To balance the 2016 budget, lawmakers are eying a tax windfall from national broadcasters. But the costs of the deal are too high.
STATE budget writers huddled in Olympia for yet another special legislative session shouldn’t be too desperate for a go-home deal on the 2016 supplemental budget.
On the 61st day of a 60-day session, lobbyists from broadcast TV networks offered what could seem like manna from heaven: about $81 million in unexpected tax revenue to balance the budget, a proposal structured to appeal to even anti-tax conservatives. The latest budget offer from the Republican-led Senate hinges on the windfall.
But gifts to the Legislature — especially from powerful industry lobbyists — should be opened with skepticism. In this case, lawmakers should decline the offer because it would reward national broadcasters with a permanent $11 million-plus tax break for not previously paying that same tax.
At issue is a 2010 update to the state tax code, applying business taxes for in-state commercial activity — even if businesses don’t have a physical presence here. National broadcasters — the likes of NBC, Disney and ESPN — disputed an argument from the state Department of Revenue that the law applied to them and that the broadcasters’ advertising revenue generated from in-state broadcasts was taxable.
Years of negotiations have failed. Litigation seems imminent. The state attorney general has advised lawmakers that Washington has a good case.
The deal now offered would give Washington all those unpaid taxes up through this year — more than $81 million worth. It would end the state’s risk of litigation, which could, in theory, end with the broadcasters winning.
Lawmakers would reward an industry that hasn’t been paying its share. That’s a lousy message to send.”
But those national broadcasters would trade the lump payment for a break on future taxes. The proposed deal, included in the Senate’s latest budget offer, would lower calculations for Washington’s taxable share of the national market from 2.2 percent — the portion of the nation’s population that lives here — to 1.1 percent.
Unlike other recent tax breaks granted by the Legislature, there is no sunset clause. If Washington’s population grew faster than the nation — which is likely — the 1.1 percent market share would be chiseled in granite.
In short, lawmakers would reward an industry that hasn’t been paying its share. That’s a lousy message to send. Find another way to balance the budget.