State of Washington Legislative Report - 2019 Session Wrap Up

May 01, 2019  -  Business

2019 SESSION WRAP UP

 

General Information

 

Following their sweep in the November elections, Democratic legislators arrived in Olympia eager to pass policies for which they were previously unable to muster sufficient votes. Since 2013, bipartisanship had been a necessity for bill passage, as the partisan makeup of both chambers were within a few votes.  Not this session. In the House, Democrats lead 57-41. In the Senate, Democrats lead 28-21.  These leads gave Democrats the ability to pass a bold populist agenda addressing climate change, education, gun responsibility, sexual assault prevention, orca protection, health care, homelessness, and behavioral health.

 

With just two hours before the midnight deadline of the 66th legislature, many insiders were certain a special session was inevitable with such a great number of contentious items left to pass. At a little over an hour to spare, legislators reached agreements and bills began racing between the chambers.  The 2019 legislative session was adjourned at midnight exactly.

 

The bill threatening a special session, SB 5313 sponsored by Senator Lisa Wellman, was the divisive Levy Lid Lift policy. Negotiated as part of the McCleary fix, advocates said the return to additional local levy monies was necessary to prevent imminent widespread school district lay-offs. Critics claimed the lift would create inequality between wealthier suburban districts and those unable to pass a levy. Late Sunday night, legislators reached agreement to lift the lid, stripping Senator Guy Palumbo’s amendment funding charter schools, and creating penalties if a district uses levy funds for basic education.  Other policies that were part of this agreement include retroactively exempting the names of participants in the bump stock buy-back from public record and using a portion of the vape tax to fund the Andy Hill cancer research center.

 

Earlier in the evening, the Legislature also passed Initiative 1000, allowing the state to use affirmative action to address discrimination or underrepresentation by race, gender, sexual orientation, disability, and veteran status, so long as those factors are not the sole qualifying reason for choosing an otherwise less-qualified applicant. This vote keeps the bill off the November ballot, where chances of passing were slim. After the Senate vote was taken, angry voices from anti I-1000 Asians for Equality could be heard shouting “Vote them out!” and “Let the people vote!” The opponents have already filed a referendum.

 

Coming into session, Democratic legislators and Governor Jay Inslee recommended a variety of plans to raise revenue. In the final weeks of session, it became evident the proposed capital gains tax lacked adequate votes in 2019.  Another bill which failed to gain support was SB 5996, sponsored by Senator Kevin Van De Wege, which would have created a fund for wildfire prevention and suppression through tax increases on insurance companies.

 

In the last days of session however, the Legislature did pass $830 million dollars in new revenue in the 2019/21 biennium including:

 

 

  • SB 5997, sponsored by Senator Christine Rolfes (D-Bainbridge), converts the nonresident sales tax exemption to a remittance program and will raise $54 million in the 2019/21 biennium. This will largely impact Oregon residents shopping in Vancouver.

 

  • HB 2116, sponsored by Representative Gael Tarleton (D-Ballard), increases the B&O tax paid by financial institutions with an annual net income of at least $1 billion, adding a 1.2% surcharge raising $133 million in the 2019/21 biennium. Because the surcharge from HB 2158 will also be applied, B&O rates for large banks will double, rising from 1.5% to 3%.

 

  • HB 2158, sponsored by Representative Drew Hansen (D-Bainbridge), applies a 20% B&O surcharge on income from approximately 80,000 service businesses such as lobbyists, engineers, accountants, doctors, and lawyers; a 33.33% B&O surcharge on income from advanced computing businesses with revenue of more than $25 billion but less than $100 billion; and a 66.66% B&O surcharge no advanced computing businesses like Microsoft with revenue of more than $100 billion. It will raise $380 million in the 2019/21 biennium to provide tuition-free public college and apprenticeships for families earning less than $50,000 per year, and partial scholarships for families earning up to the state’s median income.

 

  • HB 1873, sponsored by Representative Gerry Pollet (D-Seattle), places a high excise tax on vape products, raising $28 million in the 2019/21 biennium to fund foundational public health and a cancer fund named after the late Senator Andy Hill. Many vape product retailers have claimed the cost involved will cause stores to close.

 

  • SB 5998, sponsored by Senator Joe Nguyen (D-West Seattle), applies a graduated Real Estate Excise Tax to raise $244 million in the 2019/21 biennium. For homes sold for less than $500,000, REET will be reduced. For homes sold above $1.5 million, REET will be increased.

 

  • SB 6004, sponsored by Senator Christine Rolfes (D-Bainbridge), removes the tax preference for travel agents and tour operators to raise $5 million in the 2019/21 biennium. Supported by Expedia, many travel agents warn they will close their doors.

 

 

 

The $52.4 billion Operating Budget spends an additional $2 billion, 17% more than the last biennial budget to fund Democratic priorities including:

 

  • $3.9 billion to maintain current K-12 funding, including salaries and cost of living increases
  • An additional $155 million for special education
  • An additional $460 million for school employee benefits
  • $451 million for state employee salary increases and health care benefits
  • $280 million for behavioral health
  • $10.3 million towards the backlog of 10,000 untested rape kits
  • $35 million for high level foster care providers
  • $83 million to increase rates paid to state supported childcare providers
  • $45.5 million for wildfire prevention and suppression
  • $41 million for homelessness

 

 

The Low Carbon Fuel Standard, a priority for Governor and presidential candidate Jay Inslee ultimately failed in the last week of session. In addition to the many other climate wins this session – such as a 100% Renewable Energy Policy for Electricty Generation (SB 5116), Clean Buildings Policies (HB 1257) and a phase out of Hydrofluorocarbons in refrigeration and air conditioning (HB 1112) -- presidential candidate Jay Inslee can also campaign on passage of “Cascade Care,” a public option health insurance policy that directs the state to contract with private insurers to provide plans on the individual market with the state capping reimbursement rates for providers at 160% of the Medicare rate. The plan is designed to aid the 4% of insurance customers shopping for a policy on the state exchange who neither receive workplace insurance benefits nor qualify for subsidized plans. The consumer costs for these plans have increased by double digits each of the past few years. Inslee says he is “hopeful that this can be an example for the rest of the country,” but the Washington State Medical Association has warned their members will not participate, dramatically limiting patient access to care. The plan is also opposed by the Washington State Hospital Association and Kaiser Permanente.

 

Both sides of the aisle recognized the work of outgoing Speaker of the House Representative Frank Chopp (D-Seattle) on Sunday evening. House Democrats announced on Wednesday, April 24th that they will delay the election of a new Speaker until the summer, easing tensions within the caucus. Speaker Frank Chopp (D-Seattle), the longest reigning Speaker in the United States will step aside a few days after Sine Die, at which point Speaker Pro Tem, Representative John Lovick (D-Mill Creek), will temporarily assume duties of Speaker. A number of people are rumored to be interested in the position, including Representatives June Robinson (D-Everett), Monica Stonier (D-Vancouver), Laurie Jinkins (D-Tacoma), Gael Tarleton (D-Ballard) and John Lovick (D-Mill Creek).  Chopp has said he will return to status as a rank and file member after serving twenty years as Speaker.

 

Below are the specific bills we worked on and tracked this year that passed the Legislature.  After the Governor completes his work (signing or vetoing legislation – including the final budgets), I will send detailed reports with impact of laws and work for next session.

 

 

 

Bill Details

Status

Sponsor

Priority

Position


2SHB 1087 (SSB 5331)

Long-term services & support

Del to Gov

Jinkins

High

Concerns

Concerning long-term services and supports. Puts in place a new 0.58 percent payroll tax on all employees to fund this program.

Establishes a long-term services and supports (LTSS) trust program (trust program) that provides up to $36,500 in lifetime benefits for eligible beneficiaries to apply to the cost of their long-term care. Assesses a 0.58 percent premium on an employee's wages to fund the trust program. Requires the Health Care Authority, Department of Social and Health Services, the Employment Security Department, and a newly established LTSS Trust Commission to work together to administer the program.


SHB 1102 (SSB 5134)

Capital budget 2019-2021

Del to Gov

Tharinger

High

Support

Concerning the capital budget.


ESHB 1109 (SB 5153)

Operating budget

Del to Gov

Ormsby

High

Neutral

Making 2019-2021 biennium operating appropriations.

Makes 2019-2021 biennium operating appropriations.


ESHB 1160 (SSB 5214)

Transportation budget

Del to Gov

Fey

High

Support

Making transportation appropriations for the 2019-2021 fiscal biennium.


EHB 1219 (SB 5195)

Real estate taxes/housing

C 73 L 19

Walen

Medium

Concerns

Providing cities and counties authority to use real estate excise taxes to support affordable housing and homelessness projects.

HB 1219 - DIGEST Authorizes the use of real estate excise taxes, by cities and counties, to support affordable housing and homelessness projects.


E3SHB 1257 (2SSB 5293)

Energy efficiency

Del to Gov

Doglio

High

Concerns

Concerning energy efficiency.

Brief Summary of Bill Requires the Department of Commerce (Commerce) to establish a State Energy Performance Standard for covered commercial buildings by November 1, 2020. Requires Commerce to establish a State Energy Performance Standard Early Adoption Incentive Program. Requires the State Building Code Council to develop rules for electric vehicle infrastructure that require electric vehicle charging capability at all new buildings that provide on-site parking. Establishes energy benchmarking requirements for covered commercial buildings. Establishes a natural gas conservation standard. Authorizes a gas company to propose a renewable natural gas program. Requires each gas company to offer by tariff a voluntary renewable natural gas service available to all customers.


SHB 1377 (SSB 5358)

Housing dev./religious orgs.

Del to Gov

Walen

Medium

 

Concerning affordable housing development on religious organization property.


SHB 1399 (SSB 5449)

Paid family & medical leave

C 13 L 19

Robinson

Medium

Neutral

Concerning paid family and medical leave.

Modifies and reorganizes certain statutes in the family and medical leave program.


SHB 1403

Municipal B&O tax apportion.

C 101 L 19

Frame

Medium

Support

Simplifying the administration of municipal business and occupation tax apportionment.


SHB 1406 (SB 5646)

Affordable housing/sales tax

Del to Gov

Robinson

Medium

 

Encouraging investments in affordable and supportive housing.


2SHB 1424 (SB 5069)

CTE course equivalencies

Del to Gov

Steele

High

Support

Concerning access to state career and technical course equivalencies.


ESHB 1450 (ESSB 5478)

Noncompetition covenants

Del to Gov

Stanford

Medium

Concerns

Concerning restraints on persons engaging in lawful professions, trades, or businesses.


HB 1568 (SB 5570)

Port district worker dev.

Del to Gov

Chapman

Medium

Support

Concerning port district worker development and occupational training programs.

Authorizes port districts to contract with nonprofit corporations and private and public entities that provide certain training systems and promote workforce diversity. Requires ports that are seeking to engage in certain activities or contracts to, by resolution, declare that port-related workforce development provides a substantial public benefit consistent with the port commission's economic development goals and with ongoing worker training initiatives in place in the port district.


ESHB 1696

Wage and salary information

Del to Gov

Dolan

Medium

Concerns

Concerning wage and salary information. -- primary reason for bill was to ensure that employers could not require applicants to disclose prior salary history on both new hires and promotions.

Needs amendment to remove requirements for posting salary ranges for all new job postings or promotions. Many employers negotiate salaries in these situations and do not have set ranges.


SHB 1798 (SB 5870)

Short-term rentals

Del to Gov

Ryu

Medium

 

Concerning short-term rentals.


E2SHB 1923

Urban residential building

Del to Gov

Fitzgibbon

High

 

Increasing urban residential building capacity.


E2SHB 2042

Green transportation

S Pres Signed

Fey

Medium

Concerns

Advancing green transportation adoption.


ESHB 2140

K-12 education funding

S Pres Signed

Sullivan

High

Concerns

Levy Lid Lif

Enrichment Levies. Beginning in the 2020 calendar year, the proposed substitute changes the enrichment levy limit for school districts from the lesser of $2,500 per pupil or $1.50 per $1,000 of assessed property value to either 20 percent of the state and federal levy base in the prior school year or the lesser of $3,000 per pupil or $1.50 per $1,000 of assessed property value. Local Effort Assistance. Beginning in the 2020 calendar year, the proposed substitute bill changes the local effort assistance funding formula for school districts from $1,500 per pupil for eligible districts to a formula that equalizes districts up to 10 percent of the state and federal levy base in the prior year for districts with less than 70 percent of students eligible for free and reduced priced meals. Districts with 70 percent or more eligible for free and reduced-priced meals are equalized up to 12 percent of the state and federal levy base.


E2SHB 2158

Workforce education

Del to Gov

Hansen

High

Oppose

Imposes a .3 surcharge on some service businesses and increases the B&O for some tech companies to 2.0% to create a workforce education investment to train Washington students for Washington jobs.

While the projects funded are ones supported by business (apprenticeship programs, career connected learning, etc...) the increase in the B&O taxes is opposed by most.


SHB 2159

Budget stabilization account

Del to Gov

Ormsby

High

 

Making expenditures from the budget stabilization account for declared catastrophic events.


SHB 2167

Financial institutions tax

S Pres Signed

Tarleton

High

 

Relating to tax revenue.


E2SSB 5116 (2SHB 1211)

Clean energy

Del to Gov

Carlyle

High

Concerns

Supporting Washington's clean energy economy and transitioning to a clean, affordable, and reliable energy future. There are significant concerns over the resulting cost increase for electricity as a result of this bill. Several "off ramps" have been included in the bill to measure economic impact.

Requires electric utilities to be completely carbon neutral by 2030 and to be using only 100% renewable energy sources by 2045. Restricts use of natural gas but only for electrical generation, not for home heating.


ESSB 5313

School levies

H Spkr Signed

Wellman

High

 

Raises the property tax levy lid for school districts.

Brief Summary of Second Substitute Bill ?--Allows a district to levy at the lesser of $2.50 per $1,000 of assessed value or $2,500 per pupil for school districts with fewer than 40,000 FTE students. -- Allows a district to levy at the lesser of $2.50 per $1,000 of assessed value or $3,000 per pupil for school districts with 40,000 FTE students or more. ?-- Provides local effort assistance to school districts that do not generate an enrichment levy of at least $1,500 per student when levying at a rate of $1.50 per $1,000 of assessed value. ?-- Provides that districts that are eligible for local effort assistance (LEA) but do not levy $1.50 receive LEA in proportion to the lesser of $1.50 or the school district's actual levy. ?-- Bases the definition of inflation on the implicit price deflator for personal consumption expenditures. -- Limits growth in supplemental contracts for teacher salaries. --?Provides enrichment funding for charter schools based on the local enrichment levy collected by school districts.


ESB 5334 (HB 1306)

Common interest ownership

Del to Gov

Pedersen

High

Support

Concerning the Washington uniform common interest ownership act. - reduces liability for contractors who build condominiums

SB 5334 - DIGEST Modifies the uniform common interest ownership act regarding condominium liability and makes technical corrections to certain statutes.


ESSB 5383

Tiny houses

Del to Gov

Zeiger

Medium

 

Concerning tiny houses.


ESSB 5526 (E2SHB 1523)

Individual health ins market

Del to Gov

Frockt

Medium

Concerns

Brief Summary of Engrossed Substitute Bill (As Amended by Committee) ?Requires the Washington Health Benefit Exchange to develop standardized health plans. ?Requires the Health Care Authority to contract with health carriers to offer standardized qualified health plans. ?Requires the Health Care Authority to develop a plan for premium subsidies for individuals purchasing coverage on the Washington Health Benefit Exchange. ?Requires the Insurance Commissioner to submit an annual report on the number of health plans available per county on the individual market.


ESSB 5825 (HB 1899)

Tolling/I-405, SR 167 & 509

Del to Gov

Hobbs

High

Support

Addressing the tolling of Interstate 405, state route number 167, and state route number 509.


ESSB 5997

Tax preferences

Del to Gov

Rolfes

High

Oppose

Eliminating or narrowing certain tax preferences to increase state revenue for essential public services.


ESSB 5998

Grad. real estate excise tax

Del to Gov

Nguyen

High

Oppose

Establishing a graduated real estate excise tax.


ESSB 6004

Travel agents & tour ops/tax

Del to Gov

Rolfes

High

 

Relating to fiscal matters.


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