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A decade of evaluating tax preferences
3 pearls for your consideration
JLARC staff presentation to Western States Fiscal Leaders Meeting
John Woolley, Deputy Legislative Auditor: Washington State Legislature
Start carefully, caution with causation, and be patient
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Learn how by starting simple Causation is
hard (but everyone expects it) Patience in
defining success
JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
1854 property tax exemption for cemeteries?
#1: Careful, strategic, simple start
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Contemporary exemption for large airplane manufacturing?
JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
Citizen Commission are the deciders
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Began with chronological march through the tax code
10 years of experience: more targeted and more complexCommission discussion
JLARC staff presentation to Western States Fiscal Leaders Meeting
#2: Caution with causation
7JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
Caution with causation: try risk analysis?
Legislature does not approve preferences.Boeing sites 787 elsewhere and phases future assembly to other states
Legislature does approve preferences.Boeing stays and adds new jobs for new assembly
Legislature does approve preferences. Boeing stays but doesn’t add jobs specifically for new assembly
Aerospace job impacts -47,977 +5,203 +572
Other private sector job impacts
-119,674 +10,664 -1,600
Public sector job impacts -23,139 -1,264 -3,613
Total Impacts -190,790 +14,603 -4,641
JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016 8
JLARC staff presentation to Western States Fiscal Leaders Meeting
Job gains v. losses depend on how much qualified spending is caused by the preference
Jobs gainedfrom film industry spending
may be offset by jobs lostfrom reduced public
spending
Net Gain+111 FTE Jobs
Net Loss-90 FTE Jobs
Break Evenin Jobs
None
45%
All
Film Industry Spending Caused by the Preference
June 2016 9
Caution with causation: risk analysis, second generation
#3: Success can be defined in many ways
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It takes time to do things right away!
JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
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Success can be defined in many ways
JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
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Success can be defined in many ways
JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
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Success can be defined in many ways
The Legislative Auditor, with the assistance of a task force, must make recommendations on the appropriate data and metrics that should be included in tax preference performance statements to evaluate new tax preferences…
Guide available:http://leg.wa.gov/JLARC/AuditAndStudyReports/Documents/LegAudGuidance-DraftingTaxPrefLeg.pdf
JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
Conclusion: remember Mark Twain
14JLARC staff presentation to Western States Fiscal Leaders Meeting June 2016
I didn’t have time to write a shorter letter, so I wrote a long one instead.
“Short letter”
