State legislative report 03/22: Legislature gets positive economic news

By Diana Carlen
WAWG Lobbyist

Today marks the 69th day of the 2021 Legislative Session. The Legislature is busy meeting in policy committees, holding public hearings and voting on bills that the opposite chamber approved. Bills need to pass out of their respective policy committees by March 26 to continue to advance through the legislative process.

Several major issues must be addressed in the next 36 days. The Legislature will need to pass three budgets – operating, transportation and capital – and decide how to distribute new federal funding. This week will see the unveiling of budgets by Senate and House Democrats.

There is also a hearing this week on the agricultural overtime issue (ESSB 5172). The version that passed out of the Senate included a phased in approach for all of agriculture to pay overtime, but also included a “safe-harbor” provision, protecting farmers against back-pay claims. Unfortunately, the bill did not address overtime policies for seasonal and harvest workers. WAWG continues to advocate for a harvest exemption from paying overtime.

Revenue forecast announced

On March 17, the Washington State Economic and Revenue Forecast Council released updated revenue forecasts bringing the budget writers very good news – the state is expected to collect an additional $1.3 billion in state revenues for the current two-year budget, and an additional $1.9 billion for the 2021-2023 biennium, leaving the state with a net surplus of nearly $3 billion – including reserves – at the end of the current biennium. The increase is in addition to the $4.25 billion the state will receive from the American Rescue Plan (federal stimulus). Notably, revenue projections indicate that moving forward, collections are anticipated to continue at prepandemic levels. Additional details of the revenue forecast can be found here.

The Senate Democrats are expected to unveil their proposed operating and capital budgets on March 25 and transportation budget sometime later. House Democrats will follow with their own proposals later in the week.

Capital gains proposal heard in the House Finance Committee

Despite the positive economic news to budget writers, Democrats are still set on raising revenue. The capital gains proposal (SB 5096) had a public hearing in the House Finance Committee this past week. This bill would establish a 7 percent tax on capital gains that exceed $250,000 in a given year (earnings from retirement accounts and home sales would be exempt). Under the legislation, $350 million per year of capital gains tax revenue would be reserved for investments in early education programs. The remainder of the tax revenue, an estimated $200 million, would go into a new taxpayer relief fund.

As noted in last week’s report, there are currently problems with how the current version of the bill treats agricultural land. We are working to get this fixed as the bill is likely to continue to move through the process.

The public hearing comes after the bill narrowly passed the Senate by a vote of 25-24 following a passionate debate. Opponents argued that a new tax was not needed, and a capital gains tax is really an income tax which is unconstitutional in the state and the voters have spoken multiple times rejecting income tax proposals. However, proponents of the proposal argued that Washington’s tax system is regressive and that this legislation would only impact a small group of high earners.

Monday’s hearing reiterated many of the same arguments and generated a great amount of interest. Nearly 4,000 individuals signed up to weigh in on the legislation and let their stance be recorded. The bill has yet to be scheduled for a vote out of committee.

Cap and trade hearing

On Monday, March 15, SB 5126, sponsored by Sen. Reuven Carlyle (D-Seattle), was heard in the Senate Ways & Means Committee. The bill would establish a cap and trade program in the state and is considered Necessary to Implement the Budget as revenue related to the program could be part of a transportation revenue package. The hearing saw more than 50 individuals wishing to testify on the bill and just under 450 individuals signed in not wishing to testify, the majority in opposition to the proposal.

The bill was scheduled to be voted on in the Senate Ways & Means Committee on Thursday, but no action was taken. Twenty-six amendments have been proposed if the bill is brought up for a vote. A new date for executive action on the bill is scheduled for March 22.

There are ongoing discussions between the chairs of the environment and transportation committee. Carbon pricing, a low carbon fuel standard and the transportation budget are all linked, along with the environmental justice legislation. The budgets that are released next week should be telling what bills the Senate and House think are “Necessary to Implement the Budget.”

Low carbon fuel standard legislation voted out of committee

On March 16, legislation that would establish a statewide Low Carbon Fuel Standard (E3SHB 1091) was amended and voted out of the Senate Environment, Energy & Technology Committee. The amendment made several technical changes including what is included in future fuel supply forecast reports and updates to deferral language in case of a low carbon fuel shortage, among other things. A summary of the changes can be found here. As previously reported, for the past two years, the bill has been voted out of the House but stalled in the Senate. The bill will now proceed to the Senate Ways & Means Committee for further consideration.

DNR lease termination pulled to the floor calendar

On Friday, the Senate Rules Committee pulled EHB 1199, sponsored by Rep. Chris Corry (R-Yakima), to the consent calendar, making it eligible for a vote of the full Senate at any time. The bill would require the Department of Natural Resources (DNR) to compensate lessees should DNR terminate a lease early on state land used for agricultural purposes. The bill previously passed out of the House unanimously and the Senate policy committee as well.

Other notable bills that received a public hearings last week:

  • Road Maintenance & Preservation in Transportation Planning (SHB 1137), sponsored by Rep. Bob McCaslin (R-Spokane Valley), would require DOT to prioritize preservation and safety in state transportation agencies’ planning.
  • Allocation of Groundwater in the Columbia Basin (SSB 5230), sponsored by Sen. Perry Dozier (R-Walla Walla), would ascertain that agreements with the Federal Government for the allocation of Columbia Basin Program groundwaters do not require compliance with the groundwater code for the establishment of groundwater areas or subareas. The bill is scheduled for executive action in the House Rural Development, Agriculture & Natural Resources Committee next week.
  • Pesticide registration (SSB 5317), sponsored by Sen. Judy Warnick (R-Moses Lake), is WSDA request legislation that would increase license and application fees under the Pesticide Control Act and the Pesticide Application Act. The bill is scheduled for executive action in the House Rural Development, Agriculture & Natural Resources Committee next week.
  • Fertilizer fees (SSB 5318), sponsored by Sen. Judy Warnick, would increase fertilizer distribution application, license, inspection and late fees. The bill is scheduled for executive action in the House Rural Development, Agriculture & Natural Resources Committee next week.
  • Irrigation District Elections (SSB 5342), sponsored by Sen. Mark Schoesler (R-Ritzville), would permit irrigation district board of directors, by adoption of resolution, to conduct an election via mail-in ballots. The bill also clarifies who may vote in an irrigation district election and establishes measures to ensure election security. The bill is scheduled for executive action in the House State Government & Tribal Relations Committee next week.

Other Notable Bills That Were Voted out of Committee this Week:

  • Paid Family and Medical Leave Expansion (E2SHB 1073), sponsored by Rep. Liz Berry (D-Seattle), would establish temporary, alternate eligibility requirements for the Paid Family and Medical Leave Program for individuals that do not meet the program’s hours worked threshold in 2020. New language in the bill also clarifies that grants for employee leave related to alternate eligibility created by the legislation would not be funded from the family and medical leave insurance account and would instead utilize federal funding from the America Rescue Plan Act. The bill passed out of the Senate Labor, Commerce & Tribal Affairs Committee and was referred to the Senate Ways & Means Committee for consideration.
  • Allowing Whistleblowers to Bring Actions on behalf of State Workplace Protections (SHB 1076), sponsored by Rep. Drew Hansen (D-Bainbridge Island), would allow attorneys to bring actions in the name of the state against employers for worker violations under various state laws and get attorney fees. Of note, the current version of the bill removes the following laws that may be enforced under a qui tam action: laws relating to seasonal labor and agricultural labor. The bill was heard in the Senate Labor, Commerce & Tribal Affairs Committee this week and was voted out of committee on a party line vote. The bill now proceeds to the Senate Ways & Means Committee for consideration.
  • Dredged Material Disposal (SHB 1193), sponsored by Rep. Larry Hoff (R-Vancouver), would modify the Shoreline Management Act to exempt federal navigation channel maintenance and improvement projects from the permitting process. The bill is scheduled for executive action in the Senate Environment, Energy & Technology Committee next week.
  • Paid Family and Medical Leave Expansion (SSB 5097), sponsored by Sen. June Robinson (D-Everett), would expand the definition of family member under Washington’s Paid Family and Medical Leave law. The current version of the bill includes a narrowed definition of family member from the original, defining family member as an individual regularly residing in an employee’s home or an individual dependent on care from an employee. The bill was also amended to remove changes to the time period that qualifies an employee for job and health insurance protection and include new language requiring the Employment Security Department to report on Paid Family and Medical Leave utilization. The proposal was heard in the House Labor & Workplace Standards Committee and passed out of committee.