OLYMPIA — The businesses hit hardest by the pandemic would see $500 million in state assistance for their unemployment insurance (UI) premium taxes in 2022, under a bill introduced by Sen. Karen Keiser (D-Des Moines) and passed out of the Senate Ways & Means Committee today by a strong bipartisan vote.
“Small businesses across our state are hurting,” said Keiser. “We took urgent action earlier this session to provide immediate relief. Now is the time to look to the future and smooth the path for our long-term recovery. This bill addresses the very uneven effect that the pandemic has had on our economy.”
SB 5478, which is broadly supported by business groups, would target $250 million in relief to employers in economic sectors that were required to close due to public health measures in 2020 and 2021, including restaurants, hotels, movie theaters, gyms, bowling alleys, retail outlets, and others. Absent legislative action, those businesses will see a spike in their UI taxes in 2022 due to the large number of workers who used UI benefits during the pandemic. Under SB 5478, state funds would be used to minimize those tax increases.
Another $250 million would be used to minimize tax increases for other employers—those in sectors that were not required to close but nevertheless suffered significant effects of the pandemic recession and would otherwise see large UI tax increases.
The relief would be targeted to the experience part of the UI tax calculation. When employers have large numbers of workers who use unemployment benefits, that increases their experience rate classification, leading to higher taxes. The bill would lower affected businesses’ experience rate classifications. This would also have the secondary effect of lowering the social tax rate paid by all businesses.
The first category of businesses would include the grocery store in Point Roberts, which has been hit hard by the closure of the border with Canada.
This tax relief for Washington businesses would come on top of a historic step the Legislature took earlier this session with SB 5061, which prevented $1.7 billion in UI tax increases due to the pandemic.
The 2021 legislative session is scheduled to adjourn on April 25.