Legislative Report
By Boswell Consulting
The 105-day, 2025 legislative session officially adjourned on April 27 (click here to watch the Sine Die ceremony).
During the last week of the session, the legislature focused on reconciling differences on bills passed by the House and Senate, passing major new taxes, and negotiating the final 2025-27 Operating, Capital and Transportation Budgets. During this session, 2,535 bills were introduced and ultimately 432 are on their way to the Governor’s desk to be signed into law. The Governor also has the option to veto a bill entirely or veto a specific section or appropriation within a bill. To see a full list of bills that have already passed the legislature and have been signed by the Governor, click here. Any bill that did not pass this session will automatically be reintroduced next session, the second half of the biennium.
High-profile policy issues played out in the final week of session. Senate Bill 5041 was a top priority for labor this session, the bill makes striking employees eligible for unemployment insurance benefits. While the bill passed both chambers, the Senate and House disagreed on the amount of time striking employees would be able to access benefits. The bill ultimately ended up in a conference committee where the conferees agreed to six weeks. The bill was approved by both chambers and will head to the Governor’s desk to be signed into law.
Another issue that was front-and-center this session was rent stabilization. After controversial amendments made on the Senate floor, House Bill 1217 ended up in a conference committee. Democrats ultimately agreed to and passed a compromise version of the bill on the final day of session. The compromise bill caps rent increases at 7% annually plus inflation, or 10%, whichever is less. The bill also prohibits rent increases during the first 12 months of new tenancy. You can read more about House Bill 1217 here.
Tax and Revenue Update
The 2025 State Legislative Session was notable in that it marks the largest tax increase in state history. The total revenue package, not including transportation revenue, raises approximately $9.4 billion over 4 years. This package of taxes includes a broad B&O increase with an additional 0.5% surcharge on businesses with $250 million in revenue, elimination of several preferential tax rates, increase in capital gains taxes, increases in estate taxes, new sales taxes on certain services, a zero-emission vehicle tax, and a broad increase on liquor license fees. The final revenue package was created following signals from Gov. Bob Ferguson that he would not sign a budget that relied heavily on new and untested taxes, like the proposed wealth tax. Gov. Ferguson has also consistently urged the legislature to look for opportunities to reduce spending before raising taxes or creating new taxes. The original tax packages released by the majority party had much higher price tags and relied heavily on a new wealth tax. It is unclear where the new Governor stands on their final $9.4 billion dollar tax package. In a statement released yesterday, the Governor commended the legislature for its work and stated that he would review the revenue proposals carefully. You can read that statement here.
The final 2025-27 Capital Budget includes $7.6 billion in new appropriations for the 2025-27 biennium, with $4.5 billion financed with general obligation bonds. Some highlights of spending include $975 million in education, $2 billion on natural resources, $760 million on housing, $1.2 billion on higher education, and $466 million on behavioral health facilities.
The final 2025-27 Transportation Budget includes spending of $15.6 billion for the 2025-27 biennium that relies heavily on new revenue. The final transportation revenue package includes a 6 cent-per-gallon tax increase that starts on July 1, followed by a 2% increase annually. Other revenue comes from increased car-tab fees for vehicle weight, and an increase in vehicle sales taxes and a new luxury tax on cars worth more than $100,000, and other changes. Senate Bill 5802 transfers $225.9 million from the transportation budget to the general fund in 2026. Then the bill would transfer $609 million from the general fund to the transportation budget in the next biennium and beginning in 2028, the bill would direct state sales and use tax collections equal to 0.1% of the selling price to the transportation budget which is expected to be around $581.1 million.
The final 2025-27 Operating Budget appropriated $77.9 billion, which represents an increase of $5.9 billion (8.2%) over enacted appropriations for the 2023-25 budget. The proposed operating budget has a projected ending balance for the 2025-27 biennium of $225 million and $2.3 billion in total reserves. While there are significant cuts throughout the budget overall, there is an increase in spending of $1 billion over the maintenance level. Notably, the budget fully funds the collective bargaining agreements with state and non-state employees and does not include any furloughs. This level of spending relies on new taxes and many fund transfers. The operating budget would transfer $629 million from other accounts into the general fund in 2025–27.
Updates on key bills that passed the legislature:
Employment Law
House Bill 1213 creates expanded protections under the state’s paid family and medical leave insurance program. Notably, the bill lowers the minimum benefit increment to four hours of leave and expands job protection and continuation of benefits from the current standard of employers of 50 or more to employers of 8 or more by 2028. The bill passed the legislature and was delivered to the Governor on April 23.
House Bill 1308 requires a private employer to provide an employee or former employee with a copy of the employee’s personnel file within 21 days of a request and requires a public employer to do so in accordance with the requirements and procedures of the Public Records Act. The bill also creates a private right of action. House Bill 1308 has been backed by the workers’ comp section of the claimants’ bar, viewing it as a tool to obtain information outside of formal discovery processes to support their claims. The bill passed the legislature and was delivered to the Governor on April 22.
Economic Development
House Bill 1515 seeks to expand alcohol service options in public spaces and civic campuses, including shared outdoor and indoor service areas and a new license for nonprofit organizations to serve alcohol at community events. The bill modernizes the regulation of alcohol service in Washington state, with provisions for expanded outdoor alcohol service in designated areas through Dec. 31, 2026, expanded service on publicly owned civic campuses for events through Dec. 31, 2027, and special allowances for international sports events in June and July 2026. The Seattle Metro Chamber supported this legislation, which was delivered to the Governor on April 25.
Dead Bills
While this year was tough for the employer community, we wanted to highlight some bills that the Seattle Metro Chamber of Commerce opposed that did not advance this session.
Updates on key bills that DID NOT pass the legislature:
Employment Law
House Bill 1155 would have made any noncompetition covenant void and unenforceable, regardless of when the parties entered into the covenant. The bill made it to the House floor but did not come up for a vote.
Senate Bill 5292 would have made incremental increases to the cap on the total paid family and medical leave premium rate every two years, from Jan. 1, 2027, to Jan. 1, 2033, until it reaches 2%. The bill passed the Senate but ultimately died in House Rules.
House Bill 1764/SB 5578 would have made annual incremental increases to the minimum hourly wage rate, from $17.50 in 2026 to $25 in 2031 and required employers to provide each employee with at least 2.3 hours of paid vacation leave for every 40 hours worked. The bill would have also required employers to provide each employee with at least five days of paid bereavement leave per calendar year. Both bills received public hearing but did not advance this session.
Technology
House Bill 1168 would have required developers of generative artificial intelligence systems or services to post documentation regarding the data used to train the system or service. The bill also had a private right of action. While the bill passed out of committee it ultimately died in House Appropriations.
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