Washington Main Street Program tax credit cap increased

Washington state's Main Street funding program will have an extra $1 million available to registered Main Street communities through its tax credit incentive program.

Sen. Ann Rivers of La Center in the 18th legislative district sponsored SB 5977 to increase the cap from $1.5 million to $2.5 million. The tax credit incentive allows businesses in Main Street communities to pay their business and operation (B&O) taxes directly to the sponsoring organization within the city or town.

Colfax Downtown Association, which was accepted into the program in December of 2015, receives the B&O taxes here and this year used the funds to establish a storefront grant program. The grant allows businesses to apply for funds for storefront improvements. The first grant this year was received by a new business, The Dusty Attic.

The Downtown Association received approximately $21,000 in incentives from three local businesses this year, a number that Gregory said was well below what Colfax could have actually done.

“We had four businesses that didn't get in because they missed the deadline and probably $30,000 left on the table because of that,” she said.

That deadline may no longer be an issue thanks to the bill passed. Previously, enrolled communities could receive up to $133,333 in tax credit incentives, and those were awarded on a first-come, first-served basis. The first businesses to get their applications in were the ones allowed to funnel their B&O taxes to their respective communities. This led to a competitive mode with businesses attempting to get their paperwork in as soon as possible after Jan. 1.

Now each community will have an allotment to reach by March 31.

“We have until the end of March to reach our share and then it opens up and allows other towns to get more if you didn't fill all of yours,” said Gregory.

Each community will now have an equal allotment, with the $2.5 million to be divided amongst the 32 enrolled Main Street communities. Applications will be allowed from businesses in those communities between the second Monday in January and March 31. As long as a community does not exceed its allotment prior to March 31, all applications will be approved and the B&O taxes can funnel to respective communities. After March 31, any incentives that still remain from the initial $2.5 million will be released so that any community can apply for them. The bill caps incentives for single communities at $250,000.

Gregory said the increased cap plus the added opportunity for actually receiving the incentives will be a big boost for Colfax.

“Since we know we're going to get that money, we can do more,” she said. “We have our storefront grants and we might be able to do small business grants or small business loans so that we can help start new businesses that we need. All of that money will help revitalize downtown Colfax.”

In December, there was a class hosted to educate business owners on the B&O tax credit incentive and teach them how to apply. Gregory said that class will be repeated next year, but with a lot less pressure on the deadline.

“Now we can have that class later and actually have all the people come in and do their application with our help,” she said. “It literally takes 15 minutes.”

The businesses were left to apply as soon as funding opened up on Jan. 1 last year for the opportunity to receive the incentives. The total $1.5 million allocation ran out within days.

“Now you don't have to stay up ‘til midnight to put in the application,” said Gregory.

Businesses which funnel their B&O taxes to Main Street communities will still be eligible for tax credits under the new bill. They will be eligible to receive up to a 75 percent tax credit for the following year, and if donating to the Colfax Downtown Association, will also receive a tax write-off for the following year since the association is a non-profit organization.

Gregory said that each of the enrolled Main Street communities was present in Olympia to speak to the need for an increased cap and the allocation to each community.

“It was quite impressive,” she said.

The vote on the bill was unanimous.

“Senator Rivers, she was the one that made it happen,” Gregory commented. “She really went to bat for us.”