State Director Patrick Connor reports from Olympia on the small business agenda for the legislative week ending April 18

Wednesday, April 16, was opposite chamber cut-off, meaning House bills had to pass the Senate and vice versa by the end of the business day. This was the first year in memory that both chambers adjourned by 5 p.m. without a controversial bill being brought to the floor minutes before the deadline, allowing the body to debate it past the 5 o’clock hour. It was surprisingly anticlimactic.

However, the House used its NTIB rule to consider several of its own bills deemed “necessary to implement the budget” the next day. In addition, both chambers released a new tax package heralding a nascent budget deal.

Budget & Taxes

Before we get into detail about spending and revenue, please note that NO TAX BILLS HAVE PASSED … no property tax increases, B&O hikes, or gas tax boosts have become law … at least not yet.

The operating and transportation budgets are being negotiated behind closed doors in conference committees. Those panels have three members appointed from each chamber, with the majority party given a two-to-one member advantage. Most troubling about conference committees is they can report back a completely different version of the bill than was sent to the committee for negotiation.

As the two chambers near agreement on the state’s new two-year general operating budget spending plan, they also appear very close to a tax package to fund it. Several companion bills were announced, fittingly, on Tax Day, April 15. We will focus on those with the most direct impact on small businesses, omitting the Tesla tax, Zyn tax, and bullion tax.

HB 2049 / SB 5812 — Property taxes.
SB 5812 was introduced this week as a companion to the House’s property tax bill we’ve previously discussed. SB 5812 was referred to the Senate Ways & Means Committee, but was removed from the executive session calendar during Friday’s (April 18) committee meeting. Meanwhile, executive action planned for HB 2049 in the House Finance Committee April 18 was deferred to a special meeting called for April 19. It looks like the House bill will be the vehicle for this tax increase. NFIB remains opposed to property tax increases.

HB 2081 / SB 5815 — B&O taxes.
Part 1 of the bill would increase B&O base rates for retailing, wholesaling, extraction, and most other activities from the current 0.471% for retail and 0.484% for other classifications, to 0.5% largely across the board. In testimony this week before the Senate Ways & Means Committee, NFIB requested an increase in the Small Business Tax Credit and filing threshold to reduce the impact on our smallest businesses. Sen. Rebecca Saldaña, the bill’s prime sponsor, asked NFIB to provide potential amendment language. We did. However, the bill was also removed from Friday’s Ways & Means executive session calendar. NFIB was signed up to testify on the House companion during Friday’s Finance Committee hearing on HB 2081. We were 4^th on the sign-in list but not given an opportunity to testify. Instead, NFIB provided written comments. The bill is scheduled for Finance Committee approval in the morning, so we will have to try to get our amendment introduced in time for floor action in one or both chambers.

HB 2082 / SB 5813 — Capital gains and estate taxes.
This bill would substantially increase rates for both the capital gains and estate taxes. Many family-owned small businesses are largely protected from the capital gains tax when a firm with $10.7 million or less in annual worldwide gross receipts passes from the owner to a qualifying family member. However, if a business passes from one generation to the next due to the death of an owner, there is only a partial deduction (currently $2.5 million) against a maximum $6 million business value if a list of qualifications are met. In response to NFIB testimony this week, NFIB member and Senate Republican Leader Sen. John Braun amended the senate bill in Ways & Means to increase the small business deduction to the estate tax to $3 million next year then index it to inflation. NFIB appreciates the leadership of Sen. Braun and assistance from Senate Ways & Means Committee chair Sen. June Robinson and finance vice chair Sen. Noel Frame in winning passage of the amendment in committee.

In a press event Thursday, Governor Bob Ferguson renewed his opposition to large tax increases. He also warned, once again, of impending cuts from the Trump Administration. It’s unclear what this means for the looming budget and revenue deal as lawmakers move ahead with their tax package.

Priority Bills

HB 1213 — PFML mandates.
This bill sought to require all employers, regardless of size, to provide job protection and maintain health insurance coverage for workers on Paid Family & Medical Leave. The bill has an estimated cost of nearly $1 billion over six years and is expected to force rates to the statutory cap of 1.2% of payroll by 2027. Then run a deficit. Thanks to a Ways & Means amendment by Chair Robinson, the bill will provide a phased reduction in firm size, finally exempting only those businesses with seven or fewer employees by 2028. The House is scheduled to concur with the Senate amendment as early as this evening (April 18), sending the bill to the governor’s desk for signature. NFIB appreciates the amendment but still opposes the bill. A related bill, SB 5292, would have changed how PFML tax rates are calculated to improve rate stability. That bill was amended by the House labor committee to allow a phased increase in the rate cap to 2% of payroll. That bill appears to have died at opposite chamber cut-off Wednesday. It is possible, but not expected, that the bill could be resurrected as “necessary to implement the budget.” NFIB opposes HB 1213.

HB 1308 — Personnel records.
A Senate amendment replacing the private right of action with an administrative remedy for workers unable to obtain personnel records from their current or former employer within the bill’s 21-day deadline failed to pass. That leaves suing the boss as the only recourse for a dispute about a missed deadline or disagreement over what documents should have been provided. The Senate did adopt an amendment stripping a troublesome, catch-all clause from the bill that would have been a boon to trial lawyers. The slightly improved bill is also slated for a concurrence vote in the House. NFIB opposes the bill.

HB 1382 — All Payer Claims Database.
This NFIB-supported health care cost transparency bill was also amended in the Senate and is expected to win House concurrence.

HB 1409 — Clean fuels program standards.
NFIB opposes this bill increasing the state’s clean fuels standards, which will drive fuel prices up. Again. We are also concerned there is a lack of available alternative fuel additives to meet the higher requirements in the bill. The bill was amended in the Senate; its status in the House is unclear at this time.

HB 1483 — Right to Repair.
The House concurred with Senate amendments made at the request of the bill sponsor, with the support of NFIB and other coalition partners backing this bill. NFIB is disappointed the final version still includes a special exemption for Apple and its biometric security features, but the bill is an important step forward in allowing small businesses to repair a variety of digital devises using parts, tools, and instructions acquired from the manufacturer. The bill is headed to Gov. Ferguson’s desk for signature.

HB 1533 — Specialty electricians. The House concurred with Senate amendments to this bill allowing apprentice electricians to perform some specialty electrical work, like residential electrical installations, without jeopardizing their hours or standing in pursuit of sitting for the commercial journeyman certification exam. NFIB supports the bill, which will be sent to the governor for signature.

HB 1788 — Workers’ compensation benefit increase.
The Senate passed this bill, with seven Republican votes, increasing wage replacement benefits for single parents on time loss due to an on-the-job injury or illness. We find the $36 million fiscal note unrealistic given the original cost breakdown from the Department of Labor & Industries that estimated the price tag to be in excess of $100 million. This bill will also head to the governor for action. NFIB opposes the bill.

SB 5041 — Unemployment benefits for striking workers.
The House passed an amended version of this bill April 12. A narrow bipartisan majority pushed through a four-week limit on benefits, mirroring last year’s House bill. The bill heads back to the Senate for further action. NFIB opposes the bill.

SB 5408 — Job posting right to cure.
A couple of Seattle lawsuit mills have generated $500 million in legal claims against Washington employers who are alleged to have failed to provide complete wage and benefit information in their online job announcements. In many cases, these advertisements were scooped up by third-party websites that did not properly post the necessary material. The House rejected a bad labor committee substitute bill. It then adopted other amendments that weaken the protections in the original bill, but do allow a (convoluted) process for either correcting a deficient job posting or demanding a third-party online entity fix its mistakes. NFIB supports the bill as introduced and will ask the Senate to refuse to concur with the House amendments.

Next week the House and Senate will continue the concurrence/dispute process to resolve differences on bills that passed in different forms. Work on the operating and transportation budgets and related tax packages will also continue. The Legislature must complete its work no later than Sunday, April 27, to avoid going into special session.

Prior Legislative Reports

— April 12: Tax Increases Loom as Session Draws to a Close

— March 28: Small Business Dodges Tax Bullets

— March 22: NFIB Testifies on Two Big WC, UI Bills

— March 15: How of Origin Deadline Passes, Sending Many Bills to an Early Grave

— March 8: Bill Giving Striking Workers UI Benefits Passes Senate

— February 28: Lawmakers Trying to Skirt Federal Law on Unemployment Benefits

— February 21: Minimum Wage Bills Dead For Now

— February 15: NFIB Members Turn Out in Force to Oppose Minimum Wage Bill

— February 8: Minimum Wage Bills Coming Up for First Hearings 

— January 31: Entrepreneurs called on to testify on upcoming legislation by signing-in

— January 25: NFIB Testifies Against Giving Striking Workers Unemployment Benefits

— January 18: Washington State Legislature Begins 2025 Session