The new “One Big Beautiful Bill Act” brings powerful tax benefits that can help small businesses save money, invest in growth, and support employees.
Key highlights include:

• 20% Qualified Business Income (QBI) deductions are now permanent, with new minimum amounts and expanded eligibility.
• Immediate deduction of domestic Research & Experimental (R&E) expenses—retroactive benefits available for 2022–2024.
• In Section 179, the expensing limit doubled to $2.5M, helping businesses write off their equipment and software in the year of purchase.
• Expanded Qualified Small Business Stock (QSBS) exclusion, offering larger capital gains tax breaks for investors.
• Enhanced Employer-Provided Child Care Credit—up to $600K and 50% of expenses for qualifying small businesses.

Many benefits apply right now, including retroactive savings. Do not wait until the tax season—review your eligibility with a tax professional and start planning today.

​Read the full Small Business Guide to the New Tax Law here.

Thanks to everyone who attended the Congressional Update Membership Luncheon on August 27, sponsored by Battelle.

The July 2025 Washington Business Outlook report provides an in-depth examination of how national and state economic trends are shaping the business environment. This quarterly publication from the Association of Washington Business Institute is guided by a panel of economists who analyze the key factors affecting employers and industries across the state. While the U.S. economy has slowed, it has not yet tipped into recession. The report highlights that the first-quarter economic activity contracted by 0.5%, mainly due to tariff-driven import surges, and that both businesses and consumers are showing caution as they wait to see how federal policy will develop in the coming months.

One of the central themes of this edition is policy uncertainty. Constant changes in federal trade and fiscal policies have made it difficult for companies to plan ahead or make investments. Rising inflation expectations also present a challenge, as surveys show that consumers expect inflation to run above 3% over the next year. Although the Federal Reserve has maintained steady interest rates, there is growing tension between the White House and the Fed, with future rate cuts depending on whether inflation will continue to cool.

The report also notes that, while equity markets regained strength after a sharp dip in April, global trade disputes remain a major source of instability. Tariffs are beginning to affect prices for both manufacturers and service providers, with surveys showing that many businesses are passing on these costs directly to customers. Simultaneously, fuel prices have remained flat or even declined slightly, which has helped slow the pace of inflation. However, Washington’s gas prices remain about a dollar higher than the U.S. average, creating additional cost pressures for residents and businesses in the state.

Agriculture remains one of the most affected sectors. Uncertainty over immigration enforcement impacts the availability of seasonal labor, and new tariffs disrupt trade relationships. This combination of policy changes is pushing fruit prices higher for apples and pears, while lowering prices for sweet cherries due to larger harvests. Industry leaders worry that a prolonged period of aggressive tariffs could shrink markets for Washington crops overseas and increase the cost of domestic goods.
​
Overall, the mid-year 2025 economic outlook underscores how national policy choices shape the local economic conditions. Business leaders in Washington are advised to stay alert, plan cautiously, and prepare for periods of ongoing volatility. For a complete and detailed analysis of these economic trends, the full report can be accessed at https://www.awb.org/wp-content/uploads/JUL_2025_EconomicReport_072525.pdf.

Congratulations to bankcda on the ribbon cutting and open house for their very first location in the Tri-Cities. Visit the new branch at 1950 Keene Rd., F-100 in Richland.

Congratulations to At Home Staffing on their ribbon cutting in Richland on Thursday, August 21! Visit At Home Staffing and learn about their variety of home care services by stopping by their new home at 309 Bradley Blvd., Ste. 125 in Richland.

View more photos from the event on the City of Richland's Facebook page.

When Is It Legal to Help? Understanding “Gifting Public Funds” in Washington State

Local governments in Washington often want to support small businesses, nonprofits, and residents, particularly during emergencies or economic hardships. Although this can be a positive goal, state law places strict limits on how public funds can be used. The concept of “gifting public funds” comes from Article VIII, Section 7 of the Washington State Constitution, which prohibits cities, counties, and other local governments from giving or loaning public money or property to private individuals, companies, or organizations—unless it’s for the “necessary support of the poor and infirm.”
This law protects taxpayers and ensures that public funds are spent for legitimate public purposes. However, not all support for private entities is considered illegal. Over the years, Washington Courts have developed tests and rulings to help public agencies understand what is allowed and what crosses the line.


What Counts as a Gift?

Washington Courts generally apply a two-part test to determine whether an action constitutes an unconstitutional gift of public funds:

1. Does the expenditure serve a recognized public purpose?
2. If not, did the government receive sufficient “consideration”—something of equal value—in return?

If an action does not serve a public purpose and the government receives nothing of value in return, it is likely to be considered a giftand thus unconstitutional.

In the case Clean v. State (2004), the Washington Supreme Court, reinforced that expenditures must be evaluated based on whether they primarily serve the public interest rather than private gain. The court upheld the use of public funds to promote regional transportation tax measures, noting that educating voters was a public purpose.  (Clean v. State, 130 Wn. App. 90, 121 P.3d 831 (2005)).

Another important case is Adams v. University of Washington (1960). Here, the court ruled that the university’s use of public funds to develop and operate a hospital, while it charged private fees to patients, was legal because it still served a vital public health function. The court emphasized that the presence of some private benefit does not invalidate a public purpose if the government action mainly serves the public interest (Adams v. University of Washington, 106 Wn.2d 312 (1960)).


What Actions Are Not Allowed?
​
Several types of activities have been found, or are widely accepted, to violate the gift clause, if not carefully structured. Examples include forgiving unpaid utility bills for private businesses, donating land or equipment to nonprofits without receiving fair value in return, or using taxpayer money to reimburse private losses from events such as construction or street closuresunless supported by a federal program.

For instance, in State ex rel. Graham v. Olympia (1921), the court held that the city could not use tax funds to pay for advertising private businesses, stating this did not constitute a public purpose (Graham v. City of Olympia, 80 Wash. 212 (1921)).


What Is Permitted?

There are clear exceptions and circumstances in which public funding is allowed even when a private entity benefits.

One exception is when the government receives something of equal value in return, such as payments for services, lease agreements, or economic development partnerships. For example, if a business pays the market rate to lease city property, the exchange is considered valid and not a gift.

Another lawful use is when expenditures support a core government’s purpose, such as public safety, health, emergency response, or community welfare. Actions such as police unlocking cars for safety reasons or public works responding to a flood fall well within this exception.


In addition, federal and state grant funds, such as those from the HUD Community Development Block Grant (CDBG) program or the American Rescue Plan Act (ARPA), may be used to support local businesses, infrastructure, or economic recovery. These funds are not considered “public funds” under the gift clause because they come from external sources rather than local tax dollars. The Municipal Research and Services Center (MRSC) highlights this distinction in its 2023 article, “Overcoming Roadblocks: Strategies for Supporting Local Businesses Within Legal Limits” (MRSC Insight, September 2023).

In fact, many local governments across Washington have used CDBG and ARPA funds to help businesses impacted by COVID-19, criminal activity, or major construction projects, provided they follow federal guidelines and document community benefits.


Conclusion: Understand the Limits, Empower the Community

Washington’s gifting of public funds rule is a key protection for taxpayers, but it does not prevent local governments from helping their communities. The key is to ensure that any spending serves a true public purpose or that the public agency receives fair value in return. When aid is backed by federal grants or is used to support the poor, infirm, or community-wide needs, it is often legally allowed.
​
By following state law, legal guidance, and best practices from organizations such as the MRSC, public officials can make lawful and effective decisions that support both public integrity and community resilience.
​

References:

• Washington State Constitution, Article VIII, Section 7
• Clean v. State, 130 Wn. App. 90, 121 P.3d 831 (2005)
• Adams v. University of Washington, 106 Wn.2d 312 (1960)
• State ex rel. Graham v. Olympia, 80 Wash. 212 (1921)
• MRSC Insight: “Overcoming Roadblocks: Strategies for Supporting Local Businesses Within Legal Limits” (Sept. 27, 2023): https://mrsc.org/stay-informed/mrsc-insight/september/overcoming-roadblocks
• MRSC Topic Page: Gift of Public Funds
• U.S. Department of Housing and Urban Development: Community Development Block Grants (CDBG)
• U.S. Treasury: ARPA Guidance

The Washington Research Council’s July 2025 report, “The Band-Aid Budget,” takes a close look at the state’s recently approved 2025–27 operating budget. The central message of the report is that while the legislature managed to balance the budget on paper, it did so in ways that do not address the underlying financial challenges the state is facing. Instead of fixing long-term issues, the budget relies on tax increases, spending cuts, and short-term savings, which may lead to more problems in the future.

The report explains that Washington entered the 2025 legislative session with an $8.6 billion shortfall over the next four years. Even with this gap, the legislature increased spending, pushing total appropriations to $77.9 billion for 2025–27, 8.2 percent more than the previous budget. To cover these expenses, lawmakers passed tax increases that would raise $9 billion over the outlook period and made cuts or delays to existing programs worth nearly $7 billion. Much of the new money was directed toward employee pay and benefits, while other areas of the budget saw reductions or slowed growth.

Although these actions technically balance the budget by 2029, the report emphasizes that the financial picture remains fragile. The reserves left at the end of the biennium are very small—only $80 million in 2027, and are likely to shrink even further because of the updated revenue forecasts. In addition, several choices, such as delaying obligations, relying on temporary tax increases, and assuming unusually high reversions of funds, make it very likely that the state will face another shortfall by 2026.

The report also highlights that lawmakers avoided using the state’s rainy-day fund for regular spending, which is a positive step toward stability. However, it warns that the budget still carries risks tied to new taxes, one-time savings, and unfunded costs that will occur in the next few years. These risks are compounded by the possibility that revenue may not meet expectations or unexpected expenses.

Although the 2025–27 operating budget avoids an immediate crisis, it does not offer a long-term solution. The state has postponed dealing with its structural budget problems, and, unless future lawmakers make significant changes, Washington will continue to face recurring financial challenges. For a full review of the numbers, policy choices, and potential outcomes, readers are encouraged to review the complete report at https://researchcouncil.org/wp-content/uploads/BandAidBudget.pdf.

At our most recent Regional Advocacy Roundtable, local education leaders and state legislators came together to discuss key issues shaping the future of education and workforce development in Washington.

Representative April Connors opened the discussion with an overview of House Bills 1414 and 1722, both aimed at expanding career and technical education (CTE) opportunities for high school students. These bills focus on removing barriers for students in skill centers, particularly in fields like healthcare and firefighting, by adjusting labor laws to allow earlier testing and employment. Rep Connors highlighted these legislative wins as key outcomes of the session, noting the collaborative efforts required to overcome policy hurdles.
​
Paul Randall, Director of Tri-Tech Skills Center in Kennewick, shared updates on the facility’s expansion beyond its original 66,000 square feet and the addition of new training programs aligned with local workforce needs. His remarks underscored Tri-Tech’s vital role in connecting education with industry in the Tri-Cities. The discussion also highlights the broader role of skill centers in Washington State, emphasizing career pathways for high school juniors and seniors, ongoing modernization efforts to upgrade facilities and equipment, and partnerships with institutions such as WSU Tri-Cities for programs such as nursing. 

​Representative Sklyer Rude closed the discussion by sharing insights from his work as Ranking Member of the House Education Committee and a member of the Post-Secondary Education and Workforce Committee. He described the careful evaluation process that his caucus uses when reviewing education bills, especially those with financial implications. Rep. Rude also touched on a proposed bill to limit cell phone use in classrooms, and his financial literacy bill which failed this session but is expected to return. He voiced support for the State Board of Education’s direction on key policies but expressed strong concerns about the recently passed Parents’ Bill of Rights, criticizing it for constitutional issues and the inclusion of unrelated language around gender ideology and discrimination.
​
The Regional Advocacy Roundtable on education offered a comprehensive look at how state policy, local leadership, and education institutions are working together to strengthen career pathways and improve student outcomes across the Tri-Cities. From expanding access to career and technical education through legislative wins like House Bills 1414, 1722, and 1273, to investing in facilities like Tri-Tech and protecting higher education funding at WSU Tri-Cities, the discussion highlighted a shared commitment to preparing students for real-world opportunities. Lawmakers and educators alike acknowledged both progress and ongoing challenges, particularly funding stability, policy implementation, and ensuring that legislation supports all students equally. The session underscored the importance of continued collaboration between schools, state leaders, and the business community in creating a future-ready workforce and a responsive education system in our region.

The September Regional Advocacy Roundtable is scheduled for September 2nd at 8 am at the Tri-City Business and Visitor Center and will be about the 2025 Washington State Budget. You can sign up here.

​A new report titled Shattered Green Dreams: The Environmental Costs of Wind and Solar takes a close look at the environmental trade-offs of renewable energy. While many see wind and solar power as clean, green alternatives to fossil fuels, the report argues that these technologies have significant impacts of their own. Published by the Center of the American Experiment, the report encourages readers to ask hard questions about what it really takes to shift toward an all-renewable energy system.

The report begins with a simple but important idea: no form of energy is completely free from environmental harm. Whether it is oil, coal, nuclear, wind, or solar, each option has costs, such as land use, wildlife disruption, mining, and waste. Wind and solar power, in particular, require considerable land to generate power. According to the report, producing the same amount of energy from wind as we do now from natural gas would require land equal to about two entire states the size of California.

There is also the issue of how these projects affect nature. The report highlights how large-scale wind farms have been linked to bird and bat deaths, whereas offshore wind installations may disrupt whale habitats. Solar farms often clear wide open spaces that can break up ecosystems and push out native wildlife. Environmental risks are not just on land, either. Much of the mining required to produce wind turbines and solar panels occurs in countries with weak labor and environmental protection. Even in the U.S., mining projects often face pushbacks from communities concerned with water, air, and land quality.

Another concern raised by the report is the lifespan and waste. Solar panels and wind turbines usually last for approximately 20 to 25 years. When they reach the end of their life, they often go to landfills. In contrast, power plants fueled by natural gas can last for approximately 40 years, and nuclear plants can last for up to 80 years. Although recycling programs for renewables are being developed, they are not yet widespread or fully effective. Recycling requires energy and can create pollution of its own.

In short, the report does not argue entirely against renewable energy. Instead, it pushes for more realistic expectations and thoughtful planning. It suggests that people should understand the full cost of energy choices before making major decisions. This includes weighing land use, mining, wildlife, and waste along with carbon reduction goals. The authors call for a balanced energy policy that considers both renewable and traditional energy sources using data and science, not just hope, to guide the way.

To further explore these findings, readers can explore the full report, Shattered Green Dreams, available from the Center of the American Experiment: Read the full report here.