Hedrick Weekly: February 27th - March 3rd
The legislature is now in its eighth week and is in full tilt floor action. Majority Democrats are hard at work passing their 2023 priorities including abortion, the environment, labor and workforce issues, affordable housing, and gun violence. Some bills will die during this floor period because they are simply not one of the majority party’s priorities or they lack adequate votes. Other bills that are indeed majority caucus priorities will die on the floor calendar because the bills get laden with time-consuming amendments from the minority party. Still other bills will become the victims of too little time and too many bills moving through the process. Bills have until Wednesday, March 8 to pass the floor in the house of origin. If a bill does not pass the floor in its house of origin, the policy idea moves closer to the dead end of the legislative life continuum and options to revive the concept become fewer.

Early in the week, both chambers began addressing the fallout from the 2022 Dobbs decision. The House passed HB 1469 (Hansen, D-23) also known as the Shield Law, which protects patients and providers of reproductive and gender-affirming care in Washington from retribution by other states. The House also passed HB 1340 (Riccelli, D-3) ensuring that Washington providers cannot be disciplined in Washington State because they provide reproductive or gender-affirming care in accordance with Washington state law, regardless of where their patients reside. The Senate passed SB 5242 (Cleveland, D-49) prohibiting out-of-pocket costs for abortion and SB 5599 (Liias, D-21) which provides that a licensed shelter for runaway or homeless youth does not need to contact the youth's parents if there is a compelling reason not to, including a youth seeking protected health services such as abortion or gender-affirming care.

Environmental issues have been on the agenda for majority Democrats this week as well. The House passed HB 1085 (Mena, D-29) this week, which seeks to address the use of plastics by eventually prohibiting hotels from providing small plastic bottles of soap and shampoo, requiring new construction that provides a drinking fountain to provide water bottle refill stations, and prohibiting the sale of expanded or extruded plastic foam in overwater structures. Also passed this week was HB 1047, also by Rep. Mena, that would ban formaldehyde and formaldehyde releasers, PFAS, lead, phthalates, and other chemicals in cosmetics and personal care products by 2025. The Senate passed SB 5447 (Billig, D-3) a bill giving a B&O tax credit for sales and purchases of alternative jet fuel and also moved legislation aimed at reducing the amount of polychlorinated biphenyls (PCBs) entering Washington state waters. SB 5369 (Billig, D-3) would petition the U.S. Environmental Protection Agency to lower the level of PCBs in consumer products and require the state Department of Ecology to make rules prohibiting paints and inks containing PCBs in Washington.

Labor and workforce issues came into play this week with the passage of SB 5550. Among other items, the bill requires Washington State Ferries to adopt a formal DEI strategy and allows WSF employees to gain maritime credentials and pilotage on the job. After a lengthy debate and a number of proposed amendments, the Senate also 2 passed SB 5217 (Dhingra, D-45), the bill to reinstate the Department of Labor & Industries (L&I) ability to regulate ergonomics. Last year’s version of the bill died in the Senate, so many see this as an indicator the bill will indeed make it over the finish line this year. The House passed HB 1176 (Slatter, D-48) enacting the Washington Climate Corps Network to help transition Washington’s workforce to a clean energy economy.

Affordable housing is a focus for House Democrats this week as they passed HB 1074 (Thai, D-41) after a long debate. The bill would provide a three-year statute of limitations for landlords to file a lawsuit to recover expenses exceeding a damage deposit, prohibits landlords from withholding tenant deposits in certain instances, and requires landlords to substantiate the cost of any damages withheld from a tenant deposit with repair estimates, invoices, or other documentation.

The Senate began the majority’s work on gun violence prevention this week with the passage of SB 5078 (Pedersen, D-43). The bill requires firearm industry members to establish, implement, and enforce reasonable controls regarding the manufacture, sale, distribution, import, use, and marketing of the firearm industry members' firearm and firearm related products. It also prohibits firearm industry members from creating or maintaining a public nuisance and authorizes the attorney general to investigate suspected violations of firearm industry members' duties and to enforce actions against such firearm industry members.

The Washington State Economic and Revenue Forecast Council met Friday. Revenue collections since the November forecast are $89 million (1.1%) above expectations. The report warns of a possible recession in the next year as inflation remains high, leading the Federal Reserve to continue to raise interest rates and layoff notices have increased. The next monthly revenue collection report will be available on March 14 and the revenue forecast will be presented on March 20. These reports inform legislative budget writers as they craft 2-year legislative budget proposals.

The Washington State Department of Health announced Friday that effective April 3, masks are no longer be required in healthcare, long-term care, and adult correctional facilities. The end of Washington’s universal masking requirements aligns with a similar announcement made Friday by the state of Oregon. DOH continues to recommend masks for patients, healthcare providers, and visitors in healthcare settings. Several worker protection requirements enforced by the Department of Labor & Industries remain in effect, including that employees and contractors may choose to use facemasks or other personal protective equipment on the job without employer retaliation. Additionally, under the state Health Emergency Labor Standards Act rules, several key worker protections remain in place until the federal pandemic response declaration ends May 11.

This week a reliable rumor has revealed a tentative legislative budget where the Senate Operating and Capital budgets are expected on about March 21st (one day after the revenue forecast) and the House Operating and Capital released on March 27th. 

NYBA lobbyist Jim Hedrick has shared his thoughts on the current legislative session, and highlighted the following items that will be of particular interest to our NYBA members:

"The Washington State Legislature is now about a third of its way through to its adjournment date on April 23. This past Friday (2/18) was the policy committee cutoff and next Friday (2/24) is the fiscal committee cutoff. 

This week the House Capital Budget Committee is hearing  SHB 1378 concerning the removal of derelict aquatic structures and restoration of aquatic lands. The bill would authorize the Department of Natural Resources (DNR) to purchase or otherwise acquire lands and facilities related to derelict aquatic structures, and to remove, refurbish, or dispose of derelict aquatic structures. The Senate companion bill, SB 5433, will also be heard in the Senate Ways & Means Committee.

House Bill 1085 concerning plastic pollution continues to advance and is now in the House Rules Committee. HB 1085 was amended to narrow the restrictions on plastic foam in floating overwater structures to apply only to structures or blocks and floats that are not fully enclosed and contained in a 0.15 inch-thick plastic shell or a concrete, aluminum, or steel shell.  The Substitute version is expected to come to a House vote as early as Wednesday of this week. 

Senate Bill 5371 which would expand the perimeter to protect southern resident orcas from 400 to 1,000 yards continues to advance and is in the Senate Rules Committee. The bill would make it unlawful for a person to cause a vessel or other object to approach, in any manner, within 1,000 yards of a southern resident orca or position a vessel to be in the path of a southern resident orca at any point located within 1,000 yards of the whale. This includes intercepting a southern resident orca by positioning a vessel so that the prevailing wind or water current carries the vessel into the path of the whale at any point located within 1,000 yards of the whale. 

The House Finance Committee will hold a hearing on the Margins Tax, HB 1644. The bill has received heavy opposition from businesses across the board as not fully understanding how the bill affects their industry while others argue they would pay significantly more taxes under a new Margins Tax than the current B&O tax. The Margins Tax is not expected to pass the legislature this year until it’s better understood by businesses and the legislature.

Check out the full Hedrick Weekly for February 13th-17th here.

From lobbyist Jim Hedrick:
"The Margin Tax was introduced in the legislature this week as Senate Bill 5482 (link below). SB 5482 is scheduled for a committee hearing next week on Thursday, January 26 at 10:30am before the Senate Committee on Business, Financial Services, Gaming & Trade.

Click here for a link to Senate Bill 5482 Margins Tax

How The Margin Tax Works:

Instead of a business paying tax on their gross revenue with no deductions (unless you are lucky enough to have a special exemption in the code!), ALL BUSINESSES GET A DEDUCTION. Each year, a business gets to take one major deduction of their choosing: cost of labor, cost of goods sold, a flat 30% or a flat $1 million, and then their tax is calculated on their remaining margin.

The rate for all business activity in Washington state under this proposal is 3.1966%. Businesses with $5 million of revenue or less can opt instead to use the EZ rate off 1.75% and pay on gross receipts rather than their margin.

Here are additional resources at taxworkgroup.org:

• Overview of margin tax proposal developed by the Tax Structure Work Group for the 2023 legislature
• Comparison of margin tax proposal, Texas franchise tax, and Washington business & occupation (B&O) tax
• Current law business and occupation (B&O) tax incentives in the margin tax proposal
• Business tax incidence graphs: comparison of business and occupation (B&O) tax vs. margin tax by industry and firm size
• Margin tax bill: SB 5482 Concerning the margin tax

Want to see how much your business would pay? Use the Tax Calculator which has been fully modeled to match SB5482."

Thank your to Jim and the Government Affairs Committee for providing this info to our members.

Into the second week and Legislative Democrats rolled out several of their high-profile priorities including policies on guns, nurse staffing, recycling, middle housing, a margins tax to replace the existing B&O tax and a new wealth tax.

The majority party is making good this week on their bold declaration that voters have called on them to make gun violence a priority in 2023. On Tuesday, 4,406 people signed in not wishing to testify in House Civil Rights & Judiciary Committee on HB1240 (Peterson, D-21), a Governor and Attorney General request bill that prohibits the manufacture, importation, distribution, sale, or offer for sale of any assault weapon, with a few exceptions. This is the seventh session Attorney General Bob Ferguson has requested this bill and Democrats hope this is the year they will succeed. Also heard on Tuesday, were HB 1178 (Hackney, D-11), which repeals the statute that preempts local jurisdictions from adopting laws relating to firearms, HB 1143 (Berry, D-36) which would require gun buyers to obtain a permit before purchasing a firearm, and HB 1144 (Berry, D-36), which would require safety training and an extended waiting period before acquiring a firearm. Over in the Senate, the Law & Justice Committee heard SB 5078, which creates a private right of action towards firearm industry members for those harmed by guns.

Tuesday Senate Law & Justice Committee Chair Senator Manka Dhingra (D-45) announced she would not be give a committee hearing to a bill addressing vehicular police pursuits. Dhingra said she “has not seen any data correlating crime to the vehicular pursuit ban and the 2021 law limiting police pursuits was passed when crimes were already on the rise, . . . the “increase in crime occurred nationally, regardless of laws that people have passed.” Fellow Democrat Senator John Lovick (D-44), a former Washington State Patrol Sargent and Snohomish County Sheriff has introduced SB 5352 which would change the evidentiary standard for officers to pursue suspects from “probable cause” to “reasonable suspicion” and additional mandatory conditions on pursuits that include communication with a commanding officer. SB 5352 has bipartisan cosponsors and is awaiting action in Dhingra’s Law & Justice Committee.

House and Senate Transportation Committees received hours of public testimony on Governor Inslee’s proposed Transportation budget. The governor’s proposal has taken sharp criticism from around the state for the “delays” of several major highway projects including US 2 and State Route 522 in Snohomish County, State Route 18 connecting I-90 with I-5 in King County, US 395 the North Spokane Corridor, and State Routh 167 the Gateway project in Pierce County. The governor’s office has fired back stating the

no gas tax, no bonds, all federal and state cash “Move Ahead Washington” plan passed by the legislature last March “front-loaded” the money and there is not the through puts in workforce or at the Department of Transportation (WSDOT) to realistically do all those major projects on the timeline prescribed by the legislature. It is expected the legislature will develop their own transportation budget sequencing which will need to look different given the inflationary costs of highway construction. The House and Senate are expected to release a budget sometime in late March.

The Senate Labor & Commerce Committee heard SB 5236 (Robinson, D-38), bringing out a huge number of participants in the legislative process. 3,015 people signed in not wishing to testify on this bill that directs the Department of Labor and Industries to set staffing standards for health care workers, and specifically, set minimum nurse to patient ratios. Unlike a bill from 2022, this proposal does not set the standards, but has the state develop them over the next two years with input from stakeholders. The bill is supported by labor and is opposed by the Washington State Hospital Association.

The WRAP Act, SB 5154 (Rolfes, D-23), was heard this week, as was its companion HB 1131 (Berry, D-36). This is the latest in a series of bills over the past few years that attempts to overhaul the recycling system in Washington. This proposal implements an extended producer responsibility (EPR) program for packaging and printed paper and establishes minimum post-consumer recycled content requirements on single use consumer products. The bill also authorizes the establishment of an Oregon-style bottle deposit return system. If passed, consumers will pay a 10 cent fee on beverage containers and then redeem the 10 cents at drop locations. The redemption is credited to the consumer’s online account and the funds can be redeemed for cash, put into a college savings account, or donated to nonprofits. The WRAP “bill” is supported by environmentalists and local governments and opposed by industries including waste collectors, grocery stores, and the hospitality industry.

Medium density, or “middle” housing took the stage this week with HB 1110 (Bateman, D-22), a bill that would force cities to allow more housing density in single-family neighborhoods. The bill effectively ends single-family zoning, something the state of Oregon did in 2019 and California did in 2021. Representative Andrew Barkis (R-2), the owner of a property management company, is the second sponsor of the bill, though no other Republicans signed onto it. The bill is supported with great enthusiasm by urbanists and builders, but legislators will face criticism from those who enjoy living in single-family zoning. 1,950 lobbyists and members of the public signed in on it.

Senator Noel Frame (D-36) and Representative My-Linh Thai (D-41) introduced a Wealth Tax bill this week at a news conference. The bills, HB 1473 and SB 5486, would

create a property tax on the ownership of stocks, bonds, and other financial assets over $250 million. The revenue generated is dedicated to four funds - the Education Legacy Trust Fund, which is a dedicated funding source for early learning, K-12, and higher education; the Housing Trust Fund, which pays for the construction of affordable housing, and two new funds created in the bill: a Disabilities Care Trust account that will pay for services for Washingtonians with disabilities, and a Taxpayer Justice account, that will offer credits against taxes paid by low and middle-income families.

Next week, legislative Democrats have reproductive rights on their agenda and will bring forward bills in several committees, including policies on access to abortion, consumer health data, and protecting employers that provide access to reproductive care services.

The 68th Washington State Legislature convened their 15 week (105-day) regular session this week under almost normal circumstances, after having operated in a mostly-remote fashion the past two years. This year, masks are still encouraged and required in most legislator offices and access to all offices is restricted by security, preventing lobbyists and the public from casually dropping by. Some aspects of remote sessions are here to stay, including remote committee hearing testimony. Roughly half of public speakers were remote and committee chairs easily moved from live to remote testimony all week.

Legislative Democrats say they feel emboldened by 2022 General Election results. Democrats are saying the election results prove voters agree with their agenda on abortion, taxes, guns, the environment and other issues. In a recent interview, House Speaker Laurie Jinkins (D-Tacoma) said “People have spoken in terms of the majorities they sent back to the legislature…Washingtonians have said they trust Democrats to lead.” Democrats picked up one seat in the House flipping the seat in the swing 10th Legislative District (Island County), with Clyde Shavers (D-10) besting incumbent Rep. Greg Gilday (R-10), bringing the House political makeup to 58 Democrats and 40 Republicans. Jinkins will now lead a caucus with a lot of new members who have tilted that caucus decidedly to the left politically.

In the state Senate the makeup was 28 Democrats plus one Democrat who caucused and voted with Republicans (Senator Tim Sheldon, D-35) and 20 Republicans. In the 2022 election, the Democrats picked up the Senate seat in the 42nd Legislative District (Whatcom County) flipping from appointed Republican Senator Simon Sefzik to former Representative Sharon Shewmake (D-42), producing a new 29-20 Democrat majority.

Legislative Democrats who control both chambers, in coordination with Democrat Governor Jay Inslee, have a bold agenda for the 2023 session that includes the following issues:

● Gun Violence Prevention - In a recent news interview, Senator Jamie Pedersen (D-Seattle) said “It’s clear what we have done on guns is not troubling the voters,” calling the election results “yet another affirmation of our approach.” This year, Democrats have introduced bills to ban the sale of assault-style semiautomatic rifles, require a permit to purchase a firearm, make gun makers and sellers liable for selling weapons used in crimes, and granting gun control authority to local governments.

● Drug Possession - After the Washington State Supreme Court struck down the state’s felony drug-possession law (aka the “Blake Decision”) during the 2021 legislative session, lawmakers passed a quick fix to classify possession as a misdemeanor but refer people to treatment before charging them. That law sunsets in July. Most lawmakers agree that treatment is needed for people with substance abuse issues, but some members hope for stiffen criminal penalties, while others seek to decriminalize drug possession.

● Housing and Homelessness - Governor Inslee has proposed the state raise $4 billion to build affordable housing by issuing bonds outside the state’s debt limit, which will require legislative and voter approval. If passed as proposed, the bond issue would go to a statewide ballot in November 2023 for voter approval. Additionally, there are proposals to allow more units on residential lots, intensify transit-oriented development, eliminate design review boards on residential construction, and cap the amount landlords can raise rent each year.

● Workforce Issues - Republicans and Democrats agree there is a workforce crisis, given nearly every sector is experiencing staffing shortages due to baby boom retirements and the Covid-era resignations. Senate Majority Leader Andy Billig (D-Spokane) recently said “If you look at law enforcement, we have workforce issues; if you look at early learning, we have a workforce issue.” Expect more legislation to expand apprenticeships, provide retention bonuses, change licensure requirements etc.

● Abortion - In 1991, Washington voters passed Initiative 120, codifying Roe v Wade into state law. 32 years later, Senate Democrats have introduced a bill to amend the constitution to further protect access to abortion and contraception in a post-Roe world. Supporters claim an amendment would offer stronger protections because it is easier for the Legislature to repeal a statute than a constitutional amendment. Amending the constitution in Washington requires a two-thirds majority in each chamber and voter approval.

● Budget - As lawmakers prepare to write the 2023-25 budgets, they do so with increased revenue and a few uncertainties that will play out during session. First, the state is now collecting the new capital gains tax, which is expected to generate hundreds of millions of dollars per year for early learning and childcare. Though, the state Supreme Court will hear arguments on January 26 that could possibly strike down the law, creating a large hole in budget expectations. Second, the Department of Ecology will hold the first of four annual auctions for carbon emission allowances on February 28 under the state’s new Cap & Trade law. The Office of Financial Management (OFM) anticipates the purchase of

“pollution credits” will generate approximately $480 million this year. Legislators will need to agree on how to spend these early proceeds.

Committee hearings this week mostly focused on Governor Inslee’s operating, capital, and transportation budgets, reports due to the legislature from state agencies, and getting this large group of new members up to speed with work sessions on various agencies and topics. This 68th Legislature has 21 brand-new legislators with 9 of whom have served previously or are moving from the House to the Senate.

Expect a faster pace on committee hearings on bills next week. The legislature operates on a series of dates whereby bills must advance beyond a certain point in the legislative process to continue to advance. These hard dates are commonly referred to as “cutoffs.” The first “cutoff” is February 17 where bills must be approved by the committee to which they were originally referred. Next week will be committee hearings on gun bills, a bill to reduce plastic packaging used on products, and a bill to protect the consumer health care data of patients who come from out-of-state to received health care services.