OLYMPIA -- A bill renewing tax breaks for high-tech research and development headed to Gov. Gary Locke for signature Tuesday after it passed the Senate easily.
House Bill 2546 includes a requirement that the amount of tax relief a company takes be made public, a provision that wasn't in the version of the bill passed by the Republican Senate last month.
But the disclosure requirement -- scaled down from a more sweeping proposal made by House Democrats -- wasn't enough to derail a bill that's a priority for Locke and lawmakers from both parties.
"Thirty-seven other states have similar kinds of R&D incentives," Senate Ways and Means Chairman Joe Zarelli, R-Ridgefield, said before the bill passed 40-9. "The debate isn't about whether we want to do this, but whether we want to be competitive for these jobs."
Some Democrats continued to oppose the bill, arguing that it extends the tax breaks for too long and should be considered alongside the state's supplemental budget. The breaks will cost about $75 million in the current two-year budget cycle, and about $100 million per year thereafter.
Senate Minority Leader Lisa Brown said she feared cost might crowd out other spending for health care and education programs.
"What are we going to be told? 'Well, there's just not enough money,' " said Brown, D-Spokane.
The incentives were adopted in 1994 in a bid to diversify the state's economy as timber, fishing and airplane manufacturing lagged. They were scheduled to expire this year unless the Legislature acted. Locke, a Democrat, called for their renewal and is expected to sign the bill.
The main point of contention has been how much information about which companies take the money and what they do with it should be made public. Republicans argued to keep virtually all information confidential. House Democrats initially called for an aggressive disclosure scheme that would have made public many elements of a company's operation that are normally confidential, such as how many people a company employs at a certain wage level. But as a compromise, the House passed a bill that would essentially create a public list of companies and the amount of tax relief they had claimed under each of the two incentives.
One of the incentives allows companies a sales tax exemption for equipment, materials and construction related to research and development. The break essentially discounts the price of such spending by as much as 10 percent.
The other allows companies a credit against the state's business and occupation tax of as much as $2 million a year for research and development. It's aimed at lightening the burden of the B&O tax, which falls heavily on companies that aren't yet turning a profit.
In 2002, 590 companies took the B&O credit, while 49 took the sales tax exemption, according to the Department of Revenue.