Friday afternoon, I was joined by Bellevue Mayor Lynne Robinson, Redmond Mayor Angela Birney and Renton Mayor Armondo Pavone, in addition to Kent Mayor Dana Ralph and Des Moines Mayor Traci Buxton, to ask the Washington State Legislature for help -- help from our state elected leaders to reject proposed tax measures that would destabilize Washington’s economy and have a lasting detrimental impact on our region’s economic competitiveness, job market and overall fiscal health.
You can watch the full press conference on YouTube.
I’m talking specifically about two new revenue proposals released by the State Legislature as part of the 2025 to 2027 operating budget – a proposed Payroll Excise Tax and increased Business and Occupation tax on large businesses, which the state classifies as any business with more than $7 million in payroll.
These taxes will impact thousands of businesses across the state – including in Auburn. As a city, we’ve worked hard to attract a diverse group of industries, from aerospace and IT, to healthcare, manufacturing and freight services. These companies have choices about where they do business. And the next set of job creators also have choices. These taxes will make attracting great jobs much harder, not only in Auburn, but in cities across the state.
In Auburn, our largest businesses aren’t necessarily generating the highest profit margins and would be unable to sustain operations without increasing costs – a burden passed on to our already cash-strapped residents. In a high inflation environment, a payroll tax will make goods and services unaffordable for the most marginalized populations.
Higher labor costs will also lead to lower hiring rates and job creation, and will incentivize businesses to either invest in automation, including new tools like AI, or outsource labor entirely. This comes at a time when Cities & Schools (Algona, Auburn, Pacific, Green River College, and the Auburn School District) have committed to reinstating our Task Force on Jobs. We need more businesses and more family wage jobs in our area!
Many of our largest businesses in the White River Valley are warehouses, and with increasing costs, it is becoming more financially reasonable for them to move out of the state altogether to avoid the high business taxes. Reduced revenues in Auburn could mean reduced spending in areas like Public Safety, Human Services and Public Works, areas of city management that no resident wants to see underfunded.
Washington businesses already pay an average of more than $10,000 per employee in state and local taxes, more than 23% above the national average of $8,200 per employee. The taxes being discussed would make that average significantly higher, putting Washington at a competitive disadvantage for job creation.
In just a few short years, we could see distinctly-Washington industries like aerospace and technology shrink before our eyes, with high-paying jobs moving out of the state completely.
Twelve area mayors and I all share an appreciation for the predicament our state legislators are in -- that's why we also penned a letter to the House and Senateimploring our elected leaders hear our concern. We know how difficult this situation is, and we are sympathetic. But I agree with Governor Ferguson, when he said that new taxes should be a “last resort.”
Above all else, we would like to problem solve together, just as we’ve done at every fork in the road. We know we can be creative in reducing spending and generating revenue through economic development – not new taxes that will squeeze our already-struggling businesses and residents.
Read the full letter on our City of Auburn website or blog.
And if you agree with anything I've written here, please consider contacting your legislator -- they've heard from me and my fellow mayors plenty, and we're just a small drop in the bucket!
