Week 10, state legislative report

By Diana Carlen
Lobbyist, Washington Association of Wheat Growers

We have wrapped up the 10th week of the session on March 22. This past week, committees focused on hearing bills passed by the opposite chamber. The next deadline is April 2 when all bills must pass out of their policy committee.

Legislators have shifted to budget mode. Earlier this week, the Washington State Economic and Revenue Forecast Council released its latest revenue forecast, projecting a decrease of $845 million in state revenue through 2029. Estimates of the state’s actual budget deficit for the next four years range between $7 billion and $15 billion, depending on whether new proposals such as the state employee collective bargaining agreements are included that former Gov. Inslee negotiated last fall.

Budget writers will use the latest revenue forecast to finalize their budget proposals. Operating (HB 1198/SB 5167) and transportation budget proposals (HB 1227/SB 5161) are scheduled to be released on March 24. Hearings are planned on the operating budget on March 25 in each chamber with plans to vote them out of their respective fiscal committees on March 27. The Senate plans to pass their budget on the floor on March 29 and the House on March 31.  The proposed capital budget (HB 1216/SB 5195) is slated to be released on March 31.

This week also saw Senate and House Democrats each unveil their proposed revenue packages, including record tax increases, to deal with the budget shortfall. Senate Democrats went first proposing a $17 billion revenue package, followed by House Democrats with a $15 billion revenue package. Democrat leadership in the Senate and House have publicly stated they do not plan on taking major votes on the tax policies below until the two chambers agree on which ones to pursue. Both proposals are compared below. The governor has not publicly commented on either revenue proposals, although previously he has been skeptical of a wealth tax which both proposals include.

Wealth Tax (Senate Bill 5797)

  • Targets individuals with wealth over $50 million by imposing a tax of $10 on every $1,000 of assessed value of financial assets like stocks, bonds, exchange-traded funds and mutual funds.
  •  Taxes the entire amount, instead of anything over $50 million
  • Estimated to impact 4,300 individuals
  • Generates $4 billion per year starting in fiscal year 2027

Wealth Tax (House Bill 2046)

  • Targets individuals with wealth over $50 million by imposing a tax of $8 on every $1000 assessed value of financial assets like stocks, bonds, mutual funds, and index funds with the first $50 million exempt from the tax
  • Also exempts pensions, retirement accounts and education savings accounts
  • Estimated to impact 4,300 individuals
  • Generates $2 billion per year beginning in fiscal year 2027

Property Tax Cap Removal (Senate Bill 5798)

  • Removes the 1% cap on property tax growth limit and changes to the combined rate of population growth plus inflation
  • Does not set a cap of 3%.
  • Raises $779 million to the state over the four year budget cycle

Property Tax Levy Lid 1% to 3% (House Bill 2049)

  • Allows an increase in annual property tax growth from the current 1% cap to the combined rate of population growth plus inflation, not to exceed 3%.
  • Applies to the state’s common schools levy and for cities and counties, as well as special purpose districts.
  • Raises $779 million to the state over the four year budget cycle

Payroll Tax on Large Employers (Senate Bill 5796). No similar House proposal.

  • Imposes a 5% tax on employers on the amount of payroll expenses above the social security threshold – currently $176,100 per year.
  • Applies to companies with $7 million or more in payroll expenses
  • Includes credit for businesses already paying Seattle’s “JumpStart” tax.
  • Estimated to apply to 5,289 companies
  • Raises $2.3 billion per year once fully implemented

B&O Surcharge on High-Grossing Corporations & Financial Institutions (House Bill 2045). No similar Senate proposal.

(High-grossing corporations)

  • Beginning January 1, 2026, 1% B&O surcharge on businesses with taxable income over $250 million.
  • Exempts certain manufactures
  • Estimated to impact 400 taxpayers

(Financial institutions)

  • Beginning July 1, 2025, increases B&O surcharge from 1.2% to 1.9% for financial institutions with annual net incomes of $1 billion or more
  • Estimated to impact 200 taxpayers

Repealing Tax Preferences (Senate Bill 5794). No similar House proposal.

  • Repeals 20 tax exemptions
  • Generates over $1 billion over the four-year budget cycle
  • Notable preferences impacting agriculture include repealing the B&O tax preference for packing agricultural products and eliminates a public utility tax exemption for the intrastate transportation of goods, commodities and agricultural products.

Reduces the State Sales Tax(Senate Bill 5795). No similar House proposal.

  • Reduces the state sales tax from 6.5% to 6% starting in 2027
  • Decrease to state revenue of $1.3 billion per year

Notable bill action this past week:

  • Agricultural Fuel Exemptions (Engrossed Second Substitute House Bill 1912), sponsored by Rep. Tom Dent (R-Moses Lake), makes it easier for farmers to receive the exemptions they were promised under the Climate Commitment Act for fuel used for agricultural purposes. The bill would require Ecology to publish a directory by October 1st to notify farmers of retail fuel sellers that sell exempt fuel used for agricultural purposes. The bill also declares it is the legislative intent to continue the rebate program similar to the budget proviso from last year through June of 2027 for farmers who are not able to get exempt fuel. Finally, it extends the exemption for fuel used to transport agricultural products on public highways until Dec. 31, 2029. The bill was originally scheduled for a hearing on March 19 in the Senate Environment, Energy & Technology Committee, but has been rescheduled to March 25.
  • Environmental Crimes (Engrossed Substitute Senate Bill 5360), sponsored by Sen. Yasmin Trudeau (D-Tacoma), increases criminal penalties for environmental crimes. The bill would update the state’s criminal penalties for violations of the Clean Air Act, the Hazardous Waste Management Act, and the Water Pollution Control Act to more closely align with current federal penalties. The bill currently has a very narrow exemption for agriculture and does not align with exemptions currently in place for the respective federal environmental laws. Business and agricultural groups continue to have concerns about the bill and have been working as a coalition to make sure there are further amendments to the bill if it moves forward in the House. On March 12, a group of agricultural interests met with the Attorney General’s Office to discuss concerns agriculture has with the bill.
  • Enhanced Producer Responsibility Program (EPR) (Engrossed Second Substitute Senate Bill 5284),sponsored by Senator Liz Lovelett (D-Anacortes) requires producers of certain product packaging to participate in and fund the operations of a producer responsibility organization (PRO) related to the postconsumer management of covered PPP and other recycling-related activities. The bill contains two key amendments for agriculture. First, it exempts agricultural producers will less than $5 million in gross revenue from in-state sales. Second, it prohibits a retailer from assigning responsibility to a person who produces an agricultural commodity introduced under the brand or trade of another manufacturer. The Senate bill, however, still faces challenges when it eventually gets to the House floor as House Democrats still are undivided on whether to move forward with a full blown EPR program. The pressure will be on House Democrats to figure out whether they can resolve this issue now that the Senate has passed legislation on the issue. A hearing was held in the House Environment & Energy Committee on March 17.
  • Unemployment Benefits for Striking Workers (Substitute Senate Bill 5041), sponsored by Senator Marcus Riccelli (D- Spokane), would allow workers who choose to go on strike to be eligible for unemployment insurance (UI) benefits. The bill was amended on the Senate floor to limit unemployment benefits for striking workers to 12 weeks and the law to expire after 10 years. The bill takes effect on January 1, 2026. The business community is in strong opposition to this legislation because Washington’s UI system is designed to provide benefits to workers who lose their jobs through no fault of their own. A hearing was held in the House Labor & Workplace Standards Committee on March 18.
  • Yakima Basin Water Plan Extension (Engrossed Substitute Senate Bill 5303), sponsored by Sen. Judy Warnick (R-Moses Lake), extends the water supply milestone for the Yakima River Basin Integrated Plan from June 30, 2025, to June 30, 2035. This extension allows additional time to secure permits and funding for water supply facilities designed to provide at least 214,000 acre-feet of water for both instream and out-of-stream uses. The bill also updates related deadlines for cost-benefit reviews of large water projects and land management plans under the community forest trust to align with the new milestone date. A hearing was held in the House Agriculture & Natural Resources Committee on March 19.
  • PFAS Testing of Biosolids (Substitute Senate Bill 5033), sponsored by Sen. Jeff Wilson (R-Longview), requires Ecology to establish PFAS chemical sampling or testing requirements for biosolids. By July 1, 2028, Ecology must complete an analysis of the levels of PFAS chemicals in biosolids produced in Washington state. By December 1, 2029, the department must submit a report to the appropriate committees of the legislature with recommendations on how to proceed based on the analysis. A hearing was held in the House Environment & Energy Committee on March 17.
  • Pesticide Safety Committee Extension (Substitute House Bill 1294), sponsored by Rep. Tom Dent (R-Moses Lake), extends the expiration date of the pesticide application safety committee from July 1, 2025, to July 1, 2035. This committee includes experts from agriculture, public health, and worker safety, to continue reviewing best practices and ensuring pesticide application remains safe for workers, consumers, and the environment. The bill passed out of the Senate Agriculture & Natural Resources Committee on March 20 and has been referred to the Senate Ways & Means Committee.
  • Agritourism Tax Relief (Substitute House Bill 1261), sponsored by Rep. Sam Low (R-Lake Stevens), seeks to expand permissible incidental uses of open space land to include agritourism activities while providing tax relief for landowners. The bill defines agritourism activities as recreational, educational, or entertainment events on farms, such as festivals, weddings, and produce stands, provided they are incidental and do not exceed 20 percent of the total classified land. It also reduces the financial penalties for removing land from its current use classification by shortening the additional tax calculation period from seven years to four years and allowing waivers or refunds of certain taxes and penalties. A hearing was held in the Senate Agriculture & Natural Resources Committee on March 17.
  • Auction Price Containment CCA (Second Substitute House Bill 1975), sponsored by Rep. Joe Fitzgibbon (D-West Seattle), makes some modest adjustments to the Climate Commitment Act (CCA). For example, it sets the price ceiling for calendar years 2026 and 2027 at $80 (instead of $95). It also requires Ecology to increase the amount of allowances available at auction for the second compliance period. A hearing was held in the Senate Environment, Energy & Technology Committee on March 19.
  • Clean Fuels Program (Second Substitute House Bill 1409), sponsored by Rep. Joe Fitzgibbon (D- Burien), proposes significant amendments to Washington’s Clean Fuels Program (i.e. Washington’s low carbon fuel standard for transportation fuels). The bill adjusts the reduction schedule to achieve a 45% decrease in carbon intensity by 2034. The bill was amended to specify that Clean Air Act civil and criminal penalties no longer apply to violations of the Clean Fuels Program, but establishes penalties and other enforcement powers specific to the CFP program. The bill also prohibits Ecology from increasing the carbon intensity standards beyond 20% beginning in 2030 unless Ecology determines that one new or expanded biofuel production facility has received a siting, operating, or environmental permit after Jan. 1, 2025. A hearing was held on the bill on March 19.
  • Supply Chain Infrastructure (Senate Bill 5649), sponsored by Sen. Marko Liias (D-Lynnwood), establishes the Washington State Supply Chain Competitiveness Infrastructure Program to enhance the state’s global trade competitiveness by funding and prioritizing supply chain infrastructure projects. The program, administered by the Department of Transportation (DOT) in collaboration with stakeholders such as the Department of Commerce, public ports, tribal governments, and industry representatives, would provide grants and loans to public ports and tribal governments with public port operations. A hearing was held in the House Committee on Technology, Economic Development, & Veterans on March 19.
  • Safety of Working Minors (Engrossed Substitute House Bill 1644), establishes minimum penalties for employers who violate laws and rules governing the employment of minors. It requires the Department of Labor and Industries (L&I) to conduct a safety and health consultation at a worksite before granting a student learner variance allowing a minor to perform work typically prohibited based on the minor’s age. It also requires L&I to revoke an employer’s minor work permit for certain violations of the Washington Industrial Safety and Health Act or laws pertaining to the employment of minors. A hearing was held in the Senate Labor & Commerce Committee on March 18.