• Washington Enacts Tax Legislation that Addresses Critical Infrastructure and Agricultural Issues
  • August 7, 2015 | Authors: David H. Godenswager; David M. Kall; Susan Millradt McGlone
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • Highway funding

    The federal government has struggled for years to pass measures that could help address the nation’s infrastructure problems. Similarly, lawmakers in many states are at odds with each other over the best way to address crumbling roads and bridges. The situation has become increasingly problematic over time.

    In Bumpy Roads Ahead: America’s Roughest Rides and Strategies to Make our Roads Smoother, the national research group TRIP reported the following:
    • More than a quarter of the nation’s major urban roadways, which includes highways and major streets that are the main routes for commuters and commerce, are in poor condition. These critical links in the nation’s transportation system carry 53 percent of the approximately three trillion miles driven annually in America.
    • The average motorist in the U.S. is losing $516 annually—$109.3 billion nationally—in additional vehicle operating costs as a result of driving on roads in need of repair.
    • Driving on roads in disrepair increases consumer costs by accelerating vehicle deterioration and depreciation, increasing the frequency of needed maintenance and requiring additional fuel consumption.
    • Heavy trucks stress the nation’s roads to a greater extent that cars. Travel by large commercial trucks in the U.S. increased by seventy-nine percent from 1990 to 2013, and the level of heavy truck travel nationally is anticipated to increase by approximately seventy-two percent from 2015 to 2030.
    • A properly implemented pavement preservation approach to keeping pavements in good condition has been found to reduce overall pavement lifecycle costs by approximately one-third over a 25-year period.
    Washington stands out as one jurisdiction that has come to terms with tax increases as one way to address the issue. The Evergreen State is also using tax policy to encourage reliance on alternative forms of transportation and alternative fuel vehicles, thereby approaching the dilemma from all angles. Thus, it may not be a coincidence that there are not any Washington cities on TRIP’s top 25 urban regions with a population of at least 500,000 where motorists pay the most in additional vehicle maintenance. The top five cities on this list include:
    1. San-Francisco-Oakland, California
    2. Los Angeles-Long Beach-Santa Ana, California
    3. Concord, California
    4. Tulsa, Oklahoma
    5. Oklahoma City, Oklahoma
    Earlier this month, Gov. Jay Inslee signed transportation revenue legislation into law, with most of the provisions taking effect on July 15, 2015. According King5News, the legislation represents the largest investment in transportation in state history, providing $16.1 billion of funding for the completion of the North Spokane Corridor, and dozens of other maintenance and construction projects across the state. In addition, the law allocates $1 billion to rail, transit and bike path projects, and $16 million to improve the Burke-Gilman trail on the University of Washington campus so it can accommodate increased bike and pedestrian traffic when light rail service begins at the university in 2016.

    Residents will see a 7 cents-per-gallon increase in their gas taxes starting in August 2015, and another 4.9 cents a gallon in July 2016. The American Petroleum Institute’s July 15, 2015, state motor fuel tax rates report shows that Washington’s total state gas tax is 37.50 cents, versus the national average of 30.48 cents per gallon.

    Other provisions of the new transportation law include the following:
    • An alternative fuel commercial vehicle tax credit against the business and occupation tax and the public utility tax, purposed in increasing sales of commercial vehicles that use clean alternative fuel to 10 percent of commercial vehicle sales by 2021
    • An extension of the existing sales and use tax exemption on certain clean alternative fuel vehicles, in order to reduce the price of alternative fuel vehicles
    • A credit for employers against any business and occupation taxes and public utility taxes for amounts paid to employees as incentives for ride sharing, using public transportation or non-motorized commuting methods
    The Northwest Progressive Institute believes that the new law is a mix of good and bad. As for the good, it contains funding for new ferries, freight mobility improvements, additional rail infrastructure, and safer right-of-ways for bicyclists and pedestrians. There is also new revenue authority for the Sound Transit, subject to voter approval, which would build upon the existing mass transit system of light rail, commuter rail and bus services, and identifies options for expanding and improving the system in King, Pierce and Snohomish counties.

    On the other hand, the institute takes the position that “[e]nlarging highways is wasteful and problematic because it encourages people to drive more, which only makes traffic and pollution worse...adding lanes to gridlocked highways...is utterly pointless.”

    The Spokesman-Review blog revealed that “the package took nearly three years of negotiations, compromises, false starts and debates in the Legislature.” Governor Inslee called it a “monument to the optimism of the state.”

    Beekeeping agriculture

    The plight of the honey bee is a significant problem that affects virtually everyone. The New York Times recently ran on op-ed written by biologist and director of the Center for Dialogue at Simon Fraser University Mark Winston, in which he asserted that agriculture is heavily dependent upon honey bees, whose “tumultuous demise...should alert us that our own well-being might be similarly threatened.” The biologist decried the fact that bee colonies are collapsing at alarming rates for thousands of little reasons, like the increasing use of pesticides, pests, diseases, nutritional deficiencies, the lack of diverse flowering plants, and ironically, the commercial beekeeping industry, which moves colonies around to pollinate crops, and in so doing, harms them.

    Washington’s legislature has a specific public policy to support the honey bee industry and provide tax relief to eligible apiarists, and 2015 in particular is “a good year to be a honey beekeeper,” according to Taxrates.com.

    To provide a helpful hand to the honey bee, the Washington State Department of Revenue issued a Special Notice that accomplishes the following:
    • Includes eligible apiarists in the definition of “farmer” for excise tax purposes
    • Includes honey bee products in the definition of “agricultural products”
    • Exempts, from the business and occupation tax, bee pollination services provided by an eligible apiarist to a farmer, and bee sales by eligible apiarists to farmers for providing bee pollination services
    • Renders honey beekeepers eligible for retail sales tax exemption on replacement parts and repair services
    With these changes, beekeepers can now receive the same tax benefits as other farmers.