Budget deal gives tax break to Darigold

SEATTLE — The budget deal approved last week in Olympia includes a new half-million dollar tax break for Washington state’s largest private company, Darigold.

The dairy-production company, which brought in nearly $2.5 billion in revenue last year, says it is considering building an infant-formula plant but can’t go forward if formula exported from the state is subject to the state business-and-occupation tax, The Seattle Times reported in Saturday’s newspaper, (http://is.gd/FCddXK ).

One prominent Seattle lawmaker highlighted the break this week as an example of the unscrutinized items that get into budget deals at the last minute.

Rep. Reuven Carlyle, who chairs the House Finance Committee, mentioned on his Facebook page the Darigold tax-break and several others as part of the “give and take” of final budget negotiations.

Carlyle wrote that he wishes the Legislature had vetted tax breaks more fully.

Lawmakers approved 16 tax breaks worth roughly $13?million over the budget’s two years, benefiting beekeepers, dance clubs, nonprofit gun clubs, international investment firms and others, as part of an operating budget that put an additional $1 billion into K-12 education.

Carlyle and others say those tax breaks were the price the Republican-led Senate demanded to end a break for residential phone service that’s expected to net about $85 million over the two years.

Top Senate GOP budget negotiator Andy Hill said “the final deal was made up of a lot of moving parts.”

Hill, of Redmond, noted negotiators were contending with a June 30 deadline to reach an agreement on an operating budget to avoid a government shutdown that would have started Monday absent a deal.

But he said that the tax breaks had already been introduced — and in many cases, were sponsored by Democrats.

Hill said the Darigold break was meant as an incentive to get a new plant built in Washington, thus creating jobs.

Steven Rowe, a senior vice president at Darigold, said the break was critical to the company’s hope of expanding its formula business by partnering with another firm on a new plant.

“Without the B&O tax component, there’s no way they’d do it. They’d just go to Idaho or Oregon,” said Rowe, although he emphasized no agreement for a new plant is in place.

Helping business helps the state, he said.

“This very small economic impact to the budget line is ridiculous — ridiculous compared to the value that will return to the state over the long term,” he said. “Bottom line, this was a very wise move for the Legislature and for the state.”

Carlyle said that might be the case. But, he said, it’s hard to know because the bill was not fully examined before being put into the budget as part of last-minute negotiations.

“In the dark hours of the end of the session, the Senate demanded new tax exemptions that were just put into the budget. They were not vetted,” he said. “I think the taxpayers deserve better.”

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