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updated 2:54 PM CDT, Jul 28, 2018

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Mike Lowry, who created now-debated tech tax breaks, offers another side to debate

The tax breaks for high-tech companies that are now seen by some as depriving the state of millions of dollars at a time of dire budgetary challenges were a proud accomplishment of his administration, says former Gov. Mike Lowry, noting they were created to lure new business to Washington.

 

 "We were coming out of what was, at that time, the state's worst recession and we needed to attract industries that would produce good-paying jobs," Lowry recalled of the proposal he came up with and pressed through the 1994 Legislature.

 

 
 

The focus of the current criticism, and Lowry's comments during a recent interview, are what the critics refer to as "tax loopholes" and he calls "incentives" that have permitted high-tech companies to avoid paying state sales tax on new facilities, including equipment.

 

"We were absolutely correct to come up with policies to lure companies to the state that would create high-paying jobs that were basically the jobs of the future," Lowry said.

 

"We kept encountering companies that said they had looked at and then rejected this state as a place for new facilities," Lowry recalled. "The incentives allowed us to move into one of the most competitive positions among states."

 

One of the state's key competitors in the hunt for new high-teach companies was neighboring Oregon, which had and has no sales tax, and that put this state at a dramatic disadvantage.

 

Soon after enactment of the sales-tax exemption legislation, Washington State won a major victory when Taiwan Semiconductor announced it would be locating in Clark County rather than in Oregon. "The largest one-time capital investment ever in this state," Lowry said. Other wins were a Sharp Electronics facility and an Intel plant in southern Pierce County

 

A $132 million tax break for Microsoft, due primarily to its construction of data centers in Quincy in Grant Country, has raised some eyebrows among those viewing the state's list of the dollar impact of such tax preferences.

 

While he is convinced about the importance to the state of having created the sales-tax exemptions, he is equally convinced that they need to be reviewed periodically to ensure they are doing what was intended.

 

"Those tax breaks shouldn't just continue automatically," Lowry said. "Each piece of tax-incentive legislation needs to be looked at individually from time to time for possible sunset (termination). Each must be justified on the basis of expansion of jobs."

 

In fact, in the intervening period since Lowry's program in 1994, sales tax exemptions, and exemptions from the state's business & occupation tax have proliferated and been extended to logical industries like aerospace manufacturing, biotech and medical-device manufacturers.

 

Other also logical exemptions are for manufacturing in rural counties and manufacturers of timber and wood products, though some of the exemptions may cause more head-scratching, like fruit and vegetable processors, dairy and seafood processors and cold-storage warehouses.

 

The State Department of Revenue's most recent figures on the tax exemptions, for 2009, indicate 278,000 jobs were credited to the tax incentives, which cost the state $236 million, $109 million of which was claimed by high-tech firms while $80 million in reduced state and local tax receipts was for rural manufacturers.

 

Mike Fitzgerald, who was a key member of Lowry's team as director of Community, Trade and Economic Development and who has held held similar positions in three other states and may  be one of the nation's most experienced economic-development experts, reserves special praise for Lowry. Fitzgerald credits Lowry with really understanding the way the game had to be played to bring jobs to the state.

 

"He would bring his entire cabinet together and tell us that we were not to violate any environmental considerations, but otherwise we each had a role to play in working together to go after these companies," Fitzgerald recalled in a visit about a year ago. "Under Lowry, we recruited or were in competition for more big business than maybe under any other governor."

 

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Dineen's vineyards is back to roots, not entrepreneur encore, after banker career

The 80-acre vineyard and winery in the Yakima Valley where Patrick J. (Pat) Dineen focuses an increasing amount of his attention isn't an entrepreneurial encore for the retired bank executive so much as it's a return to his roots on the farm.

 

Dineen, who hasn't totally stepped aside from his 40-year banking career since he chairs the board of Bellevue-based Puget Sound Bank and is one of its original investors, grew up on a dairy farm in the Midwest. "I knew that when I retired I wanted to get back into farming," he says, admitting that the dirt called to him from time to time over the years.

 
 

This is harvest time in Wine Country and thus Dineen is spending many of his days this month at Dineen Vineyards, which sits on a hillside north of  Zillah, amid a cluster of Washington State's well-known wineries, with an impressive view looking west toward the mountains.

 

It's there that Dineen Vineyard's grapes, primarily cabernet, cabernet franc and sirah, are being harvested and winemakers from many of the 23 wineries that are his customers arrive to load up their grapes.

 

Dineen only produces about 300 cases a year for his own use, either under the Dineen Vineyards label or the Kamiakin label, a second label featuring a red blend, that came into being about five years ago. Most of the 190 tons of grapes are bought  by the other wineries.

 

One of those wineries buying his grapes is Sheridan Vineyards, in which Dineen invested in 2000 after being introduced to Sheridan's founder, Scott Greer. He soon ran across a rundown apple orchard nearby that he bought in 2002 and turned into Dineen Vineyards. TheSheridan winery is built on part of Dineen's acreage and is leased back to Greer.

 

The vineyards primarily produce the three major varietals, but a total of eight different varietals are grown, though Dineen is quick to make it clear that "the viticulture is my interest in growing the grapes rather than making the wine."

 

His ongoing process of learning about the grapes includes traveling to Europe each year to visit different grape-growing regions and says with satisfaction that "I get into prestigious wineries that I wouldn't be able to if I didn't have the winery."

 

Like a number of those involved with vineyards or wineries in Washington State, Dineen first looked for land in the Napa Valley in California, but found "it was more pricey than I wanted to get into."

 

Dineen produced his first wine under the Dineen Vineyards label in 2003, primarily for personal consumption, but about four years ago he got his commercial bond to permit him to market and sell his wine.

 

"That was primarily to promote the vineyard," he said. "My plan is not to get any bigger since I'm retired. We could get bigger but chances are we won't."

 

Dineen, discussing his decision to be in the group who put up money to launch Puget Sound Bank in 2005, says "I had a good career in banking, made good money, and wasn't looking to get back into the business. But I figured I could do this with a minimal amount of time and effort. It hasn't turned out that way."

 

Dineen says Puget Sound Bank, a $200 million, single-office bank, "has a strong balance sheet. We didn't get into problems because we avoided real estate and focused on commercial and industrialized loans."

 

Dineen started his banking career with Seafirst Bank after moving West following graduation from Marquette University and five years in the Air Force. He then joined Spokane-based Old National Bank, which was acquired by U.S. Bank, where Dineen eventually served as president for Washington before he retired.

 

Looking ahead at the industry, Dineen said "we're going to see a lot of branch closures in an era when people can do their banking from anywhere. They could care less today if your bank has a branch on the busiest corner in town."

 

He notes "there aren't many healthy banks changing hands these days because banks looking to sell find that their book value is pretty much what they're being offered today."

 

"A few years ago, selling prices for banks would have been twice book value or even better for an attractive bank," he added. "Until we get back there somehow, you're not going to see much movement among healthy banks."

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Jon Huntsman's Senior Games dream 25 years on

Jon Huntsman Sr.'s vision was that an event called the World Senior Games, even if held in a remote corner of Southwest Utah, would eventually draw thousands of what others might dismiss as the elderly for the chance to recreate and compete with their peers.

So it is that 25 years after their founding that the games this year will attract about 10,000 seniors who, over the next two weeks, will compete in everything from track and field to badminton, pickelball, lawn bowling, volleyball, square dancing and even bridge. Some of the competitors are in their 90s.

john and karen huntsman
Jon and Karen Hunstman from Games website

The event, under Huntsman's fathering, has grown over its quarter century into a major tourism attraction in Southern Utah and thus a major opportunity to expose the now rapidly growing city of St. George during its most appealing fall season. You can't drive far beyond the red rock mesas, what is referred to locally as "color country," that edge the city without encountering the aspens that by early October stretch north and east toward various national and state parks.

I've been drawn to the games because of the "world" name since I first heard of them in 2003 and made up my mind to compete in the 100 and 200 meters in my age group once I learned that they weren't really world games. That means some competitors really were world class while others like me, who weren't, could still compete, and that's always been the magic draw.

In that 2003 competition, I managed to finish sixth in both the 100 and 200 out of fields of 24 in each event. But the reality was that those at the front of the pack in both events were, in fact, world class and thus it was satisfying just to be in the same race in which I could see them in the distance.

The two guys way out ahead that day were a Southern California pharmacist named Gary Sims, who had never run competitively until he was 50, and John Ross, a professor at the University of Edinburgh who was European champion in both events earlier that same year. They've been dueling it out each year since. Sims holds the meet record for both the 100 and 200 in the 70-74 age group and Ross the meet record for the 100 in the 60-64 age group.

I'm entered as a competitor in the games again this year in the 100 meters for the 70-74 age group and will be looking forward to seeing Sims and Ross in the distance ahead of me as the race unfolds, a bit of familiarity that's important since age brings brushes with the unfamiliar as part of its baggage

There's a special import for me with this year's trip to St. George in that it's an outgrowth of my new-found commitment to do today what I might yesterday have put off until tomorrow. Successful recovery from colon cancer surgery in late May while various friends are battling the disease, or have lost their battles, prompts my new "do it today" mantra.

The games were actually founded by a dreamer named John Morgan Jr. who envisioned and named the games.

 Two years later, Huntsman, founder and CEO of what would eventually be the world's largest chemicals company, caught the vision of the event's potential for the region and the state. Thus he and his wife, Karen, became the major sponsor of what has ever since been the Huntsman World Senior Games.

The visitors the event has attracted each fall may well have had at least something to do with the dramatic growth of the area, with St, George becoming one of the nation's fastest growing metropolitan areas from 1990 on, now with a population of 75,000.

And in that growth and advances in the economy may be the lesson of Huntsman's vision that other states and regions might emulate.

Huntsman, 73, has stepped up to executive chairman of what is now a publicly traded (as of 2005) $9 billion world's largest chemicals company with 12,000 employees. But he and Karen still open each year's Senior Games event, where the participants now number in the thousands each October.

Huntsman is, of course, the father of the former Utah governor, China ambassador and a Republican presidential hopeful, Jon Huntsman Jr.

All of which brings me to the final point about the Jon and Karen Huntsman and their commitments to community in Utah.

It was after his surgery for prostate cancer some 15 years ago that Huntsman set out to establish a world-class cancer research and treatment center, a dream he's pleased to say is now realized with the Huntsman Cancer Institute and Hospital in Salt Lake City.

The Huntsman family continues to serve as principal benefactors and fundraisers for the Huntsman Cancer Institute with what he describes as "the ultimate goal" of eradicating the most challenging forms of cancer.

And it's on that final note about the Huntsmans' commitment to community and overcoming as great a challenge as cancer that I sense a common thread in their commitments and the commitments of those who travel to St. George each year to participate and compete.

The producer of a recent movie on the senior games said: "What drew us to the senior games was the positivity. These people have an unparalleled zeal for life. When you're 90 and 100 years old and have endured life's challenges and still have such a positive attitude, it's beyond impressive. We felt it was worth a film."

In a sense the producer summed up in his way what's become my view: Life is a race to be appreciated for the joy of participation and whether world class -- or a bit slower --making in to the finish line ahead of cancer, or any other physical or mental obstacle, is really the sweetest race to win.

 

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