2019 Legislative Session  AFA | Leading the Way

2019 Legislative Session

Sine Die

May 1, 2019

 

Following a blue sweep in the November election, Democrats arrived in Olympia eager to pass policies for which they were previously unable to muster sufficient votes. Since 2013, bipartisanship had been a necessity for bill passage, as the partisan makeup of both chambers were within a few votes.  Not this session. In the House, Democrats lead 57-41. In the Senate, Democrats lead 28-21. A number of moderate legislators who were known to cross the aisle and join with the other party lost in November, leaving more deeply divided chambers leaning strongly to the left. During this session Republicans have no longer possessed the votes to stop Democratic policy, revenue, budget proposals, or to hear, much less pass, legislation reflecting much of their ideology and agenda. Without the need to band together against the Republicans, Democrats had greater opportunity to disagree with each other and were still able to pass a bold populist agenda addressing climate change, education, gun responsibility, sexual assault prevention, orca protection, health care, homelessness, and behavioral health.

 

With just two hours before the midnight deadline of the 66th legislature, many insiders were certain a special session was inevitable with such a great number of contentious items left to pass. At a little over an hour to spare, legislators reached agreements and bills began racing between the chambers.  The 2019 legislative session was adjourned at midnight exactly.

 

The bill threatening a special session, SB 5313 sponsored by Senator Lisa Wellman, was the divisive Levy Lid Lift policy. Negotiated as part of the McCleary fix, advocates said the return to additional local levy monies was necessary to prevent imminent widespread school district lay-offs. Critics claimed the lift would create inequality between wealthier suburban districts and those unable to pass a levy. Late Sunday night, legislators reached agreement to lift the lid, strip Senator Guy Palumbo's amendment funding charter schools, and create penalties if a district uses levy funds for basic education.  Other policies that were part of this agreement include retroactively exempting the names of participants in the bump stock buy-back from public record and using a portion of the vape tax to fund the Andy Hill cancer research center.

 

Earlier in the evening, the legislature passed Initiative 1000, allowing the state to use affirmative action to address discrimination or underrepresentation by race, gender, sexual orientation, disability, and veteran status, so long as those factors are not the sole qualifying reason for choosing an otherwise less-qualified applicant. After the Senate vote was taken, angry voices from anti I-1000 Asians for Equality could be heard shouting "Vote them out!" and "Let the people vote!" The opponents have already filed a referendum.

 

Coming into session, legislative Democrats and Governor Jay Inslee recommended a variety of plans to raise revenue. In the final weeks of session, it became evident the proposed capital gains tax lacked adequate votes in 2019. Whereas the Senate planned to use a capital gains revenue to fund tax cuts for seniors and low to middle income families, the House included it in their budget and scrambled to find other revenue sources. Another bill which failed to gain support was SB 5996, sponsored by Senator Kevin Van De Wege, which would have created a fund for wildfire prevention and suppression through tax increases on insurance companies.

 

In these last days, the legislature did pass a number of other bills to total $830 million dollars in new revenue in the 2019/21 biennium including:

 

  • SB 5997, sponsored by Senator Christine Rolfes (D-Bainbridge), converts the nonresident sales tax exemption to a remittance program and will raise $54 million in the 2019/21 biennium. This will largely impact Oregon residents shopping in Vancouver.

 

  • HB 2167, sponsored by Representative Gael Tarleton (D-Ballard), increases the B&O tax paid by financial institutions with an annual net income of at least $1 billion, adding a 1.2% surcharge raising $133 million in the 2019/21 biennium. Because the surcharge from HB 2158 will also be applied, B&O rates for large banks will double, rising from 1.5% to 3%.

 

  • HB 2158, sponsored by Representative Drew Hansen (D-Bainbridge), applies a 20% B&O surcharge on income from approximately 80,000 service businesses such as lobbyists, engineers, accountants, doctors, and lawyers; a 33.33% B&O surcharge on income from advanced computing businesses with revenue of more than $25 billion but less than $100 billion; and a 66.66% B&O surcharge no advanced computing businesses like Microsoft with revenue of more than $100 billion. It will raise $380 million in the 2019/21 biennium to provide tuition-free public college and apprenticeships for families earning less than $50,000 per year, and partial scholarships for families earning up to the state's median income.

 

  • HB 1873, sponsored by Representative Gerry Pollet (D-Seattle), places a high excise tax on vape products, raising $28 million in the 2019/21 biennium to fund foundational public health and a cancer fund named after the late Senator Andy Hill. Many vape product retailers have claimed the cost involved will cause stores to close.

 

  • SB 5998, sponsored by Senator Joe Nguyen (D-West Seattle), applies a graduated Real Estate Excise Tax to raise $244 million in the 2019/21 biennium. For homes sold for less than $500,000, REET will be reduced. For homes sold above $1.5 million, REET will be increased.

 

  • SB 2004, sponsored by Senator Christine Rolfes (D-Bainbridge), removes the tax preference for travel agents and tour operators to raise $5 million in the 2019/21 biennium. Supported by Expedia, many travel agents warn they will close their doors.

 

 

 

The $52.4 billion Operating Budget spends an additional $2 billion, 17% more than the last biennial budget to fund Democratic priorities including:

 

  • $3.9 billion to maintain current K-12 funding, including salaries and cost of living increases

  • An additional $155 million for special education

  • An additional $460 million for school employee benefits

  • $451 million for state employee salary increases and health care benefits

  • $280 million for behavioral health

  • $10.3 million towards the backlog of 10,000 untested rape kits

  • $35 million for high level foster care providers

  • $83 million to increase rates paid to state supported childcare providers

  • $45.5 million for wildfire prevention and suppression

  • $41 million for homelessness

 

 

The Low Carbon Fuel Standard, a priority for Governor and presidential candidate Jay Inslee ultimately failed in the last week of session. A last-ditch effort to pass SB 5971 sponsored by Senator Reuven Carlyle, was heard in Ways and Means on Friday, where both industry and the environmental community turned out to oppose. In addition to the many other climate wins this session, presidential candidate Jay Inslee will look forward to campaigning on passage of "Cascade Care," a public option health insurance policy that directs the state to contract with private insurers to provide plans on the individual market with the state capping reimbursement rates for providers at 160% of the Medicare rate. The plan is designed to aid the 4% of insurance customers shopping for a policy on the state exchange who neither receive workplace insurance benefits nor qualify for subsidized plans. The consumer costs for these plans have increased by double digits each of the past few years. Inslee says he is "hopeful that this can be an example for the rest of the country," but the Washington State Medical Association has warned their members will not participate, dramatically limiting patient access to care. The plan does is also opposed by the Washington State Hospital Association and Kaiser Permanente.

 

Finally, before adjourning, both sides of the aisle recognized the work of outgoing Speaker of the House Representative Frank Chopp (D-Seattle) on Sunday evening. House Democrats announced on Wednesday, April 24th that they will delay the election of a new Speaker until the summer, easing tensions within the caucus. Speaker Frank Chopp (D-Seattle), the longest reigning Speaker in the United States will step aside a few days after Sine Die, at which point Speaker Pro Tem, Representative John Lovick (D-Mill Creek), will temporarily assume duties of Speaker. A number of people are rumored to be interested in the position, including Representatives June Robinson (D-Everett), Monica Stonier (D-Vancouver), Laurie Jinkins (D-Tacoma), Gael Tarleton (D-Ballard) and John Lovick (D-Mill Creek).  Chopp has said he will return to status as a rank and file member after serving twenty years as Speaker.

Submitted by Trent House

Week 14

April 23, 2019

"Will we finish on time?" is the big question on the legislative campus this week.  Moods swing daily between optimism and doom. While most lawmakers returned home for the weekend, budget negotiators remain behind aiming to produce an agreement on revenue and spending that can muster sufficient votes in one week.

 

Wednesday, April 17th was the last day to pass a bill off the floor of the opposite house. On floor cut-off days, anticipation surrounds the bill each majority caucus will choose to be their Special Order of Business, the last bill they will advance just prior to the 5pm cut-off. The Senate Democratic Caucus picked HB 1638, the ever-controversial MMR vaccine exemption bill sponsored by Representative Paul Harris (R-Vancouver). Seeing it was next on the order of consideration, the Senate Republican caucus engaged in procedural efforts to run down the clock by proposing other bills for immediate consideration, calling for roll call votes, and challenging the Lieutenant Governor. With minutes to spare, Senate Democrats pulled HB 1638 and chose a different bill for the Special Order. After the dinner break, Senate Democrats brought HB 1638 back and worked long into the night to pass it. This bill will certainly be an acrimonious topic of conversation long past the pending concurrence and signature. The bill is to be implemented 90 days after signing. 

 

On Tuesday, April 16th, the Senate passed HB 1087 sponsored by Rep. Laurie Jinkins (D-Tacoma), establishing the Long-term Care Services and Supports Trust Program. Washington is the first state in the nation to establish an employee-paid insurance benefit to off-set the costs of long-term care. The program will provide up to $36,500 in lifetime benefits for eligible beneficiaries.  These benefits could be applied to the cost of long-term care including things like installation of a wheel-chair ramp, rides to the doctor, delivered meals, or reimbursement to unpaid family caregivers.  To fund this, all employees who work at least 10% of a full time work schedule in Washington will automatically receive a 0.58% payroll deduction starting in 2022. An employee earning $50,000 per year would pay approximately $24 per month, subject to premium increases. Advocates say this fills a need for working people who will not otherwise be able to afford long term care. Critics call it a $1 billion payroll tax on employees who have not indicated they want such a program. The bill awaits concurrence.

 

On Wednesday, April 16th the Senate passed HB 1196 sponsored by Representative Marcus Riccelli (D-Spokane), appealing to Congress to implement Pacific Daylight Savings Time year-round. The Oregon Senate has passed a bill that awaits confirmation in their House, and California voters approved a referendum last fall pending implementation by the California Legislature. Leaders in British Columbia are also said to be considering a change. Supporters point to benefits of making the switch, including a potential 20% reduction in crime, particularly among juveniles. The current treatment of Daylight Savings Time is not a benefit to either agriculture or energy conservation. Rather, it dates back to a fuel saving measure implemented by Kaiser Wilhelm during World War 1.

 

On Thursday, April 18th former Governors Dan Evans (R), Gary Locke (D), and Christine Gregoire (D) testified before a joint House and Senate committee in support of Initiative 1000, an initiative to the Legislature. I-1000 would replace the 1998 voter-approved ban on affirmative action, I-200. That initiative, led by former Republican gubernatorial candidate John Carlson, banned race or gender-based government discrimination or preferential treatment in public employment, education, and contracting thus outlawing affirmative action. If passed, the initiative would again allow the state to use affirmative action to address discrimination or underrepresentation by race, gender, sexual orientation, disability, and veteran status, so long as those factors are not the sole qualifying reason for choosing an otherwise less-qualified applicant. The initiative also creates a Governor's Commission on Diversity, Equality and Inclusion responsible for monitoring and enforcing state compliance.

 

Supporters of I-1000 are numerous and include past and current Democratic public officials, the labor community, the NAACP, El Centro De La Raza  and the King County council. These advocates suggest I-1000 helps to level the playing field for people affected by generations of prejudice. Opponents include John Carlson, Tim Eyeman, and Ward Connerly, a former University of California regent who has led anti-affirmative action efforts in several states since the 1990s. Joining them in opposition were Asians for Equality, a group charging I-1000 will promote discrimination against the Asian community by supporting other minority groups they allege are less qualified for opportunities including college admissions .

 

The Legislature may approve, reject, or pass an alternative policy. If they reject it or take no action during session, it will automatically go to the fall ballot. The legislature could also suggest an alternative which would be featured on the ballot along-side I-1000. Either of these situations will likely make for voter confusion with both sides alleging discrimination.

 

Non-compete clauses have been a priority of the Labor Community for a decade. On Wednesday April 17th, HB 1450, sponsored by Representative Derek Stanford (D-Bothell) and championed by Sen. Marko Liias who sponsored the Senate companion, finally passed both chambers. This bill prohibits non-compete restrictions for workers earning up to $100,000 per year, restricts non-competes for longer than 18 months, and prohibits employers from subjecting low-wage workers to moonlighting restrictions. Proponents of the bill point to how the broad use of these types of agreements make it impossible for some workers to find work after leaving their employment.  The final bill was an agreement negotiated over the last two years between businesses and worker advocates. 

 

The #MeToo movement, and the subsequent removal of several legislators from office, has shined a bright light on sexual harassment and violence, even in the marble halls of Olymia. This year, the Washington State Legislature passed an unprecedented wave of bills to address these issues including, HB 1692, sponsored by Representative Laurie Jinkins (D-Tacoma) and HB 2020, sponsored by Representative Laurie Dolan (D-Olympia) protecting agency and legislative employees who make claims or witness workplace sexual harassment or stalking from public disclosure;  HB 2018, sponsored by Representative Melanie Morgan (D-Tacoma) prohibiting sexual harassment and discrimination by legislators and legislative branch employees under the Ethics Act;  SB 5861, sponsored by Senator Manka Dhingra (D-Redmond) directing the Public Disclosure Commission to create and require a training course for lobbyists on the legislative code of contact; HB 1056, sponsored by Representative Gina Mosbrucker (R-Goldendale) creating a Joint Legislative Task Force on domestic violence and workplace resources to identify the role of other workplaces in helping to curb domestic violence; SB 5258, sponsored by Senator Karen Keiser (D-Kent) protecting isolated workers from sexual assault and harassment by requiring certain employers of isolated workers adopt sexual harassment policies, provide sexual harassment to all staff and supervisors, and provide panic buttons to staff workers who work alone or without other employees present in the area.

 

Monday April 15th was the last day for presidential campaigns to release first quarter totals for fundraising and available funds to the Federal Election Commission.  Inslee for America revealed this week it has raised over $2.25 million since Washington's governor announced his candidacy on March 1. His campaign boasts 75% of contributions are $25 or below and 95% of donations are $100 or under. In these short months ahead of the June debates, Inslee has more cash available than Julian Castro and Andrew Yang ($1.1 and $1.7 million respectively) but trails Harris ($12 million), O'Rourke ($9.4 million), Buttigieg ($7 million), Warren ($6 million), and Gillibrand ($3 million). In the first quarter, Bernie Sanders raised $18.2 million, 84% from contributions under $200. Combined with transfers from prior campaign accounts, he has more than $26 million available. Incumbent President Donald Trump reported raising $30 million January through March, giving him $40 million, more than a year and a half before election day. 

 

Inslee, who on CNN last week he "will make defeating climate change the No. 1 priority of the United States," celebrated several more legislative wins this week.  Last week, the environmental community successfully passed SB 5116 sponsored by Senator Reuven Carlyle (D-Queen Anne) requiring all electric utilities in Washington to transition to a 100% carbon-neutral electricity supply by 2030 and to 100% carbon-free electricity by 2045. This week, the Senate passed HB 1112 sponsored by Representative Joe Fitzgibbon (D-West Seattle) directing the Department of Ecology to issue rules phasing out refrigeration gases, as well as HB 1444 sponsored by Representative Jeff Morris (D-San Juan Islands) which sets tighter energy-efficiency standards for appliances including electric water heaters, computers, and computer monitors. Also passed in the Senate was HB 1257 sponsored by Representative Beth Doglio (D-Olympia) a "green buildings" bill that sets an efficiency performance standard for large commercial buildings. All await concurrence.

 

Attorney General Bob Ferguson expressed frustration this week that the legislation to abolish the death penalty in statute has hit a wall for this session. SB 5339, request legislation from Attorney General Ferguson, would replace the death penalty for those convicted of aggravated first-degree murder with life in prison without the possibility for parole. This would codify statute with the October 2018 Washington State Supreme Court decision that found the death penalty law to be unconstitutional. House Leadership has said that though the Attorney General provided "considerable support," the "death penalty is illegal at this time" and delaying SB 5339 in order to prioritize other bills would not cause any harm. Sponsor Senator Reuven Carlyle, boldly joined Ferguson in blaming Speaker Frank Chopp (D-Seattle), saying "This decision rests squarely and unequivocally on the desk of the Speaker. It's his choice, his decision, and his silence has been deafening." Other lawmakers pointed to cutoff week decisions to prioritize floor time to other priorities.  If the bill had become law, legislators would not have been able to amend the death penalty statute.

 

 

 

April 28, 2019

Last day allowed for regular session under state constitution.

* After the 94th day, only initiatives, alternatives to initiatives, budgets and matters necessary to implement budgets, matters that affect state revenue, messages pertaining to amendments, differences between the houses, and matters incident to the interim and closing of the session may be considered.

 

Submitted by Trent House

Week 13 - 14

April 15, 2019

The Washington State Legislature is working especially long hours this week.  Wednesday, April 17th is the deadline for policy bills to be passed off the floor in the opposite house. In the last 5 days, a number of priority bills including bills protecting the environment, working families, gun responsibility and victim protection and public safety have passed in their respective chambers.  After Wednesday, the House and Senate will take concurrence votes and be focused on negotiating the budgets.  

 

This is also the point in session when title-only bills are introduced to hold the place in the process for bills yet to come, and the caucuses reach for seldom-used procedural rules to resurrect bills that are struggling to survive. 

 

This occurred twice last week, once on a yet-to-be-agree-on bill on data privacy in House Appropriations and again on the Senate floor, when majority Senate Democrats brought to the floor HB 1575 sponsored by Representative Monica Stonier (D-Vancouver). This bill is a top priority for labor as a response to the 2018 Janus ruling in the United States Supreme Court. In that case, the court ruled that public-sector employees cannot be compelled to financially support unions, including fees paid by nonmembers for collective bargaining.  HB 1575 modifies how public-sector employees can join or leave unions and protects unions from liability from collecting past fees. Supporters say the bill will help ensure that public-sector employees are aware of their union's benefits before opting out. Critics argue the bill sidesteps the Janus ruling by making it easier to join a union, but more difficult to leave. On Thursday, Senate Republicans delved into the rules to express their strong opposition to this bill. The Senate rules state that when a bill is placed on second reading, it should be read in its entirety. In practice, the Secretary of the Senate will read a few lines before the President cuts him off and instructs to skip to the last line. Minority Leader Senator Mark Schoesler (R-Ritzville) asked HB 1575 be read in its entirety, which took several readers 40 minutes to perform. After the next 90 minutes of amendments, minority Floor Leader Senator Shelly Short (R-Addy) denied suspension of the rules, forcing the bill to be set aside. It did ultimately pass the next day 25-21. 

  

This week Senate Democrats brought the Capital Budget $3 billion bond bill, HB 1101, to the floor.  This bill takes a supermajority to pass and it became immediately clear that Republicans would not give the votes needed to pass the bill. Customarily, the capital bond bill comes to a vote after the capital budget is agreed upon in the very last days of session. The bill passed unanimously out of the House, but Senate Republicans admit they need to preserve their only leverage and will only vote for it after they have agreed on a capital budget. HB 1101 failed to garner the required constitutional majority and will be reconsidered.

 

Governor Jay Inslee is on the presidential campaign trail again this week, commanding between 0-1% in Democratic primary polls. Earning 1% in three approved polls has now qualified him for the June debates alongside household names like Biden, Sanders, Harris, O'Rourke, and Buttigieg. Governor Inslee has remained discreet about his fundraising status, but leading candidates polling as high as 39%, have released impressive first quarter fundraising totals.

 

Inslee has made climate change the focus of his campaign, pointing to Washington state as a model for the country. The success of his climate agenda this session is critical and received a big boost this week. The Governor's clean energy request legislation SB 5116 sponsored by Senator Reuven Carlyle (D-Queen Anne) passed the House on April 11th and will now return to the Senate for concurrence. The bill requires all electric utilities in Washington to transition to a 100% carbon-neutral electricity supply by 2030 and to 100% carbon-free electricity by 2045. This legislation passed the House on party lines with one Democrat crossing the aisle to oppose.

 

Inslee has also advertised the publication of his first two books this week; for adults he has produced "Apollo's Fire -  A great look at how to ignite America's clean energy economy to defeat climate change"; and for children "Elvis and the Elves - the story of Elvis' attempts to get his friends to help stop the coal smoke before their snowman friend, Sammy, melts into nothing."

 

SB 5323, the statewide plastic bag ban sponsored by Senator Mona Das (D-Kent) continues to advance. To provide fairness between small independent grocers and large chain grocers, a store must charge an 8-cent taxable pass-through fee for paper or thick plastic bags. Environmentalists hope the statewide ban will help keep single use plastic bags out of the ocean and recycling stream. Grocers look forward to statewide conformity preempting local government ordinances. The paper industry contends a paper bag fee will lead to a decreased demand for bags that will in turn hurt rural pulp and paper jobs. The bill has been passed out of the House Rules committee and is ready for a vote on the house floor. 

 

The capital gains discussion continues in Olympia. Until now, opinions on the proposed capital gains tax could be divided into three general camps: House, Senate, and opposition. The House calls their capital gains proposal the "Extraordinary Profits Tax." This 9.9% tax on capital gains above $100,000 for individuals and $200,000 for joint filers funds the budget. The Senate version, the "Fix our Tax Code Plan" calls for an 8.9% tax on profits of capital-gains earnings above $250,000 for individuals and joint filers. The Senate plans to use this new revenue to provide tax cuts for working families, small businesses, senior property owners, and to eliminate the sales tax on items such as diapers and OTC medications. Then of course are the opponents of the capital gains tax proposals altogether. 

 

When the Senate proposal (5961) was heard in the Senate Ways & Means Committee on Monday, a fourth camp turned out to support the concept of a capital gains tax: the Washington Education Association and Washington Paramount Duty, the parent organization formed to demand school funding in the McCleary era. They brought a new message; pass a capital gains tax to fund education. Cue the heated division between education advocates and supporters of the already proposed Senate spending. 

 

This is not an entirely new idea. In October, Superintendent of Public Instruction Chris Reykdal pitched an 8% capital gains to raise $1 billion annually, half of which would replace and buy down the state property tax by 35 cents per $1,000 of assessed valuation in hopes of uncapping the levy lid for districts. His proposal used a much lower threshold than the House and Senate plans. Single filers who make more than $25,000 from capital gains annually or couples who make over $50,000 would pay tax on the gains. The other half of the revenue would fund other K-12 priorities including special education, career and technical education, professional education, school nurses and counselors, and expanded learning opportunities.

 

Submitted by Trent House, AFA Lobbyist

Week 11 Recap & Bill Tracker

April 2, 2019

With one month remaining in the legislative session, we have now entered budget time. In the coming weeks, the Senate and House must find agreement between their budget proposals.

Senate budget writers rolled out their Operating Budget last Friday. The Operating Budget was heard Monday and put to a floor vote later this week. The proposal, SB 5153, is a $52.2 billion plan, a $7.5 billion increase over the last biennium. 

Whereas the House proposes $2.36 billion in new spending, the Senate comes out to approximately $1.6 billion in new spending. Like the House proposal, Senate budget writers include major investments in education and behavioral healthcare.  And like the House writers, Senate Democrats say additional revenue will be needed to fund tax cuts in SB 5961 which creates a "Working Families Tax Credit," tax reductions for small business, senior property tax reductions, and the elimination of sales tax on items such as diapers and OTC medications. 

To pay for it, the Senate unveiled their own $780 million capital gains tax (SB 5961). The revenue plan also includes an $878 million graduated Real Estate Excise Tax (SB 5991). And like their House counterparts, Majority Democrats propose the elimination of tax preferences for nonresident sales tax and travel agents/tour operators in SB 5997 ($133.7 million), and drug resellers in SB 5998 ($78.7 million). To fund wildfire prevention and fire suppression, SB 5596 calls for a tax increase on property auto and casualty insurance from 2-2.5% ($90.6 million). These proposals have not yet been scheduled for public hearing. 

Also last week, Senate budget writers released their proposed $4.6 billion Capital and $10 billion Transportation plans.

House budget writers rolled out their budget plans on last Monday. In their version, the 2019/20 Operating Budget (HB 1109) spends $52.811 billion, an 18.2% increase over the last biennial budget. Of the $8.150 billion increase, $5.834 billion maintains current services and $2.316 billion will fund new policies and new/increased spending that includes behavioral health, homelessness and housing, orca recovery, and collective bargaining agreements. The budget was quickly heard in committee and passed the floor in a party line vote last Friday night.

Though current revenue exceeds expectations by $5.565 billion, House Democrats say it will not be enough to maintain current spending associated with McCleary and have proposed a three-legged tax plan. The first leg is a graduated capital gains tax (HB 2156), termed the "Extraordinary Profits Tax." The second leg is the end of tax preferences for travel agents and tour operators, bullion, and replacing the out-of-state sales tax exemption with an opportunity for refund after sale (HB 2157).

The third leg will affect far more people across the state. In order to provide post-secondary education for students of families earning less than $60,000 per year, HB 2158 applies a 20% B&O tax surcharge on businesses in nearly every field (HB 2158) including engineering, architecture, legal services, insurance carriers, financial services, medical services, software publishing, scientific research, internet shopping, and telecommunications. If a business is likely to be/hire an employee that is highly skilled with a post-secondary education, the B&O tax is almost certainly subject to an increase from the current 1.5% to 1.8%. The bill also imposes a 33.3% B&O tax surcharge on the income from service and other activities for advanced computing businesses with worldwide gross revenue between $25-100 billion. Advanced computing businesses with worldwide gross revenue of over $100 billion. There are two Washington businesses that fit this description, Microsoft and Amazon. Microsoft is supportive, Amazon is not.  Both would be levied with a 66.66% B&O tax surcharge. This drew considerable attention in the House Finance Committee on Friday and is expected to receive executive action next week.

March 22-28

The Washington State Patrol announced this week they will need to double the size of Governor Jay Inslee's security team on account of his presidential bid. The cost will be more than $4 million over the next two years if he remains in the race. Should he drop out prior to the start of a new fiscal year in July, the cost will be reduced to $1.5 million. Inslee has rejected the idea that his campaign should pay, saying every governor is entitled to State Patrol protection whether for official or political business. Pursuant to Federal Election Commission rules, his campaign is paying for rental cars and use of state vehicles for campaign purposes both inside and outside of the state. To become eligible for the first of the DNC debates in June, Inslee must either receive 65,000 donations from individuals including donations from at least 20 states or earn at least 1% in polling at either the national level or in the four early primary states: New Hampshire, Iowa, Nevada, and South Carolina.

HB 1074, sponsored by Representative Paul Harris (R-Vancouver) is on its way to Governor Inslee for signature. This bill makes Washington the 9th state to raise the smoking age from 18 to 21. Selling either vape or tobacco products to a minor will result in a gross misdemeanor. While public health advocates celebrate, retail advocates have expressed concern over the impact of smokers who will no longer purchase other items when they stop for a pack of cigarettes. The bill received bipartisan support with two Democrats (Salomon and Hasegawa) joining ten Republicans in opposition. Loss of tobacco and vape sales to 18, 19, and 20-year-olds will cost the state $8.9 million in tax revenue in the 2019/20 biennium. Public health advocates say preventing young people from smoking will save the state millions per year in healthcare costs.

 

Majority Democrats have taken action to preserve elements of the Affordable Care Act in Washington, regardless of changes at the federal level. Sponsored by Representative Lauren Davis (D-Shoreline) and Senator Annette Cleveland (D-Vancouver) HB 1870 and SB 5805 will prevent health insurance plans sold in Washington from rejecting/limiting/denying coverage for people with pre-existing conditions. The bills also prevent plans from dropping plan members from coverage and applying an annual or lifetime limit on a variety of services. Votes in both the Senate and House were on party lines. An amendment to apply an emergency clause was added in the Senate, so the House will confer before it is sent to Governor Inslee for a signature.  At the moment of signature, the bill will be in effect.

Budget and Revenue Forecast Update

March 25, 2019

 

In the first year of the biennium (odd-numbered years), the Washington State Legislature passes three budgets, Operating, Capital, and Transportation. The Operating Budget funds ongoing state activity and is written by the House Appropriations and Senate Ways & Means Committees. The Capital Budget is written by the House Capital Budget Committee and Senate Ways & Means, funding construction in areas such as public schools, parks, prisons, affordable housing, and environmental clean-up. The Transportation Budget is written by the Transportation Committees in each chamber and is largely user-funded with gas taxes, permits, and other licensing fees. In the second year of the biennium (even-numbered years), the Legislature passes three supplemental budget bills.  These bills make adjustments to the original budgets based on new information, updated assumptions or unforeseen events. 

Operating Budget

Written by: the House Appropriations and Senate Ways & Means Committees

Funds:

• Ongoing state activity

Capital Budget

Written by: the House Capital Budget Committee and Senate Ways & Means Committees

Funds:

Construction in areas such as:

  • Public schools

  • Parks

  • Prisons

  • Affordable housing

  • Environmental clean-up

Transportation Budget

Written by: the Transportation Committees in each chamber

Funds:

Programs such as:

  • Ferries Operating

  • Highway Maintenance

  • Public Transportation

  • Rail Operating

In odd-numbered years, the House of Representatives introduce their budgets first and the Senate follows.  In even-numbered years, the Senate begins the process and the House follows. The budgets are negotiated and passed late in the session and then shuffled between the chambers for amendments and concurrence before arriving at the Governor's desk. The Governor may issue line item vetoes rather than vetoing an entire budget bill. A 2/3 majority in each chamber is required to override such a veto.

 

While the Office of Financial Management releases the Governor's budget in December prior to the start of the biennium, majority party House and Senate budget writers wait until after the formal release of the Spring revenue forecast before releasing their proposals. Washington is unique in its approach to revenue forecasting. The forecast is nonpartisan and is used for budget preparation by both the executive and legislative branches. The work is guided by Washington State Chief Economist Stephen Lerch Ph.D. and the Economic and Revenue Forecast Council, made up of State Treasurer Duane Davidson (R), Senate Ways & Means Chair Senator Christine Rolfes (D-Bainbridge) and Ranking Member Senator John Braun (R-Chehalis), House Finance Ranking Member Ed Orcutt (R-Kalama), House Appropriations Chair Timm Ormsby (D-Spokane), Office of Financial Management Director David Schumacher, and Department of Revenue Director Vikki Smith.  Revenue forecasts are to be submitted to the Governor and Legislature on or before March 20th, June 27th, and September 27th in odd-numbered years. In even numbered years, they are submitted on prior to November 20th and February 20th.

 

March 22, 2019, the Economic and Revenue Forecast Council announced state revenues will continue to grow through mid-2021. Projections show an increase of nearly $307 million for the current cycle ending June 30th, and $554 million for the next two-year cycle. In total, this is an increase of roughly $860 million more than was previously expected, bringing the state budget to $50.6 billion. Senate Ways & Means Ranking Member Senator John Braun (R-Chehalis) suggested this increase is proof that no new revenue is needed. House Appropriations Chair Representative Timm Ormsby (D-Spokane) disagreed, claiming the budget growth will not adequately address current funding levels or the education investments promised in the resolution of the McCleary court case. 

 

In addition to the strong tax collections announced on Wednesday, budget writers also received favorable news regarding the state's current caseload obligations.  

 

Democrats have for months planned to raise additional revenue through closure of tax preferences, a capital gains tax, modifying the REET (real estate excise tax), a broad B&O increase across all taxpayers or a specific B&O increase limited to service sector taxpayers. In order to accomplish the stated need of approximately $1-$1.5 billion in additional revenue, it is likely to require budget writers to use a combination of these revenue streams to satisfy their needs. 

 

 

The House will releases its budget Monday, March 22, 2019.

Submitted by Trent House

Recap March 4-9

March 9, 2019

 

The Washington State Legislature has reached the halfway point in the 2019 session.  Lawmakers have until 5 p.m. Wednesday, March 13 to pass bills off the floor of their respective chambers, excluding bills that are deemed necessary to implement the budgets.

 

The state fiscal forecast is likely to occur on March 20th, after which the House and then the Senate will release their budget proposals. The House operating budget is expected to rely on new revenue from a capital gains tax, an escalating real estate excise tax, or perhaps a B&O tax increase.

 

Senate Transportation Chair Steve Hobbs (D-Lake Stevens) held a hearing Thursday on the $16.6 Billion 10-year transportation funding plan he calls “Forward Washington.”

 

The package is made up of three bills:

  • SB 5970 authorizes the sale of $5 billion of general obligation bonds for transportation funding

  • SB 5971 outlines the 20 different sources of revenue for the transportation fund

  • SB 5972 details the specific projects to be funded.

 

As it stands now, the Forward Washington plan will tackle 80 transportation and environmental projects over the next ten years. Priority projects include:

  • the I-5 bridge replacement in Vancouver

  • rebuilding the US 2 trestle

  • widening several state routes

  • storm water retrofits and improvements

  • $3.5 billion of the proposed spending is slated for the removal and replacement of fish culverts throughout the state

  • $1.67 billion would go toward the electrification of Washington State Ferry vessels and terminal construction

 

Funding for these projects would come from a variety of sources, but the largest portion would come from a new “carbon pollution fee” equal to $15 per metric ton of carbon dioxide starting July 2020. Unlike recent attempts to pass carbon fees in Washington, this proposal does not progressively increase the fee. The carbon fee would bring in approximately $7.88 billion over the 10-year plan. Also making up a significant portion of the funding is an additional 6 cent per gallon gas tax which is expected to bring in $2.2 billion. Additional funding would come in the form of increases to vehicle weight fees, auto parts sales and use tax increases, additional electric vehicles fees, and assessed value transportation impact fees.

CUT OFF DATES

March 13, 2019

Last day to consider (pass) bills in house of origin (5 pm).

April 3, 2019

Last day to read in-committee reports (pass bills out of committee and read them into the record on the floor) from opposite house, except House fiscal committees and Senate Ways & Means and Transportation committees.

April 9, 2019

Last day to read in opposite house committee reports (pass bills out of committee and read them into the record on the floor) from House fiscal committees and Senate Ways & Means and Transportation committees.

April 17, 2019*

Last day to consider (pass) opposite house bills (5 pm) (except initiatives and alternatives to initiatives, budgets and matters necessary to implement budgets, differences between the houses, and matters incident to the interim and closing of the session).

April 28, 2019

Last day allowed for regular session under state constitution.

* After the 94th day, only initiatives, alternatives to initiatives, budgets and matters necessary to implement budgets, matters that affect state revenue, messages pertaining to amendments, differences between the houses, and matters incident to the interim and closing of the session may be considered.

 

Submitted by Trent House Government Relations

ADDRESS

925 4th Ave, STE 2000

Seattle, WA 98104

WATR Center

3008 100th St SW

Everett, WA 98204

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