June 1, 2009

Dear friends and neighbors,

In this time of economic uncertainty, we need to do everything possible to protect jobs and retain businesses. This past fall, an interpretation by the Department of Revenue (DOR) had the potential to impact thousands of jobs in Washington related to the horse boarding industry.

The horse population in Washington is estimated at almost 250,000 horses, ranking our state 11th highest in the United States. A 2007 report prepared by the King County Office of Business Relations and Economic Development stated equine activities produced over 4,000 jobs and generated over $227 million dollars in revenue in 2005.

The DOR interpretation meant the state could have collected years of back taxes from horse boarding operations. However, citizens brought this issue to the attention of the Legislature and during the legislative session, which concluded in April, we passed a bill to preserve the tax exemption for horse boarders.

This week's article discusses how this industry dodged a major tax bullet.

As always, I welcome your comments. Please click here to contact my office through our e-mail service.

It is an honor to serve you.

Sincerely,

Dan Kristiansen
State Representative
39th Legislative District

P.S. - When e-mailing me, please do not hit reply to this e-mail as I will not receive the response. Instead, I invite you to click here and e-mail me. Thank you!

Horse boarding operators dodge big tax bullet
By Rep. Dan Kristiansen

The state seems to always be looking for new and creative ways to separate citizens from their hard-earned money. Last fall, horse boarding operations nearly lost a long-time tax exemption.

Since 1971, a rule has been on the books that centered on the definition of commercial agriculture purposes. The Washington Administrative Code (WAC) 458-30-200 requires that an owner's land must be used for the feeding, breeding, managing and selling of livestock to be eligible for a tax exemption. Horse boarding operations across the state had been receiving this tax exemption since its inception nearly 38 years ago.

Last fall, the state Department of Revenue interpreted the rule to mean that an owner must be engaged simultaneously in all four activities to be eligible for the tax exemption. Not only was DOR looking into collecting future taxes from horse boarders for this now-closed exemption, it was also considering the possibility of collecting tens of thousands of dollars in back taxes.

I received an e-mail in November from a Sedro-Woolley resident involved in these operations. She wrote, "Please know that the equine industry is a very large industry. It affects an untold number of industries indirectly related to it. Any economic factors could impact positions of employment, clothing, tack, equipment, feed, boarding, and so forth."

She made a good point. Imagine the devastation of back tax collections to horse boarding operations struggling in this uncertain economy.

When citizens began expressing concerns about this rule interpretation, several legislators got involved. To its credit, DOR decided not to enforce collection of the fees. However, legislative action was needed to prevent future collection of current and back taxes.

As a result, I co-sponsored House Bill 1232. As originally written, the measure would have defined commercial agricultural purposes "to include current farming practices and activities related to the raising, harvesting, feeding, breeding, managing, selling, care, or training of a farm product." This also would have included other commercial livestock operations, in addition to horse boarding.

The bill received a hearing and passed the House Agriculture and Natural Resources Committee. It was referred to the House Finance Committee where it died.

Fortunately, a second measure, not as broadly written, moved forward. House Bill 1733 extends property tax exemptions to equestrian activities only, and excuses others from back taxes who thought they were under the open space tax exemption. The measure was signed by the governor and becomes effective July 26.

I commend those citizens who came forward and brought this issue to light. As a result, we were able to put the brakes on the back collection of what could have been a devastating tax bill.

Other help provided this session to the agriculture industry includes:

• Senate Bill 5120 - Reduces permitting fees on farm structures;

• Senate Bill 5583 - Provides protection from relinquishment of groundwater rights;

• Senate Bill 5562 - Provides the same protections as the state's "Right to Farm" laws for growing and harvesting of timber.

If you have an issue involving state government or would like more information about these bills, contact my Olympia office at (360) 786-7967.

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