Sad news on the passing of Senator Ramos

Sudden News on the passing of Senator Ramos
Starting the weekly report with some very sad news.  After a full day of voting on the Senate floor on Saturday, Sen. Bill Ramos passed away unexpectedly while out on a trail run Saturday night. Sen. Ramos represented the 5th legislative district which is the Kirkland/Issaquah area.

With one week to go, the tax debate takes center stage
There is one week left in Washington’s legislative session, with sine die adjournment set for Sunday, April 27^th. Lawmakers have two primary objectives this week: reaching final deals on the operating, transportation, and capital budgets, and revenue bills necessary to support them, and ironing out differences between the House and Senate on priorities that passed both chambers in different forms. Both chambers were on the floor Saturday, with the Senate passing its major tax bills and the House debating smaller budget bills and concurring on Senate amendments. Governor Ferguson made news again this week casting doubt on the sustainability of the latest $13 billion tax package House and Senate Democrats announced on Tuesday, although without providing specific guidance of his own. This has led some insiders to speculate whether the “three corners” can finish the budget this week without the need for a special session. In the meantime, the Governor has signing various bills as they have been passed to his desk. Bills delivered to the Governor more than five days before the session adjourns have five days in which to be signed, while bills delivered fewer than five days before adjournment have twenty days to be signed, excluding Sundays. Unless they contain an “emergency clause,” or contain a specific date of their own, signed bills go into effect 90 days after adjournment of the session, July 27^th.  

Top updates and issues from the fourteenth week, and upcoming activity, include:

Budget & Taxes
As reported mid-week, House and Senate Democrats on Tuesday announced a new $13 billion tax package to support a forthcoming operating budget deal. These taxes included the “Tesla tax” on zero-emission vehicle credits (HB 2077 / SB 5811), the property tax lid lift for K-12 education (HB 2049 / SB 5812), a capital gains and estate tax expansion (HB 2082 / SB 5813), increased B&O rates and surcharges (HB 2081 / SB 5815), a sales tax on certain services along with new taxes on non-tobacco nicotine products and a one-time pre-payment of sales taxes in 2026 (HB 2083 / SB 5814), a repeal of certain B&O tax preferences, (SB 5794), and increased alcohol taxes on beer, cider, and wine (HB 2079). The Senate heard several of their tax bills on Wednesday in Ways & Means, and voted out the B&O preferences repeal, the capital gains increase, the sales tax on services, and a resurrected “wealth tax” (SB 5797) on intangible assets valued above $50 million at a rate of .34 cents per $1,000. The new, more modest wealth tax, with revenue dedicated to the education legacy account, appears aimed at avoiding the Governor’s opposition to the original plan and setting up the concept for a legal challenge to determine its constitutionality. The House, meanwhile, heard their bills Friday in Finance and on Saturday morning voted out of committee the B&O increase, the “Tesla tax,” an increase in B&O for storage units, precious metals and bullion (HB 2084), and the increase in property tax growth limit. During floor action Saturday, the Senate debated amendments and passed the sales tax on services, nicotine products, and pre-payment of sales tax bill, the repeal of tax preferences bill, and the capital gains and estate tax increase.

Transportation
Progress continues on the transportation budget and revenue package, but few details have been made public. An announcement is expected by Tuesday, as SB 5801, the transportation revenue bill, has been scheduled for hearing in the Senate Transportation Committee, with a committee vote scheduled for Wednesday. The transportation budget for the upcoming biennium is tied to the operating budget to a higher degree than usual, particularly with respect to a potential sales tax transfer, so fluidity in the operating budget talks is also at play in a transportation deal. In that regard, on Saturday, the Senate passed SB 5802, moving 0.1 percent of the state sales tax to the transportation budget, on a 39-9 vote. Earlier, on Friday, the House passed HB 1958 on a 61-35 vote, providing $2.5 billion in bonding authority for the I-5 bridge replacement between Washington and Oregon. SB 5804, authorizing issuance of up to $5 billion in bonds for fish passage projects, offset by new and increased taxes on light and power utilities, while possibly considered necessary to implement the budget and exempt from cutoffs, hasn’t moved since early April and appears sidelined for the session.

Capital Budget & Construction
While the Senate has passed its $7.3 billion capital budget plan two weeks ago, the House has yet to act on their somewhat similar $7.6 billion proposal. Differences will have to be worked out this week. In remaining bill action, HB 1970, streamlining contracting options for the Department of Transportation, passed the Senate 48-1 on Wednesday with amendments that end it back to the House for concurrence. HB 1183 on building code and development regulation reform, passed the Legislature on Monday, as the Senate approved it on a 28-21 vote. HB 1217, imposing rent control on residential units, passed the Senate Thursday evening 29-20, with heavily debated amendments adopted lifting the cap from 7 percent to 10 percent plus inflation, and exempting single family homes not owned by a corporation. It is before the House for concurrence or dispute, and housing groups are putting significant pressure on the House to strip the Senate amendment.

 

Labor & Employment

Among remaining major bills, SB 5041, providing unemployment insurance benefits to workers on strike is still before the Senate on a decision whether to concur in House amendments that limited the amount of benefits to four weeks. Senate Democrats are under pressure from unions to strip the amendment and go back to twelve weeks of benefits. HB 1213, substantially expanding job protection benefits in the state’s paid family and medical leave insurance program to workers of smaller employers, passed the Senate 28-20 on Tuesday with an amendment stepping down the size of employer who must hold a job open while their employee is on leave. The House concurred in the amendment Saturday afternoon on a 57-38 vote, sending the bill to the Governor. Also Tuesday, the House concurred in Senate amendments to HB 1308, giving workers a private right of action to enforce rights to request and review personnel records, sending it to the Governor.

Insurance
In property and casualty, HB 1006, expanding options for the financial backing of service contracts, was signed by Governor Ferguson on Wednesday and goes into effect July 27th. SB 5721, requiring an auto repair appraisal policy term and creating an appraisal process for disputes over repair and total loss appraisals, passed the House 96-1 on Monday with the Consumer Protection & Business Committee amendment removing the “loser pays” provision adopted. The bill is back before the Senate for concurrence.  HB 1539, creating a wildfire mitigation working group, passed the Legislature on Friday, as the House concurred in Senate amendments adding more stakeholders to the working group, while HB 1516, creating a study of insurance options for affordable housing units, passed the Legislature on Wednesday and heads to the Governor.  Conversations are still underway on the budget provisos that revived SB 5589, ordering a OIC study on the use of credit history and credit-based insurance scores and other rating factors in underwriting personal lines, to remove the provisos from the final negotiated budget or change it to less biased and less expensive design.

Financial Services
While there aren’t many policy bills broadly impacting financial services remaining, financial institutions continue to be on alert for the B&O tax surcharge on larger banks contained in HB 2081 and any other possible tax maneuvers in the final week. In a major development on Friday, the Senate Ways & Means Committee adopted an amendment to SB 5794 (repealing various B&O tax preferences) that would end the B&O tax exemption for credit unions. However, this amendment was stripped on the floor Saturday, and replaced with an amendment similar to the concept in HB 1506, requiring credit unions to pay B&O taxes if they acquire or merge with a commercial bank.  

Civil Justice & Liability
HB 1403, providing new warranty options and liability protections for condominium builders and developers to promote affordable housing units passed the Legislature on Thursday, as the House concurred in some minor amendments made by the Senate. The bill heads to the Governor. SB 5408 on an employer’s ability to correct job postings’ salary disclosures prior to being sued over them, passed the House 94-1 on Tuesday with a new floor amendment adopted. The amendment replaces the current administrative and judicial enforcement mechanisms in the underlying Equal Pay and Opportunity Act with a new administrative or judicial right of action that includes a five-day opportunity to correct an errant job post, and discretion on the part of Labor & Industries or the courts to assess penalties based on the severity of the violation. The bill is back in the Senate, which has this week to concur in the amendment.

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