As part of his 2019–21 operating budget proposal, the Appropriations Committee Chair had proposed HB 2158, which would impose a “workforce education investment” business and occupation (B&O) tax surcharge on certain businesses to fund higher education and career connected learning programs. As originally proposed, HB 2158 would appropriate $389.6 million in 2019–21, on top of the $52.934 billion in appropriations that would be made under the House-passed 2019–21 operating budget.

Yesterday the House Appropriations Committee approved SHB 2158, with amendments. The bill would create a “workforce education investment account” (WEIA) to which the revenues from the surcharge would be directed.

As approved by Appropriations, the bill would appropriate $385.4 million in 2019–21 and $551.0 million in 2021–23. Although the bill specifies that spending from the WEIA “must be used to supplement, not supplant, other federal, state, and local funding for higher education,” the amended bill would increase appropriations from the WEIA for the higher education institutions for compensation and central services—something that is usually funded in the operating budget bill, from funds subject to the outlook. Additionally, the amended bill would appropriate $10.8 million for the WSU medical school. This was funded in the budget that passed the House with funds subject to the outlook.

The bill would impose a 20 percent surcharge on top of current B&O taxes on businesses in certain sectors in the services and other activities category. The surcharge would be 33.3 percent for certain advanced computing businesses whose affiliated groups have worldwide gross revenue of more than $25 million to $100 billion and 66.7 percent for certain advanced computing businesses whose affiliated groups have worldwide gross revenue of more than $100 billion. As amended, the combined surcharge paid by all members of an affiliated group would have to be at least $4 million and could not be more than $7 million annually. There is not an updated fiscal note for this version of the bill.

An amendment was proposed, but not passed, that would have subjected the WEIA to the four-year balanced budget requirement. In discussing the amendment, Rep. Stokesbary argued that doing so would make it less likely that future legislatures act to sweep the WEIA in order to balance the budget, as the WEIA resources would already be accounted for in the outlook. Additionally, the WEIA would fund various programs that would typically be funded by funds subject to the outlook, so including its spending and revenues in the outlook would make sense.

Chair Ormsby said that including the WEIA in the outlook would be inconsistent with the intent of the four-year balanced budget requirement. I don’t see how that is the case: When the requirement was enacted in 2012, it stated that budgets must leave “a positive ending fund balance in the general fund and related funds.” Related funds were defined as the opportunity pathways account and the education legacy trust account. The ELTA is dedicated to “support of the common schools, and for expanding access to higher education through funding for new enrollments and financial aid, and other educational improvement efforts.” Opportunity Pathways is similarly dedicated to education. Adding the WEIA (an account dedicated to education) to the outlook would be appropriate and improve public understanding of state spending and taxation.