Seattle Times gets a gift from Olympia

The B&O tax break doesn't even pass the newspaper's own smell test for fiscal responsibility.
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The B&O tax break doesn't even pass the newspaper's own smell test for fiscal responsibility.

In January, a Seattle Times editorial predicted the tough legislative session would produce "audible ouches and shrieks reflecting the pain of a thousand budget cuts." But at the Times, the state dominant newspaper company which is itself enduring financial setbacks, the sound you might hear is a squeal of joy.

Governor Christine Gregoire just signed into law a tax break for the state's newspapers, slashing their share of B&O tax by about 40 percent, the same kind of favor doled out to other powerful industrial sectors in the state. Small businesses and entrepreneurs don't usually get such help, but everyone knows that you're nobody unless you have your own Olympia-approved tax break or loophole, just like Boeing or Microsoft.

So while the state's teachers and poor lose their jobs and get kicked off basic health care, the Times and other papers are getting a little relief, a gift that made balancing the budget tougher.

According to the fiscal impact of the law, produced by the state Office of Financial Management, the "newspaper industry B&O tax" bill will cost $1.2 million this year, $1.3 million next year, and a total of nearly $8 million through 2015 (assuming there are still newspapers). At a time when the state needs more revenue, it'll get millions less.

On top of that, the tax cut also has a cost. OFM's fiscal note, using figures provided by the Department of Revenue, indicate that the newspaper's B&O break will actually cost an additional $22,500 to implement and administer this year, and a total of about $42,500 through 2015. So not only is the state decreasing its revenue, it is increasing, however slightly, its administrative costs. At the very least, it's increasing the workload for staffers.

So how does this square with the Times' own editorials on the state's budget crisis? The newspaper has argued against tax increases and a state income tax saying these strain the pocketbooks of the common citizen. Its philosophy about the budget has been simple. In an editorial in February, the Times declared that when it came to expenses "the state must cut, cut, cut."

In another editorial, they declared: "Efficiency will be the watchword. Lawmakers will have to find numerous savings and new, less expensive ways to do business."

By those standards, the newspaper B&O tax break does not meet the Times' test. It cuts revenues, making the budget hole deeper by millions of dollars, and it increases administrative costs. That is not greater "efficiency," it does not create a "savings," and it is neither a "new" way of doing business in Olympia nor is it "less expensive."


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About the Authors & Contributors

Knute Berger

Knute Berger

Knute “Mossback” Berger is Crosscut's Editor-at-Large.