The 2026 session of the Washington State Legislature gavels in at noon on Monday, January 12th

The 2026 session of the Washington State Legislature gavels in at noon on Monday, January 12^th, and runs for 60 days until March 12^th. As the second session in the current biennium, the primary task before the Legislature is to make course corrections in supplemental operating, transportation, and capital budgets, ensuring the former is balanced over a four-year budget outlook. This will be complicated by reduced forecasts in revenue collections, increased caseloads in the state’s various human services programs, federal funding reductions, and climbing tort lawsuit payouts, leading to current biennium shortfall that Governor Bob Ferguson estimates at $2.3 billion. Other major issues the Legislature will debate include new or increased taxes to balance the budgets, new labor and employment regulations and social insurance program expansions, artificial intelligence regulation, and various new regulations on business and commerce.

Political Composition Unchanged and Possibly Emboldened

The political composition of the Legislature remains almost entirely unchanged from last session, with House and Senate Democrats holding 60 percent supermajorities in both chambers at 59D-39Rin the House and 30D-19R in the Senate. In last November’s special legislative elections, there were nine seats previously filled by special appointments on the ballot, and the appointed Democratic incumbent prevailed in all nine elections, in some instances turning away serious challenges from either more moderate Democrats or centrist Republicans. Caucus leaders in both chambers have been public about the fact they interpret the election results as an endorsement of their policy direction by the voting public. There will be one new face in the Legislature, as Rep. Zach Hall, D-Issaquah, was appointed to fill a vacancy when Senator Victoria Hunt moved from the House to the Senate.

Governor announces budget framework and priorities

As noted, Governor Ferguson has pointed to a $2.3 billion shortfall in the remainder of the current biennium, and has proposed a supplemental operating budget that seeks to balance through a mixture of agency cuts, a transfer from the state’s “rainy day” fund, and changes to tax law impacting data centers, prescription drug warehousers, and insurance companies. The latter proposal, SB 5949 (Robinson, D-Everett), has provoked considerable opposition from the insurance industry as it seeks to undo a recent Washington Supreme Court decision and impose the B&O tax on insurance companies’ internal administrative activities in furtherance of providing insurance, which are exempt from B&O due to insurers’ obligations to pay the separate state premium tax. Governor Ferguson’s supplemental transportation budget focuses on road maintenance and preservation and the ferry fleet, adding $3 billion to the current transportation budget. The supplemental capital budget proposal adds $237 million to the existing capital budget with a heavy focus on affordable housing units and response to recent flooding events.   

Pre-filed bills, anticipated issues, and upcoming hearings of interest to business & industry

On the eve of session, over 500 bills have been pre-filed between the House and Senate for introduction on Monday. Additionally, a number of issues are under discussion that are likely to be introduced as bills in the coming days. Policy committees will be holding a number of introductory work sessions, while several pre-filed bills have also been scheduled for public hearing next week.

Budget

The House and Senate fiscal committees will be holding early hearings on the outgoing Governor’s operating, capital, and transportation budget proposals next week. These are largely pro forma hearings, as the ultimate budget negotiations on all three will occur much later in session. Budgets, and bills necessary to implement budgets, including tax bills, are exempt from the legislative cutoff deadlines described above, and typically come into play much later in the legislative session.

Taxes

In addition to Governor Ferguson’s tax proposals described above, several other new tax bills have been pre-filed. HB 2100 (Scott, D-Seattle) is a “payroll excise tax” that imposes a 5% annual tax on the portion of a larger employers’ payroll that is made up of employees earning $125,000 per year or more. Rep. Scott has also pre-filed HB 2097, authorizing counties to impose their own local B&O taxes, and HB 2089, which narrows a tax preference covering interest on loans originated by community banks to fund wildfire mitigation. HB 2098 (Reed, D-Seattle) would remove the $75 million cap on the B&O tax surcharge for advanced computing activities to direct additional funds to higher education. Tax concepts widely discussed but not yet filed include a 9.9% income tax on annual income above $1 million, which Governor Ferguson has indicated he supports, and a “wealth tax” of .5% on an individual’s intangible financial assets valued above $50 million, similar to last year’s SB 5797 (Frame, D-Seattle). Republican caucus members have filed a number of bills to repeal or limit portions of the 2025 tax package, particularly around the SB 5814 sales tax on services, but they are unlikely to advance.       

Civil Justice/Liability

Two major pre-filed bills in this area are HB 2255 (Walen, D-Bellevue), which requires disclosure and imposes regulations on the third party financing of litigation, and HB 2095 (Reed, D-Seattle), which creates a presumption of negligence on the part of motorists if they are involved in collisions with “vulnerable roadway users” such as cyclists and pedestrians. HB 2095 is up for public hearing in the House Civil Rights & Judiciary Committee on Wednesday.

Consumer & Business Regulation

Artificial Intelligence regulation continues to be a hot topic, with the pre-filing of HB 2157 (Ryu, D-Shoreline) seeking regulation of “high risk” AI system development, and HB 2225 (Callan, D-Issaquah), a Governor request bill, proposing greater regulation of AI chatbots. They join holdovers HB 1168 (Shavers, D-Friday Harbor) which requires a comprehensive list of data that must be disclosed to the public by developers of AI platforms, and HB 1170, also by Rep. Shavers, which requires AI system creators to provide end users with an AI detection tool, and disclose in certain images, video, and audio whether it is AI-generated. Grocery and retail consumer bags have popped up as an early area of business regulation, with SB 5965 (Bateman, D-Olympia) banning reusable plastic bags and increasing the fee on paper bags, while SB 6030 (Braun, R-Chehalis) takes an opposite approach of repealing restrictions and fees on single-use carryout plastic bags.

Labor & Employment

Notable pre-files in labor & employment include HB 2105 (Ortiz-Self, D-Mukilteo)/SB 5852 (Saldana, D-Seattle), which is Attorney General Nick Brown’s request bill to establish the Immigrant Worker Rights Act, requiring employers provide notice to current and former employees when notified by the federal government that the employers’ I-9 employment eligibility documents would be audited, HB 2144 (Parshley, D-Olympia), requiring notice to employees if the employer uses electronic monitoring methods to assess job performance, and HB 2191 (Cortes, D-Everett), governing the relationship between construction contractors and subcontractors arising from the Underground Economy Task Force. While unclear how widespread the practice is, HB 2303 (Thomas, D-Seattle) would prohibit employers from microchipping employees. A holdover from last session, HB 1155 (Berry, D-Seattle), banning all employment non-compete agreements, is expected to move in early action this session.

Social Insurance/Payroll Tax Programs

The state’s large, payroll-tax supported social insurance programs have already been the subject of numerous pre-filed bills, especially in workers’ compensation. There, physical therapists and occupational therapists are seeking standing to become attending providers for injured workers, HB 2243 (Bronoske, D-Lakewood), the claimants’ bar is seeking to weaken the system’s Medical Provider Network standards for treatment of injured workers, HB 2218 (Ortiz-Self, D-Mukilteo), construction trades are seeking to add the full value of employer-provided health insurance to a worker’s disability benefits, SB 6067 (Alvarado, D-West Seattle).  The employer community is seeking a 3% cap on annual COLA increases, SB 5927 (Schoessler, R-Ritzville), an elimination of the age restriction on agreements to settle claims, HB 2189 (Schmidt), self-insurers’ authority to issue allowance orders, SB 5997 (MacEwen, R-Shelton), transparency about State Fund premium rate-setting, HB 2188 (Schmidt), and HB 2336 (Abbarno, R-Centralia), a bill facilitating third-party recording and video storage of independent medical examinations. In unemployment insurance, HB 2264 (Berry, D-Seattle) expands the availability of UI benefits to workers subject to voluntary layoffs. And in paid family and medical leave insurance, HB 2345 (Schmidt) realigns the percentages of premium an employer may deduct from worker pay for the family leave and medical leave portions of the system, with more bills likely to come addressing various solvency and sustainability issues in this program.     

Insurance

Several bills impacting insurance have been pre-filed, with several more anticipated on the way. Insurance Commissioner Patty Kuderer has requested bills requiring disclosure of wildfire risk models and scores, HB 2277 (Hall, D-Issaquah)/SB 5928 (Warnick, R-Moses Lake), increasing the agency’s enforcement tools over insurance fraud, HB 2394 (Goodman, R-Kirkland)/SB 6031 (Lovick, D-Snohomish), and banning post-loss assignments of benefits, HB 2399 (Hackney, D-Tukwila). These join her holdover from last session, HB 1199 (Thomas, D-Seattle)/SB 5331 (Cortes, D-Battle Ground), authorizing restitution orders and imposing unlimited per violation fines on property & casualty insurers. Other notable pre-files include a wildfire victims’ compensation fund and prevention council, HB 2275 (Reeves, D-Federal Way), adopting a model law governing travel insurance, HB 2087 (Ryu, D-Shoreline), online insurance verification, SB 5864 (Lovick, D-Snohomish), and regulating motor vehicle glass repair claims, SB 5871 (Cortes, D-Battle Ground). A holdover from last session, HB 1078 (Walen, D-Bellevue), restricting pet insurance products from certain policy cancellations or non-renewals, is scheduled to move out of the House Consumer Protection & Business Committee on Wednesday.    

Financial Services

In this space, SB 5754 (Hasegawa, D-Seattle), the annual bill creating a state bank, is a holdover from last session but is set for an early hearing next week in the Senate Ways & Means Committee on Thursday. SB 5849 (Cortes, D-Battle Ground) would make financial literacy education a graduation requirement for high schoolers.

Key Session Dates

• January 12 - First day of session
• February 4 - Policy Committee Cutoff for House of Origin
• February 9 - Fiscal Committee Cutoff for House of Origin
• February 17 - House of Origin Cutoff
• February 25 - Policy Committee Cutoff for Opposite House
• March 2 - Fiscal Committee Cutoff for Opposite House
• March 6 - Opposite House Cutoff
• March 12 - Last day of session (Sine Die)

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