’s a move our members support as one way to jumpstart job creation in every part of the state.
Rep. Mike Chapman, D-Port Angeles, has put forward House Bill 2947 that we believe is a good start to the conversation on how to reverse the trend of manufacturing job losses. Unfortunately, the bill narrows the tax relief to apply to manufacturing operations in just 30 of the state’s 39 counties.
We believe a small change to the bill to make the lower B&O tax rate uniform statewide would send a positive signal of tax certainty to manufacturers across Washington as well as demonstrate an understanding that the entire sector needs room for more investment in their operations, regardless of whether the business is based in King County or Spokane County.
In the other chamber, Sen. Michael Baumgartner, R-Spokane, has introduced Senate Bill 6542, which would reinstate the lower, uniform B&O tax for manufacturers across the state.
Phased in over four years, each of these bills, with the small change to the House bill, would help roughly 10,000 small- and medium-sized manufacturers in Washington invest in their employees and create jobs.
During the manufacturing tour, companies of all sizes and making all manner of products told us the B&O tax relief would be reinvested in business expansion, employee training and benefits and exploring new goods to produce.
With the 60-day, 2018 legislative session now past the halfway point, time is running short to pass this tax relief. However, it’s not too late to reach out to legislators in your district and explain what tax relief would mean for your business, your employees and your communities.
For our part, AWB will continue to advocate for policies that add to the robust manufacturing sector and make our state more competitive. One important part of that effort is reinstating the much-needed manufacturing B&O tax relief before the Legislature adjourns March 8.
Kris Johnson is president of the Olympia-based Association of Washington Business, the state’s chamber of commerce and designated manufacturing association.