Jay Inslee and Rob McKenna have radically different approaches on how to create new jobs in Washington. About the only things the two gubernatorial candidates agree on are the need to increase blue-collar and white-collar job training opportunities and to reform health care insurance.
Beyond that, McKenna and Inslee have pointed their job creation plans in different directions.
Democrat Inslee envisions more hands-on government participation in boosting jobs. Republican McKenna calls for cutting state-related expenses that businesses have to pay, and for the government to then step out of the way.
On Tuesday (May 1), McKenna introduced a slightly updated version of his earlier jobs plan at Tri-Tec Manufacturing Co. in Kent. Inslee recently discussed his own jobs plan at a lunch with Crosscut writers.
Inslee said of his plan: "We have built a plan tailored to the unique abilities of our state. ... This race should be about who'll be the most successful on jobs creation."
McKenna said: " To stimulate hiring in our state, we need to lower the cost and complexity of doing business, and lower the cost of creating jobs. ... I'm told (by businesses) that it is too expensive to employ people here in Washington state."
McKenna acknowledged his plan closely mirrors the Republican legislative agenda of the past two years. Inslee's campaign criticizes McKenna's plan because of that.
In broad strokes, McKenna's plan calls for reforms in taxes, especially business and occupation taxes; state regulations; health insurance; and unemployment insurance and workers compensation. It calls for boosting education and for health care reforms.
Inslee's plan calls for reforms in taxes, especially business and occupation taxes plus tax breaks for fledgling companies; health care; and some regulations. Inslee would split some duties away from the state commerce department to create small agencies to concentrate on recruiting and training for life sciences, maritime, aerospace and military jobs and businesses. It also calls for boosting education.
Inslee's plans are mum on unemployment insurance and worker compensation reforms -- which McKenna stresses. McKenna's plan is very light on specifics on the aerospace, biotech, military support, and agriculture industries -- fields that Inslee's plan stresses.
McKenna and Inslee both call for closing some tax exemptions, but have different approaches. Both candidates have declined to name specific loopholes that they would target.
Closing tax exemptions enters the jobs-creation picture in that such actions would give the state extra money to play with in juggling, adding, or compensating for measures to increase employment. Inslee leans toward a proposed law that would put automatic expiration times on every tax exemption on the books -- a total of at least 530. Then the Legislature would decide whether to renew the exemptions case-by-case. McKenna criticizes that plan, saying: "Given that we have hundreds and hundreds of (tax exemption) preferences, that would create chaos."
Democrat and Republican legislators agree that the majority of tax exemptions should remain; there is, for instance, the popular exemption from sales taxes on food purchases. However, Democrats want to eliminate some loopholes, while Republicans have tended to be dead set against trimming any by declaring such actions equate to tax increases. Since a two-thirds majority is needed in both the state House and Senate to remove an exemption, almost none have been eliminated because Republicans control more than one-third of each chamber. Democrats are in court challenging a rule requiring a two-thirds-majority to remove a tax exemption rule.
McKenna said the current system of reviewing tax exemptions for potential elimination works well and should remain in place. A bipartisan comission reviews exemptions that have possibly outlived their purposes and recommends every three months that some loopholes be eliminated.
The problem is that the Legislature has never acted on those recommendations to close a tax exemption, said William Longbrake, the commission's chairman and executive-in-residence at the Robert H. Smith School of Business at the University of Maryland in a late 2011 interview. The process "has no teeth to get the legislature to take some action. There's no penalty for inaction (by the legislature)," he said then.
The legislature eliminated one exemption by a strongly bipartisan vote in the last days of the last session in Olympia. The closed loophole protected out-of-state banks from being taxed on first-tme mortgages. However, speculation has surfaced that the Republicans outsmarted the Democrats because removing this single loophole could weaken a court argument Democrats have made that the two-thirds majority is an impossible-to-reach threshold. According to Washington State Wire, McKenna is keeping tabs on that matter.
Here is a rundown of some differences in Inslee's and McKenna's jobs-creation plans.
Tax reforms
McKenna wants to increase the Business and Occupation (B&O) tax credit to $4,800 for all small businesses. He also wants to change the state's current requirement that businesses collect sales taxes where a product is delivered or service performed -- switching to a pre-2009 practice that businesses collect sales taxes based on their home locations.
Inslee wants to create short-term B&O tax credits for start-up biotech and information technology businesses. He also proposes allowing these businesses to sell and buy these tax credits among themselves. Inslee wants to provide small businesses with B&O tax credits based on every new job they create -- topping out at $4,000 per new job. And he proposes tax credits for aerospace manufacturing and research ventures.
Job and industry recruitment
Inslee wants to set up small department in charge of recruiting and providing support for new biotech and aerospace businesses. He wants to expand state support activities for companies seeking military-related work. He would provide more help to research institutions for spinning off new technologies into new businesses. He also seeks some regulatory reforms.
McKenna's plan does not go into detail on recruiting activities beyond making Washington's unemployment insurance, workers compensation, and regulatory climate attractive to out-of-state firms. McKenna criticizes Inslee's plan to create agencies focusing on specific industries, saying he has talked with 450 business people in 14 meetings around the state. "Not one person stood up and said that what their company needs is a new state bureaucracy or government czar to lead their industry," McKenna said.
Workers comp
McKenna notes that Washington is one of four states where workers compensation has a monopoly on industrial insurance, arguing that forces all firms -- except for very large businesses -- into the state system. McKenna wants to allow non-profit coops or companies to compete to provide such coverage.
Inslee's plan is silent on the subject.
Agriculture
Inslee calls for ree-stablishing a program to provide farmers with low-interest and no-interest loans to farmers to build housing for seasonal and migrant workers. He also calls for the state to help the feds on increasing irrigation water while preserving water for fish in the Yakima River basin; to help move surface water from near Moses Lake to help irrigation along the Columbia and Snake rivers; and to help a project replenish dry riverbeds in the Walla Walla River basin to support wine-grape growers.
Beyond voicing general support for agriculture, McKenna's plan is silent on the subject.
