Keiser bill to cut $500 million in business taxes passes Senate

OLYMPIA — A bill to provide hard-hit businesses with $500 million from a state funded unemployment relief account to reduce unemployment insurance (UI) premium taxes in 2022 passed the Senate today on a unanimous vote of 49-0.

“This awful pandemic has hit some businesses much harder than others,” said Sen. Karen Keiser (D-Des Moines), the bill’s sponsor. “We took urgent action earlier this session to provide immediate relief to all employers in our state. This bill will bring targeted aid to the sectors where pandemic precautions caused the most layoffs.”

SB 5478, which is broadly supported by business groups, would provide $250 million in relief to employers in economic sectors that were required to close to the public due to COVID-19 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 massive spike in UI taxes in 2022 due to the historically large number of their workers who received UI benefits during the pandemic. Under SB 5478, state funds would be used to prevent many of those tax increases.

Another $250 million would be used to minimize tax increases for other employers 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 component 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.

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.