Inslee Strikes Tax Exemption Through Partial Veto

OLYMPIA, WA — Washington Gov. Jay Inslee has drawn the ire of at least one Democratic lawmaker after using a partial veto to alter a bill that had passed the state Legislature.

The bill in question, SB 5901 passed both the Senate and House in early March, and were handed to Inslee on March 11. The bill creates a sale-and-use tax deferral of up to $400,000 for new buildings, machinery, and equipment used for manufacturing, research and development, commercial testing, and vegetable-and-seed conditioning in qualifying counties and, as the Spokesman-Review explains, is designed to promote growth in manufacturing outside the Puget Sound region.

However, in signing the bill, Inslee struck a single line that broadened tax exemption for small businesses— a move one critic called "a short-sighted attempt to apply a Seattle-centric, one-size-fits-all policy to our whole state."

“This bipartisan bill made it to the governor’s desk with broad support because it was an overdue investment in our communities beyond the I-5 corridor," said Sen. Emily Randall (D-Bremerton), one of the original sponsors of the bill. "Now, with this partial veto, SB 5901’s impact will not expand beyond the biggest warehouses in King County, and the smaller facilities and businesses — like those that might grow and scale at the Port of Bremerton’s industrial park — will not see the benefits of this tax exemption."

When asked about the partial veto at a bill signing event Thursday, Inslee characterized the tax exemption as one that would largely benefit warehouses, which, he said, don't need any support to thrive in Washington.

"We thought the tax break for warehouses was really not a good investment for Washington right now," Inslee said. "Warehouses are popping up right now like daisies all over the state of Washington. I could not justify thinking it was a good investment for Washingtonians to subsidize warehouse owners when every time I turn around I see a new warehouse."

The governor said he had considered a full veto, but ended up preserving the majority of the bill after learning of a provision that could be important to enticing an unnamed "high-tech manufacturer in the clean energy space."

"First off, it was very important to get that company to Washington state," Inslee said, "and would be a very large entity and would help with our clean energy."

That's all well and good, Randall said, but still leaves smaller businesses in the lurch.

“I am extremely disappointed in the governor’s decision to ignore the needs of our more rural local economies, but I remain as committed as ever to policies that bring good paying jobs to all our communities across the state and invest in the strength of our small businesses,” the senator said.