Fiscal Note - 5515 SB, Hospitality employment/B&O (Multiple Agency Summary, Final)
Summary
A Multiple Agency Fiscal Note Summary for 5515 SB, Hospitality employment/B&O, marked Final, followed by a Department of Revenue fiscal note and an Employment Security Department note. The summary shows Department of Revenue estimated cash receipts of (36,000) for 2021-23, (147,000) for 2023-25 and (151,000) for 2025-27, and operating expenditures of 156,800 for 2021-23. The Department of Revenue narrative describes a B&O tax credit of $275 for each qualified employment position created after July 1, 2022, in an eligible area, and states that the bill takes effect on July 1, 2022.
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“Fiscal Note - 5515 SB, Hospitality employment/B&O (Multiple Agency Summary, Final).”
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Multiple Agency Fiscal Note Summary
Bill Number: 5515 SB Title: Hospitality employment/B&O
Estimated Cash Receipts
Agency Name 2021-23 2023-25 2025-27
GF-State NGF-Outlook Total GF-State NGF-Outlook Total GF-State NGF-Outlook Total
Department of (36,000) (36,000) (36,000) (147,000) (147,000) (147,000) (151,000) (151,000) (151,000)
Revenue
Total $ (36,000) (36,000) (36,000) (147,000) (147,000) (147,000) (151,000) (151,000) (151,000)
Estimated Operating Expenditures
Agency Name 2021-23 2023-25 2025-27
FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total
Department of .1 156,800 156,800 156,800 .0 0 0 0 .0 0 0 0
Revenue
Employment .0 0 0 0 .0 0 0 0 .0 0 0 0
Security
Department
Total $ 0.1 156,800 156,800 156,800 0.0 0 0 0 0.0 0 0 0
Estimated Capital Budget Expenditures
Agency Name 2021-23 2023-25 2025-27
FTEs Bonds Total FTEs Bonds Total FTEs Bonds Total
Department of Revenue .0 0 0 .0 0 0 .0 0 0
Employment Security .0 0 0 .0 0 0 .0 0 0
Department
Total $ 0.0 0 0 0.0 0 0 0.0 0 0
Estimated Capital Budget Breakout
NONE
Prepared by: Cheri Keller, OFM Phone: Date Published:
(360) 584-2207 Final
FNPID 63645
:
FNS029 Multi Agency rollup
Department of Revenue Fiscal Note
Bill Number: 5515 SB Title: Hospitality employment/B&O Agency: 140-Department of
Revenue
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
Account FY 2022 FY 2023 2021-23 2023-25 2025-27
GF-STATE-State (36,000) (36,000) (147,000) (151,000)
01 - Taxes 05 - Bus and Occup Tax
Total $ (36,000) (36,000) (147,000) (151,000)
Estimated Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.1 0.1 0.1
Account
GF-STATE-State 001-1 146,200 10,600 156,800
Total $ 146,200 10,600 156,800
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact . Factors impacting the precision of these estimates ,
and alternate ranges (if appropriate ), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50 ,000 per fiscal year in the current biennium or in subsequent biennia , complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia , complete this page only (Part I).
X Capital budget impact, complete Part IV.
Requires new rule making, complete Part V.
Legislative Contact: Clinton McCarthy Phone: 360-786-7319 Date: 01/10/2022
Agency Preparation: Beth Leech Phone: 360-534-1513 Date: 01/17/2022
Agency Approval: Don Gutmann Phone: 360-534-1510 Date: 01/17/2022
OFM Review: Cheri Keller Phone: (360) 584-2207 Date: 01/17/2022
Request # 5515-1-1
Form FN (Rev 1/00) 172,078.00 1 Bill # 5515 SB
FNS062 Department of Revenue Fiscal Note
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe, by section number, the significant provisions of the bill , and any related workload or policy assumptions , that have revenue or
expenditure impact on the responding agency .
CURRENT LAW:
There is no business and occupation (B&O) tax credit for qualified employment positions in the accommodation and hospitality
service industry.
PROPOSAL:
This bill provides a B&O tax credit of $275 for each qualified employment position created after July 1, 2022, in an eligible area.
The employer earns the credit for the calendar year the person is hired and the four subsequent consecutive years, if the
employer maintains the position for those four years.
A credit may not be taken for persons hired into positions that exist on July 1, 2022, but for new employees hired for new
positions created after July 1, 2022. New positions filled by existing employees are eligible for the credit if the position vacated
by the existing employee is filled by a new hire. A newly created position is eligible for the full yearly credit if filled before July 1.
If it is filled after June 30, the position is eligible for half of the yearly credit.
This credit does not require an application. By December 1 of each year, the Department of Revenue (Department) must
determine eligible areas for the following calendar year. An area remains an eligible area for three consecutive years. Qualified
employment positions created prior to any calendar year in which an area is later determined to be ineligible continue to earn
credit.
If the Department determines that a person is not eligible for the tax credit, the amount of taxes for which the credit has been
claimed is immediately due with interest at the rate for delinquent excise taxes, but not penalties.
The Employment Security Department (ESD) must provide the Department with any information needed to verify eligibility.
Definitions:
- Qualified employment position means a permanent full-time position for the eligible person in a hospitality industry with annual
wages exceeding the average annual wage for the county.
- Eligible area means a county in which the county unemployment rate is at least 25 percent greater than the statewide
unemployment rate.
- Average annual wage for the county is the average annual wage reported by the ESD in its quarterly census of employment
and wages for the calendar year prior to the year of employment.
- Unemployment rate means the unemployment rate for the state and counties provided by the ESD in the seasonally adjusted
monthly employment report for September of the prior year. For employment positions created between July 1, 2022 and
December 31, 2022 the monthly employment report for April must be used.
- Hospitality industry means a business engaged in providing accommodation services, good services, amusement and recreation
services, or any combination of such services.
EFFECTIVE DATE:
This bill takes effect on July 1, 2022.
Request # 5515-1-1
Form FN (Rev 1/00) 172,078.00 2 Bill # 5515 SB
FNS062 Department of Revenue Fiscal Note
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency , identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources . Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived . Explain how workload assumptions translate into estimates . Distinguish between one time and ongoing functions .
ASSUMPTIONS:
- The state wide unemployment rate is 3.4 %. Eligible areas have an unemployment rate of at least 4.25%.
- November 2021 unemployment data is similar to September 2021 unemployment data. Based on this data the following
nine counties qualify as an eligible area. The average hourly wage, as determined by ESD's quarterly census of
employment and wages for each county is also listed: Ferry (25.80), Franklin(27.90), Grant(29.57), Grays Harbor(27.56),
Mason(27.93), Okanogan(23.33), Pacific(24.38), Pend Oreille(30.37), and Yakima(26.23).
- February 2020 employment data was used to approximate pre-pandemic employment. To approximate the lost positions
due to the pandemic, this data was compared to June 2020 employment data. This resulted in approximately 800 businesses
that lost employment during this time in the eligible counties and job classifications.
- Less than 50 businesses paid wages in 2021 higher than the average wage for the county in 2020. Of these, less than 20
businesses had a B&O tax liability sufficient to earn an employment credit in 2021.
- One full time equivalent employee works 2080 hours in a year.
- The average work week is 32.4 hours, which translates to 1685 hours worked in a year. Average hourly wage by county
was determined.
- Wages in the hospitality sector increased 18.4% in 2021.
- Newly created positions will be filled before July 1st of each year and qualify for a full yearly credit.
- Growth in this B&O credit mirrors the Economic and Revenue Forecast Council November 2021 Employment Forecast.
DATA SOURCES:
- Employment Security Department, unemployment and wage data
- Department excise tax data
- Pewresearch.org, "Many U.S. workers are seeing bigger paychecks in pandemic era, but gains aren't spread evenly "
- Economic and Revenue Forecast Council November 2021 Employment Forecast
REVENUE ESTIMATES:
This bill decreases state revenues by an estimated $29,000 in Fiscal Year 2023, and by $59,000 in Fiscal Year 2024.
TOTAL REVENUE IMPACT:
State Government (cash basis, $000):
FY 2022 - $ 0
FY 2023 - ($ 36)
FY 2024 - ($ 73)
FY 2025 - ($ 74)
FY 2026 - ($ 75)
FY 2027 - ($ 76)
Local Government, if applicable (cash basis, $000): None
Request # 5515-1-1
Form FN (Rev 1/00) 172,078.00 3 Bill # 5515 SB
FNS062 Department of Revenue Fiscal Note
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation ), identifying by section
number the provisions of the legislation that result in the expenditures (or savings ). Briefly describe the factual basis of the assumptions and the method
by which the expenditure impact is derived . Explain how workload assumptions translate into cost estimates . Distinguish between one time and ongoing
ASSUMPTIONS:
This legislation will affect 20 taxpayers.
FIRST YEAR COSTS:
The Department will incur total costs of $146,200 in Fiscal Year 2022. These costs include :
Labor Costs - Time and effort equates to 0.1 FTE.
- System programming and configuration.
Object Costs - $132,000.
- Contract computer system programming.
SECOND YEAR COSTS:
The Department will incur total costs of $10,600 in Fiscal Year 2023. These costs include :
Labor Costs - Time and effort equates to 0.1 FTE.
- Create a Special Notice and identify publications and information that need to be created or updated on the
Department’s website.
- Respond to tax ruling requests, email inquiries, and more difficult call backs from the telephone information center.
ONGOING COSTS:
There are no ongoing costs.
Part III: Expenditure Detail
III. A - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.1 0.1 0.1
A-Salaries and Wages 9,000 6,400 15,400
B-Employee Benefits 3,200 2,300 5,500
C-Professional Service Contracts 132,000 132,000
E-Goods and Other Services 1,300 1,200 2,500
J-Capital Outlays 700 700 1,400
Total $ $146,200 $10,600 $156,800
III. B - Detail: List FTEs by classification and corresponding annual compensation . Totals need to agree with total FTEs in Part I
and Part IIIA
Job Classification Salary FY 2022 FY 2023 2021-23 2023-25 2025-27
IT SYS ADM-JOURNEY 89,916 0.1 0.1
TAX INFO SPEC 4 64,332 0.1 0.1
Total FTEs 0.1 0.1 0.1
Request # 5515-1-1
Form FN (Rev 1/00) 172,078.00 4 Bill # 5515 SB
FNS062 Department of Revenue Fiscal Note
III. C - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and dexcribe potential financing methods
NONE
None.
Part V: New Rule Making Required
Request # 5515-1-1
Form FN (Rev 1/00) 172,078.00 5 Bill # 5515 SB
FNS062 Department of Revenue Fiscal Note
Individual State Agency Fiscal Note
Bill Number: 5515 SB Title: Hospitality employment/B&O Agency: 540-Employment Security
Department
Part I: Estimates
X No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Operating Expenditures from:
NONE
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact . Factors impacting the precision of these estimates ,
and alternate ranges (if appropriate ), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50 ,000 per fiscal year in the current biennium or in subsequent biennia , complete entire fiscal note
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia , complete this page only (Part I).
Capital budget impact, complete Part IV.
Requires new rule making, complete Part V.
Legislative Contact: Clinton McCarthy Phone: 360-786-7319 Date: 01/10/2022
Agency Preparation: Lesley Carpenter Phone: 360 902-9404 Date: 01/11/2022
Agency Approval: Danielle Cruver Phone: 360-810-0901 Date: 01/11/2022
OFM Review: Anna Minor Phone: (360) 790-2951 Date: 01/12/2022
Form FN (Rev 1/00) 171,167.00 Request # UI 5515-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 5515 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe by section number , the significant provisions of the bill , and any related workload or policy assumptions , that have revenue or
expenditure impact on the responding agency .
This bill creates a Business & Occupation tax credit for employers in the hospitality industry located in counties with high
unemployment rates who then hire full-time employees to positions with annual wages that exceed the average annual wage
in the county.
Sec. 1(6) requires Employment Security to provide any information to Revenue that Revenue needs to verify eligibility for
this tax credit.
Sec. 1(7)(c), (i) explicitly relies on Employment Security aggregate wage data for the various counties and published
seasonally adjusted monthly unemployment rates for the state and the various counties as part of the criteria for determining
if a particular business qualifies for the B&O tax credit.
Department of Revenue currently has a data-sharing agreement with Employment Security to access the data it needs to
verify eligibility under this bill (employee names, social security numbers, quarterly hours, quarterly wages ), and currently
does access that data under other tax credit programs that Revenue also administers that rely on the same Employment
Security data.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency , identifying the cash receipts provisions by section number
and when appropriate the detail of the revenue sources . Briefly describe the factual basis of the assumptions and the method by which the cash receipts
impact is derived. Explain how workload assumptions translate into estimates . Distinguish between one time and ongoing functions .
Because the Department of Revenue will be using the same process to access the same data it already accesses, there is
no anticipated increase in cash receipts as a result of this bill.
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation ), identifying by section number the
provisions of the legislation that result in the expenditures (or savings ). Briefly describe the factual basis of the assumptions and the method by which the
expenditure impact is derived . Explain how workload assumptions translate into cost estimates . Distinguish between one time and ongoing functions .
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
NONE
III. B - Expenditures by Object Or Purpose
NONE
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation . Totals need to agree with total FTEs in
Part I and Part IIIA
NONE
III. D - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
Hospitality employment/B&O 540-Employment Security Department
Form FN (Rev 1/00) 171,167.00 Request # UI 5515-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 5515 SB
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
IV. D - Capital FTE Detail: List FTEs by classification and corresponding annual compensation . Totals need to agree with total FTEs in
Part IVB
NONE
Part V: New Rule Making Required
Hospitality employment/B&O 540-Employment Security Department
Form FN (Rev 1/00) 171,167.00 Request # UI 5515-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 5515 SB
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