SENATE BILL REPORT

SSB 5844

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Passed Senate, March 3, 2017

Title: An act relating to adopting citizen commission 2016 recommendations and making adjustments to the commission's review process.

Brief Description: Adopting citizen commission 2016 recommendations and making adjustments to the commission's review process.

Sponsors: Senate Committee on Ways & Means (originally sponsored by Senator Braun).

Brief History:

Committee Activity: Ways & Means: 2/22/17, 2/24/17 [DPS].

Floor Activity:

Passed Senate: 3/03/17, 45-0.

Brief Summary of First Substitute Bill

  • Terminates six tax preferences as recommended by the Citizen Commission for Performance Measurement of Tax Preferences (Commission) and the legislative auditor as they have never been used.

  • Provides five tax preference performance statements where the Commission recommended the Legislature to review and clarify

  • Provides that for each tax preference that does not have metrics or accountability standards the Joint Legislative Audit and Review Committee (JLARC) or the Commission must recommend to the Legislature statutory metrics or accountability standards that will help determine the effectiveness of the tax preference in a future review.

SENATE COMMITTEE ON WAYS & MEANS

Majority Report: That Substitute Senate Bill No. 5844 be substituted therefor, and the substitute bill do pass.

Signed by Senators Braun, Chair; Brown, Vice Chair; Rossi, Vice Chair; Honeyford, Vice Chair, Capital Budget ; Ranker, Ranking Minority Member; Rolfes, Assistant Ranking Minority Member, Operating Budget; Frockt, Assistant Ranking Minority Member, Capital Budget; Bailey, Becker, Billig, Conway, Darneille, Fain, Hasegawa, Keiser, Miloscia, Pedersen, Rivers, Schoesler, Warnick and Zeiger.

Staff: Dean Carlson (786-7305)

Background: State law requires a periodic review of most excise and property tax preferences to determine if their continued existence or modification serves the public interest. A tax preference is a tax exemption, deduction, credit, or preferential tax rate. The enabling legislation assigns specific roles in the review process to two different entities. The job of scheduling tax preferences, holding public hearings, and commenting on the reviews is assigned to the Commission. The responsibility for conducting the reviews is assigned to the staff of JLARC.

The Commission develops a schedule to accomplish a review of tax preferences at least once every ten years. The Commission is authorized to omit certain tax preferences from the schedule such as those required by constitutional law, the sales and use tax exemptions for machinery and equipment and food, the small business credit for the business and occupation (B&O) tax, the property tax relief program for retired persons, and tax preferences that the Commission determines are a critical part of the tax structure. The Commission is allowed to consider other factors including, but not limited to, grouping preferences for review by type of industry, economic sector, or policy area in determining the schedule.

When reviewing tax preferences, JLARC is required to consider the following factors:ŸŸ

After evaluating these factors, JLARC provides a recommendation as to whether the tax preference should be continued without modification, modified, scheduled for sunset review at a future date, or terminated immediately.

Summary of First Substitute Bill: Six tax preferences are terminated as recommended by the Commission and the legislative auditor as they have never been used. They are as follows:

Five tax preference performance statements are added to tax preferences where the Commission recommended the Legislature to review and clarify. They are as follows:

For each tax preference that does not have metrics or accountability standards, JLARC or the Commission must recommend to the Legislature statutory metrics or accountability standards that will help determine the effectiveness of the tax preference in a future review.

The Commission must review tax preferences at least one year prior to the expiration date.

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony on Original Bill: The committee recommended a different version of the bill than what was heard. OTHER: We have concerns regarding the forest products part of the bill. We don't think the language provides meaningful metrics. We have provided language to staff that would.

Persons Testifying: OTHER: John Ehrenreich, WA Forest Protection Association.

Persons Signed In To Testify But Not Testifying: No one.