Senate Bill Report — SB 5515, As of January 18, 2022

Summary

This Senate Bill Report on SB 5515, as of January 18, 2022, concerns a state business tax credit for new employment positions in the hospitality industry, with Senators Dozier, Holy and Padden as sponsors. The Brief Summary says the bill creates a $275 business and occupation tax credit for full-time employees hired into the hospitality industry with annual wages exceeding the average wage for the county, only in areas where the unemployment rate is at least 25 percent greater than the statewide rate. In the Summary of Bill (Proposed Substitute), the credit is earned for the calendar year an employer fills a position, plus four subsequent consecutive years if the position is maintained. The report gives the effective date as July 1, 2022.

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Issuer: Congressional materials
Document type: Report
Date: 2022-01-25
Case: 2022 01 25 A29562 D238672 Bill Report 5515 Sbr Bfst Ta 22

Cite this document

“Senate Bill Report — SB 5515, As of January 18, 2022.” Original at app.leg.wa.gov, dated 2022-01-25. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-01-25-2022-01-25-a29562-d238672-bill-report-5515-sbr-bfst-ta-22/, SHA-256 2569d4c557436e94026073649428fd2355f464b76b68e368012aa84291884924.

Full text

SENATE BILL REPORT
SB 5515

As of January 18, 2022

Title: An act relating to encouraging economic growth by providing a state business tax credit
for new employment positions in the hospitality industry.

Brief Description: Encouraging economic growth by providing a state business tax credit for
new employment positions in the hospitality industry.

Sponsors: Senators Dozier, Holy and Padden.

Brief History:
Committee Activity: Business, Financial Services & Trade: 1/18/22.

Brief Summary of Bill
• Creates a $275 business and occupation tax credit for full-time
employees hired into the hospitality industry with annual wages
exceeding the average wage for the county.
• Makes the credit only eligible in areas where the unemployment rate is at
least 25 percent greater than the statewide unemployment rate.

SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

Staff: Clinton McCarthy (786-7319)

Background: Business and Occupation Tax. Washington State'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 deduction for the costs of doing
business. The B&O tax rate varies by classification of business.

Business and Occupation Tax Credits. A B&O tax credit is allowed against the amount of
tax otherwise due to the Department of Revenue (DOR). The state provides a number of

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- SB 5515
tax credits for B&O tax. The following are a few of the major B&O tax credits offered:
• rural county B&O credit for new employees;
• high technology B&O tax credit;
• small business B&O tax credit;
• multiple activities tax credit; and
• credit for hiring unemployed veterans.

Summary of Bill: The bill as referred to committee not considered.

Summary of Bill (Proposed Substitute): A $275 B&O tax credit is created for full-time
employees hired into the hospitality industry with annual wages exceeding the average
wage for the county. The credit is earned for the calendar year an employer fills a position,
plus four subsequent consecutive years if the position is maintained during that period of
time. New positions eligible for the credit can be created only if a position vacated by an
existing employee is filled by a new hire. When a position is newly created, if it is filled
before July 31st, this position is eligible for the full yearly credit. If it is filled after June
30th, this position is eligible for half of the credit.

The hospitality industry is defined to include:
• accommodation services;
• food services;
• wineries;
• breweries;
• distilleries;
• amusement and recreation services; or
• any combination of these services.

The credit may be accrued and carried over. No application is necessary for the credit, but
the person must be able to verify eligibility with DOR for the credit. The credit is only
eligible in areas where the unemployment rate is at least 25 percent greater than the
statewide unemployment rate.

The Employment Security Department is directed to provide DOR any information needed
by DOR to verify eligibility for the credit.

Appropriation: None.

Fiscal Note: Available.

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

Effective Date: The bill takes effect on July 1, 2022.

Staff Summary of Public Testimony On Proposed Substitute: PRO: COVID hit the

Senate Bill Report -2- SB 5515
hospitality industry the hardest relative to any other component of the economy. Even
though this is a small credit, this is an opportunity to create new employee positions in parts
of the state that need the help. These positions have to be held open for four years.
Wineries, breweries, and distilleries were hit hard and need to be included as part of the
definition of the hospitality industry. In the early stages of the pandemic, the industry lost
100,000 employees. As of today, the workforce is down 12 percent. Recruiting and
retention of staff is difficult. The pandemic has had a negative impact on the brewing
industry. Pandemic costs and issues in the supply chain have been difficult challenges to
navigate.

Persons Testifying: PRO: Senator Perry Dozier, Prime Sponsor; Julia Gorton, Washington
Hospitality Association; Annie McGrath, WA Brewers Guild.

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

Senate Bill Report -3- SB 5515

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Original: app.leg.wa.gov