Senate Bill Report SHB 1279 — Committee on Business, Financial Services & Trade (As of March 11, 2021)

Summary

This Senate Bill Report on SHB 1279, as of March 11, 2021, concerns modifying the Washington main street program tax incentive to respond to the economic impacts of the COVID-19 pandemic. It lists House passage on 2/12/21 by 96-0 and committee activity before Business, Financial Services & Trade on 3/11/21. The bill expands the business and occupation (B&O) tax or public utility tax (PUT) credit allowed under the Main Street Tax Incentive program to 90 percent for contributions beginning in calendar year 2021, sets the limit for each designated local program at $160,000, and extends the program's expiration to January 1, 2032. The report lists testimony in favor, including from Representative Alicia Rule, Prime Sponsor.

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Issuer: Congressional materials
Document type: Report
Date: 2021-03-16
Case: 2021 03 16 A28696 D231655 Bill Report 1279 S Sbr Bfst Ta 21

Cite this document

“Senate Bill Report SHB 1279 — Committee on Business, Financial Services & Trade (As of March 11, 2021).” Original at app.leg.wa.gov, dated 2021-03-16. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-03-16-2021-03-16-a28696-d231655-bill-report-1279-s-sbr-bfst-ta-21/, SHA-256 d29ce579830a4f81086780781c1d1c5cf1c390049c76904c68804b395f962e55.

Full text

SENATE BILL REPORT
SHB 1279

As of March 11, 2021

Title: An act relating to modifying the Washington main street program tax incentive to respond
to the economic impacts of the COVID-19 pandemic.

Brief Description: Modifying the Washington main street program tax incentive to respond to
the economic impacts of the COVID-19 pandemic.

Sponsors: House Committee on Finance (originally sponsored by Representatives Rule, Ramel,
Bateman, Boehnke, Shewmake, Chapman, Ryu, Johnson, J., Wicks, Senn, Hoff, Walen,
Peterson, Hackney, Rude, Callan, Leavitt, Vick and Harris-Talley).

Brief History: Passed House: 2/12/21, 96-0.
Committee Activity: Business, Financial Services & Trade: 3/11/21.

Brief Summary of Bill
• Expands the total business and occupation (B&O) tax or public utility
tax (PUT) credit allowed under the Main Street Tax Incentive program to
90 percent, for contributions made to a designated local program or the
state Main Street Trust Fund beginning in calendar year 2021.
• Expands the total tax credits allowed statewide to $5 million and for each
designated local program to $160,000 for the Main Street Tax Incentive
program.
• Specifies that the Department of Revenue must allocate tax credits under
the Main Street Tax Incentive program between 8:00 a.m. on the second
Monday in January and 8:00 a.m. on April 1 of the same year.
• Expands the total B&O tax or PUT credit allowed under the Main Street
Tax Incentive program to 90 percent, for contributions made to a
designated local program in calendar year 2020.
• Allows any tax credits earned under the Main Street Tax Incentive
program as a result of contributions made in calendar year 2020 to be

This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.

Senate Bill Report -1- SHB 1279
carried over until December 31, 2023.
• Removes any program, taxpayer, or statewide limits on the amount of
tax credits provided under the Main Street Tax Incentive program for
credits earned as a result of contributions made in calendar year 2020.
• Extends the expiration of the Main Street Tax Incentive program until
January 1, 2032.

SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

Staff: Clinton McCarthy (786-7319)

Background: Business & Occupation Tax. Washington's major business tax is the
business and occupation (B&O) tax. The B&O tax is imposed on the gross receipts of
business activities conducted within the state, without any deduction for the costs of doing
business. Businesses must pay the B&O tax even though they may not have any profits or
may be operating at a loss.

A taxpayer may have more than one B&O tax rate, depending on the types of activities
conducted. Major B&O tax rates are 0.471 percent for retailing; 0.484 percent for
manufacturing, wholesaling, and extracting; and 1.5 percent—businesses with taxable
income of less than $1 million—or 1.75 percent—businesses with taxable income of $1
million or more—for services and for activities not classified elsewhere. Several
preferential rates also apply to specific business activities.

Washington Main Street Program. The state Main Street Program (program) was
established in 1984 and provides technical assistance for local comprehensive downtown or
neighborhood commercial district revitalization initiatives. The Department of Archeology
and Historic Preservation (DAHP) operates the program through a contract with the
Washington Trust for Historic Preservation. DAHP provides initial site evaluations by
technical specialists, training for local programs and staff, and design and implementation
assistance to local governments, businesses, organizations, and property owners undertaking
revitalization initiatives. DAHP also may provide financial assistance for initial start-up
costs for a local program.
DAHP may designate local downtown or neighborhood commercial district revitalization
programs and official local Main Street programs for such assistance based on certain
criteria including:
• the degree of interest and commitment to comprehensive downtown or neighborhood
commercial district revitalization and historic preservation by both the public and
private sectors;
• the evidence of potential private sector investment in the downtown or neighborhood
commercial district;

Senate Bill Report -2- SHB 1279
• a downtown or neighborhood commercial district with sufficient historic fabric to
become a foundation for an enhanced community image;
• the capacity of the organization to undertake a comprehensive program and the
financial commitment to implement a long-term downtown or neighborhood
commercial district revitalization program that includes a commitment to employ a
professional program manager and maintain a sufficient operating budget;
• DAHP's existing downtown revitalization program's tier system; and
• the National Main Street Center's criteria for designating official Main Street cities.

DAHP may not designate a program undertaken by a local government with a population
over 190,000 people.

Washington Main Street Program Tax Incentives. Designation of a nonprofit organization
with the sole mission of revitalizing a downtown or neighborhood commercial district area
by DAHP as a local program qualifies that program to participate in the state Main Street
Tax Incentive program.

The Main Street Tax Incentive program is administered by the Department of Revenue
(DOR) and allows persons making contributions to a local program, or generally to the state
Main Street Trust Fund Account (trust fund), to claim a B&O tax credit or a public utility
tax (PUT) credit. The contribution must be made in the same calendar year that the
contribution was approved.

The tax credit is equal to:
• 75 percent of a contribution made directly to a designated local program; and
• 50 percent of a contribution made to the trust fund.

The tax credit must be claimed in the calendar year immediately following the calendar year
in which the credit was approved, and the contribution was made. Credits may not be
carried over to subsequent years or refunded.

The Main Street Tax Incentive program has certain limits and is provided on a first-come
basis. No person may receive a tax credit over $250,000 per calendar year. The total tax
credits allowed for each designated local program may not exceed $100,000 per calendar
year. The total tax credits allowed statewide may not exceed $2.5 million per calendar year.

DOR must allocate tax credits under the Main Street Tax Incentive program between the
second Monday in January and March 31 of the same year.

The Main Street Tax Incentive program expires January 1, 2028, if a review by the Joint
Legislative Audit and Review Committee finds the number of businesses that are a part of
Main Street communities is not equal to or more than the number that were a part of Main
Street communities prior to January 1, 2018.

Senate Bill Report -3- SHB 1279
Summary of Bill: The limitations on credit authorized by the Washington Main Street
Program Tax Incentives is amended to include:
• an additional 15 percent B&O tax or PUT credit to a designated local program,
beginning with contributions made in calendar year 2021; and
• an additional 40 percent B&O tax or credit is provided to the trust fund, beginning
with contributions made in calendar year 2021.

The total tax credits allowed for each designated local program may not exceed $160,000
per calendar year. The total tax credits allowed statewide may not exceed $4 million per
calendar year.

DOR must allocate tax credits under the Main Street Tax Incentive program between 8:00
a.m. on the second Monday in January and 8:00 a.m. on April 1 of the same year.

For contributions made to a designated local program in calendar year 2020, an additional
15 percent B&O tax or PUT credit is provided. Any credits earned as a result of
contributions made in calendar year 2020 may be carried over until December 31, 2023.
Any limits on the amount of tax credits received by an individual taxpayer, generated from
a designated local program, or provided by the statewide program, do not apply to credits
earned as a result of contributions made in calendar year 2020.

The Main Street Tax Incentive program expires January 1, 2032.

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: Our neighborhood businesses are in dire
need. This bill supports our downtown areas, and will help our economy recover. The state
receives $1.58 for every dollar invested in this program. Small businesses could not have
possibly prepared for this crisis. This is our opportunity to help those businesses. We want
to change the deadlines to avoid the chaos. The Main Street program focuses on historic
preservation. Contributions to the organizations could be made beginning January 1st,
which set off a frenzy for first come first serve. This bill makes the start time 8:00 am to
accommodate work schedules, and it no longer interferes with the holiday season. Last year
has been challenging for small businesses. Recovery will require support for our existing
businesses, and innovation so that our businesses will thrive. It starts with Main Street.
Pasco converts $100,000 into $600,000 every year. Lots of people have been helped with
this seed money. This program is invaluable to communities across the state of
Washington. This Main Street Program is one of the finest in the country. This will help

Senate Bill Report -4- SHB 1279
expand the program across the state of Washington.

Persons Testifying: PRO: Representative Alicia Rule, Prime Sponsor; Richard May, City
of Blaine; Chris Moore, Washington Trust for Historic Preservation; Gustavo Gutierrez-
Gomez, Downtown Pasco Development Authority; Kathryn Witherington, Downtown
Walla Walla Foundation; Patrice Frey, National Main Street Center.

Persons Signed In To Testify But Not Testifying: No one.

Senate Bill Report -5- SHB 1279

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Original: app.leg.wa.gov