Notice of Public Hearing of Engrossed Third Substitute House Bill 1324

Office of the Governor / Office of Financial Management sent this bulletin at 04/08/2019 10:08 AM PDT

Having trouble viewing this email? View it as a Web page.

You are receiving this email as a subscriber to the Initiative 960 email list. RCW 43.135.031 (I-960) requires that notices be sent each time a bill that raises taxes or fees is: introduced in either house; scheduled for a public hearing; approved by any legislative committee; or passed by either house of the Legislature.

Please note: This email message was sent from a notification-only address. Please do not reply to this message.

E3SHB 1324, titled AN ACT Relating to creating the Washington rural development and opportunity zone act, has been scheduled for a public hearing by the Senate Committee on Ways & Means.

Date and Time: 04/09/2019 10:00AM (Subject to change by the Legislature.)
Location: J.A. Cherberg Building, Senate Hearing Rm 4, Olympia, WA

The Office of Financial Management has identified this bill as requiring a ten-year projection of increased cost to the taxpayers or affected fee payers.

Ten-year projection:

This bill does not result in any new or additional fees or taxes for the Office of Insurance Commissioner.

Note: This fiscal note reflects language in 3SHB 1324 (H-2212.1), 2019 Legislative Session.

This version changes the name of the investment fund.

This proposal creates a business and occupation tax or insurance premium tax credit for qualified investments by taxpayers to a rural development and distressed opportunity zone fund.

The Department of Commerce will manage the application process for the rural development and opportunity zone funds and those businesses that qualify for a tax credit certificate. Section 5 of this bill creates a statutory framework for issuing, amending, and revoking tax credit certificates. No more than $100 million in investment authority and no more than $60 million in credit-eligible capital contributions may be approved.

Investment authority is defined as the amount stated on the written approval issued by the Department of Commerce certifying the rural development and opportunity zone fund. At least 60 percent of a rural development and opportunity zone fund's investment authority must be comprised of credit-eligible contributions.

Credit-eligible contributions are investments by a person subject to business and occupation taxes or insurance premium taxes in a rural development and opportunity zone fund. The investment equals the amount specified on a tax credit certificate issued by the Department of Commerce.

Sections 13 through 16 describe the credit and changes to the business and occupation tax:

The business and occupation tax credit is equal to the amount of a taxpayer's credit-eligible capital contribution to the rural development and opportunity zone fund. The taxpayer may claim up to one-third of the credit authorized for each of the calendar years that includes the fourth through sixth anniversaries of the closing date noted on the tax credit certificate, exclusive of amounts carried forward from prior years.

The amount claimed for a tax reporting period may not exceed the amount of business and occupation tax due. Unused credits may be carried forward until used. Taxpayers must file all returns and required information with the Department of Revenue (Department) electronically including a copy of the tax credit certificate issued by the Department of Commerce. Taxpayers claiming this tax credit must file an annual report with the Department as required in RCW 82.32.534.

The credit may not be transferred or allocated to any other entity other than an affiliate subject to business and occupation taxes. The Department of Commerce must provide the Department with a copy of the amended tax credit certificate.

The Department of Commerce must notify the Department if a tax credit certificate is revoked.

This bill also extends the preferential tax rates to 2036 for persons engaging in the business of extracting timber, extracting timber for hire, manufacturing timber, manufacturing timber for hire, wholesaling timber, or selling standing timber.

Under current law, the surcharge imposed on the preferential tax rates above is 0.052 percent and is suspended when receipts total at least $8 million during the fiscal biennium. This surcharge expires July 1, 2024.

This bill extends the surcharge expiration to July 1, 2036.

This new tax exemption expires July 1, 2025.

If funding for this bill is not provided by June 30, 2019, it will be null and void.

The bill takes effect 90 days after final adjournment of the session in which it is enacted.

ASSUMPTIONS

- The earliest closing date for earning business and occupation tax credits will be in January 2020.

- One-third of the $60 million in authorized credits may be claimed in the fourth through sixth years after the closing date.

- The fourth, fifth, and sixth years after the closing date are assumed to be Calendar Years 2024, 2025, and 2026.

- The carry-forward provisions allow taxpayers to continue to claim any credit that has not been used in years four through six indefinitely, potentially creating B&O tax impacts in years outside the analysis time frame of this fiscal note.

- The B&O credits authorized by this legislation would result in a decrease in B&O tax revenue (state general fund) starting as early as Fiscal Year 2024. However, the number of taxpayers that will be eligible for the credit and the amount of any authorized credit is unknown, resulting in an indeterminate revenue impact.

- The preferential timber tax rates will be extended, resulting in a revenue impact starting in Fiscal Year 2025. Under current law the timber tax rate in Fiscal Year 2025 would have been 0.484 percent.

- The timber tax surtax of 0.052 percent will be extended, resulting in an additional revenue impact starting in Fiscal Year 2025. Under current law the timber tax surtax will expire June 30, 2024.

DATA SOURCES:

- Department excise tax data base

REVENUE ESTIMATES:

This bill decreases state revenues by an estimated $26.1 million in Fiscal Year 2025 due to the extension of a preferential B&O rate for the timber industry. State revenue decreases due to the B&O tax credit are indeterminate.

TOTAL REVENUE IMPACT:

      State Government (cash basis, $000):

FY 2020 - $ 0

FY 2021 - $ 0

FY 2022 - $ 0

FY 2023 - $ 0

FY 2024 - $ 0

FY 2025 - ($ 26,100)

      Local Government, if applicable (cash basis, $000): None

The cash receipts impact associated with this proposed legislation is indeterminate. No historical data exists to support a reasonable set of assumptions regarding application fees.

This engrossed bill is proposed by the House of Representatives.

The third substitute bill was proposed by:

House Committee on Appropriations
(360) 786-7155

The original bill sponsors and contact information are:

Representative Mike Chapman, Prime Sponsor
Democrat
(360) 786-7916
Mike.Chapman@leg.wa.gov

Representative Jacquelin Maycumber
Republican
(360) 786-7908
MAYCUMBE_JA@leg.wa.gov

Representative Larry Springer
Democrat
(360) 786-7822
Larry.Springer@leg.wa.gov

Representative Bruce Chandler
Republican
(360) 786-7960
Bruce.Chandler@leg.wa.gov

Representative Brian Blake
Democrat
(360) 786-7870
Brian.Blake@leg.wa.gov

Representative Drew Stokesbary
Republican
(360) 786-7846
Drew.Stokesbary@leg.wa.gov

Representative Mike Steele
Republican
(360) 786-7832
mike.steele@leg.wa.gov

Representative Kristine Reeves
Democrat
(360) 786-7830
Kristine.Reeves@leg.wa.gov

Representative Eric Pettigrew
Democrat
(360) 786-7838
Eric.Pettigrew@leg.wa.gov

Representative Laurie Dolan
Democrat
(360) 786-7940
Laurie.Dolan@leg.wa.gov

Representative Mike Volz
Republican
(360) 786-7922
Mike.Volz@leg.wa.gov

Representative Andrew Barkis
Republican
(360) 786-7824
Andrew.Barkis@leg.wa.gov

Representative Carolyn Eslick
Republican
(360) 786-7816
ESLICK_CA@leg.wa.gov

Representative Debra Lekanoff
Democrat
(360) 786-7800
LEKANOFF_DE@leg.wa.gov

Representative Steve Tharinger
Democrat
(360) 786-7904
Steve.Tharinger@leg.wa.gov

Representative Larry Hoff
Republican
(360) 786-7812
HOFF_LA@leg.wa.gov

Representative Laurie Jinkins
Democrat
(360) 786-7930
Laurie.Jinkins@leg.wa.gov

Representative Christine Kilduff
Democrat
(360) 786-7958
Christine.Kilduff@leg.wa.gov

Representative Mari Leavitt
Democrat
(360) 786-7890
LEAVITT_MA@leg.wa.gov

Senate Committee on Ways & Means members and contact information:

Senator Barbara Bailey
Republican
(360) 786-7618
Barbara.Bailey@leg.wa.gov

Senator Randi Becker
Republican
(360) 786-7602
Randi.Becker@leg.wa.gov

Senator Andy Billig
Democrat
(360) 786-7604
Andy.Billig@leg.wa.gov

Senator John Braun
Republican
(360) 786-7638
John.Braun@leg.wa.gov

Senator Sharon Brown
Republican
(360) 786-7614
Sharon.Brown@leg.wa.gov

Senator Reuven Carlyle
Democrat
(360) 786-7670
Reuven.Carlyle@leg.wa.gov

Senator Steve Conway
Democrat
(360) 786-7656
Steve.Conway@leg.wa.gov

Senator Jeannie Darneille
Democrat
(360) 786-7652
DARNEILL_JE@leg.wa.gov

Senator David Frockt
Democrat
(360) 786-7690
David.Frockt@leg.wa.gov

Senator Bob Hasegawa
Democrat
(360) 786-7616
Bob.Hasegawa@leg.wa.gov

Senator Jim Honeyford
Republican
(360) 786-7684
Jim.Honeyford@leg.wa.gov

Senator Sam Hunt
Democrat
(360) 786-7642
Sam.Hunt@leg.wa.gov

Senator Karen Keiser
Democrat
(360) 786-7664
Karen.Keiser@leg.wa.gov

Senator Marko Liias
Democrat
(360) 786-7640
Marko.Liias@leg.wa.gov

Senator Mark Mullet
Democrat
(360) 786-7608
Mark.Mullet@leg.wa.gov

Senator Guy Palumbo
Democrat
(360) 786-7600
Guy.Palumbo@leg.wa.gov

Senator Jamie Pedersen
Democrat
(360) 786-7628
Jamie.Pedersen@leg.wa.gov

Senator Ann Rivers
Republican
(360) 786-7634
Ann.Rivers@leg.wa.gov

Senator Christine Rolfes
Democrat
(360) 786-7644
Christine.Rolfes@leg.wa.gov

Senator Mark Schoesler
Republican
(360) 786-7620
Mark.Schoesler@leg.wa.gov

Senator Kevin Van De Wege
Democrat
(360) 786-7646
Kevin.VanDeWege@leg.wa.gov

Senator Keith Wagoner
Republican
(360) 786-7676
Keith.Wagoner@leg.wa.gov

Senator Judy Warnick
Republican
(360) 786-7624
Judith.Warnick@leg.wa.gov

Senator Lynda Wilson
Republican
(360) 786-7632
Lynda.Wilson@leg.wa.gov

Legislative Bill Information Website: http://apps.leg.wa.gov/billinfo/

Initiative 960 Website: http://www.ofm.wa.gov/tax/default.asp

Update your subscriptions, modify your password or email address, or stop subscriptions at any time on your Subscriber Preferences Page. You will need to use your email address to log in. If you have questions or problems with the subscription service, please visit subscriberhelp.govdelivery.com.