New Law Encourages Businesses to Create Jobs in Rural Areas

Opinion - Yakima Herald-Republic

March 23, 2004

While there's no comparison to last year's "Boeing session" that plied the aerospace giant with a plethora of tax breaks and incentives, this year's legislative session did provide rural areas of the state with significant and much-needed economic boosts.

Gov. Gary Locke on Friday signed Senate Bill 6240, a measure that was a key component of his economic development initiatives for the state. It will extend rural tax breaks that would have expired in July.

A breakdown:

* Companies that sell information technology help-desk services to third parties can take a credit against the state business and occupation tax for up to 100 percent of the tax due.

* Firms that engage in computer software manufacturing or programming can claim $1,000 as a credit against the B&O tax for each new job created for up to five years.

* Those that add at least 15 percent more jobs over the prior year in manufacturing, research and development and computer services can claim at least $2,000 against the B&O tax for each new job.

* Companies that build manufacturing and research facilities can apply to defer sales taxes on buildings, machinery and equipment.

Nothing earth-shaking, but taken together they can help prime the economic pump in rural Washington, an area that needs more jobs-producing diversification of its economies. Forty-four percent of all jobs in Washington state are in King County and that's just too much of a tilt.

The legislation defines a rural county as one that has a population density of less than 100 people per square mile. Yakima, Kittitas, Benton, Grant and Klickitat counties are all defined as rural.

Dave McFadden, president of New Vision, Yakima County's economic development group, testified for the bill in Olympia. He said while incentives may not make or break a company's decision to add jobs in rural areas, they level the playing field with other states that do offer them.

In a guest commentary published by this newspaper prior to the session's opening in January, McFadden added, "When the (state) budget was finally passed in June, it did not include the funds to extend these initiatives. Opposition from some who would call these programs giveaways, combined with an extremely tough budget situation, prevented these tax credits from getting continued."

That inaction saved the budget writers pennies when compared to the Boeing's tax incentive package of about $3.2 billion, yet non-aerospace incentives are every bit as important, if not more so, to rural areas struggling to revitalize slumping agriculture-based economies. We have a hunch that savings of a few pennies in the original two-year state budget will be dwarfed by the economic gains the legislation should help promote.

In a legislative session we have criticized for being noted more for what it didn't do than what it accomplished, we would be remiss if we didn't acknowledge the efforts lawmakers and the governor in approving this important piece of legislation. It may not be Boeing-class stuff, but it is still appreciated.

Members of the Yakima Herald-Republic editorial board are Michael Shepard, Sarah Jenkins and Bill Lee.