Just a few short weeks from now we’ll all be making many choices on our ballots in the November 2016 election. And while there are big races getting lots of attention, the outcome of several initiatives on the ballot this fall will likely have the most immediate and noticeable impact on businesses here in Southwest Washington.
The implementation of these initiatives if they pass, or a legislative attempt to revive if they fail, faces different paths depending on the outcomes of the Washington House and Senate races. For the first time in a while they are both in play.
The initiatives that could impact our local business community significantly are I-1433 (minimum wage increase), I-1464 (publicly funded elections) and I-732 (carbon tax).
I-1433 would increase the hourly minimum wage in this state from $9.47 to $11 in 2017. Incremental increases to follow annually, with a rate of $13.50 per hour reached by 2020. If I-1433 passes, employers will be compelled to provide employees up to 12 days of paid sick leave.
While retail businesses will certainly feel the most impact should this initiative pass, I-1433 will drive up the cost of all wages. According to 2015 data provided by regional labor economist Scott Bailey, here in Clark County the median hourly wage for construction (including managers, skilled trades, bookkeepers, etc.) was $25.69. If the state’s minimum wage increases, this number is expected to rise, as well. All employers experience the effects of rising wages, with small businesses being hit particularly hard.
Publicly funded elections sound good to just about everyone. We all have a desire to ensure that our elections are fair, honestly funded and represent the will of the people. However, Initiative 1464 (aka Washington State-Provided Campaign Financing Funded by a Non-Resident Sales Tax) attempts to address this issue in a way that will be extremely damaging to all “border cities” in Washington including Vancouver, Spokane and Walla Walla.
I-1464 removes the out-of-state sales tax exemption which would impact Oregonians crossing the river to frequent our local businesses. Clark County is projected to take a 15 percent loss in retail sales according to data from the Washington Retail Association.
Amidst these proposed changes to wages and non-resident sales tax, Washington is also looking to become the first state of the Union to implement a carbon tax with Initiative 732.
I-732 would tax carbon emissions at $25 per metric ton and be phased in over a period of two years. Each year after reaching the $25 level, the tax would increase by 3.5 percent plus the rate of inflation. Initiative 732 would also lower the sales tax from 6.5 to 5.5 percent and offer rebates to low income families of up to $1,500 to offset the carbon tax. In addition, the business and occupation tax on manufacturers would be reduced from 0.484 to 0.001 percent of gross business receipts (source: Ballotpedia).
There’s a lot going on in this initiative. In short, a tax on carbon equals an increase to the cost of gas which impacts most every business. By 2018 it will add .32 per gallon of gasoline at the pump. The revenue generated from I-732 does not go towards environmental protection, improving energy efficiency or get put to work repairing our transportation infrastructure like the gas tax does.
According to Jan Himebaugh, Government Affairs Director for Building Industry Association of Washington, “I-732 supporters claim the measure is revenue neutral, but state financial experts say it will actually cost the state $800 million in lost tax revenue in the first six years.”
Revenues are decreased with the drop in state retail sales tax rate by 1 percentage point and the reduction of certain manufacturing business and occupation taxes. The carbon tax would bring in less revenue than is needed to cover these tax cuts and to fund the Working Families Tax Exemption Program (similar to the earned income tax credit that benefits low to moderate income individuals).
This is coming from a state that is already grappling with a large shortfall in education funding.
There is a lot happening in our state during this election that will impact businesses of all sizes. The Building Industry Association and our members will be closely monitoring this election along with the rest of Clark County’s employers, I’m sure. Most importantly, please cast your vote so the voice of Southwest Washington’s business community is heard up in Olympia!
Avaly Scarpelli is the executive director of the Building Industry Association of Clark County.