Bill ties Marysville, Arlington businesses’ tax breaks to jobs

OLYMPIA — A bill enabling Marysville and Arlington to offer new manufacturing businesses a tax break if they create high-paying jobs has cleared a big hurdle.

Passed by the state Senate, the bill allows the cities to exempt companies from paying a portion of property taxes if they create at least 25 jobs that pay at least $18 an hour.

Marysville and Arlington leaders think it would help attract aerospace, high-tech and manufacturing companies to an area the cities have designated for industrial development.

“We’re hoping to be business-friendly,” said Marysville Mayor Jon Nehring, who first proposed the idea in 2013. “It doesn’t mean it will be a panacea, but it will make us competitive.”

Other states already offer the same or similar incentives to the very companies the two cities are trying to land, said Arlington Mayor Barbara Tolbert

“We don’t have the economic development tools other states are utilizing. We want to be able to compete with them,” she said.

Senate Bill 5761 cleared the Senate on a 48-0 vote March 5. It is set for a public hearing Wednesday in the House Technology and Economic Development Committee.

The bill, sponsored by Sen. Kirk Pearson, R-Monroe, targets prospective development on land zoned industrial and manufacturing.

Under the bill, taxes that are now paid on the land would continue to be collected. The proposed exemption would apply only to taxes due on the value of improvements, such as construction of new facilities.

A company would be exempt from paying those taxes for 10 years under certain conditions, including that the firm create a minimum of 25 jobs that pay at least $18 an hour.

The two mayors hope that with the exemption they will be able to develop roughly 1,200 contiguous acres overlapping the two cities’ borders in and around Arlington Municipal Airport.

About 800 acres are in Marysville and lie east of I-5 and south of Highway 531, between 128th and 164th streets NE. In the past, that property has been considered for a NASCAR race track and a University of Washington branch campus. It connects with about 400 acres in Arlington around the airport.

The mayors know they would lose out on some tax dollars in the short term but will make it up over the long haul from having new businesses employing well-paid workers who spend money in the community, they said.

“We think it’s a net revenue-generator,” Nehring said. “We don’t have anything in there right now. At the end of the day, nothing of nothing is nothing.”

Sen. John McCoy, D-Tulalip, a bill sponsor, said there’s no guarantee it will work. If it turns out well, it might be worth making the tool available for all cities and counties, he said.

“These are taxes the locals have control over. Let them do whatever they want. It’s their money,” he said. “If it does what it’s designed to do, maybe we want to do it statewide.”

The bill didn’t progress far in 2013, then passed the Senate in 2014. It was in the mix of items negotiated by the House and Senate in the final days of the session, but the two chambers didn’t agree to move it forward.

If the bill becomes law this year it will blaze a new trail by tying receipt of a tax break with creation of jobs paying well more than the state’s minimum wage.

Nehring and Tolbert said they’ve not encountered any opposition from business leaders.

In the meantime, some Democratic lawmakers and the state’s two largest aerospace worker unions want to write the same kind of provision into tax incentives granted to the Boeing Co. and hundreds of aerospace firms. Bills to accomplish that are pending in the state House.

Nehring said the cities’ effort shouldn’t become linked in any way with the conversation surrounding the aerospace tax breaks.

“We came up with this concept before the Boeing debate came up,” he said. “It was never designed to cast any type of opinion on the Boeing bills at all. I think everybody understands that.”

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.