WSDA Advocacy on B&O Tax Legislation
Over the last several weeks, legislators in Olympia worked to pass the next biennial state Operating Budget. In December of 2024, estimates from the Office of Financial Management (OFM) projected a budget deficit of $12 to $15 billion over the next four years “due to inflation, higher projected caseloads in several safety net programs, expansion of popular programs like early learning, and workforce costs.” At the same time, OFM notes “Revenues have dipped lower than forecasted due to lagging home sales and collections for sales and capital gains taxes.” As Washington state requires a balanced budget, this posed a challenge for lawmakers.
One of several proposals to increase state revenue was House Bill 2081 (HB 2081), which, among other things, would have increased Business and Occupation (B&O) taxes for independent health care providers like dentists. Originally, HB 2081 proposed to increase B&O taxes from the current rate of 1.75% to 2.1% for all independent health care providers with gross income greater than $1 million.
As the end of session neared, the bill was introduced and scheduled to move unusually quickly. HB 2081 was introduced April 16, scheduled for a public hearing in the House Finance Committee April 18, and scheduled for a House Finance Committee member vote on April 19. Recognizing the impact this legislation would have on dental offices, the WSDA Legislative Task Force met and planned a course of action.
WSDA joined a health care coalition effort to advocate against B&O tax increases for health care providers, sent out an action alert campaign to constituents of lawmakers on the House Finance Committee, and WSDA President Dr. Chris Dorow planned to testify during the April 18 public hearing. While there was not time in the public hearing for Dr. Dorow to testify in opposition to the bill, WSDA submitted written testimony on his behalf, which can be found below.
As a result of these efforts, HB 2081 was amended. Instead of a B&O tax increase most dentists would have been subject to, only those with gross income equal to or greater than $5,000,000 will be subject to the increased rate.
The Legislature passed the amended version of HB 2081 on April 26, and the bill now sits on the governor’s desk. Thank you to our membership for continuing to advocate on behalf of your patients and your profession.
Written testimony on HB 2081 from WSDA President Dr. Chris Dorow:
Good morning, Chair Berg and members of the Committee. My name is Chris Dorow and I’m a general dentist practicing in rural Washington, and current president of the Washington State Dental Association. I am here today on behalf of our over 4,000 member dentists across the state testifying CON on House Bill 2081.
I’ve practiced dentistry in Othello, Washington for over 3 decades. Over the course of that time, I’ve seen the cost to provide care to my community steadily increase due to things like inflation, tax increases, and dental employee wage growth caused by unprecedented workforce shortages. Meanwhile revenue, which is largely determined by reimbursement rates, has failed to keep pace.
Independent health care providers, including dentists, were already subject to a 16.7% B&O tax increase in 2019. The majority of dental offices are small business owners, and increasing the B&O tax another 20% as this bill proposes would place a huge financial strain on practices like mine and our ability to provide our patients the care they need.
I urge you to consider the financial impact of this bill on our state’s small business health care providers, and the implications this will have on patient access to care. Please vote no.
Thank you.
