Fiscal Note - 5799 SB Workforce Surcharge/Clinics, Department of Revenue (01/18/2022)
Summary
Department of Revenue Fiscal Note for Bill Number 5799 SB, Workforce surcharge/clinics (Agency: 140-Department of Revenue), with an OFM Review date of 01/18/2022. The narrative states that current law imposes a workforce education investment surcharge of 1.22% on select advanced computing businesses, with the amount paid by all members of an affiliated group capped at $9 million per calendar year. Under the Proposal, the bill exempts from the surcharge a provider clinic offering primary care, multispecialty and surgical services, including behavioral health services, and certain affiliates, with an effective date of July 1, 2022. The note says the Department will have minimal costs to implement the legislation and will absorb them within current funding.
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“Fiscal Note - 5799 SB Workforce Surcharge/Clinics, Department of Revenue (01/18/2022).”
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Department of Revenue Fiscal Note
Bill Number: 5799 SB Title: Workforce surcharge/clinics 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
Workforce Educationa Investment (1,100,000) (1,100,000) 700,000 2,700,000
Account-State
01 - Taxes 05 - Bus and Occup Tax
Total $ (1,100,000) (1,100,000) 700,000 2,700,000
Estimated 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
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: 01/11/2022
Agency Preparation: Melissa Howes Phone: 360-534-1518 Date: 01/17/2022
Agency Approval: Valerie Torres Phone: 360-534-1521 Date: 01/17/2022
OFM Review: Cheri Keller Phone: (360) 584-2207 Date: 01/18/2022
Request # 5799-1-1
Form FN (Rev 1/00) 172,120.00 1 Bill # 5799 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:
A workforce education investment surcharge of 1.22% is imposed on select advanced computing businesses. This surcharge
applies to the taxable amounts subject to the service and other activities business and occupation (B&O) tax and is in addition to
the service and other activities B&O tax.
The amount of workforce education investment surcharge paid by all members of an affiliated group is capped at $9 million per
calendar year.
Hospitals are exempt from the workforce education investment surcharge.
Provider clinics and affiliated organizations are subject to the workforce education investment surcharge if they are affiliated
with a select advanced computing business.
The service and other activities B&O tax is equal to the gross income of the business multiplied by the rate of :
- 1.75%, or
- 1.5% for any business subject to the workforce education investment surcharge.
Revenues from the workforce education investment surcharge are deposited into the workforce education investment account.
PROPOSAL:
This bill exempts from the workforce education investment surcharge a provider clinic offering primary care, multispecialty and
surgical services, including behavioral health services, and any affiliate of the provider clinic, if the affiliate is an organization that
offers health care services or provides administrative support for a provider clinic, or is an independent practice association or
accountable care organization.
"Health care services" means services offered by health care providers relating to the prevention, cure, or treatment of illness,
injury, or disease.
"Primary care" means wellness and prevention services and the diagnosis and treatment of health conditions.
The bill also clarifies that the workforce education investment surcharge exemptions do not apply to amounts received by any
member of an affiliated group other than those businesses specifically defined as exempt.
EFFECTIVE DATE:
July 1, 2022
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
- This legislation takes effect July 1, 2022. It impacts one quarter of workforce education investment surcharge collections
and 11 months of service and other activities tax collections in Fiscal Year 2023.
- The workforce education investment surcharge tax return is filed quarterly. Fiscal Year 2023 quarter 2 return is due July
Request # 5799-1-1
Form FN (Rev 1/00) 172,120.00 2 Bill # 5799 SB
FNS062 Department of Revenue Fiscal Note
31, 2023, resulting in cash collections for this quarter occurring in Fiscal Year 2024.
- Taxpayers meet the workforce education investment surcharge $9 million cap in the first two quarters of a calendar year.
- Taxpayers who are subject to the workforce education investment surcharge pay the service and other activities tax at the
1.5% rate. Taxpayers who are exempt from the workforce education investment surcharge will pay the service and other
activities tax at the 1.75% rate.
- The service and other activities tax is reported on each affiliated entity's excise tax return, which is filed monthly.
DATA SOURCES
- Washington State Department of Revenue excise tax data
- Economic and Revenue Forecast Council November 2021 forecast
REVENUE ESTIMATES
This bill decreases state revenues by an estimated $1.1 million in the 11 months of impacted collections in Fiscal Year 2023
and increases state revenues by an estimate $100,000 in Fiscal Year 2024, the first full year of impacted collections.
TOTAL REVENUE IMPACT:
State Government (cash basis, $000):
FY 2022 - $ 0
FY 2023 - ($ 1,100 )
FY 2024 - $ 100)
FY 2025 - $ 600 )
FY 2026 - $ 1,100
FY 2027 - $ 1,600
Local Government (cash basis, $000): none
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
The Department will have minimal costs to implement this legislation and will absorb within current funding.
Part III: Expenditure Detail
III. A - Expenditures by Object Or Purpose
NONE
III. B - Detail: List FTEs by classification and corresponding annual compensation . Totals need to agree with total FTEs in Part I
and Part IIIA
NONE
III. C - Expenditures By Program (optional)
NONE
Request # 5799-1-1
Form FN (Rev 1/00) 172,120.00 3 Bill # 5799 SB
FNS062 Department of Revenue Fiscal Note
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 # 5799-1-1
Form FN (Rev 1/00) 172,120.00 4 Bill # 5799 SB
FNS062 Department of Revenue Fiscal Note
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