A state Senate bill designed to provide incentives to create manufacturing jobs is receiving some support here, though it might reduce revenue for some public entities that were created to promote such job creation.

Senate Bill 5901 would create a sale-and-use tax deferral of up to $400,000 for new buildings, machinery, and equipment used for manufacturing, research and development, commercial testing, and vegetable and seed conditioning in qualifying counties, says Sen. Andy Billig, of Spokane, a cosponsor of the bill.

“The bill is so important to Spokane,” Billig says. “The Legislature is focused on jobs and economic prosperity, and this bill is a natural fit.”

He says the bill specifically is aimed to promote growth of manufacturing industries beyond the Puget Sound region.

Jake Mayson, director of public policy for Greater Spokane Incorporated, says the organization fully supports the bill.

“In addition to outlining the things that need to get done to keep manufacturing competitive, it also talks about workforce,” says Mayson, adding that the bill speaks to a goal to double manufacturing jobs within 10 years, creating jobs for people with high school diplomas, GED certificate, or some community college.

The bill also includes conditions under which the tax deferrals could be forgiven entirely for projects in counties under the population threshold of 650,000, which includes Spokane County and most counties outside of the most populated areas in the Puget Sound region.

The Washington state Office of Financial Management estimates Spokane County’s 2021 population at 539,339. 

The deferral-forgiveness conditions written into the bill spell out the scope of projects and timelines for starting and completing them. 

The first condition requires that construction on proposed projects must begin within two years of being issued a certificate of deferral. Furthermore, the project must be operational within five years of being issued a deferral. As for scope, the project must operate within manufacturing or research and development for eight years after the project has been issued a certificate of deferral. 

Todd Coleman, executive director for the public development authority S3R3 Solutions, says he supports any opportunity that could bring significant economic development to the region, even though there are some concerns as to how the bill could reduce the organization’s revenue.

S3R3 Solutions receives some of its revenue through city and county sales tax collected within the district surrounding Spokane International Airport on the West Plains. Because the language of the bill outlines criteria for the deferral of sales tax to be entirely waived if met, there is a concern as to how that could negatively impact the organizations revenue streams. 

Bill Butler, board chair for S3R3 Solutions, says the agency has goals in common with the intent of the bill, regardless of its potential revenue impact.

Butler says via an email response, “S3R3’s mission is to add new, above-the-median-wage jobs to the Spokane region through the recruitment of new businesses and expansion of existing businesses. We support efforts to add incentives to attract businesses to the West Plains meeting our mission.”

Mayson says he has calls out to policy and tax experts to ascertain what those impacts may be, yet he maintains that the state already has extra funds in state coffers that are intended to partially fund this bill.

The bill is still in its early stages and is scheduled for public hearing today, Jan. 27, before the Senate Committee on Business, Financial Services, and Trade. If passed, this act would take effect July 1. 

At the Journal’s press time, Mayson says GSI had a grassroots advocacy team that was looking for local business leaders who might benefit from the bill. That team wants those leaders to provide public testimony, via Zoom, in support of it and the “great family wage jobs that come with manufacturing.”

According to the Association of Washington Business, Spokane County has a total of 569 manufacturers that employ roughly 16,400 workers. The average annual manufacturing job salary is estimated to be $57,928, much lower than the statewide average annual manufacturing salary of $93,095.

AWB also claims that exports drive Washington’s manufacturing economy, with more than $46 billion in manufactured goods exported in 2018. In 2015, small businesses represented 90% of all Washington exporters, and from 2010 to 2019, the state saw a nearly 14% growth in the export and manufactured goods sector, it adds.