Legislative Update: Week 11

Priority Areas

Business Impacts

Paid Family Medical Leave

Rep. Berry introduced E2SHB 1073, which provides temporary alternate eligibility for Paid Family Medical Leave claims through June 30, 2022. One of the key changes that has been made to the bill is that it now utilizes federal funding from the America Rescue Plan act to provide financial assistance to access state paid family and medical leave benefits. It has been scheduled for a hearing on March 30^th in the Senate Ways & Means committee.

Sen Robinson introduced ESSB 5097, which expands the definition of family member in the Paid Family and Medical Leave (PFML) program. It requires the Employment Security Department to collect and analyze data and submit reports to the Legislature with certain information relating to the PFML program and requires the general fund to cover additional leave expenses under certain circumstances. The bill has been scheduled for a hearing on March 30^th in the House Appropriations committee.

Climate Change and the Environment

Climate Commitment Act

Sen Carlyle sponsored 2SSB 5126 on behalf of the Governor and it requires the Governor to establish a comprehensive program to implement the state’s commitment and convene a Climate Commitment task force. It established a cap and invest program for greenhouse gas (GHG) emissions to be implemented by the Department of Ecology and directs distribution of auction revenues to clean transportation, natural climate resiliency, clean energy transition and assistance, and energy efficiency projects. This bill is a critical component in Sen. Hobbs’ transportation package and will be changing and in play till the end of session. The bill was amended and passed by the Senate Ways & Means committee on March 22^nd. There were five amendments adopted in committee and a summary of the adopted amendments can be found here. It has been referred to Senate Rules for further consideration.

Greenhouse gas emissions

Rep. Fitzgibbon introduced E3SHB 1091 on behalf of the Governor, which directs the Department of Ecology to establish a Clean Fuels program to limit the aggregate, overall greenhouse gas emissions per unit of transportation fuel energy to 10% below 2017 levels by 2028, and 20% below 2017 levels by 2035. The bill was heard on March 27^th and is scheduled for executive session on March 29^th in the Senate Ways & Means committee.

Housing

Condominium construction

Sen. Padden introduced ESSB 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 amended and passed by the House Civil Rights & Judiciary committee on March 26^th. A summary of the changes made to the bill can be found here, here, and here. It has been referred to House Rules for further consideration.

Just cause evictions

Rep Macri introduced ESHB 1236, which specifies exclusive causes for eviction, refusal to renew a tenancy, and termination of tenancy under the Residential Landlord-Tenant Act (RLTA) and clarifies penalties for inclusion of unlawful provisions in rental agreements. The bill has been placed on second reading and is awaiting further action by the Senate.

Landlord-tenant relations

Sen Kuderer introduced E2SSB 5160, and requires landlords to offer tenants a reasonable schedule for repayment of any unpaid rent accrued during the public health emergency that does not exceed monthly payments equal to one-third of the monthly rental charges during the accrued debt. It expands eligibility for claim reimbursement under the landlord mitigation program to include unpaid rent accrued during the eviction moratorium and public health emergency periods and the tenant vacated or abandoned the tenancy and any remaining unpaid rent after the tenant defaults on a repayment plan. Additionally, it requires the Department of Commerce to authorize landlord an opportunity to apply to certain state rental assistance programs. The bill was amended and passed by the House Housing, Human Services & Veterans committee on March 25^th. A summary of the changes made to the bill can be found here. It has been referred to House Appropriations for further consideration.

Multifamily tax exemption

Sen Das sponsored E2SSB 5287 and authorize a 12-year extension of existing 8-year and 12-year Multifamily Property Tax Exemptions (MFTEs) that are set to expire if they meet certain affordability requirements. It establishes a new 20-year property tax exemption for the creation of permanently affordable homes.

Additionally, it temporarily expands the definition of a city not otherwise eligible for the 12-year MFTE and the 20-year exemption for permanently affordable homes to include all cities until December 31, 2031. The bill was heard on March 16^th in the House Finance committee.

Revenue source for eviction prevention

Rep Ormsby introduced SHB 1277, which creates an additional $100 surcharge on recorded documents to fund an eviction prevention rental assistance program, landlord mitigation program, and for the operations, maintenance, and service costs for permanent supportive housing. It creates the eviction prevention rental assistance program in the Department of Commerce. It was passed by the House on March 28^th with a 57-40 vote count. The bill is considered necessary to implement the budget (NTIB) so is not subject to the cutoff calendar.

Transit-oriented development

Sen Mullet sponsored SB 5312 and it provides that appropriations to the Growth Management Planning and Environmental Review Fund for the purpose of grants to cities to facilitate transit-oriented development may be used to pay for the costs associated with the preparation of SEPA environmental impact statements, planned action ordinances, subarea plans, costs associated with the utilization of other tools under SEPA, and the costs of local code adoption and implementation of such efforts. It requires the Department of Commerce to prioritize applications for grants to facilitate transit-oriented development that maximize density and transit access related policy objectives. The bill has been scheduled for a hearing in the House Appropriations committee on March 30^th.

Land Use

Climate response through updates to the comprehensive plans

Rep Duerr sponsored E2SHB 1099 and was amended and passed by the House on March 5^th with a 56-41 vote count. The bill adds a goal of climate change mitigation to the listed goals of the Growth Management Act. It adds a climate change and resiliency element to the list of elements that certain counties and cities must adopt under the GMA. Additionally, the Department of Commerce in consultation with other state agencies to publish guidelines that specify a set of actions counties and cities have available to them to take related to greenhouse gas emissions reductions and vehicle miles traveled reductions. The bill was amended and passed by the Senate Housing & Local Government committee on March 24^th. A summary of the changes made to the bill can be found here. It was heard on March 27^th and is scheduled for executive session on March 29^th in the Senate Ways & Means committee.

Emergency shelters and housing through local planning and development regulations

Rep Peterson sponsored E2SHB 1220 and it updates the housing goals of the GMA to include planning for and accommodating affordable housing. It requires jurisdiction to address moderate, low, very low, and extremely low-income housing, and racially disparate impacts in the housing element of the comprehensive plan.

Additionally, it requires the Department of Commerce to provide the inventory and analysis of existing and projected housing needs required in the housing element of the comprehensive plan. The bill was amended and passed by the Senate Housing & Local Government committee on March 25^th. A summary of the changes made to be bill can be found here and here. It is scheduled for a hearing on March 31^st in the Senate Ways & Means committee.

Planning under the GMA

Rep Duerr sponsored ESHB 1241 and it was amended and passed by the House on March 8^th with a 54-43 vote count. The bill increased the review and revision cycle for comprehensive plans and Shoreline Master Plan from 8 to 10 years. It requires counties and cities to submit an implementation progress report with certain required information to the Department of Commerce 5 years after reviewing and revising a comprehensive plan. Additionally, it requires counites, cities, and other local governments to consult with federally recognized tribes during the planning process under the GMA upon receipt of notice from the tribes. It was passed by the Senate Housing & Local Government committee on March 24^th. The bill is scheduled for a hearing on March 31^st in the Senate Ways & Means committee.

Salmon recovery through revisions to the comprehensive plans

Rep Lekanoff introduced E2SHB 1117, and it adds a goal of salmon recovery to the listed goals of the of the Growth Management Act. It requires the land use element of the comprehensive plan to include a strategy that achieves net ecological gain of salmon habitat and stipulates that compliance by local governments is contingent on state funding and takes effect two years after the state funding has been appropriated.

Additionally, capital facilities element and transportation element of comprehensive plan must include a schedule for the elimination of all identified fish passage barriers. The Department of Fish and Wildlife must also adopt rules to establish criteria for net ecological gain and consistency with applicable regional salmon recovery plans. The bill was passed by the Senate Housing & Local Government committee on March 24^th. It is scheduled for a hearing on March 31^st in the Senate Ways & Means committee.

Revenue

Capital gains

Sen. Robinson introduced SSB 5096, which applies a 7% tax to profits from the sale of stocks and bonds, personal property and the sale of a business but only if those profits are in excess of $250,000 for both individuals and those who file jointly. The bill exempts all real estate, retirement assets, assets condemned by the government, livestock, timber, timberlands, goodwill received from the sale of an auto dealership, and certain depreciable property used in a trade or business. The proceeds from the tax must be distributed as follows, the first $350 million each year going into the Education Legacy Trust Account, the next $100 million into the general fund, and the remainder into a newly created taxpayer fairness account. The bill was heard on March 15^th in the House Finance committee. Revenue from the proposal was accounted for into both the House and Senate operating budget proposals.

Rep Senn sponsored a similar bill, HB 1496, and it imposes a 7% capital gains tax on the sale of real property and 9.9% rate on the sale of corporate stocks, bonds, and other high-end financial assets to fund the expansion and affordability of childcare. The bill exempts the first $200,000 in profit for single taxpayers and $400,000 for joint filers. It also exempts primary residences sold for $5 million or less; retirement accounts, including IRA and 401K retirement plans; livestock; and the sale of agricultural land and timber. Qualifying family-owned businesses grossing under $10 million annually are also exempt. The capital gains tax proposal also includes a credit for taxes paid through the Real Estate Excise Tax. For the first two years, 50% of the revenue is directed to the Fair Start for Kids Account created under HB 1213 and the balance goes to the State General Fund. After two years, the amount going to the Fair Start for Kids Account increases to 60%. The bill was heard on February 11^th in the House Finance committee. This bill is considered necessary to implement the budget (NTIB) so is not subject to the cutoff calendar. This proposed new revenue source was not accounted for in either proposed budget.

Covered Lives

Sen. Robinson introduced SB 5149, which would impose a tax on health insurance plans in Washington. Revenue collected under this proposal is deposited in the foundational public health services account. The bill is at the request of the Governor. SB 5149 was heard on January 27^th, amended and passed by the Senate Health & Long-Term Care committee on February 12^th. A summary of the changes to the amended bill can be found here. Among the changes made, the amendment set a maximum per member per month rate and total assessment to be collected for each fiscal year starting at $1.54 in fiscal year 2022 and increasing each year to $3.07 for fiscal year 2026 and beyond. It also removes limited health care services plans from the definition of covered lives. The bill has been referred to the Senate Ways & Means committee for further consideration.

This bill is considered necessary to implement the budget (NTIB) so is not subject to the cutoff calendar. This proposed new revenue source was not accounted for in either proposed budget.

Estate Tax

Rep Orwall sponsored HB 1465 and it changes the Washington estate tax, including increasing the exclusion amount, changing deductions, and making changes to the rates and rate structure. It creates the Equity in Housing Account to be funded by 10% of the estate tax revenues and can only be used to address homelessness, including foreclosure prevention, rental assistance, outreach engagement services, housing services, and behavioral health. The bill was heard on February 9^th in the House Finance committee. This bill is considered necessary to implement the budget (NTIB) so is not subject to the cutoff calendar. This proposed new revenue source was not accounted for in either proposed budget.

Sugary Beverage Tax

Sen Robinson introduced SB 5371, which provides funding for public health services and health equity initiatives through a statewide sweetened beverage tax. The bill imposes a tax on sugar sweetened beverages of $0.175 per fluid ounce, and then annually is adjusted to reflect the yearly increase of the consumer price index. Of the revenue collected, 60% must be deposited into a health equity account, and the remaining 40% must be deposited into the foundational public health services account. The bill establishes a community advisory board to make recommendations on the disbursement of funds in the health equity account. It is scheduled for a public hearing on February 22^nd in the Senate Ways & Means committee. This bill is considered necessary to implement the budget (NTIB) so is not subject to the cutoff calendar. This proposed new revenue source was not accounted for in either proposed budget.

Wealth Tax

Rep Frame and Sen Hunt introduced HB 1406/SB 5426, which improves the equity of Washington state's tax code by creating the Washington state wealth tax and taxing extraordinary financial intangible assets. The bill creates a state wealth tax by narrowing the existing tax preference that exempts all intangible property and assesses a modest one percent tax only on financial intangible assets, such as publicly traded options, futures contracts, and stocks and bonds. The first $1,000,000,000 of assessed value is exempt from the Washington state wealth tax. The bill uses revenue generated by the state wealth tax to offer credits against taxes paid disproportionately by low-income and middle-income families and small start-up and low-margin businesses. In addition, the bill invests the revenues generated by the tax to fund other critical services, such as education, childcare, public health, housing, and public safety. HB 1406 bill was heard on February 2^nd in the House Finance committee. SB 5426 has not yet been scheduled for a hearing. Both bills are considered necessary to implement the budget (NTIB) so is not subject to the cutoff calendar. This proposed new revenue source was not accounted for in either proposed budget.

Transportation

Transportation Budget

The House and Senate released their 2021-2023 biennium and 2019-2021 supplemental transportation budgets on Monday. The pandemic continues to negatively impact transportation revenues and challenge infrastructure funding.

The House proposals for the second supplemental transportation budget for the 2019-21 biennium and the new transportation budget for the 2021-23 fiscal biennium provide spending authority of $9.447 billion and $10.933 billion. The recent enactment of the federal American Rescue Plan, along with earlier federal relief packages, will provide over $1 billion to the state for transportation purposes. A portion of the funds will be used to backfill accounts that supported services affected by COVID-19 pandemic-related revenue losses, a portion will be used to address ferry operating needs, and a portion of the funding will be used to address fish passage barrier removals

The 2021-23 biennial transportation budget focuses on a couple of new and emerging areas of emphasis.

• Diversity and equity: WSDOT office of equal opportunity is provided $6 million for efforts to increase diversity in the transportation construction workforce through the pre-apprenticeship support services The Joint Transportation Committee is directed to conduct a study on the impacts of current and historical city transportation investments on communities of color, low-income households, vulnerable populations, and displaced communities.
• Electrification and green transportation: $152.5 million is provided to continue work on the state’s first hybrid electric Olympic Class vessel, with construction in spring 2022. It also expands previous electric vehicle charging infrastructure and green transportation

The Senate proposals for the second supplemental transportation budget for the 2019-21 biennium and the new transportation budget for the 2021-23 fiscal biennium provide spending authority of $9 billion and $11.7 billion. Federal recovery and relief bills recently passed provide new resources to the transportation budget to help offset some of the impacts of the Covid-19 pandemic. These include:

• $1.0billion from the American Rescue Plan Act of 2021, of which $600 million is being used to partially backfill revenue losses from the pandemic and $400 million is being used for water infrastructure investments to remove fish
• $142.9 million in Coronavirus Response and Relief Supplemental Appropriations Act funds are used to help fund the removal of fish barriers in order to make progress on complying with the court injunction by 2030.
• $124 million in Coronavirus Response and Relief Supplemental Appropriations Act funds are deposited into the Puget Sound Ferry Operations account to offset a shortfall of ferry fare revenue, eliminating the need to transfer funds from other state accounts to support this

Both transportation budgets were passed on March 25^th by their respective committees and were referred to the Rules committee for further consideration.

Extending the issuance period of driver licenses and identicards

Rep Ramel sponsored SHB 1207 and it extends the renewal cycle for standard and enhanced driver’s licenses, standard and enhanced identicards, commercial driver’s licenses, and motorcycle endorsements from 6 years to 8 years and adjusts the associated fees to reflect the new terms while allowing an option for a 6-year renewal term. It allows online issuance and renewal of non-photo driver’s instruction permits and requires remote photo capture at driver’s license and identicard online renewal beginning January 2023. The bill was heard on March 16^th and is scheduled for executive session on March 30^th in the Senate Transportation committee.

Fare enforcement

Rep Fitzgibbon introduced SHB 1301 and was amended by the House Transportation committee to allow Sound Transit to establish an alternative fare enforcement system, which allows for the issuance of notices of violation, the resolution of notices of violation, and appeals. It also limits the fines associated with notices of violation to the same maximum amount allowed for civil infractions. The bill was heard on March 16^th and is scheduled for executive session on March 30^th in the Senate Transportation committee.

Limiting bonding toll revenues on certain state highway facilities

Sen King sponsored SB 5232 and it repeals toll bond authorizations for I-405/SR 167 express toll lanes and the Puget Sound Gateway facility. It also requires toll facility proposals to consider a policy guideline to pledge toll revenue for debt financing only when the revenue is generated from toll bridges. The bill was placed on second reading by the Senate Rules committee on March 5^th and awaits further action. This bill is considered necessary to implement the budget (NTIB) so is not subject to the cutoff calendar.

Transportation Revenue

More details about Sen Hobbs’ proposal are here:

• Balance Sheet: http://leap.leg.wa.gov/leap/Budget/Detail/2021/stHobbsBalancSheet012821.pdf
• Revenue Summary: http://leap.leg.wa.gov/leap/Budget/Detail/2021/stHobbsNewLawRevenueSummary012821.pdf
• Project List: http://leap.leg.wa.gov/leap/Budget/Detail/2021/stHobbsNewLawProjectList012821.pdf

Details about the Rep Fey’s proposal are here:

http://leap.leg.wa.gov/leap/Budget/Detail/2021/htRevenueAndSpendingFramework1_19.pdf

Sen King unveiled an 8-year $10.1 billion revenue proposal on February 19^th. It includes a $0.03 cent gas tax increase, increase in vehicle weight fees, transit and light rail surcharge, 2% increase in the bicycle sales and use tax, and shifting the motor vehicle sales and use tax from the operating budget to the transportation budget. His proposal predominately funds highway maintenance and preservation, culverts, and major highway projects such as the US 2 Trestle, Hood River Bridge, and I-5 Columbia River Bridge. Details about Sen King’s proposal can be found here.