Audit Authority

The Joint Legislative Audit and Review Committee (JLARC) works to make state government operations more efficient and effective. The Committee is comprised of an equal number of House members and Senators, Democrats and Republicans.

JLARC’s non-partisan staff auditors, under the direction of the Legislative Auditor, conduct performance audits, program evaluations, sunset reviews, and other analyses assigned by the Legislature and the Committee.

The statutory authority for JLARC, established in Chapter 44.28 RCW, requires the Legislative Auditor to ensure that JLARC studies are conducted in accordance with Generally Accepted Government Auditing Standards, as applicable to the scope of the audit. This study was conducted in accordance with those applicable standards. Those standards require auditors to plan and perform audits to obtain sufficient, appropriate evidence to provide a reasonable basis for findings and conclusions based on the audit objectives. The evidence obtained for this JLARC report provides a reasonable basis for the enclosed findings and conclusions, and any exceptions to the application of audit standards have been explicitly disclosed in the body of this report.

Citizen Commission

Members: Citizen Commission for Performance Measurement of Tax Preferences

Voting Members

Stephen Miller

Dr. Grant D. Forsyth

Ronald L. Bueing

Diane Lourdes Dick

Non-voting Members

John Braun, JLARC Chair

Troy Kelley, State Auditor

Citizen Commission Sets the Schedule

The Legislature directed the Commission to develop a schedule to accomplish an orderly review of most tax preferences over ten years.  The Commission is directed to omit certain tax preferences from the schedule, such as those required by constitutional law. The Commission may also exclude preferences from review that the Commission determines are a critical part of the tax structure.

The Commission conducts its reviews based on analysis prepared by JLARC staff.  In addition, the Commission may elect to rely on information supplied by the Department of Revenue.

In 2016, JLARC staff completed 22 preference reviews (similar preferences may be combined into one report).  The Commission's website includes analysis of preferences completed in previous years: See http://www.citizentaxpref.wa.gov/.

JLARC Members

JLARC Members on Publication Date

Senators

Randi Becker

John Braun, Chair

Sharon Brown

Annette Cleveland

David Frockt

Bob Hasegawa

Mark Mullet, Assistant Secretary

Representatives

Jake Fey

Larry Haler

Christine Kilduff

Drew MacEwen

Ed Orcutt, Secretary

Gerry Pollet

Derek Stanford, Vice Chair

Drew Stokesbary

Scope & Objectives

Why a JLARC Study of Tax Preferences?

Engrossed House Bill 1069 (2006) established the Citizen Commission for Performance Measurement of Tax Preferences and directed it to develop a schedule for periodic review of the state’s tax preferences. The bill directed the staff of the Joint Legislative Audit and Review Committee (JLARC) to conduct the periodic reviews.

Background

Tax preferences include: exemptions, exclusions, or deductions from the base of a state tax; credits against a state tax; deferrals of a state tax; or preferential state tax rates. As of the 2015 legislative session, JLARC staff estimate the state has 632 tax preferences.

Recognizing the need to assess the effectiveness of these tax preferences through an orderly process, the Legislature established the Citizen Commission for Performance Measurement of Tax Preferences. One of the Commission’s roles is to develop a schedule for the orderly review of all tax preferences at least once every ten years. The ten-year schedule is to be revised annually.

Omitted from review are several categories of tax preferences identified by statute (e.g., tax preferences required by constitutional law). Any tax preference the Commission determines is critical to the structure of the tax system may also be omitted. Additionally, the Commission may recommend an expedited process for any tax preference.

JLARC staff are to review tax preferences according to the schedule developed by the Commission. For each tax preference the Commission selects for a performance review, JLARC staff are to provide a recommendation to either: (1) continue; (2) allow to expire; (3) continue and modify the expiration date; (4) review and clarify; or (5) terminate the preference.

Study Scope

The Citizen Commission selected the following tax preferences for a performance review by JLARC staff in 20156