MARYSVILLE, WA – Remember when “Schoolhouse Rock” tried to teach you how a bill becomes a law? Well, they left out a lot of stuff, like the public participation part (your part). Dealers in Washington state, led by their state association, pooled resources, became politically active and scored a major victory this year.
Washington bill 5338 levels the playing field with Dealers in nearby sales-tax-free jurisdictions. The new law, which goes into effect Aug. 1, makes it a gross misdemeanor for Washington residents to fail to title and register an off-road vehicle within 15 days of a state notice, and imposes penalties up to a $1,000 fine and up to a year in jail for scofflaws. For enforcement purposes, vehicle manufacturers/distributors will be required to submit annually a list of Washington warranty registrations for off-road vehicles bought out of state.
“With this law, going forward, we expect annual additional sales to our Dealers of over 1,200 units and $10 million in revenue – for years to come,” said Washington State Motorcycle Dealer Association’s president and director, Jim Boltz, in a congratulatory email to WSMDA Dealer members who worked to ensure passage of legislation.
Getting the change was a team effort, with the Washington State Motorcycle Dealers Association (WSMDA) guiding Dealer efforts. It’s a lesson for Dealers nationwide who want to try to change laws that disfavor them in their own states. The point is, it doesn’t happen by itself. Dealers have to work together. Here’s how and why Washington Dealers did it.
The problem:
Neighboring Oregon doesn’t charge sales tax on off-road vehicles. For many years, that sent cost-conscious consumers in Washington over the state line to make their vehicle purchases.
“This [sales tax disadvantage] has gone on for years, but has increased recently as the price of vehicles has gone up. Some UTVs sell for over $20,000 and the sales tax savings is over $2,000,” said WSMDA president and Cycle Barn owner Jim Boltz. “The bad economy and slow recovery for Dealers still struggling to find income made the loss of these sales more significant.”
Off-road vehicles skirted the licensing requirement by using an Oregon off-road sticker — the states have a reciprocity agreement to honor each other’s off-road permits, Boltz explained. The squeeze was particularly acute for Dealers near Washington’s southern state line: Portland, just eight miles away, advertises nationally, “145 square miles of tax-free shopping.”
“It’s more personal to me because I had a business in 1997 through ’99 that was right on the border with Oregon. There was no way we could compete on retail,” said Dan Denchel, principal at Desert Valley Powersports/BMW Motorcycles Prosser and a new WSMDA board member. “We focused our efforts on doing things that are required to be licensed — street bikes and boats. We got away from the recreational stuff.”
These Dealers don’t fault their customers or their Oregon colleagues, especially after the recession tightened everyone’s purse strings. “You can’t blame the businesses. They take advantage of what they have. It’s America,” said Brian Nilsen, general manager of The Brothers Powersports in Bremerton. “But it’s nice to compete on a level playing field. In the past, it wasn’t such a huge deal because the unit cost was lower. If someone’s buying something for $6,000, you were talking about $500. Now, when it’s ten grand and it’s 9 or 10 percent… we were really hemorrhaging up here.”
Sales tax avoidance also depleted Washington’s trail maintenance coffers, which are funded by taxes on off-road vehicles. “All that support goes back into the community, school system, road development, trails — that’s $10 million [per year],” Denchel said. “The people that live here and support the state are being hurt the worst.”
Dealers took action
As more Dealers felt the sting, WSMDA moved to change the law, and in 2016 got to work on a bill.
WSMDA board members – Boltz, Denchel, John Jabusch of Pro Caliber in Vancouver, Vicki Gray of South Sound Honda (Olympia) and South Bound Honda (Tacoma), and Scott Schmidtman of Westside Motorsports in Spokane – along with staff lobbyist Grant Nelson, worked to craft a bill and get support.
“With less than 100 franchised Dealers and dues of only $500 per year, we do not have unlimited resources,” Boltz said. “For this event we worked hard to build up our cash position, knowing our expenses would be significant for campaign contributions and lobbying. We met, over the summer, with key state agencies to explain the issue, and get buy-in and to make certain we had no key opposition. We also asked the rider club organizations to support the bill, as it supported the state off-road program.”
A state bill writer worked on language, with feedback from WSMDA. Nelson found sponsors in the state House and Senate. Once the bill was ready for introduction, WSMDA prepared a single-page description to help get Dealers involved. Many had never flexed their political muscles before.
“Dealer buy-in was automatic for Dealers who sell off-road vehicles. However, we also lobbied streetbike Dealers with a message that ‘we are all in this together and next time it could be all about them,'” Boltz said.
Denchel estimates he put in 35 to 40 hours of work, strategizing with the WSMDA board and personally contacting some of the representatives in his area. He also sent emails as the bill progressed. Indeed, many members kept the pressure on by contacting their representatives. Each time Bill 5338 was coming up for a debate or vote, WSMDA provided an email in support which members could sign and forward to their legislators.
“Jim Boltz rolled up his sleeves and emailed the Dealers and had them contact our legislators at every step of the process. He had us figure out who our legislators were in the House and the Senate, and had us contact, via email, those representatives when the time came. He pretty much held our hands through it,” Nilsen said.
The results
When the dust cleared, Dealers got everything they asked for. “Out of all the legislators, there were only six nay votes – not against the bill, but as a protest of our state’s taxing system, a political statement,” Boltz said.
Even with the success, Denchel points out that enforcement will be the test of the new law, which takes effect Aug. 1. Manufacturer reporting begins Feb. 1, 2018. “The reality is, there has to be enforcement. A lot of people will still skirt the law,” he said. “If you are a Dealer in Oregon and all of a sudden you lose a stream of revenue that you have been depending on for years… the temptation to register them to a fake address in that state might apply.”
Nilsen is more optimistic, and points to the value of the group. “This is going to move the needle for us,” he said. “It’s important. This is our lives. We all get so busy in our daily lives and our businesses, and these things are too important to ignore. When you lose a half a dozen deals a month, that’s a lot of money. Do the math.”
WHY A STATE ASSOCIATION MATTERS
“It is imperative that states have a legitimate Dealer association. Ours is run by Dealers and, other than a part-time accountant and lobbyist, there is no overhead.” – Jim Boltz, WSMDA
WASHINGTON STATE’S OFF-ROAD DEALERS would still face losing sales to Oregon for years to come if its state Dealer association hadn’t mobilized its members to get an unfavorable law changed.
“It’s been an in-our-face thing for a long time. Having the association gave us the strength to pull together unilaterally and work together with the state. It helps everybody if everybody plays by the same rules,” said Dan Denchel, principal at Desert Valley Powersports/BMW Motorcycles of Prosser.
A state association provides Dealers with influence they wouldn’t otherwise have individually, and a good part of that influence merely comes from pooling their resources. “It is imperative that states have a legitimate Dealer association. Ours is run by Dealers and, other than a part-time accountant and lobbyist, there is no overhead,” WSMDA president Jim Boltz said.
“The Dealer association heading up the effort made it easier on the Dealers to get involved and have a say. You need the whole group behind you. They have a lobbyist and the organization behind them,” said Brian Nilsen of The Brothers Powersports.
WSMDA was able to get the law changed even though only about a third of the state’s franchised Dealers are association members. Boltz hopes the recent victory will help bring more Dealers on board. “We do mass mailings to our entire database when there is good news to share,” he said. “We are hopeful that our success with this bill passage will get a membership boost.”
WSMDA’s latest membership drive offers special rates through June 1. Generally, WSMDA membership costs $500 a year for franchised Dealers, and $300 rate for independent shops and accessory retailers. For more information, visit http://www.wsmda.org/join-us
Editor’s note: The Dealernews INSIDER site has created a private online working group solely for WSMDA members, per the association’s request. Contact WSMDA for more information. If your state organization would like to establish a private online forum/working group on Dealernews INSIDER, contact marygreen@dealernews.com