Senate Budget Resurrects Small Business Bill of Rights

State spending plans emerge, negotiations begin

State Director Patrick Connor reports from Olympia on the small-business agenda for the legislative week ending March 29

Week 11 has been a hotbed of budget activity as the state House of Representatives announced its two-year, $52 billion operating proposal. The plan relies on three tax bills (summaries available here), which combined would increase revenues by $1.4 billion, to fund it.

The bill was made public and received a hearing Monday. It was approved by the House Appropriations Committee, Wednesday, and passed the House today.

Of the three tax bills, House Bill 2158, adding B&O tax surcharges, was heard in the House Finance Committee this morning. NFIB testified in opposition to the bill. The other two, House Bill 2156 and House Bill 2157 will be heard April 4, and are scheduled for committee approval as early as April 5.

The State Senate majority Democrats released their spending framework today. Bill text and supporting materials should be available online. The Senate Ways & Means Committee will hold a public hearing Monday, April 1. (No fooling!) The Senate is expected to approve the plan next week, paving the way for negotiations with the House to begin in earnest.

NFIB will delve into the Senate tax proposal next week, once we’ve had time to digest it. Of note, however, is that the Senate Democrats’ capital gains proposal is not used to support the biennial operating budget, in contrast to the House. Instead, Senate Democrats would use the new revenue to cut taxes “… on 300,000 small businesses,” provide property tax relief to senior citizens, exempt feminine hygiene products and diapers from sales taxes, and fund a Working Families Tax Credit benefitting some 400,000 families.

We do not yet know if the small business tax relief measure is Senate Bill 5994, introduced Wednesday by NFIB member Sen. Guy Palumbo. As we read that measure, most all B&O rates would be set at 0.73 percent – an increase on retailing, manufacturing, and wholesaling, but a near 50 percent reduction for the service sector. Moreover, the bill would exempt the first $250,000 of gross revenue from B&O for firms earning $5 million or less annually. Palumbo’s bill was not designed to be revenue neutral, and a fiscal note is not yet available, but the bill could raise $1.5 billion in added tax collections over four years while reducing B&O taxes for most small businesses in the state.

Speaking of Senator Palumbo, at our request, he secured a budget proviso directing the Governor’s Office of Regulatory Innovation and Assistance (ORIA) to convene agencies and stakeholders to develop a small business bill of rights. If approved, a report will be due to the Legislature by November 1, 2019. NFIB is deeply grateful to Sens. Palumbo and Lynda Wilson, our lead co-sponsors, and to Senate Ways & Means Committee Chairwoman Sen. Christine Rolfes for their support. Sen. Rolfes directed $110,000 to this effort; NFIB had requested $10,000.

Not to be left out, Senate Republicans sent NFIB a list of tax-related measures they’ve introduced this year. They were stung by our mention last week that they’ve introduced or co-sponsored some tax increases as well. Their list of 25 tax-related bills can be read here.