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Thursday, November 10, 2011

In Crisis, Washington Legislature Should Repeal Newspaper B&O Tax Break

Posted by on Thu, Nov 10, 2011 at 1:03 PM

The Seattle Times editorial board makes a compelling—if unintentional—argument today for suspending a multimillion dollar state tax break their own newspaper enjoys.

On Tuesday, Washington voters overwhelmingly approved Initiative 1163, mandating training, certification, and criminal background checks for home health care workers... which of course prompted the direct democrats at the Seattle Times to immediately call for its suspension. I-1163 passed in all 39 counties, and by a landslide two-to-one margin statewide, yet the headline from the paper with its finger on the pulse of the people Frank Blethen's sclerotic heart declares: "In crisis, Washington Legislature should suspend Initiative 1163."

THE voters approved Initiative 1163, to require more training for home-health-care workers and have the state pay for the training for workers in state programs. Legislators are wondering whether they have the moral authority to suspend this measure, which requires a two-thirds vote. They do and they should.

Uh-huh. So why do legislators have the "moral authority" to suspend a measure that has now been overwhelmingly approved by voters twice in three years (the virtually identical I-1029 passed 73-27 in 2008)? According to the editors:

I-1163 was sponsored by the Service Employees International Union, which ... says to legislators, "Find $36 million per biennium and spend it on this. We do not care where you find the money. That is your problem."

First of all, that's a lie. According to the I-1163 fiscal note (pdf) prepared by the state Office of Financial Management: "Over six fiscal years, costs are estimated to increase $31.3 million and revenue from the federal government and fees is estimated to increase $18.4 million." That's a net budget hit of $12.9 million over three biennium, not $36 million over one, as the Seattle Times falsely claims.

To be fair, even I-1163's backers freely admit that OFM's six-year projection is misleading, because it assumes the measure's mandates as its starting point in 2014, when I-1029 is currently scheduled to go back into effect. So the most relevant and objective numbers are for 2012 through 2013, when I-1163 would increase costs by $32 million, while increasing revenues by $14.2 million. That's a net biennial budget hit of $17.8 million, not $36 million as the editors absurdly claim. I'm not sure where the Seattle Times gets its numbers; certainly not from OFM or any other reputable source. They're just wrong.

$17.8 million comes to less than 0.027 percent of the state's $66 billion in total budgeted expenditures for 2009-2011, and "in a fat year," the editors admit, "this would not matter." But in a "crisis" year like this, they argue, "If you want something that costs the government money, provide a way to pay for it."

Okay. What's good for the more than two-thirds of Washington voters who have twice voted for I-1163's modest measures, should also be good for newspaper publishers, don't you think? In 2009, even as his own editorial board argued that legislators "must cut, cut, cut" their way through this fiscal crisis, Seattle Times publisher Frank Blethen drove down to Olympia to personally lobby for—and get—a 40 percent cut in the B&O tax rate for newspapers. That's a special interest tax break that costs over $2.5 million in the current biennial budget.

In a fat year, this would not matter. But, I'm sure his own editorial board would agree, this year it does. In this situation it is not reasonable to puff up a tax preference without adding a funding source unless it is an emergency, which this is not. Legislators are wondering whether they have the moral authority to suspend this tax break, which requires a two-thirds vote. By the Seattle Times' own reasoning, they do and they should.

I asked The Stranger publisher Tim Keck, who also benefits from this tax break, for his input on whether our state can afford not to suspend a multimillion dollar tax break that panders to wealthy media barons like himself at a time we're slashing education and cutting children from the health care rolls, to which he thoughtfully replied, "Fuck you, Goldy." Not exactly an enthusiastic embrace of such a pragmatic public policy proposal, but then, in The Stranger's tradition of editorial freedom, neither did Tim attempt to mute my bold public advocacy.

And if my esteemed colleagues on the Seattle Times editorial board weren't such a bunch of gutless, hypocritical fucks, I'm sure they'd join me in challenging our publishers, and calling for the suspension of a newspaper B&O tax break that, by the editors' own logic, the citizens of Washington state can simply no longer afford.

 

Comments (15) RSS

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ryanayr 1
Or, conversely, they could advocate for the suspension of the absurd supermajority rule for tax increases.
Posted by ryanayr on November 10, 2011 at 1:08 PM
Vince 2
And yet they wonder why "media" has become a dirty word. Look, clearly home health care is invaluable. Not only is it money saving for the state to not have people flooding state nursing homes, we all would rather have as much comfort when old and sick in our own homes. How much comfort would it be to have criminals and abusers in our homes or our parents homes. This is an issue that goes to the heart of what kind of people we are.
But that the rich like Blethen use their megahorn to trumpet their foolish greed over the very basic needs of our states good people, shows just how off the rails we've gone.
Posted by Vince on November 10, 2011 at 1:16 PM
Will in Seattle 3
All tax exemptions should be subject to a mandatory 2/3 Voter reauthoriztion vote, listing the companies and persons receiving funds and the amounts, at every Presidential General Election.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on November 10, 2011 at 1:20 PM
Will in Seattle 4
That or kill the Tunnel.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on November 10, 2011 at 1:21 PM
Ya Sure Ya Betcha 5
The old, crusty geezer forgot to mention the sales tax exemption that newspaper customers enjoy.
Posted by Ya Sure Ya Betcha on November 10, 2011 at 1:22 PM
Kinison 6
When it comes to building a billion dollar tunnel to replace the viaduct with, within weeks people spring to action and collect signatures to put it up to a vote. But when it comes to more serious problems like closing loopholes and eliminating tax breaks during a fiscal crisis, the same group of activists are all ... meh.
Posted by Kinison http://www.holgatehawks.com on November 10, 2011 at 1:25 PM
Joe Szilagyi 7
@3

All tax exemptions should be subject to a mandatory 2/3 legislative reauthoriztion vote, listing the companies and persons receiving funds and the amounts, on a bi-annual cycle.


Wow, it's been forever since I've agreed with something you wrote, selecting just the highlighted bit. This would be an awesome law, with the tweaks I put in.

I'm thinking I'm going to mail it to my reps and senator.
Posted by Joe Szilagyi http://twitter.com/joeszi on November 10, 2011 at 1:30 PM
8

People voted for this thing because they were deceived that seniors were at risk, barring federal background checks. However, the state already sets a minimum for state background checks, and virtually all employers (for insurance purposes) conduct a national search as standard practice. This bill is nothing – nothing - except a union guise to enroll healthcare workers, and compel workers and the State to participate in a government-funded, union-run, for-profit training scheme worth million$ per year to organized labor.

That's why the legislature killed this turd, and will continue to do so.

Using sick & old people as human shields for your membership drive is a pretty fucked-up way of unions to be "the good guys."
Posted by Zok on November 10, 2011 at 2:17 PM
Will in Seattle 9
@7 no, Citizen Reauthorization.

Not legislative.

Not a friendly Amendment.

Corporations aren't people, but they hire lobbyists to sneak in amendments.
Posted by Will in Seattle http://www.facebook.com/WillSeattle on November 10, 2011 at 2:38 PM
Teslick 10
Well, I'll admit I voted against it, as, like with every Eyman initiative, where the money is supposed to come from was not defined. I think every initiative with any fiscal impact should say exactly how it is supposed to be funded. Unfunded mandates (either in spending increases or revenue decreases) are one of the stupidest things we do, whether it be as voters or through our representatives.
Posted by Teslick on November 10, 2011 at 2:43 PM
11
And there's this from the Weekly's story on state corporate tax breaks last year:

Under a B&O tax break for advertising sold to out-of-state buyers, radio and TV stations are deducting $2.7 million every two years. The newspaper industry—particularly the publishers who, unlike freebie Seattle Weekly, for example, sell their print product for hard cash on the street or by subscription—get in on the exemptions too. The sales aren't taxed, mainly to "recognize the practical problem of collecting sales tax on individual sales of about a nickel, the typical price of a newspaper in 1935," the DOR report says. "Arguments have also been made in the past that newspaper carriers (mostly youth) should not have to be responsible for collecting and reporting the tax."

Though billing functions have now largely been centralized and computerized by the publishers, and kids delivering papers on their bikes are long gone, the exemptions continue. The Seattle Times, as the state's largest newspaper, presumably gets the largest benefit from the roughly $25 million that publishers (and their print readers) aren't paying over two-year sales periods.

Seattle Weekly and other papers, particularly the Times, benefit from additional media-tax breaks. About a dozen papers in all save a collective $1.2 million on sales taxes when buying new computers, as of 2004. And an exemption passed just last year cut the state B&O tax by 40 percent for newspapers. It was approved as the industry fought off death spasms. Times publisher Frank Blethen pleaded with lawmakers, saying he and other publishers were "hanging on by our fingers," while his rival, the Seattle Post-Intelligencer, folded its 146-year-old print edition. Other publications cut staff and teetered on the edge of bankruptcy. Nonetheless, the exemption means at least $2.6 million less going to the state every two years.
More...
Posted by JPierce on November 10, 2011 at 2:59 PM
Some Old Nobodaddy Logged In 12
If the ST decided to sell liquor, the Stranger writers would be lining up to suck their cock.
Posted by Some Old Nobodaddy Logged In on November 10, 2011 at 4:18 PM
13
did tim keck really say that?

he seems so nice based on his occasional QL answers and internet tidbits.

get him posting on slog so we can judge him thanks in advance.
Posted by Swearengen on November 10, 2011 at 5:06 PM
biffp 14
@12, no fucking kidding.
Posted by biffp on November 10, 2011 at 6:34 PM
15
@8 correct. SEIU makes millions from their for-profit training programs.

Posted by bornhere on November 12, 2011 at 7:53 AM

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