Government Affairs Blog

House Passing Massive Tax Increase, Sales Tax on Custom Software, B&O Increase on All Other Services

2010-03-09T05:35:00Z

As this is being written, the state House of Representatives is passing a massive tax increase, specifically targeting custom software as well as other computer related services.

Yesterday, the state Senate passed Senate Bill 6143, which increased the sales tax by .3 percent and the B&O tax on services from 1.5 % to 1.75%. The Senate bill also contains provisions on “tax avoidance”, a new concept in law that will surely be litigated. It also includes “economic nexus”, which is also a new tax concept that will subject certain businesses to tax liability that they did not have previously.

There is a section that subjects corporate officers to B&O tax liability that did not exist before. This is not to defend tax cheats but the provision is written so broadly that people who may not have had any connection to the non-payment of taxes could be found liable.

There are also a wide range of other sections in the Senate bill that limit deductions. You can read the Senate bill report here: http://apps.leg.wa.gov/documents/billdocs/2009-10/Pdf/Bill%20Reports/Senate/6143-S.E%20SBR%20APS%2010.pdf

While these tax increases may be problematic for consumers and businesses, the version the House is debating now (you can watch on TVW, www.tvw.org) is simply disdainful of taxpayers and businesses across the state.

For the tech sector, custom software providers will now have to charge sales tax to its Washington customers. The “advantage”, if you want to call it that, is that the B&O rate drops to .471% from 1.5%. Custom software providers have told us that change is simply not worth the hassle of becoming a tax collector.

In a late development that just happened this afternoon, Rep. Ross Hunter of Medina, the primary author of this massive tax increase, added a B&O increase for virtually every service business, including all computer related services to 2.0% from 1.5%.

The House has a “striking amendment” that will be placed on SB 6143, essentially wiping out the Senate version. You can find that here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6143 (specifically amd 1531). There are also many other amendments being offered but most will not be adopted.

WTIA has been working hard to strip the sales tax on custom software out of this bill. Many members of the tech community have communicated with their legislators opposing this ill-advised tax. We really appreciate your efforts on this.

Unfortunately it appears it will be for naught. The one hope is that the Senate will not buy in to this massive tax increase but it is quite possible that the Senate will go along with this and not hold their position.

Not only does the House version raise taxes by a massive amount, it creates enormous uncertainty for businesses, worsening an already fragile business climate.

The two key players in this huge fleecing of taxpayers are Rep. Ross Hunter, a former Microsoft employee and Speaker of the House Frank Chopp. They have essentially sucked up to every union and group that receives taxpayer funds to exist. Instead of truly dealing with the underlying problems that drive government costs, they have cut K-12 and higher education to ensure that state employees pay only 12% of the cost of their health insurance (compared to the 20% that most private sector employees pay).

Rep. Hunter, in particular, should know better. Interestingly, Microsoft will barely be impacted as a buyer of custom software since they pass it through to the end customers. Other large end users of custom software, such as banks, hospitals and utilities will have to pay sales tax on this service, likely driving them to look offshore to keep their costs down.

The best thing now is to contact your state Senator to ask them to reject the House version of SB 6143. You can find them here: http://apps.leg.wa.gov/DistrictFinder/Default.aspx

WTIA will keep working on this for the last three days of session but this new sales tax on custom software and other tax increases look to be a done deal.

House Poised to Pass Custom Software Sales Tax -- Please Call 800-562-6000 Now to Say No!

2010-03-07T00:26:00Z

The Washington state House of Representatives is poised to pass HB 3191, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=3191, an omnibus tax bill that contains a sales tax on custom software in Part 15 of the bill.

WTIA has been lobbying hard to delete this provsion since it came up last Monday. Thank you to those of you who have called and e-mailed your legislators. Unfortunately many of them are not listening, particularly those from Seattle and east side of King County where the bulk of the state's tech industry is located.

We need one last ditch effort to try to stop this ill-advised tax from being passed into law. Please call the legislative hotline at 800-562-6000 to express your opposition to the sales tax on custom software in HB 3191.

WTIA will continue to fight against this tax if HB 3191 goes over to the Senate. But for now we need to put pressure on the House, especially those from Seattle and greater King, Pierce and Snohomish counties. Please do this today. Thank you.

Keep the Pressure on the Legislature to Stop the Custom Software Tax!

2010-03-04T18:07:00Z

You are making a difference in getting the legislature to rethink adding the sales tax to custom software development.

Please continue to contact both your state representatives and your state senator to oppose Part 15 of HB 3191. See attached document for additional information and talking points. Feel free to attach this document if you send an e-mail to your legislators.

http://apps.leg.wa.gov/DistrictFinder/Default.aspx

In addition, please also contact Representative Ross Hunter and Speaker Frank Chopp. You can call the legislative hotline at 800-562-6000 or their offices directly. Rep. Hunter's number is 360-786-7936 and Speaker Chopp's number is 360-786-7920.

Keep the pressure on until the sales tax on custom software is dropped completely.

The legislature has a diffcult job is trying to balance the state budget in the midst of declining tax revenues. They will be raising taxes in some way, shape or form but they should not be taxing things that will result in loss of jobs, losing business to other states or that are difficult to comply with or confusing to administer. The sales tax on custom software would do all this, which is why WTIA is opposing it.

There are other problematic provisions in HB 3191, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=3191 (see substitute bill or the House Bill Report), such as a tax on investment earnings. This could drive VC funds to other states. The tax avoidance section will result in substantial disputes with the Dept. of Revenue.

Let's make sure our lawmakers understand the value of the stae's tech industry--please keep the pressure on to drop the sales tax on custom software.

House Committee Passes Custom Software Tax, Other Business Tax Increases – Contact Your Lawmaker Today!

2010-03-03T00:10:00Z

Today, the House Finance Committee passed HB 3191, a 153 page monstrosity of a bill that requires sales tax on custom software development. This is a major departure for what has been considered a professional service and taxed accordingly.

WTIA was denied an opportunity to publicly express our opposition to this new tax scheme. Representative Ross Hunter, http://www.leg.wa.gov/house/representatives/Pages/hunter.aspx, a former Microsoft employee and Chairman of the House Finance Committee, deferred instead to those who are in favor of tax increases and those opposed to taxing cigars and candy.

It is now up to those in the technology community to express opposition to the imposition of sales tax on custom software development. Please contact your legislator today to say “no” to taxing custom software development. You can find your legislator here: http://apps.leg.wa.gov/DistrictFinder/Default.aspx

In addition to contacting your state Representative and state Senator, please e-mail Representative Hunter and Speaker of the House Frank Chopp. They can be reached at hunter.ross@leg.wa.gov and chopp.frank@leg.wa.gov, respectively.

Background

Under current law, “prewritten” software and “custom” software are taxed differently. Prewritten software, whether downloaded or bought off the shelf is classified as a retail sale, subject to sales tax, whether you are a business or a consumer. Sellers of prewritten software are considered “retailers” and pay B&O tax of .471% and are responsible to collect sales tax and remit it to the state.

Custom software is considered a professional service, like accountants, engineers or lawyers. The cost of custom software development is taxed at the service rate of 1.5% with no responsibilities for collecting sales tax from customers.

Here are the definitions for B&O tax purposes: http://apps.leg.wa.gov/rcw/default.aspx?cite=82.04.215

Under the House Finance Committee amended version of HB 3191 (see attached), this would change. Custom software developers would now be taxed the same as prewritten software. This means that custom software developers would have to set up a sales tax collection system and charge their customers the sales tax rate based on their customer’s location (out of state customers are not subject to this requirement).

There are some exemptions to this requirement. For example, customized software for Microsoft is often used as a component of other software Microsoft sells so Microsoft would not pay the sales tax but would have to give the custom software developer a reseller’s permit to be exempt.

However, large customers, like Boeing, banks, hospitals, insurance companies and utilities would have to pay sales tax, which would represent an added cost to them. Large customers like this would likely seek to lower their costs by using offshore developers, taking business away from Washington based developers.

Washington-based companies might consider basing themselves in Idaho or Oregon to avoid sales tax collection responsibilities. Or large users of custom software might seek out of state companies in an effort to avoid paying sales tax (even though they still have use tax obligations).

The administrative burden would be costly and time consuming to set up a sales tax collection system. The responsibility would begin July 1.

There are many other provisions of HB 3191 that are troublesome for all kinds of businesses. See the House Bill Analysis, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=3191, for information on the economic nexus, tax avoidance, corporate officer liability and investment earnings provisions.

The legislature is desperate for money and does not want to raise the general sales tax so they are resorting to what polls well. While they have made some budget cuts, the groups and unions that want more money are lobbying furiously for passage of HB 3191—and want the legislature to raise taxes even more.

This bill is on a fast track, so it is critical to contact your lawmaker today if you are concerned about this proposal.

Contact Lmcmurran@washingtontechnology.org if you have questions or concerns.

State House Unveils Tax Package – Custom Software to be Taxed

2010-03-02T00:00:00Z

Today the state House of Representatives unveiled its version of tax increases, closing tax “loopholes” and limiting or eliminating certain tax exemptions. The House plans to adopt the governor’s ideas for adding sales tax to candy, gum, soda and bottled water and adds to that list elective cosmetic surgery, janitorial services and custom software.

Like the state Senate package, the House adds a $1 tax on each pack of cigarettes. The House also adds a 1.5% B&O tax to the investment earnings of non-financial firms.

The sales tax on custom software is slated to raise $76.5 million for the remainder of the 2009-11 biennium and another $181 million in the 2011-13 biennium.

This will work like the digital products tax in that custom software sellers will now have to charge their Washington based customers sales tax on customized software they sell to them and then remit that sales tax to the state. The B&O tax rate will drop for sellers of custom software from 1.5% to the retail B&O rate of .471%.

State Representative Ross Hunter of Medina, a former Microsoft employee, is the main architect of this package, which can be found in HB 3191, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=3191. A public hearing will held tomorrow morning, Tuesday, March 2, in the House Finance Committee in the John L. O’Brien building on the Capitol campus in Olympia.

If you want to contact Rep. Hunter directly, his e-mail address is hunter.ross@leg.wa.gov (all legislators can be reached by using the naming convention lastname.firstname@leg.wa.gov) http://www.leg.wa.gov/pages/home.aspx. His phone number is (360) 786-7936. If you are concerned about this, do not hesitate to let him know ASAP as this bill will be voted out of the House Finance Committee immediately after the public hearing and be on a fast track to move through the legislature by March 11, the scheduled last day of the legislative session.

The House package, unlike the Senate does not include a general sales tax increase. Apparently polling shows a high distaste by citizens for a sales tax increase but much less opposition to selected tax increases, removal of exemptions and closing of “loopholes”.

If you have any questions or concerns, please contact WTIA at Lmcmurran@washingtontechnology.org.

Legislative Update from Olympia – Less than Two Weeks to Go

2010-02-27T23:50:00Z

Today is day 48 of the 60 day legislative session in Olympia. Both chambers of the legislature have released their versions of the operating budget, while only the Senate has proposed a set of tax proposals to close the $2.8 billion budget gap facing our state. The House, having 98 members, is still wrangling over what mix of tax increases, loophole closing and fund transfers they can get a majority of their members to vote on.

Both budgets make cuts to programs across the board, from K-12 and higher education to social services to parks and natural resources. If you are interested in learning more about the budgets, here are the links:

http://leap.leg.wa.gov/leap/budget/detail/2010/ho2010p.asp House budget overview and summary

http://leap.leg.wa.gov/leap/budget/detail/2010/so2010p.asp Senate budget overview and summary

Both House and Senate Ways and Means Committees have passed their versions of the budget. The full Senate is currently discussing the budget in caucus and will pass it sometime today. The House will likely follow suit on Monday.

The Senate has introduced and held public hearings on three tax related proposals, SB 6873, 6874 and 6875. SB 6873, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6873 closes various tax “loopholes” but also proposes several new and dangerous tax concepts. It is similar to HB 3176 but contains additional provisions.

The biggest danger is Part 2 of SB 6873, which creates the idea of “tax avoidance” and grants the Dept. of Revenue an inordinate amount of authority to determine when an “abusive tax avoidance transaction” takes place. Part 1 of the bill establishes “economic nexus” as a basis for tax liability, ostensibly to capture more tax revenue from out-of-state companies. That section also allows for apportionment of royalty income, which helps many WTIA members.

Part 10 assigns personal liability for unpaid B&O taxes to corporate officers. While this is already allowed for sales taxes that are held in trust, this section creates undue liability for corporate employees who have no connection to a company’s tax liabilities.

WTIA is working with other business groups to delete the more egregious sections of this bill. However, in the legislature’s desperation for more money, some version of this bill is bound to pass.

SB 6874 raises the taxes on tobacco. SB 6875 raises the sales tax .3 percent and dedicates it to K-12 and higher education. While these areas are WTIA’s budget priorities, the legislature should fund those critical areas first instead of using an unpopular sales tax increase to fund what are the most important areas of the state budget.

What the legislature has not done is reform worker’s comp., get a handle on the growing problem of public employee pensions, truly reform (or eliminate) General Assistance-Unemployable and deal with overly generous eligibility requirements for some health care and social service programs.

On the education front, the Race to the Top bill, SB 6696, found here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6696&year=2010 is now in the House Ways and Means Committee. See earlier posts for additional details about this bill. If passed and signed into law, Washington will be eligible for a piece of the over $4 billion in federal money devoted to education reform and improvement. WTIA is supporting this bill and working with the Excellent Schools Now coalition to see this bill through the legislature.

If you are interested in seeing all the legislation we are tracking and involved, check WTIA’s online bill tracker, http://capwiz.com/washingtontechnology/issues/bills/

State Senate and House Release Competing Budgets Today

2010-02-24T01:06:00Z

This morning at 9 am, the state Senate released its supplemental operating budget to cover the rest of the 2009-11 biennium.

In many years, the supplemental budget would see an increase in spending due to economic and tax revenue growth. The exact opposite is true this year as the economy continues to crawl along, albeit with some signs of recovery.

This entails more budget cutting, something politicians are loathe to do. Especially in Washington state where there are literally hundreds of groups and unions that depend on and demand more tax revenue to fund their sometimes questionable programs.

Two examples of this in the Senate budget are a $22 million for increases in state employee health care and $28 million for worker retraining that is taken from the unemployment insurance trust fund—money that is supposed to pay unemployment benefits, paid exclusively by employers. This is $50 million in questionable spending while public colleges and universities are cut 6% by $69 million.

Unfortunately, many of these decisions are politically driven with an eye to the November elections, instead of the long term future of the state. To be fair, this is a difficult situation that legislators have to deal with during a severe recession.

The Senate budget also increases revenues by over $900 million. $500+ million of that is accomplished by closing “loopholes”, $300+ million is gained by a .3 percent increase in the sales tax and the remainder is done through transfers from dedicated funds.

The Senate Ways and Means Committee is holding a hearing on this budget (SB 6444) as this is being written.

At noon today, the state House unveiled its budget. While the House details its spending, it does not say how it will raise the revenue necessary to balance their budget. They contemplate $857 million in increased taxes.

The House Ways and Means Committee will start its budget hearing at 6 pm this evening. You can watch it at www.tvw.org.

The House budget cuts K-12 education in different ways than the Senate does but both do some damage to the public schools. Hopefully, Washington will qualify for Race to the Top federal funds to improve K-12 but that has yet to be determined. A subsequent post will discuss SB 6696, the Race to the Top bill that WTIA has been intimately involved in.

The bottom line is that your bottom line is likely to be negatively affected by the inevitable tax increases that are coming so the state can continue to operate. The question is if state government has really reformed itself to be more efficient, eliminate programs that are of questionable value while fully funding K-12 and properly funding higher education. In some ways the Governor and Legislature have made tough decisions, while in other ways it is business as usual.

You can find and read bills, bill reports and amendments at www.leg.wa.gov. You can also find your state Senator and Representatives there and contact them to let them know how you feel about the state budget, increased taxes or any other topic.

Gov. Gregoire Releases Tax Package – Candy, Cigarettes, Gum, Soda and Water

2010-02-19T06:30:00Z

Gov. Gregoire released her tax package Wednesday to deal with what is now a $2.8 billion gap between revenue and spending. While the revenue forecast shows a slightly improving economy, job and revenue growth are still in the future.

Attached is her nine page letter to the four legislative caucus leaders. Now that the legislature has overturned Initiative 960, which required a 2/3 vote of the legislature to raise taxes, it is essentially a done deal that taxes will go up.

These new revenues will restore cuts in the Governor’s budget that she submitted to the legislature back in December. The restorations are across the board in K-12, higher education, health care and social/human services.

There are still a number of wild cards out there that remain to be played. The legislature is under a great deal of pressure from all kinds of social services advocates, labor unions and others to increase revenue even more than the approximately $600 million the Governor’s proposal raises. There are sure to be various tax “loopholes” that will be closed or limited.

However, the sales tax is the one tax that raises serious dollars. Every 0.1 cent increase raises about $100 million so a 1 cent increase would yield about $1 billion. While there is little public support for a sales tax increase, it may be the last resort, short of budget cuts that almost no one wants to contemplate.

Another “Damocles Sword” hanging over the legislature’s head is the recent decision from Judge John Erlich in King County in the McCleary case that ruled the state is not adequately funding basic education. This will mean additional billions that will have to be spent on K-12 in the next few years.

What is rather disconcerting, though, is the lack of truly dealing with the structural problems of state spending, such as unfunded pension liabilities, state employee health care costs, overly generous Medicaid and other health related eligibility requirements, a dysfunctional worker’s compensation system and rising unemployment taxes.

This situation is faced by 47 other states and there are no easy solutions. What do you think should be done to set the ship of state on the right course? WTIA needs your comments and feedback to represent your interests adequately in Olympia. WTIA’s legislative priorities are improving K-12 education, particularly around math and science, increasing STEM degrees from the state’s universities and improving the business climate for the technology industry to succeed.

Race to the Top Bill in House Education Committee Wednesday Afternoon

2010-02-17T06:21:00Z

Senate Bill 6696, the Race to the Top proposal requested by Gov. Gregoire is scheduled for a public hearing in the House Education Committee Wednesday at 1:30 p.m.

Passage of this bill, which you can find here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6696&year=2009 (see Engrossed Second Substitute) is absolutely necessary if Washington state is going to compete for between $150 and $250 million in federal education funds.

We are finally moving away from looking at how much is spent on education to measuring outcomes. Turning this bill into law will help ALL students succeed but several amendments are necessary to ensure that Washington is in compliance with federal guidelines for Race to the Top.

E2SB 6696 is also the natural next step in education reform that was begun by the legislature last year in HB 2261.

Here are the key facets that need to be in this bill to make it a strong and worthwhile bill (and qualify Washington for RTTT funds):

OSPI needs to develop one set of statewide measures of student growth and to mandate districts use it.
Student growth data needs to comprise at least 50% of teacher and principal evaluations.
Districts should be required to use one of the approved four-tiered evaluation models developed by OSPI or obtain approval from OSPI on an acceptable alternative.
For teachers who receive a performance rating in the bottom two tiers of the evaluation system for two years in a row, they should be placed back on provisional status for up to three years.
Provide extra pay for teachers who work in high poverty, high minority or low achieving schools and hard-to-staff subject areas (math, science, special ed.), and who demonstrate effectiveness in closing the achievement gap and raising student performance.
Ensure that “required action” actually translates to bold and meaningful changes in these schools that the federal government is now requiring—including replacing 50 percent of school staff, extending the school day and instituting performance-based evaluation and compensation systems.

WTIA is a member of the Excellent Schools Now coalition that is behind this bill and these additional reforms. Attached is a document explaining this in more detail.

Now is the time to contact the lawmakers on the House Education Committee and ask them to support these amendments to SB 6696.

Following are the e-mail addresses for the committee members:

Chairman Dave Quall quall.dave.@leg.wa.gov

Vice-Chair Marcie Maxwell maxwell.marcie@leg.wa.gov

Ranking Republican Skip Priest priest.skip@leg.wa.gov

Rep. Mike Hope hope.mike@leg.wa.gov

Rep. Bruce Dammeier dammeier.bruce@leg.wa.gov

Rep. Susan Fagan fagan.susan@leg.wa.gov

Rep. Sam Hunt hunt.sam@leg.wa.gov

Rep. Norm Johnson johnson.norm@leg.wa.gov

Rep. Marko Liias liias.marko@leg.wa.gov

Rep. Tina Orwall orwall.tina@leg.wa.gov

Rep. Tim Probst probst.tim@leg.wa.gov

Rep. Sharon Santos santos.sharon@leg.wa.gov

Rep. Pat Sullivan sullivan.pat@leg.wa.gov

Please contact these folks today. Here is the link to the House Education Committee where you can find out more: http://www.leg.wa.gov/House/Committees/ED/Pages/MembersStaff.aspx

By improving our K-12 education system through this bill, we will ensure that our students and children are getting a quality education. This is critical for the future of our great state.

Tax Increase Proposal to Have Hearing Saturday Morning in Olympia

2010-02-12T06:55:00Z

House Bill 3176, discussed in this blog on Tuesday, will have a public hearing this Saturday morning in the House Finance Committee. The purpose of this bill is to increase taxes and raise new revenue for the state to close the $2.6 billion gap between state spending and revenue. Here are some of the provisions of this bill:

(1) Establish economic nexus standards

(2) Create tax avoidance transactions

(3) Place a cap on the first mortgage deduction

(4) Clarify direct seller business and occupation tax exemption

(5) Limit business and occupation tax preferences for manufacturers of products derived from certain agricultural products

(6) Eliminate tax preferences for bullion

(7) End the preferential business and occupation tax treatment received by directors of corporations

(8) Impose airplane excise tax

(9) Impose public utility tax on interstate hauls

(10) Limit foreclosure exemption

(11) Address tax debts

(12) Repeal the nonresident sales tax exemption

(13) Remove the sales and use tax exemption for livestock nutrient equipment and facilities

(14) Eliminate the business and occupation tax credit for new employment for international service activities

In the "economic nexus" sections of the bill, there are clauses that allow for apportionment of royalty income, which will benefit many Washington based WTIA members. This is the only provision of this bill that is worth supporting. WTIA will oppose or be neutral on the remainder of the bill.

You can find out more about the bill here:

http://apps.leg.wa.gov/billinfo/summary.aspx?bill=3176&year=2009

A bill report will be ready sometime Friday. Please contact us at Lmcmurran@washingtontechnology.org if you have any specific concerns or wish to testify at the public hearing.

State Senate Passes Mild Race to the Top Bill Today

2010-02-12T06:08:00Z

Today, the state Senate passed E2SSB 6696, the Race to the Top bill. While a step forward in education reform and towards garnering millions in federal education money, it still falls short in a few significant ways.

The state Senate decided not to adopt several amendments that would have strengthened the bill and improved Washington’s application for RTTT funds. One amendment would require student achievement data as part of teacher evaluations and the other would require OSPI to develop the teacher evaluation system, as opposed the 295 school districts as prescribed in the bill now.

You can read about this bill here:

http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6696&year=2009

The Washington Education Association opposed these changes. While the WEA is seeking to protect its members, their actions continue to prevent needed reform from moving forward. There is no denying that their political power was instrumental in stopping these amendments.

The bill now moves to the state House, where it is hoped that the bill can be improved. You can find your legislator at the legislature’s website: http://apps.leg.wa.gov/DistrictFinder/Default.aspx

Please contact your House members and ask them to vote for SB 6696 with the student data and OSPI evaluation amendments.

State Taxes Going Up -- Just a Matter of When and by How Much

2010-02-09T17:04:00Z

Hello Readers,

The legislative session in Olympia is half over, with 30 days to go. A wide range of proposals have been considered and voted out of policy and fiscal committees. WTIA is actively engaged on a number of proposals, primarily in the areas of K-12 and higher education and tax related proposals.

With the state economy still recovering slowly, tax receipts have not kept up as they have in previous years. In last year's legislative session, lawmakers cut spending but did not raise taxes. What they did not do, however, is truly reform how the state budget is put together and truly prioritizing spending, particularly K-12 and higher education. There is a growing recognition that there is a limit to health care and social services spending, especially as the "paramount duty" of the state is to fund K-12 education. Too often social services and health care spending is increased simply by increasing elgibility in these programs. As the economy recovers, legislators need to shrink eligibility for these programs, which will help reduce spending over time.

This is particularly important in light of the recent King County Superior Court decision in the McCleary case that ruled that the state is not fully funding "basic" education. This could require up to $2 billion in K-12 spending in next year's budget.

The other side of the budget problem is on the revenue side. The 2009-11 biennium that we are now in will see an actual drop in tax reciepts for the first time in almost 30 years. In previous economic downturns there was slowing of growth in tax receipts, as was true in 2001-03, but not an actual drop in revenues.

Additionally, from a political standpoint, numerous activists and unions are in Olympia almost daily pressuring lawmakers to raise taxes and not cut programs further.

All these factors are leading to an inevitable tax increase. The Senate Ways and Means Committee laid the groundwork yesterday by advancing a bill that eliminates the provisions of Initiative 960, the initiative that requires a 2/3 vote in the legislature to raise taxes. See the Seattle P-I article about this: http://blog.seattlepi.com/seattlepolitics/archives/193814.asp

While increases in tax rates have not yet been formally proposed, several bills have been introduced that give the state much more power over taxpayers to determine what is subject to tax. Please see the attached bill, HB 3176, which was requested by the Dept. of Revenue.

Cities and counties, as well, are seeking new revenues for public safety, mental health, tourism, utilities and other uses. HB 3179, found here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=3179&year=2009 passed the House Finance Committee today.

The question now for the technology industry, and all taxpayers, is what you think should be done to balance spending and revenue. Should the legislature cut even more into higher education, health care, social services, environment/natural resources? Or should there be a general sales tax increase to keep agencies and programs whole? Do you support an increase in the B&O or property tax? How about eliminating tax credits, like for R&D, that the tech industry uses extensively to hire and perform R&D?

We want to hear from you about this. Please contact us at Lmcmurran@washingtontechnology.org to let us know your opinion.

If you want to see the legislation WTIA is tracking, please visit our webpage: http://capwiz.com/washingtontechnology/issues/bills/?type=ST

House Education Committee Delays Math and Science Graduation Requirement – Again

2010-02-03T04:05:00Z

In a close 7-6 vote today, the House Education Committee passed House Bill 2915. This bill delays, once again, the requirement that students pass a math and science test to graduate from high school.

WTIA testified and advocated against this bill. We were almost successful in keeping this bill in committee but Committee Chair Dave Quall of Mt. Vernon twisted just enough arms of his fellow Democrats to get the bill out of committee. Kudos to Rep. Marcie Maxwell of Renton for standing up for principle instead of politics and voting against the bill. Appreciation is also warranted for the 5 Republicans on the committee who all voted against this unnecessary bill. They are Reps. Skip Priest, Bruce Dammeier, Susan Fagan, Mike Hope and Norm Johnson.

http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2915&year=2009 Here is the link to the bill page on the legislature’s website. The “House Bill Analysis 2010” gives a good background on the bill and what the bill does.

In last year’s session the legislature pushed the deadline to pass a math test to graduate from high school from 2012 to 2013 and for science from 2014 to 2015. Now the Superintendent of Public Instruction Randy Dorn wants to push it back again two more years for each subject. With no plan to be ready when the deadlines do arrive. This is simply unacceptable and continues the educational mediocrity that has become the hallmark of our state, sadly. What is more disappointing is the lack of fortitude shown by legislators over this issue.

The bill now goes to the House Rules Committee. The members of this committee can be found here: http://www.leg.wa.gov/House/Committees/RUL/Pages/MembersStaff.aspx If you believe as WTIA does that this is another unnecessary delay that only hurts our students, please call the office of the Rules Committee members and ask them to vote against HB 2915. WTIA will continue to work against passage of this bill.

Over in the state Senate, a “companion” bill, SB 6553 that is the twin of HB 2915 is scheduled for a public hearing tomorrow morning (Wednesday) at 8 a.m.

http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6553&year=2009 WTIA will testify against this bill as well.

Two Major Education Bills Considered in Olympia -- One Good, One Bad

2010-01-26T23:16:00Z

Hello Readers,

With the legislature in full swing in Olympia, your scribe has been busy tracking the flow of bills being introduced and referred to legislative committees for hearings. In the even-numbered year, the legislature meets for just 60 days, so it is like a sprint, as opposed to year-round legislatures that are more like marathons.

As is true in every sesssion, there are a slew of bills related to both K-12 and higher education that WTIA follows. We advocate for improving K-12 education, especially around math and science and for increase numbers of STEM degrees from our state's universities.

This year the state has an opportunity to really advance K-12. Senate Bill 6696, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6696&year=2009 is a bill that would help Washington compete for Race to the Top federal dollars to improve education. In order to qualify for RTTT funds, a state must have a plan to close persistently failing schools, a teacher evaluation system based on student data and robust student data collection systems. Charter schools and a STEM focus also bring extra points on the application.

This bill was requested by Governor Gregoire. She consulted with many education groups, most notably WEA, the teacher's union, who opposed last year's major education reform, HB 2261. While the Governor was successful in getting WEA to agree to evaluations, the actual bill language is not strong enough for the Feds. Amendments to the bill will be necessary.

WTIA, along with many other entities, testified in favor of SB 6696. Superintendent of Public Instruction Randy Dorn came out strong for the bill and for improving it. We applaud him for that. We will be working with the Excellent Schools Now coalition, http://www.excellentschoolsnow.org/, to make the bill as strong as possible so that Washington's application for Race to the Top stands a good chance of succeeding.

Unfortunately SPI Dorn is not quite as supportive of ensuring our high schoolers can demonstrate their mastery of math and science as he is the requester of HB 2915, http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2915&year=2009.

This bill further delays the requirement that high school students pass a statewide math and science test to graduate from high school. The bill pushes the deadline for math back to 2015 from 2013 and to 2017 from 2015 for science. This is simply unacceptable. We need to redouble our efforts to ensure that schools and students are ready by the current deadline.

WTIA, along with many other groups, testified against HB 2915 this morning in the House Education Committee. This bill is likely to be voted out of committee unless legislators hear from you. Please contact the House Education Committee members today. http://www.leg.wa.gov/House/Committees/ED/Pages/MembersStaff.aspx

You can contact them via e-mail using lastname.firstname@leg.wa.gov as the naming convention. Thank you for your support of this issue. If you have any questions, please contact us at Lmcmurran@washingtontechnology.org.

Math and Science Graduation Delay Proposal Introduced in Olympia

2010-01-21T03:23:00Z

Hello Readers,

A bill to further delay the requirement that students pass a statewide math and science assessment to graduate has been introduced in Olympia at the request of Superintendent of Public Instruction Randy Dorn.

Two separate bills, HB 2915 and SB 6553, have been introduced in the state House and Senate, respectively. The House version is attached.

WTIA opposes the further delay of the requirement that students pass a statewide assessment in math and science.

You can view information about this bill here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2915&year=2009

House Education Committee Chair Dave Quall has scheduled a hearing for next Tuesday, Jan. 26 at 10 am in the O'Brien Building on the Capitol campus. Here is a link to the House Education Committee members: http://www.leg.wa.gov/House/Committees/ED/Pages/MembersStaff.aspx

You can reach any of them by e-mail using this convention: lastname.firstname@leg.wa.gov

We encourage you to express your opposition to this proposal to committee members. Now is no time to be slowing down on the commitment to improving math and science education in Washington. Washington students have not performed well on statewide math and science tests.

However, it is also not a requirement to graduate. When emphasis was placed on reading and writing, scores improved and passage rates on the statewide assessment surpass 80% on both--plus the knowledge by students that they needed to pass the test to graduate.

Once the students who are now high school freshmen know they have to pass the test to graduate, scores will improve dramatically from the 45% passage rate in math now. We need a redoubling of efforts to ensure the new end-of-course exams test the right material and are diagnostic. Getting good teachers trained is certainly a challenge but one that needs to be done for the 2013 deadline.

Pushing it back to 2015, as the bills propose to do, simply takes away the incentive to get this done sooner rather than later. Our students cannot wait any longer. They are capable of doing well in math and science.