Comment: State worker pay raises behind $10B in tax increases

By Jason Mercier / For The Herald

There was a lot of intrigue in Washington state as citizens and businesses waited to see what Gov. Bob Ferguson would do with the record tax increases tgat lawmakers sent to his desk this year. Despite speculation that the new governor might veto these massive tax increases, in the end, he signed them into law on May 20.

Though supporters of this nearly $10 billion tax increase package (over four years) will point to many things it’s supposed to pay for, the reality is that a significant portion of these taxpayer funds will be redistributed to government pay raises.

As reported by the Washington Research Council: “In both budgets, compensation increases for state employees and collective bargaining agreements with non-state employees make up the largest share of the total increases — $1.882 billion (40.2 percent) in the Senate and $1.899 billion (46.0 percent) in the House.”

While neighboring states like Idaho and Montana spent the year adopting record tax relief, Washington has instead decided to follow the questionable strategy of trying to tax its way to economic growth.

Here are the nearly $10 billion in tax increases Washingtonians will now face during the next four years:

$5.7 billion in business tax increases;

$2.6 billion in excise and sales tax increases;

$655 million in capital gains income and death tax increases;

$385 million in repeal of targeted tax breaks; and

$281 million tax increase on the purchase of Tesla vehicles.

Expect to see taxpayers vote with their feet in response to these massive tax increases. As warned by the Association of Washington Business (AWB) last month: “It’s difficult to comprehend how state lawmakers could think this is a good time to enact $12 billion in new taxes that we know will hurt businesses, make it harder to retain employees, and raise prices for everyone. It’s alarming, tone-deaf and short-sighted.”

An AWB survey of Washington businesses found: “*(M)ore businesses say they want to relocate out of state (12 percent now versus 9 percent in the winter). Idaho is the most-listed destination for businesses planning to move out of the state. Nearly two-thirds (61 percent) of those planning to move cite taxes as the main reason they want to leave Washington.”

Along with the operating budget tax increases, Washingtonians will also be subject to billions in new tax and fee increases for the enacted transportation budget, including a 6-cent-a-gallon gas tax increase.

To paraphrase Benjamin Franklin, in this world, nothing can be said to be certain, except death and Washington state endlessly raising taxes.

Jason Mercier is vice president and director of research for Mountain States Policy Center, an independent research organization based in Idaho, Montana, Eastern Washington and Wyoming. Online at mountainstatespolicy.org.