Maybe it’s time to just — take a pause.
After several years of tax increases and steep growth in state spending, Washington employers — and taxpayers — could use some time to adjust to the new landscape before lawmakers enact any new taxes or regulations.
That was one of several ideas to come out of this summer’s Economic Future Solutions Summit, a gathering of 150 business, civic and policy leaders who came together to build a growth agenda for Washington’s economy.
The summit was the second in a series stemming from Washington in the Making 2040, the long-range economic vision launched in 2025 by the Association of Washington Business (AWB) Institute and the Washington Roundtable. One of the vision’s goals is to make Washington a top state to start, grow and sell a business. The one-day summit sought to build a shared understanding of Washington’s economic challenges, identify solutions to strengthen the state’s business climate and develop concrete recommendations for a statewide growth agenda.
In addition to “hitting pause” on new taxes, the ideas included adopting priority-based budgeting (more on that in a moment) and regularly reviewing regulations so that those that are no longer needed or effective can be sunset.
The common theme among all the ideas was a desire for stability and predictability.
Entrepreneurs are (almost by definition) nimble and adaptable. They can plan for bad news. They can plan for good news. But it’s virtually impossible to make long-term plans like where to invest millions of dollars in buildings, equipment and people when the rules of the game are constantly changing.
We know from AWB’s recent surveys that employers that are looking to move or expand in other states cite taxes as the primary reason. So, it can seem like a paradox since many of the states they’re considering have many of the same taxes that Washington has. The difference is the other states don’t overhaul their tax codes every year. Their tax structure is stable and predictable, giving employers a chance to build a plan and execute on it.
Here in Washington, we’ve seen something quite different. Rather than stability and predictability, we’ve seen year after year of increased taxes and spending growth.
It makes it challenging for businesses, which already pay 49.6% of state and local taxes here — more than our neighboring states (California, Oregon and Idaho) and higher than the national average.
Pausing new taxes would give employers a chance to catch their breath and plan for the future. It would also give policymakers some time to figure out how to break the cycle of perpetual budget deficits that we seem to be stuck in.
One way to do that is to adopt priority-based budgeting that focuses spending on programs that are delivering the strongest results. Another idea from the summit: Stop using one-time money to pay for ongoing programs.
And it’s not just taxes.
A recent study from AWB shows that Washington is the eighth-most regulated state in the country. Gov. Ferguson’s new executive order establishing a six-month pause on new rulemaking is a welcome step toward reducing unnecessary regulatory burdens.
Washington has built an economy that’s the envy of the country, but we can’t take that success for granted. We need a growth agenda that encourages employers to start and build their business here.
We need to act. And one counterintuitive way to act, at least when it comes to taxes and regulation, is to do less.
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Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association. To read the full report from the Economic Future Solutions Summit, visit www.bit.ly/EconFutureWA2040
