Massive Construction Tax Increase Moving in Legislature

In 7 days, SB 6173 was introduced, passed out of the Senate and now is out of the House Finance Committee on its way to the House floor. This is definitely a bill on the fast track. It is request legislation from Governor Chris Gregoire.

SB 6173 would be a massive tax increase on construction projects: more than $100 million over 4 years.

The committee hearing today was interesting. The only proponent for the bill was the WA Department of Revenue. Those testifying against the bill included the AIA|WA and groups representing engineers, contractors, retailers and union workers. In other words it the entire private sector is against the bill and only the agency responsible for collecting the money was for it.

While the bill passed out 7-3, on a party line vote, several Democrats spoke of significant concerns with the bill. Representatives Santos, Ericks and Springer all said that they are only voting to move the bill forward and are not committing to supporting the bill on the House floor. They called for a lot work to be done to improve the bill before it moves further.

The Republicans on the committee all voted against the bill, citing its massive impacts on the construction industry.

The bill now goes to the House Rules Committee, which determines which bills go to the floor.

Those paying close attention may note that this bill is moving after all of the normal legislative deadlines have passed. It has been deemed “necessary to implement the budget,” and thus, is exempt from the deadlines. Look for a more detailed review in another post.

Also, normally a tax increase requires a two-thirds vote of the legislature or a vote of the people. Because this is framed as a change in the way taxes are collected, it in not deemed to be a tax increase.