Paul Machtolf, vice president and resident manager of Ponderay Newsprint Co., Usk, received some reassuring news from the Washington Dept. of Revenue regarding the future of the state's sales tax exemption (M&E) on manufacturing machinery, equipment, repair and replacement parts, and, research and development. In December at AWB's urging, Machtolf joined hundreds of Washington manufacturers contacting their legislators and Gov. Gregoire asking them not to repeal the M&E even though the state's revenues plummeted.
The Governor referred Machtolf's letter to the Dept. of Revenue and Mark Craig, deputy director, responded:
"I agree with you that the M&E sales tax exemption has proven to be a significant incentive for manufacturers in this state. It has been successful in Washington in helping the manufacturing industry make necessary capital investments and in increasing family wage jobs. It has also been important in attracting and retaining manufacturers in this state."
"I want to assure you that the Department is unaware of any effort to repeal the M&E exemption and we will not be advocating for a roll back of this valuable incentive for manufacturers."
That news came after Sen. Lisa Brown (D), majority leader of the Washington State Senate, pledged her support for retaining the M&E.
Keep those letters to the Governor and your legislators coming. Lawmakers and the Governor are just starting work on the budget. Rep. Lynn Kessler (D-Hoquiam) told AWB's lobby lunch today, the revenue shortage could reach between $7.5 and $8 billion which is the highest estimate we have seen. That is more than a 20% revenue shortfall to keep state government operating as it is now.
"Lots of us remember 1993 when we raised the B&O tax to solve our budget crisis," Kessler said. "This is the largest shortfall we've seen and we can't just raise taxes to solve the problem. We have to find ways to stimulate the private sector so we stem the layoffs and put people back to work."
We agree with the Dept. of Revenue and Rep. Kessler. We need to make sure the M&E exemption is permanently taken off the table. It is an important part of the toolkit which the private sector needs to lead our state back to prosperity.
Don C. Brunell, President (DonB@awb.org)
