The Citizen Commission for Performance Measurement of Tax Preferences was established by the 2006 Legislature (RCW 43.136). The seven-member Commission is made up of five appointees: two appointed by the House, two appointed by the Senate, and one appointed by the Governor; and two non-voting members: the State Auditor and the Chair of the Joint Legislative Audit and Review Committee. Members serve four-year terms and may be reappointed to serve more than one term.
For the purposes of the Commission, the Legislature has defined a “tax preference” as an exemption, exclusion, or deduction from the base of a state tax; a credit against a state tax; a deferral of a state tax; or a preferential state tax rate. The Department of Revenue has on record about 600 such tax preferences.
The Commission develops a schedule to review tax preferences, based on a ten year review schedule. The Commission also comments on the reviews which are conducted independently by JLARC staff.
Statute exempts certain preferences from review. These are:
- tax preferences required by constitutional law;
- sales and use tax exemptions for machinery and equipment for manufacturing, research and development, or testing;
- the small business credit for the business and occupation tax;
- sales and use tax exemptions for food and prescription drugs;
- property tax relief for retired persons;
- and property tax valuations based on current use.
In addition, the Commission may exempt any preference it determines to be a “critical part of the structure of the tax system,” and may recommend an expedited review process for any tax preference.
The Commission meets periodically to consider citizen input and establish a schedule for review of tax preferences. The schedule is delivered to the Joint Legislative Audit and Review Committee (JLARC). The Commission takes into account any newly enacted or terminated tax preferences and revises the schedule as needed each year. Subject to JLARC’s available resources, the Commission determines which preferences in a given year will undergo a review by JLARC staff, and which will undergo an expedited review.
Reviews and Findings
Tax preference reviews are conducted by the Joint Legislative Audit and Review Committee (JLARC) staff according to the schedule established by the Commission. For each tax preference, JLARC staff will evaluate whether the public policy objective is being met and provide recommendations to continue, modify, or terminate the preference. JLARC must report its findings and recommendations for scheduled tax preferences to the Commission by August 30th of each year. The Commission then reviews and comments on the JLARC report. The final JLARC reports are submitted to House and Senate fiscal committees for a joint hearing.
Commission Bylaws and Policies
Tax Preference FAQs
What is a tax preference?
A "tax preference" means an exemption, exclusion, or deduction from the base of a state tax; a credit against a state tax, a deferral of a state tax, or a preferential state tax rate.
Who conducts tax preference reviews?
The Joint Legislative Audit and Review Committee shall review tax preferences according to the schedule developed by the Citizen Commission for the Performance Measurement of Tax Preferences (the Commission). Expedited reviews may be provided based on information available from the Department of Revenue. Expedited reviews do not include a JLARC recommendation.
What happens with review findings?
For each tax preference, JLARC staff shall provide a recommendation to the Legislature as to whether the tax preference should be continued, modified, or terminated.
Are any tax preferences exempt from review?
The commission shall omit from the schedule tax preferences that are required by constitutional law, sales and use tax exemptions for machinery and equipment for manufacturing, research and development, or testing, the small business credit for the business and occupation tax, sales and use tax exemptions for food and prescription drugs, property tax relief for retired persons, and property tax valuations based on current use, and may omit any tax preference that the commission determines is a critical part of the structure of the tax system.