State legislative report 04/18: Can ‘grand bargain’ come together before end of session?

By Diana Carlen
WAWG Lobbyist

There is only one week remaining in the 2021 Legislative Session. During the final week, the Legislature will continue to focus on reconciling differences between each chamber’s budget proposals, bills that are Necessary to Implement the Budget, and bills on the Concurrence Calendar.

Budget negotiators worked over the weekend to finalize their operating, capital and transportation budgets. The final negotiated budgets are expected to be made public any day. Because the budgets bills went to conference committee, the final conference committee budgets cannot be amended. The Senate and House simply get to vote “yes” or “no” on the final budgets.

One of the big questions remaining this session is whether the “Grand Bargain” can come together before the end of session. The policies included in this bargain are carbon related legislation (the cap and trade bill and low carbon fuel standard bill), environmental justice legislation (SB 5141) and a transportation revenue package. All the policy bills have cleared the Senate and had hearings in the House, but a transportation revenue package has not yet passed either chamber.

In addition, all eyes are on the capital gains tax proposal which saw action this past week.

Agriculture overtime bill passes Legislature

On Thursday, the Senate agreed to the changes the House made to the overtime legislation which means that the bill has passed the Legislature. Beginning in 2022, Washington farmworkers must be paid overtime after 55 hours. The threshold drops to 48 hours in 2023 and finally to 40 hours in 2024. The phase in requirement does not apply to dairy workers who have been required to be paid overtime since the Supreme Court decision was issued last November.

Importantly, the bill as passed protects farmers from retroactive lawsuits filed in response to the Supreme Court decision. The bill was also restructured to ensure that the critical components are all contained in the same section to protect important language from being susceptible to a veto.

Agriculture groups were unsuccessful in getting a seasonal exemption to overtime which would have allowed farmers to choose 12 weeks a year to pay time-and-a-half after 50 hours. This was very disappointing as five of the six states who currently require overtime for agriculture have this flexibility. Agriculture plans to come back and introduce legislation to fix this issue.

The bill will now be delivered to the governor for his review and signature.

Transportation revenue package passes out of committee

The adoption of a transportation revenue package this session continues to be linked to a “Grand Bargain,” which includes the Governor’s cap and invest proposal (SB 5126) and a low carbon fuel standard (HB 1091). Despite several components of the “Grand Bargain” advancing last week, final agreement on all three elements seems less likely as the end of session nears.

On April 14, the Senate Transportation Committee amended and voted the Senate “Forward Washington” proposal out of committee. The proposal is comprised of three bills, SB 5481 (Bonding Bill), SB 5482 (Spending Bill) and SB 5483 (Revenue Bill). The proposal relies on several revenue sources, including raising the gas tax by 9.8 cents a gallon on July 1 and revenue from the cap-and-invest legislation. The full list of revenue sources can be found here.

Notably, no Republicans voted in favor of the proposal, although several of them made speeches indicating they may change their vote on the Senate floor. Bipartisan support is necessary to pass the package because of the bond revenue it includes. In Washington, 60 percent of a chamber’s members must vote for a bill with bond revenue for it to pass: 30 votes in the Senate, 59 votes in the House. The proposal will advance to the Senate Rules Committee for further consideration.

Meanwhile, the House updated its transportation revenue proposal, “Miles Ahead Washington,” on March 31. However, bills associated with the proposal have not yet been introduced.

Cap and trade legislation rushed through House Environment & Energy Committee

On Wednesday, a public hearing was held in the House on legislation that would establish a cap-and-trade program in the state, 2SSB 5126. This was the first time any carbon pricing legislation was considered in the House this session.

Testimony in the House was similar to what had been heard in the Senate. The environmental justice community testified strongly opposed to the cap-and-trade legislation and instead argued in favor of a carbon tax. Most of business and agriculture also weighed in opposed, while many environmental groups and tribes testified in support.

On Friday, the bill was voted out of the House Environment & Energy Committee on a mostly party-line vote, with no Republicans supporting the bill and one Democrat voting “without recommendation.” There were some notable amendments adopted. One such amendment exempts dyed diesel used for agricultural purposes on the farm. It also requires the Department of Ecology to determine a method to expand the agricultural fuel exemption to apply to fuels used to transport agricultural products on public highway and to maintain this exemption for five years. Another adopted amendment prohibits auction proceeds from being transferred to the carbon emissions reduction account after Dec. 31, 2027, if a low carbon fuel standard with a carbon intensity reduction of greater than 10 percent is not enacted by that date.

The bill was scheduled for a hearing in the House Appropriations Committee yesterday.

The fate of the cap-and-trade legislation is uncertain with little time to iron out the issues in this complicated piece of legislation and disagreement among Democrats on which carbon pricing legislation should move forward this session. Seventeen House Democrats signed onto a letter this week expressing a preference for carbon tax proposal over a cap-and-trade system, which could mean that the House may not currently have the needed votes for the bill to pass the Legislature.

Capital gains tax passed out of House Fiscal Committee

On Friday, the House Finance Committee passed out an amended version of ESSB 5096, sponsored by Sen. June Robinson (D-Everett). The legislation would establish a capital gains tax of 7 percent on capital gains that exceed $250,000 in a given year.

Early versions of the proposal had exempted agricultural property and qualified family-owned small businesses from the tax. However, the Senate floor made last minute changes to the bill which raised concerns of how a capital gains tax would be applied to agricultural land. The House Finance Committee passed a new version of the bill Sunday, without input from agriculture, which makes changes how real estate would be treated under the proposal. The new language is being reviewed to determine if it adequately addresses agriculture’s concerns about exempting all of agricultural land, regardless of what type of corporate entity owns the property.

In addition, the latest version of the bill adds back in language saying the bill is necessary to support state government which would prevent a referendum by the people. It is unclear if the Senate would accept this language blocking the people’s right to have a say on this legislation since the Senate had removed similar language in the bill when they passed it off the Senate floor.   

Notable Bills Signed by the Governor This Week:

  • DNR Lease Termination (SHB 1199), sponsored by Rep. Chris Corry (R – Yakima), would require the Department of Natural Resources (DNR) to compensate lessees should DNR terminate a lease early on state land used for agricultural purposes. WAWG testified in support of this legislation.

Notable Bills Awaiting Action by the Governor:

  • Wage Liens (SB 5355), sponsored by Sen. Steve Conway (D-Tacoma), would establish a statutory wage lien. The bill allows a lien to be placed on the employer’s real and personal property for unpaid wages and recovery of attorney fees and costs.
  • Green House Gas Emissions from Fluorinated Gases (E2SHB 1050), sponsored by Rep. Joe Fitzgibbon (D-West Seattle), would build upon the Legislature’s work in 2019 to phase out Hydrofluorocarbons (HFCs), which are industrial chemicals primarily used for cooling and refrigeration. Some of the changes made by the Senate approved striking amendment would require the Department of Ecology to consider the availability of applicable refrigerants in the required rulemaking and clarifies that, in rulemaking, the building code council must permit the use of approved substitutes.
  • 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. 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.
  • 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. Of note, the bill was amended to limit the jurisdiction to the Columbia River only.
  • Health Emergency Labor Standards (ESSB 5115), sponsored by Sen. Karen Keiser (D-Kent), would establish an occupational disease presumption concerning workers compensation for frontline workers during a public health emergency. The bill also creates certain notification requirements for employers during a public health emergency regarding infected employees. The bill had been carefully negotiated in the Senate so that the business community was neutral. However, the version of the bill passed includes concerning language such as the removal of the provision expiring the bill upon the expiration of the Governor’s proclamation related to COVID-19.
  • 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.
  • Sales & Use Tax Exemption for Farmworker Housing (2SSB 5396), sponsored by Sen. Liz Lovelett (D-Anacortes), would extend the current sales and use tax exemption for farmworker housing. However, the bill would exclude structures built exclusively for workers on an H-2A visas. Additionally, the bill allows seasonal farmworker housing to be rented to the general public during the off-season while maintaining the tax exemption.

Notable Bills in Need of Concurrence: 

  • Low Carbon Fuel Standard (E3SHB 1091), sponsored by Rep. Joe Fitzgibbon (D-West Seattle), would establish a statewide Low Carbon Fuel Standard.
  • Road Maintenance & Preservation in Transportation Planning (SHB 1137), sponsored by Rep. Bob McCaslin (R-Spokane Valley), would prioritize policy goals of preservation and safety in state transportation agencies’ planning. The bill was amended to include the state ferry system in the preservation goal.
  • 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 version of the bill passed by the House includes a narrowed definition of family member from the original, defining family member as an individual regularly residing in an employee’s home with an expectation of care or an individual dependent on care from an employee.
  • Environmental Justice Task Force Recommendations (E2SSB 5141), sponsored by Sen. Rebecca Saldaña (D-Seattle), would seek to implement several of the State’s Environmental Justice Task Force’s recommendations, including creating an Environmental Justice Council (EJC) to advise at least seven state agencies. The version passed by the House Appropriations Committee incorporates several changes, including amendments to expand the EJC to include a member representing unions and a member of the business community, clarifying how covered agencies will implement environmental justice considerations, and refining the definition of “significant agency action” and “evidence based” as it relates to the bill.