OLYMPIA — Gov. Jay Inslee on Monday signed the first new law of this year’s legislative session, a measure that changes the structure of a new business and occupation tax surcharge levied on some professional services and technology companies in order to create a more stable revenue stream for the state’s college grant program.
The tax is to be put into a special account for higher education programs, with the largest beneficiary being the Washington College Grant program. That program guarantees aid to college students at or below the state’s median family income, based on a sliding scale that increases the grant as family income drops.
Students from families of four that make $97,000 a year are eligible for the grant.
But current projections showed that the demand was going to outpace the original funding. The new bill adds more than $200 million on top of the original $773 million the tax was expected to raise through mid-2023, according to the state Department of Revenue.
“Not having enough money would have put Washington College Grant program at risk, and our students certainly deserve better,” Inslee said before signing the bill
Under the new law, fewer professional service businesses will pay the surcharge because it would only apply to companies that have yearly gross income of more than $1 million. But business above that threshold would pay a 1.75% surcharge, rather than the 1.5% in the current law.
The new bill also streamlines the surcharge on what the law calls “advanced computing businesses” that have worldwide gross revenues of more than $25 billion. Current law calls for the surcharge to double if the that revenue is more than $100 billion. The bill has a single rate of 1.22% over the standard B&O tax, and it caps the surcharge at $9 million.