UI tax reduction, permanent increase in the B&O Small Business Tax Credit highlight some of the big NFIB victories for Main Street enterprises
State Director Patrick Connor reports from Olympia on the small-business agenda at the March 10 adjournment of the 2022 session of the Washington State Legislature
The 2022 session of 67th Washington State Legislature adjourned sine die just after 11:30 p.m. Thursday, March 10.
NFIB scored several wins for its members, including a roughly $265 million, two-year unemployment insurance tax reduction, a good portion of which is directed to employers with 10 or fewer employees, and a permanent increase in the B&O Small Business Tax Credit and reporting threshold – worth about $55 million annually – that will eliminate B&O tax liability for businesses with less than $125,000 in gross receipts.
NFIB led a coalition that defeated the Department of Labor & Industries’ (L&I) agency request legislation that sought to force small employers into a loser-pays requirement for workers’ compensation court appeals. We were heavily engaged in the business community’s successful battle to stop the resurrection of the dreaded ergonomics rule, and we also played a part in delaying implementation of the WA Cares payroll tax until July 2023.
- HB 1838 and SB 5727, Governor’s salmon recovery proposal – These bills, which died early in session, included 250-foot riparian buffers that would have severely impacted landowners. NFIB opposed the bills.
- SB 5722, Reducing greenhouse gas emissions in buildings – The final version of the bill directs the state Department of Commerce to apply energy management and benchmarking requirements from the 2019 Clean Building Act to Tier 2 buildings. Tier 2 includes nonresidential, hotel, motel, and dormitory floor areas that are greater than 20,000 square feet and less than 50,000 square feet, excluding the parking garage area, as well as multifamily residential buildings greater than 20,000 square feet. Commerce is also authorized to establish a tiered incentive program to assist owners or tenants with implementation costs. These requirements will be phased in over the next few years. The bill passed on party lines in the Senate. In the House, four Democrats joined all Republicans voting no. The bill has been delivered to the governor for his signature. NFIB opposed the bill.
- HB 1688, Balance billing – The House concurred with Senate amendments that helped address concerns NFIB, the state Medical Association, and others had about compensating medical providers for services performed where the provider does not have a contract in force with the patient’s health insurer. The bill has been delivered to the governor for his signature. NFIB supports HB 1688.
- HB 1763, Video taping independent medical examinations (IMEs) – NFIB opposed this bill that would have allowed workers to have an observer of their choice record independent medical examinations and then submit those recordings for consideration during a workers’ compensation claim dispute. The bill died in the House Rules Committee.
- HB 1837, Ergonomics – Thanks to some 40 amendments Republicans introduced and planned to debate, the bill died in the Senate at Opposite House Cut-Off without being brought to the floor for a vote. NFIB opposed HB 1837.
- SB 5801, Loser-pays for workers’ comp appeals – An NFIB-led coalition of 11 State Fund employer groups overcame repeated attempts by L&I to introduce new amendments seeking to find a path forward on this unnecessary and ill-conceived agency request bill. The bill was eligible for a floor vote in the House but died at cut-off without being brought up. NFIB opposed the bill.
- HB 1614, Online marketplaces / organized retail theft –This bill was also eligible for a vote on the House floor, but thanks to opposition from NFIB, Amazon, and others, it died at House of Origin cut-off without being debated. It would have saddled small businesses utilizing online marketplaces like Amazon, eBay, Etsy, OfferUp, etc. with additional, mandatory reporting requirements that included disclosing banking and other personally identifiable information.
- HB 1801, Right to Repair – This NFIB-supported bill failed to receive a floor vote in advance of the House of Origin Cut-Off. It would have allowed consumers and small repair shops to purchase tools, parts, instructions, and other materials needed to repair electronic devices like cellphones, tablets, laptops and desktop computers from device manufacturers.
- SB 5781, Increasing penalties for organized retail theft – Despite receiving a strong, bipartisan vote of 46-3 in the Senate, this bill died without a public hearing in the House Public Safety Committee. NFIB supported the bill.
Tax & Fiscal
- HB 1732, WA Cares payroll tax delay – The Legislature acted swiftly during the first weeks of session to pass a pair of bills to delay and revamp the “WA Cares” long-term services and supports program and payroll tax funding it. While NFIB would have preferred the law be repealed, we supported this bill to delay payroll tax implementation for 18 months. The bill was signed into law and took effect January 27.
- HB 1819 and HJR 4208, Business personal property tax threshold – NFIB was pleased the House Finance Committee gave serious consideration to this proposed constitutional amendment and law change that sought to expand a business personal property tax exemption to $100,000 of asset value and apply it to all businesses. Unfortunately, a lack of reliable data from the Department of Revenue and county assessors foiled efforts to establish and adequately fund a mitigation account to assist local governments that might have lost some revenue had this proposal been enacted. The Legislature’s Tax Structure Work Group is expected to include this concept in its deliberations for business tax reform.
- HB 2018, Back-to-school sales tax holiday – Long a priority of the state’s retail association, NFIB provided some moral support to this proposal to exempt certain purchases of items valued at up to $1,000 from the sales tax during Labor Day weekend. The bill passed the House 91-7 but died in the Senate Ways & Means Committee.
- SB 5873, Unemployment insurance tax relief – The bill will lessen the social tax increases for unemployment insurance scheduled for 2022 and 2023, as well as cap the social-tax modifier for small businesses employing 10 or fewer workers. That cap takes effect in 2023. This is estimated to be roughly $265 million in UI tax relief. NFIB supported this priority bill, which has been delivered to the governor for his signature.
- SB 5980, Increasing small-business B&O tax credit – NFIB, along with D’Arcy Harrison, a founding member of the Cosmetologists United organization, won unanimous approval of this bill that will increase the B&O Small-Business Tax Credit and the tax reporting threshold. Firms with gross receipts up to $125,000 will be exempt from the B&O tax; a partial tax credit also applies to businesses earning roughly double that amount. Unless customers are charged sales or other taxes on purchases, businesses earning less than $125,000 will not be required to file a B&O tax return. The bill has been delivered to the governor for his signature.
For information about other issues the Legislature considered this year, see Austin Jenkins’ session wrap up article here.
Prior Legislative Updates
- March 4—Unemployment Insurance Tax Relief Bill on Way to Governor
- February 25—Surprise B&O Tax Relief Bill Introduced
- February 18—Ergonomics Bill Passes House After Marathon Debate
- February 11—Weekend Work for Legislature Ahead of Big February 15 Deadline
- February 4—NFIB-Backed Retail Theft Bill Advances
- January 28—Governor Signs Bill Delaying WA Cares Payroll Tax
- January 21—House Approves Delaying WA Cares Payroll Tax
- January 14—Ergonomics is Back! Bill Would Repeal Initiative 841
- January 7—Pre-Session Glance