Legislative Update: Week 1

Priority Areas

Budget

Gov budget

The Governor’s proposed budget (HB 1094/SB 5092) was heard in the respective budget committee for each chamber this week. Governor Inslee released his proposed 2021-23 biennial operating, transportation, and capital budgets on December 17^th. After making necessary adjustments to account for enrollment, caseload and other rising costs, the governor’s proposed 2021-21 operating budget increases appropriations from funds subject to the outlook by 7.7% compared to the enacted 2019-21 budget, bringing appropriations to $57.849 billion. Of the proposed amount, $1.737 billion would be new policy items (as opposed to maintenance level funding). The key investment areas in Governor Inslee’s budget focused on COVID-19 recovery; commitment to diversity, equity & inclusion; and Governor Inslee’s climate commitment. The proposed budget was heard in the House Appropriations committee on January 14^th and Senate Ways & Means on January 12^th.

Business Impacts

Paid Family Medical Leave

Rep. Berry introduced HB 1073, which modifies the eligibility threshold for benefits from a minimum of 820 hours worked to a minimum of $1,000 earned. It also expands the job protection provisions by removing the employer size and employee hours worked threshold, and by revising the employment length threshold from 12 month to 90 days. The employer must also maintain existing health benefits during Paid Family Medical leave for any employee covered by the Paid Family Medical Leave job protection provisions. The bill was heard in the House Labor & Workplace Standards committee on January 15^th.

Sen Robinson introduced a similar bill, SB 5097, with the same changes to the job protection provisions and health benefits. SB 5907 does not change to the eligibility threshold but does change the definition of a family member to include any individual related by blood or affinity whose close association with a covered individual is the equivalent of a family member. The bill is scheduled for a hearing in the Senate Labor, Commerce & Tribal Affairs committee on January 18^th.

Taxation of governmental financial assistance programs during an emergency proclamation

Rep. Walen introduced HB 1095, which provides a B&O tax, a public utilities tax, and a retail sales tax exemption for a qualifying grant received on or after February 29, 2020, that is related to a national or state emergency proclamation. "Qualifying grant" is defined as an amount received, or relief from debt or other legal obligation received that is received under a government-funded program to address the impacts of conditions giving rise to an official proclamation of a state of emergency by the President or by the Governor. The bill was heard on January 14^th and is scheduled for executive session on January 19^th in the House Finance committee.

Climate Change and the Environment

Greenhouse gas emissions

Rep. Fitzgibbon and Sen. Stanford introduced HB 1091/SB 5231 on behalf of the Governor, which directs the Department of Ecology to adopt rules establishing a Clean Fuels Program to limit the greenhouse gas (GHG) emission per unit of transportation fuel energy to 10% below 2017 levels by 2028 and 20% below 2017 levels by 2035. Ecology is also directed to update the Clean Fuels Program rules to further reduce GHG emission from each unit of transportation fuel for each year through 2050, consistent with statutory state emission reduction limits. HB 1091 was heard on January 14^th and is scheduled for executive session on January 21^st in the House Environment and Energy committee.

Clean Air Act

Rep. Pollet has introduced HB 1057 legislation that proves that, within the Clean Air Act's definition of "air pollutant," the term "enjoyment of life and property" may include a person's use or enjoyment of a public park, public recreational facility or trail, or publicly owned commons of any municipal government or state agency. HB 1057 was heard in the House Committee on Environment & Energy on January 12^th.

Housing

The Department of Commerce has responded to the ongoing housing crisis exacerbated by the pandemic by providing $30 million to counties for quarantine, isolation, shelter distancing and sanitation. It is estimated that 30,000 households have been assisted with the $100 million in rent assistance the Department of Commerce has provided to counties to prevent evictions through December 2020. The Census Bureau Pulse Survey estimates 12% of Washington renters (127,329 households) are not caught up on rent payments and it would cost $151 million to cover one month of unpaid rent in Washington. The Department of Commerce estimates $500 million in rent assistance from the Federal COVID relief bill enacted in December and the implementation date is unclear at this time.

Local Government option for funding essential housing programs

Sen. Lovelett introduced SB 5012, which authorizes local government to levy a special excise tax up to 10% on internet-based short-term rentals and use those revenues for operating and capital cost of affordable housing programs including homeless housing assistance, temporary shelters, and other related services. The bill was heard on January 13^th in the House Housing and Local Government committee.

Condominium construction

Sen. Padden introduced SB 5024, which exempts condominiums with 10 or fewer units and no more than two stories from the requirement to submit building enclosure design documents and obtain periodic inspections throughout the course of construction. It also allows deposit funds for purchase of a unit to be used for construction costs. The bill was heard on January 12^th, amended and passed on January 14^th in the Senate Law and Justice committee. The amended bill clarifies statutory limitations that apply to earnest money deposits for real estate conveyances do not apply to deposits for the purchase of a unit in a condo community. It has been passed to the Senate Rules committee for further consideration.

Revenue

Elway Poll

In a new Crosscut/Elway poll, voters favored only 1 of 4 tax measures lawmakers are considering.

• 51% of voters were in favor of a payroll This was the only revenue proposal to poll with a majority of voters in support.
• 47% of voters were in favor of a plan to enact a statewide cap-and-trade program, which is designed to limit greenhouse gas
• 41% of voters surveyed said they support enacting a new tax on capital gains. That polling is lower than in past years. For example, in January 2015, 58% of those surveyed said they favored a capital gains
• 36% of voters said they would support a plan to tax health insurance companies, called a ‘covered lives tax’.

Pollster Stuart Elway said the poll results could indicate “it’s going to be tough sledding for the governor’s agenda” at the state Capitol this year.

Capital gains

Sen. Robinson introduced SB 5096, which imposes a 9% capital gains tax beginning January 1, 2022 on earning above $25,000 for individuals and $50,000 for joint filers. The tax would not apply to residential dwellings along with the land upon which the dwelling is located; assets held in a retirement account; assets transferred as part of a condemnation proceeding; livestock related to farming or ranching; agricultural land that meets certain requirements; certain types of property used in a trade or business such as machinery and equipment that have been immediately expensed; capital assets acquired and used only for purposed of a trade or business of a sole proprietorship; and timber and timberlands. The bill was heard on January 14^th in the Senate Ways and Means committee.

Covered Lives

Rep Riccelli and Sen. Robinson introduced HB 1201/SB 5149, which would impose a tax on health insurance plans in Washington. The tax assessed is $3.25 per member per month on health carriers, Medicaid managed care organizations, and third-party administrators. The covered lives assessment is estimated to be $143 million for fiscal year 2024 and $200 million for fiscal year 2025 and each fiscal year thereafter ($400 million biennially). Revenue collected under this proposal is deposited in the foundational public health services account. The bill is at the request of the Governor. HB 1201 has been referred to the House Finance committee and SB 5149 has been referred to the Senate Health & Long Term Care committee. Neither has been scheduled for a hearing yet.

Transportation

The transportation committees in both chambers received an update on the Governor’s 2021-23 transportation budget. The Governor’s $10.8 billion transportation budget prioritizes investments in clean green transportation, fish passage barrier removal, preservation, safety, and equity. Both transportation committees have 11 bills each and that includes the budget bills.