Leaders of the region’s biotechnology and high-tech industries had reason to smile about this year’s legislative session long before lawmakers wrapped up their work Thursday night.
A bill that renewed tech-related tax credits for another 11 years passed through the state Senate and the House of Representatives and was the first bill of the year that Gov. Gary Locke signed into law.
"That was, without a doubt, the No. 1 priority for our members," said Ruth Martens Scott, president of the Washington Biotechnology and Biomedical Association. "It was, in fact, the only issue on our legislative agenda this year."
The bill Locke signed last month extends two tax breaks that were established a decade ago and would have expired this year if the Legislature didn’t act. The new bill extends the breaks through 2015.
One incentive allows companies a sales tax exemption for equipment and construction related to research and development, which can reduce the price of such spending by as much as 10 percent. Last year, 49 companies across the state took the sales tax exemption, according to the Department of Revenue.
The other incentive allows companies a credit against the state’s business and occupation tax of as much as $2 million a year for research and development. In 2002, 590 companies took the B&O credit, according to state statistics, including 58 in Snohomish County.
A similar bill, substitute House Bill 3158, was signed into law Friday by Locke. It would allow newspapers and others in printing and publishing to avoid paying sales tax on certain machinery and equipment.
Executives at several of the county’s biotech and tech firms have said the tax credits are important in reducing their costs, especially as it can take years of research and development before their firms become profitable.
The renewal law also added a sales tax credit for research facilities built by universities and cut B&O taxes on federal research money to small firms.
"It was a great message to the technology community," said Lew McMurran, director of government and public affairs for the WSA, which represents the software industry. "The Legislature is recognizing the tech industry is a key industry, and they’re providing the support it needs to contribute to the tax base and create jobs."
The WSA, which followed several bills in this year’s session, wasn’t disappointed that proposed actions to stem outsourcing of jobs overseas failed before the session ended.
McMurran, who noted the software industry has actually increased the number of local jobs during the past two years, said the proposed bills all had flaws. But, he admitted, the export of jobs to India and other countries is a touchy subject, even within the industry.
"We’re having quite a bit of internal discussion about it," McMurran said. "We’re all for job creation in this state. At the same time, companies have to do what they need to in order to compete."
But Marcus Courtney, president of the Washington Alliance of Technology Workers, said lawmakers should have at least agreed to form a task force to study the shift of jobs to overseas locations. He contrasted the lack of action on the issue to the passage of the tax incentives.
"It’s a real frustration to see workers lose their jobs while government passes tax breaks for the companies that are exporting those jobs," Courtney said. "We’re going to bring this up again next year."
He predicted that offshore outsourcing also will be a topic during this year’s race for governor.
Scott and McMurran said this year’s session left them feeling optimistic that lawmakers understand the growing economic impact their industries have in the Puget Sound region and across the state.
Diana Dollar, vice president of community relations for the Snohomish County Economic Development Council, said she’s also upbeat about how tech- and business-related issues fared in Olympia this year.
Along with the success of the tech tax breaks, Dollar was happy to see a condominium liability bill pass the Legislature. The governor could sign it into law next week.
After several high-profile condo association lawsuits over major construction defects were settled with insurance companies several years ago, developers began seeing premiums skyrocket, while some lost coverage.
At a time when the growing county already has little affordable housing, a decline in condo construction was seen as a problem. The new bill sets limits on liability and allows disputes to be settled through arbitration rather than in court.
"This is very important to the business community," Dollar said. "Companies cite affordable housing as a big criteria when they look at areas to do business."
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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