We have only four more weeks left in the 105-day legislative session. Last week, hearings and executive sessions on policy bills continued in advance of the March 29 opposite-house policy cutoff. There was also a shift in focus to the budget; the Senate released and held hearings on its 2023-25 Operating and Capital Budget Proposals.
Revenue Forecast + Senate Budgets
The Washington state revenue forecast was released on March 20, which showed that over the next two years, the state is likely to bring in less revenue than predicted in November. The forecast of funds is $483 million less than expected for the 2023-25 biennium and $541 million less for the 2025-27 biennium. This is attributed to a decline in residential construction, slower growth in personal income, and high inflation. The March forecast is used as a guide for budget writers as they finish crafting their respective budget proposals for the upcoming biennium. We expect this forecast to have an impact on state spending. You can click here to watch the Washington State Economic and Revenue Forecast Council’s presentation.
Also on March 20, the Senate released its 2023-25 Capital Budget Proposal, which outlines the state’s infrastructure spending over the next two years within Washington’s constitutional debt limit. The Senate’s proposal includes $7.9 billion in total budgeted funds, of which $4.7 billion is debt limit bonds for the 2023-25 biennium. Major appropriations in the proposal include:
- $860 million for behavioral health needs across the state
- $625 million for affordable housing projects
- $400 million for grants and loans through the Housing Trust Fund
- $1.2 billion for higher education
- $2.3 million for natural resource projects
A public hearing was held later that day, and then on March 22 the Senate Ways and Means Committee took executive action on the proposal. On March 24 the Senate passed its Capital Budget (ESSB 5200) off the floor, 44-0.
On Thursday, the Senate released its 2023-25 Operating Budget proposal. The proposed budget looks to spend $69.2 billion over the next two years, with $5.1 billion in increased spending for education, housing, behavioral health, public safety, and climate change. Of the $5.1 billion in extra spending, the Senate proposes:
- A $2.9 billion increase for education
- $298 million towards housing and shelter for the homeless population
- $424 million for behavioral health
- $7 million for public safety
- $679 million from the funds raised from the Climate Commitment Act to go towards carbon sequestration, energy-efficient homes, and clean energy projects
- $3.8 billion for reserves for in preparation of an economic slowdown
A public hearing was held on March 24 in front of the Senate Ways & Means, and executive action is scheduled for March 27.
Capital Gains Tax Upheld
On March 24, the Washington State Supreme Court ruled on the capital gains tax, which the legislature passed in 2021. With a 7-2 majority, the court reversed a lower court decision and upheld the tax, stating that it is an excise tax. This tax applies a 7% tax on the sale of financial assets (for example: stocks or bonds) that have a profit over $250,000, and it is expected to bring in $500 million over the next biennium. These dollars are dedicated to early childhood education programs. Last year, the Supreme Court allowed the state to collect on the tax while they considered the case and the state started to collect in January. For more information , click here to read The Seattle Times article.
Legislation to Watch
Employment Law
This legislation would expand social insurance program access to rideshare drivers. Specifically, SHB 1570 provides unemployment insurance to drivers providing services for transportation network companies. It also creates a pilot program in which drivers may elect to pay for Paid Family and Medical Leave coverage. The bill passed the House, 87-9, and was heard in the Senate Labor and Commerce Committee for a public hearing on March 13. The committee took executive action on HB 1570 on March 21, and the bill is now in Rules.
HB 1762 – Protecting warehouse employees
This bill would apply to employers with 100 or more employees in a single facility and 500 employees or more statewide. It would restrict the use of quotas. Unlike the Senate version, the House version has a private right of action. The bill passed the House, 53-42. It was heard on March 16 in the Senate Labor and Commerce Committee. The committee took executive action on the bill on March 23. The bill is now in Rules.
This bill repeals the law prohibiting the Department of Labor and Industries from adopting rules related to ergonomics or musculoskeletal disorders. The bill passed the Senate, 27-21, on March 1. The bill was heard in the House Labor and Workplace Standards Committee on March 14, and the committee took executive action on the bill on March 17. It has been scheduled for public hearing on March 30 in the House Committee on Appropriations.
SB 5236 – Concerning hospital staffing standards
The Nurse Staffing legislation is back from last year. This version of the bill would require the Department of Labor and Industries to regulate and enforce hospital staffing committees, staffing plans, and minimum staffing standards. After negotiations with the Washington State Hospital Association, the bill passed the Senate on March 6, 35-13. The bill was heard in the House Labor and Workplace Standards Committee on March 15. The committee took executive action on the bill on March 21, and it is scheduled for public hearing on March 30 in the House Committee on Appropriations.
Economic Development
HB 1258/ SB 5465 – Increasing tourism to Washington state through enhancement of the statewide tourism marketing account and changing necessary match requirements
This legislation would implement multiple measures to expand tourism in Washington State, including increasing the revenue collected into the Statewide Tourism Marketing Account from $3 to $9 million per biennium. SHB 1258 was unanimously passed out of the House. The underlying bill proposed an increase of $26 million per biennium so proponents of the bill advocated that the full funding be restored as the bill moves through the Senate. HB 1258 was heard on March 14 in the Senate Business, Financial Services, Gaming and Trade Committee. The Committee took executive session on the bill on March 21 where they adopted an amendment that restored the full funding of $26 million. The bill has been referred to the Ways and Means Committee.
HB 1717/ SB 5379 – Supporting innovation at associate development organizations
This legislation requires the Department of Commerce to establish $10 million annual competitive grant program to support and catalyze initiatives to foster innovation, sustainability, partnerships, and equity at associate development organizations. HB 1717 passed the House 90-6. The bill was heard on March 14 in the Senate Business, Financial Services, Gaming and Trade Committee. The committee took executive action on the bill on March 21 and it has now been referred to the Senate Ways and Means Committee.
Housing Affordability and Homelessness
This session the conversation surrounding housing supply and the “missing middle” has gained significant momentum. HB 1110/SB 5190 would require cities with a population of at least 6,000 or a city near an urban growth area with a population of more than 200,000 to increase density in residential areas typically dedicated to single-family detached housing. HB 1110 passed the House March 6 with a strong bipartisan vote, 75-21. The bill was referred to the Senate Housing Committee and was heard on March 17. HB 1110 passed out of the Senate Housing Committee on March 22 and was referred to the Senate Ways and Means Committee.
HB 1517/SB 5466 – Promoting transit-oriented development
This legislation is focused on transit-oriented development, seeking density of residential development near transit hubs and light rail stations. SB 5466 passed the Senate, 40-8, on March 1. HB 5466 was heard in the House Housing Committee on March 16 and is scheduled for an executive session in the House Committee on Housing on March 28.
This legislation would require cities and counties to allow accessory dwelling units (ADUs) in urban growth areas (with some restrictions) and permit homeowners to convert garages into ADUs. The bill passed the House on March 2, 81-15. The bill was heard in the Senate Local Government, Land Use & Tribal Affairs Committee on March 16 and is scheduled for executive session on March 28.
HB 1276/SB 5235- Concerning accessory dwelling units
This legislation would require cities and counties to allow ADUs but differs from HB 1337 in that it also allows homeowners to lease the ADUs as short-term rentals. SB 5235 passed the Senate Feb. 27, 42-6. The bill was heard in the House Housing Committee on March 13 and was scheduled for executive action on March 16, however no action was taken on the bill the bill is now scheduled for executive action on March 27 and if the committee is unable to take it up, they will take executive action on March 28.
Environment
HB 1505/SB 5447 – Promoting the alternative jet fuel industry in Washington
This session bipartisan legislation was introduced related to sustainable aviation fuels. The goal of the legislation is to promote in-state use and deployment of sustainable aviation fuels through tax incentives and other tools. The bill was passed by the Senate on March 1 and is scheduled for a public hearing on March 28 in the House Finance Committee.
HB 1216/ SB 5380 – Concerning clean energy siting
This legislation would create an Interagency Clean Energy Siting Coordinating Council to be co-chaired by the Department of Ecology and the Department of Commerce. The purpose of the council would be to expedite permitting for clean energy projects. The bill would also establish a definition for clean energy projects “of statewide significance” and require SEPA review to be completed within two years. This legislation passed out of the House on March 4 with a strong bipartisan vote. On March 15 a public hearing in front of the Senate Environment, Energy & Technology Committee was held. On March 24, the committee took executive action and sent the bill to Ways and Means on a party line vote.
The WRAP Act passed out of the House and Senate policy committees and were sent to fiscal committees for further consideration. HB 1131 was passed by the House Appropriations Committee. The Committee adopted a proposed second substitute version of the bill and then adopted one additional amendment related to packaging for products intended for animals regulated under FIFRA. You can view the full text of 2SHB 1131. The bill was pulled from Rules and placed on the House floor calendar, however it ran into stiff resistance from a variety of stakeholders, including a significant number of legislators and ultimately did not pass out of the House. At this point, the bill appears to be dead for this session. We will continue to monitor what may come from this, but no matter what, conversations around recycling and how to manage recycling will continue. There is currently language in the Senate Operating Budget for a recycling study.
Transportation
HB 1791 – Studying the need for increased commercial aviation services
This legislation would replace the Commercial Aviation Coordinating Commission, which was tasked in 2019 with identifying locations for a new large airport in Western Washington, with a Commercial Aviation Coordinating Work Group. The new Work Group would evaluate the commercial aviation needs of Washington within the broader context of state transportation needs and the specific needs of Western Washington. It would also require the Work Group to investigate the expansion of existing aviation facilities and possible locations for new greenfield aviation facilities and report on the strengths and weaknesses of each site considered. This substitute was passed out of the House Transportation Committee on Feb. 23 and the House passed the bill, 88-9. The bill had a public hearing in the Senate Transportation Committee on March 21 and is not yet scheduled for executive action.
What’s Coming Next
Despite having less than a month left, the legislature still has a lot to do. The House is expected to release its Capital, Operating, and Transportation Proposals on March 27, with a public hearing to come soon after. The Senate Transportation budget proposal is also expected to come out this week. Both bodies will work to pass their respective budget proposals through the legislative process while negotiations begin in earnest between the House and Senate budget writers. Ultimately, the House and Senate need to come together to reconcile differences and to pass the final budgets.
Important Dates
March 29, 2023 – Policy Committee Cutoff – Opposite House
April 4, 2023 – Fiscal Committee Cutoff – Opposite House
April 12, 2023 – Opposite House Cutoff
April 23, 2023 – Sine Die