Week 11, Washington State Legislative Report

By Diana Carlen
WAWG Lobbyist

Legislators have completed the 11th week of the legislative session, and there is less than a month left until the session is scheduled to end. The next deadline is April 2, which is the deadline for bills from the opposite chamber to be passed out of policy committees. Legislators have been busy voting bills out of policy committees to meet this deadline.

The main focus of the past week has been the unveiling of the proposed operating and transportation budgets by each chamber, which will be described in more detail below. Both chambers passed their proposed operating and transportation budgets out of fiscal committees on March 27. The Senate worked Saturday, March 29, and passed both their proposed operating and transportation budgets off the floor. The House is expected to pass their proposed operating budget on Monday, March 31. Once both chambers have passed their budgets, the two chambers will start serious negotiations to reconcile differences between the various budgets to arrive at final budgets by the last day of session which is scheduled for April 27.

The upcoming week will see the release of proposed capital budgets on Monday, March 31. In addition, the Senate and House will hold public hearings on their revenue proposals to increase taxes. The Senate will hold hearings on their revenue proposals on Monday, March 31, while the House will hold hearings on their revenue proposals on April 3.

One particularly troubling tax bill is Senate Bill 5794, which proposes to eliminate allegedly “obsolete” tax incentives, including two tax preferences that impact the cost of goods moved, stored, and processed including to and from ports — a portion of the public utility tax (PUT) preference for transportation of goods through Washington and a tax preference for packing agricultural products. A hearing is scheduled on Monday, March 31, in the Senate Ways & Means Committee.

Proposed Operating Budgets

As mentioned above, Senate and House Democrats unveiled their proposed operating budgets on March 24.  House Democrats propose a $77.8 billion operating budget proposal, while the Senate put forward a $78.5 billion plan. Both proposals also rely on new taxes over the next four years — $17 billion in the Senate and $15 billion in the House.

The Senate passed their proposed operating budget on March 29 by a vote of 28-21.

Senate Democrat Operating Budget Proposal:

  • $1.6 billion in new spending, primarily for education and state worker contracts.
  • Cuts of $3 billion over the next biennium and $6.5 billion over four years.
  • Relies on new revenue from a financial intangibles tax on individuals with more than $50 million in publicly traded assets (about 4,300 taxpayers).
  • Relies on new revenue from a 5% payroll tax on compensation above the Social Security threshold for employers with $7 million or more in annual payroll (about 5,289 businesses).
  • Relies on a property tax reform that allows property taxes to grow tied to population growth and inflation with no cap.
  • Repeals 20 tax exemptions identified by budget writers as ineffective or obsolete.
  • Lowers the state sales tax rate from 6.5% to 6%.
  • Withdrawal of $1.6 billion from the state’s emergency reserves, leaving just $95 million by mid-2026.
  • Includes a temporary 5% pay cut for state employees, equating to about 13 unpaid furlough days but also includes the raises negotiated in the collective bargaining agreements by former Gov. Inslee.

House Democrat Operating Budget Proposal:

  • $920 million in new policy spending.
  • Ends the first fiscal year with $1.7 billion in reserves, growing to $3.2 billion by 2027.
  • Relies on lifting the cap to grow property taxes for state and local governments.
  • Relies on a financial intangible assets tax that imposes a tax of $8 on every $1,000 of assessed value on certain financial intangible assets, such as stocks, bonds, mutual funds, and index funds, with the first $50 million in assessed value exempt from the tax.
  • Relies on a 1% Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million.
  • Relies on a surcharge on specified financial institutions with annual net income of $1 billion or more from 1.2% to 1.9%.

Proposed Transportation Budgets

The Senate released a bipartisan proposal this past week. Click here to view the Senate budget documents. The various taxes and fees for funding the Senate transportation budget can be found here. The Senate passed their proposed transportation budget on March 29 by a vote of 35-14. Senate Bills 5161, 5800, and 5801 now move to the House for consideration.

The Senate has also introduced two additional transportation bills — one related to the 0.3% sales tax shift to the transportation budget and one related to fish habitat restoration — that are scheduled to be heard in committee next week.

Senate Bipartisan Proposal:

  • Allocates $6.2 billion for operating costs and $10 billion for capital projects.
  • Relies on a 6 cent per gallon increase which is projected to generate $1.5 billion over six years.
  • Includes a proposal to transfer 0.3% of sales tax collections from the operating budget to transportation, adding $800 million annually starting in the 2027-29 biennium.
  • Shifts $5 billion of future expenses tied to replacing culverts to the state’s capital budget.

House Democrat Proposal:

The House also released a proposal transportation budget this past week and is expected to vote on it next week. Clickhere to view the House budget documents. The revenue summary for the transportation budget can be found here.

  • Allocates $6.1 billion for operating expenses and $8.9 billion for capital costs.
  • Relies on a 9 cent per gallon increase (the fuel tax is indexed to inflation beginning in FY 2027), expected to yield $1.8 billion over six years.
  • Does not incorporate the sales tax transfer strategy found in the Senate proposal.

Notable Bill Action This Past Week:

  • 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 Dec. 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. The bill passed out the House Environment & Energy Committee on March 24. It is scheduled for a public hearing in the House Appropriations Committee on April 3.
  • 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 Jan. 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. The bill passed out of the House Labor & Workplace Standards Committee on March 21 by a party line vote with only Democrat support. The bill is scheduled for a hearing in the House Appropriations Committee on April 4.
  • Agritourism Tax Relief (Substitute House Bill 1261), sponsored by Rep. Sam Low (R-Lake Stevens), expands 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% 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. The bill passed out of the Senate Agriculture & Natural Resources Committee on March 25. A hearing is scheduled in the Senate Ways & Means Committee on April 3.
  • 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. The bill passed out the Senate Environment, Energy & Technology Committee on March 28.
  • 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. The bill passed out of the Senate Environment, Energy & Technology Committee on March 28.
  • 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. The bill passed out of the House Committee on Technology, Economic Development, & Veterans on March 21. A hearing is scheduled in the House Transportation Committee on April 3.
  • 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. The bill passed out of the Senate Labor & Commerce Committee on March 28.
  • Paid Family Leave Expansion (Engrossed Second Substitute House Bill 1213), sponsored by Rep. Liz Berry (D-Seattle), expands worker protections under Washington’s Paid Family and Medical Leave program. Currently, small employers with fewer than 50 employees are exempt from providing job protection and health benefit continuation for employees on Paid Family and Medical Leave (PFML). This bill eliminates these exemptions. In addition, employees could begin utilizing the benefits after 180 days of employment (current law requires you to have worked for the employer for a year before utilizing the benefits), regardless of the size of the employer. The bill passed out of the Senate Labor & Commerce Committee on March 28 with a couple of amendments. First, ESD must include employer information and the availability of PFML grants to smaller employers. Second, it removes the grant option for employers with fewer than 50 employees related to health care costs.
  • Salary Wage Transparency (Senate Bill 5408), sponsored by Sen. Curtis King (R-Yakima), originally would have provided a right to cure period for employers to address noncompliant wage and salary disclosures in job postings. The bill passed out of the House Labor & Workplace Standards Committee on March 28 with significant changes. The bill removed the underlying bill provisions requiring written notice and the 14 day right to cure. Now, the bill excludes wage and salary disclosure requirements from general administration enforcement and civil action provisions in the Equal Pay and Opportunities Act (EPOA), and establishes separate requirements. It requires the Department of Labor and Industries to investigate if a job applicant or employee files a complaint alleging a violation. If there is a violation, statutory damages begin at $100 but no more than $5,000 per violation, and L&I must consider if the violation was committed willfully or a repeat violation, size of the employer or third-party platform or service, and the amount necessary to deter future noncompliance. A civil action also may be filed, and a job applicant or employee is entitled to statutory damages of no less than $100 and no more than $500 per violation if a violation is found, and the court must consider the same factors as above. More negotiations will be occurring on this bill.
  • Employee Personnel Records (House Bill 1308), sponsored by Rep. Julia Reed (D-Seattle), proposes amendments to Washington state law to enhance employee access to and control over their personnel records. Key provisions include requiring employers to allow employees to inspect their personnel files annually and provide copies of the files within 21 calendar days of a request at no cost. The bill defines “personnel file” to include job application records, performance evaluations, payroll records, and other employment-related documents. Employees and former employees can request corrections to erroneous or irrelevant information, with the right to add rebuttal statements if disagreements arise. Former employees, defined as those separated within three years, can also request a signed statement detailing the reasons for their discharge. The bill received a public hearing in the Senate Labor & Commerce Committee on March 24, and on March 28, the bill passed out of committee.

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