More incentives sought for business in WA

Bill pushing economic development seeks to broaden program that pays for utilities

Richard Roesler
Staff writer Spokesman Review

OLYMPIA _ Saying they’re outgunned by business enticements in other states, some economic development officials want state lawmakers to expand a program that pays for utilities for new or expanding businesses.

"Communities should have an opportunity to invest in their future," said Sheila Martin, with Gov. Gary Locke’s executive policy office.

The proposal, House Bill 1281, would allow local governments to bankroll roads, water lines or other public utilities in order to attract businesses or other development. The work would be paid for with local sales tax or property tax revenue created by the new business. State government would provide up to $5 million a year in matching funds.

Martin calls it "pay as you grow."

Locke likes the program, which he’s touted repeatedly in speeches. He thinks it could attract up to $400 million in private investment to Washington. Spokane Democratic Reps. Jeff Gombosky and Alex Wood have signed onto the bill, as has Spokane Republican Rep. Brad Benson.

Washington started down this road two years ago, when the Legislature passed a bill allowing some "tax-increment financing." So far, only Spokane County has tried it, in order to build roads, water mains and sewers to the Northwest Pacific Biotechnology Park outside Airway Heights.

"Idaho’s ahead of us on this issue, and they’ve used this tool very successfully," said Todd Mielke, a former lawmaker who now lobbies lawmakers for the Spokane Regional Chamber of Commerce. "Frankly, we’ve seen a number of projects land on that side of the state line."

In Washington — unlike in Idaho and 46 other states — the state constitution prohibits giving state money to private ventures. Economic development officials, particularly in border cities like Spokane and Vancouver, say that hamstrings their efforts to attract new businesses or retain those that are expanding.

To get around the constitutional hurdle, Washington’s tax-increment financing programs don’t touch the state’s property or sales tax, just the local parts of those taxes. Also, all the work must be public utilities on public property.

Proponents say the programs work. Seattle-Northwest Securities Corp. vice president Richard Ehlers described using tax-increment financing to attract senior-citizen housing to a small town in Minnesota, and to build an interchange in another Midwestern town that had no freeway access.

Taxpayers will see no difference, Mielke said, except that the value of their property may increase due to nearby development. The only change will be that some of the taxes they pay will go to pay off the bonds that paid for the utility work. And nothing will happen, Mielke said, unless local city or county elected officials agree.

"We’re not grabbing anybody’s taxes," said Jay Reich, with the Seattle law firm Preston, Gates, Ellis. "This is a very modest proposal."

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