FINAL BILL REPORT

2SHB 321

                                  C 497 L 87

BYHouse Committee on Ways & Means/Revenue (originally sponsored by Representatives Peery, Sutherland, L. Smith, Cooper, Nutley and P. King) 

Authorizing excise tax deferrals on machinery, equipment, and other personal property used in the production or casting of aluminum.

House Committe on Trade & Economic Development

Rereferred House Committee on Ways & Means/Revenue

Senate Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

Out-of-state firms locating new facilities in Washington state are permitted to defer sales taxes on new construction under provisions of law in effect through June of 1988.  Taxes may be deferred for up to three years, with payment required over the following five years.  The sales tax deferral program covers taxes on new construction and equipment.  The sales tax on the labor utilized in an investment project is not covered by the deferral permitted under these provisions.

The aluminum production and casting industry in Washington state is undergoing a severe crisis as a result of several factors, including:  a major increase in world aluminum production capacity associated with new global hydroelectric power- generating capacity; increased regional electricity costs, which are a major cost factor in aluminum production; aging production facilities; and a drastic reduction in the world market price for aluminum.  The aluminum production industry is responsible for major direct and indirect employment impacts in a number of areas of the state.

SUMMARY:

The definition of situations in which sales tax deferrals will be granted is extended to include acquisition of all machinery, equipment or personal property used in the production or casting of aluminum.  The provision is applicable to aluminum smelter and related facilities that have either ceased operation or that are in imminent danger of ceasing operation for economic reasons. Sales tax deferrals will also be granted for aluminum smelter and rolling mill modernization projects intended to increase the operating efficiencies of existing facilities.

In order to receive a sales tax deferral under these provisions, consultation is required on the proposed operation of the plant and on the terms and conditions of employment for wage and salaried employees with any collective bargaining unit representing employees of the plant.  A written concurrence from the bargaining unit on the decision to apply for a deferral is also required.  A waiver of this concurrence requirement may be granted by the Department of Trade and Economic Development.

VOTES ON FINAL PASSAGE:

      House 72  24

      Senate    49     0

EFFECTIVE:May 19, 1987