Individual State Agency Fiscal Note — SB 5199 Tax Relief for Newspaper Publishers, Department of Revenue
Summary
An Individual State Agency Fiscal Note from the Department of Revenue on SB 5199, a bill relating to tax relief for newspaper publishers, numbered Fiscal Note 5199-1. The note describes a proposed business and occupation (B&O) tax deduction for amounts received from printing or publishing newspapers and from publishing eligible digital content, expiring January 1, 2035, with the bill taking effect January 1, 2024. It states that the bill decreases state revenues by an estimated $1.035 million in fiscal year 2024 and by $2.848 million in fiscal year 2025. For the department it estimates costs of $248,100 in fiscal year 2024, affecting 400 taxpayers, and says new rulemaking would amend WAC 458-20-143 and WAC 458-20-144.
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“Individual State Agency Fiscal Note — SB 5199 Tax Relief for Newspaper Publishers, Department of Revenue.”
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Individual State Agency Fiscal Note
Bill Number: SB 5199 Bill Title: AN ACT Relating to tax relief for Agency: 140
newspaper publishers Department of Revenue
Part I: Estimates
[ ] No Fiscal Impact
Estimated Cash Receipts to:
Fund Fiscal Year 2024 Fiscal Year 2025 2023-2025 Total 2025-27 Biennium 2027-29 Biennium
GF-State Business and
(979,000) (2,708,000) (3,687,000) (5,572,000) (5,851,000)
Occupation Tax
Workforce Educ Invest Acct
(56,000) (140,000) (196,000) (301,000) (331,000)
Business and Occupation Tax
Total (1,035,000) (2,848,000) (3,883,000) (5,873,000) (6,182,000)
Estimated Expenditures from:
Fiscal Year 2024 Fiscal Year 2025 2023-2025 Total 2025-27 Biennium 2027-29 Biennium
FTE Staff Years 1.4 .3 .85 .2 .2
Fund
GF-State 001 248,100 31,200 279,300 42,400 42,400
Total 248,100 31,200 279,300 42,400 42,400
The revenue and expenditures 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:
[X] 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: 1/9/2023
Agency Preparation: VAN HUYNH Phone: (360) 534-1512 Date: 1/11/2023
Agency Approval Valerie Torres Phone: (360) 534-1521 Date: 1/11/2023
OFM Review: Phone: Date:
OFM Form FN (10/95)
Fiscal Note # 5199-1
Bill # SB 5199
1
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
CURRENT LAW:
Businesses printing newspapers, publishing newspapers, or both, qualify for a preferential business and occupation (B&O)
tax rate of 0.35%. This preferential rate expires July 1, 2024, after which a tax rate of 0.484% applies.
"Newspaper" means:
- A publication issued regularly at stated intervals at least twice a month and printed on newsprint in tabloid or broadsheet
format folded loosely together without stapling, glue, or any other binding of any kind, including any supplement of a
printed newspaper; and
- An electronic version of a printed newspaper that:
- Shares content with the printed newspaper; and
- Is prominently identified by the same name as the printed newspaper or otherwise conspicuously indicates that it is a
complement to the printed newspaper.
Digital periodicals and magazines that do not have a substantially similar tangible counterpart report income from the
selling activities under the retailing or wholesaling B&O tax classification and advertising income under the service and
other activities B&O tax classification.
Digital periodicals and magazines that do have a substantially similar tangible counterpart report their income under the
printing and publishing B&O tax classification.
PROPOSAL:
This bill creates a B&O deduction for amounts received from any of the following activities:
- Printing and/or publishing newspapers.
- Publishing “eligible digital content.”
This deduction expires January 1, 2035.
"Eligible digital content" is a publication:
- Published at regularly stated intervals at least once every three months,
- Having at least two but no more than fifty employees, at least one of whom creates content for the publication,
- Primarily featuring written content, the largest category of which contains material that identifies the author or the
original source of the material, and
- Available to readers primarily or exclusively in an electronic format.
"Eligible digital content" excludes digital content created by a radio or television broadcaster.
EFFECTIVE DATE:
This bill takes effect on January 1, 2024.
II. B - Revenue Impact
ASSUMPTIONS
- The department identified publishers of "eligible digital content" using the industry classification for "internet publishing
and broadcasting and web search portals" (NAICS 519130). This may include or exclude businesses not considered a
publisher of "eligible digital content" under this bill. As a result, the actual tax impacts from "eligible digital content"
publishers may substantially differ from this estimate.
OFM Form FN (10/95)
Fiscal Note # 5199-1
Bill # SB 5199
2
- It is not clear from the bill language whether the two to fifty employee requirement only refers to those employees
involved with a particular publication, or if the requirement refers to the total number of employees for the business. As
written, the revenue impact could include businesses with more than fifty employees.
- The term “primary” means greater than 50%.
- Businesses whose employees are out-of-state could also qualify for the deduction if all other requirements are met.
- Growth rates for newspaper printers and publishers mimic the growth for newspaper production from the IHS Markit's
November 2022 forecast.
- Growth rates for eligible digital content mimic the growth of the service and other activities B&O tax classification from
the Economic and Revenue Forecast Council's November 2022 forecast.
- This legislation takes effect January 1, 2024, and impacts 5 months of collections in fiscal year 2024.
DATA SOURCES
- Department of Revenue, excise tax return data
- IHS Markit industrial production index for newspaper publishers, November 2022 forecast
- Economic and Revenue Forecast Council, November 2022 forecast
REVENUE ESTIMATES
This bill decreases state revenues by an estimated $1.035 million in fiscal year 2024 and then by $2.848 million in fiscal
year 2025, the first full year of impacted collections.
TOTAL REVENUE IMPACT:
State Government (cash basis, $000):
FY 2024 - ($ 1,035)
FY 2025 - ($ 2,848)
FY 2026 - ($ 2,903)
FY 2027 - ($ 2,970)
FY 2028 - ($ 3,049)
FY 2029 - ($ 3,133)
Local Government, if applicable (cash basis, $000): None.
II. C - Expenditure Impact
ASSUMPTIONS:
- This estimate affects 400 taxpayers.
FIRST YEAR COSTS:
The department will incur total costs of $248,100 in fiscal year 2024. These costs include:
Labor Costs - Time and effort equate to 1.4 FTEs.
- Set up, program and test computer system changes for a new deduction added to e-file and the combined excise tax
return, modifications to the buyer’s sales and use tax preference addendum and creation of a new tax preference report.
- Create a special notice and identify publications and information that the department may need to create or update on
the department’s website.
- Respond to tax ruling requests, email inquiries, and more difficult call backs from the telephone information center.
- Process tax return work items, assist taxpayers with reporting questions and respond to inquiries via email and web
message and paper correspondence.
- Examine accounts and make corrections as necessary.
- Develop and maintain annual tax performance report questions.
OFM Form FN (10/95)
Fiscal Note # 5199-1
Bill # SB 5199
3
- Amend one excise tax advisory.
- Amend two administrative rules.
Object Costs - $79,200.
- Computer system changes, including contract programming.
SECOND YEAR COSTS:
The Department will incur total costs of $31,200 in fiscal year 2025. These costs include:
Labor Costs - Time and effort equate to 0.3 FTE.
- Resolve additional return work items. Respond to email, web message, and paper correspondence inquiries. Answer
telephone questions, monitor reports, and assist taxpayers with reporting.
- Develop and maintain annual tax incentive report questions.
- Review annual tax incentive report submissions, work to verify submission accuracy, and compile statistics and
reports.
ONGOING COSTS:
Ongoing costs for fiscal year 2025-27 biennium equal $42,400 and include similar activities described in the second-year
costs. Time and effort equate to 0.2 FTE per year.
Part III: Expenditure Detail
III. A - Expenditures by Object or Purpose:
Fiscal Year 2024 Fiscal Year 2025 2023-2025 Total 2025-27 Biennium 2027-29 Biennium
Salaries and Wages 103,500 19,700 123,200 28,200 28,200
Benefits 34,200 6,500 40,700 9,200 9,200
Personal Service Contracts 79,200 79,200
Supplies & Material 21,600 3,700 25,300 3,800 3,800
Office Equipment 9,600 1,300 10,900 1,200 1,200
Total 248,100 31,200 279,300 42,400 42,400
III. B - FTE Detail:
Job Classification Salary FY 2024 FTEs FY 2025 FTEs 2023 - 2025 Total 2025 - 2027 2027 - 2029
EMS BAND 4 126,619 .01 .01
EMS BAND 5 147,919 .01 .01
EXCISE TAX EX 2 55,872 .1 .2 .15 .1 .1
IT SYS ADM-JOURNEY 92,844 .2 .1
MGMT ANALYST4 73,260 .41 .21
TAX INFO SPEC 4 66,420 .4 .2
TAX POLICY SP 2 75,120 .01 .01
TAX POLICY SP 3 85,020 .24 .1 .17 .1 .1
TAX POLICY SP 4 91,524 .01 .01
WMS BAND 3 107,685 .01 .01
Total 1.4 .3 .88 .2 .2
III. C - Expenditures by Program (optional):
Fiscal Year 2024 Fiscal Year 2025 2023-2025 Total 2025-27 Biennium 2027-29 Biennium
Total
OFM Form FN (10/95)
Fiscal Note # 5199-1
Bill # SB 5199
4
Part IV: Capital Budget Impact
None.
Part V: New Rule Making Required
Should this legislation become law, the department will use the expedited process to amend WAC 458-20-143, titled:
"Printers and publishers of newspapers, magazines, and periodicals" and WAC 458-20-144, titled: "Printing industry".
Persons affected by this rulemaking would include newspapers, publishers of newspapers, and qualified online publishers.
OFM Form FN (10/95)
Fiscal Note # 5199-1
Bill # SB 5199
5
Revenue Impact Detail
First Biennium Second Biennium Third Biennium
FUND SOURCE CODE 1st YEAR 2nd YEAR 3rd YEAR 4th YEAR 5th YEAR 6th YEAR
GF-State Business and Occupation Tax 0105 (979,000) (2,708,000) (2,756,000) (2,816,000) (2,887,000) (2,964,000)
Total (979,000) (2,708,000) (2,756,000) (2,816,000) (2,887,000) (2,964,000)
OTHER
Workforce Educ
Invest Acct Business and Occupation Tax 0105 (56,000) (140,000) (147,000) (154,000) (162,000) (169,000)
Total (56,000) (140,000) (147,000) (154,000) (162,000) (169,000)
Net (1,035,000) (2,848,000) (2,903,000) (2,970,000) (3,049,000) (3,133,000)
Revenue Impact - by Biennium
FUND SOURCE CODE 1st Biennium 2nd Biennium 3rd Biennium
GF-State Business and Occupation Tax 0105 (3,687,000) (5,572,000) (5,851,000)
Total (3,687,000) (5,572,000) (5,851,000)
OTHER
Workforce Educ Invest Acct Business and Occupation Tax 0105 (196,000) (301,000) (331,000)
Total (196,000) (301,000) (331,000)
Net (3,883,000) (5,873,000) (6,182,000)
OFM Form FN (10/95)
Fiscal Note # 5199-1
Bill # SB 5199
6
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