State Revenue Up $1.5 Billion—But it Hasn’t Quenched Thirst for New Taxes

Small Business Bill of Rights wins unanimous Senate approval

State Director Patrick Connor reports from Olympia on the small-business agenda for the legislative week ending February 21.

Week 6 of the 2020 Washington State Legislature meant late nights Sunday through Tuesday as the state House and Senate took to the floor to pass a flurry of bills in advance of Wednesday’s 5 p.m. House of Origin cut-off. Both chambers resumed committee hearings Thursday morning.

Thanks to Wednesday’s deadline, and a number of amendments NFIB or others negotiated, our bill-tracking list has been winnowed to a baker’s dozen of key bills still in play affecting small business. Borrowing from Hollywood, and NFIB California, here they are, categorized as The Good, The Bad, and The Ugly.

The Good

SB 6408, the Senate version of NFIB’s Small Business Bill of Rights, won unanimous approval from that body Wednesday, after languishing on the 2nd reading calendar for a week. We sincerely appreciate the unrelenting efforts of NFIB members Sens. Mark Mullet and Lynda Wilson who secured a floor vote just hours before cut-off. We expect the bill will be referred to the House State Government & Tribal Relations Committee, which unanimously approved the House version, HB 2577, on February 11. Gov. Jay Inslee’s office has already contacted committee chairwoman Rep. Mia Gregerson, formally requesting a hearing on our bill.

HB 2457, establishing a health care cost transparency board, passed the House and was sent to the Senate Health & Long-Term Care Committee for public hearing. NFIB has long supported greater transparency of health-care costs and quality metrics to allow small-business owners and other consumers access to better information upon which to make health care and health insurance purchasing decisions.

HB 2477, limiting new professional licensing requirements to those serving a public interest, passed the House and was sent to the Senate Labor & Commerce Committee for further consideration. Professional licensing requirements are often a long and expensive barrier to entry for workers seeking to join their chosen profession or launch their own small business. HB 2477 would require new licensing regimes to serve a public interest, not unduly limit opportunities for those seeking employment.

HB 2479, allowing the City of Kent a one-year extension to join the FileLocal business licensing and local B&O tax portal. Kent is among the 230 or so Washington cities and towns requiring a municipal business license. Kent also imposes a local B&O tax, so it makes sense for them to join the FileLocal consortium. However, IT issues have delayed Kent’s enrollment in FileLocal. Without this bill, Kent would be required to join the Department of Revenue’s (DOR) Business Licensing Service (BLS). This requirement resulted from an agreement between NFIB and other business groups, the cities, and DOR to move all municipal business licenses online, making it easier and more cost-effective for small businesses to obtain those licenses. The bill passed the Senate and was referred to the House Finance Committee for action. That committee previously passed the companion measure, HB 2840.

SB 6097, allowing the Insurance Commissioner to consider health insurer excess surplus balances when setting health insurance rates. The state’s three largest “non-profit” health insurers have amassed roughly $4.5 billion in excess surplus – cash and investments beyond reserves needed to pay the future cost of claims or to hedge against some massive health-care crisis – while saddling small-business owners and their employees with double-digit rate increases. The bill passed the Senate in a watered-down form, and has been referred to the House Health Care & Wellness Committee for public hearing.

SB 6632, Business Licensing Service fee adjustment. State business-licensing fees must be adjusted to avoid insolvency in the BLS account. The bill passed the Senate on a party-line vote, with just one Democrat joining all Republicans voting no. The bill is necessary as a result of Republican Secretary of State Kim Wyman’s decision to reassume authority for processing corporate annual reports, and the accompanying fee, a decision the business community did not support. While no one likes fee increases, NFIB negotiated an agreement with the Department of Revenue that:

— avoids insolvency in the BLS account

— protects businesses that have already invested in this system

— minimizes the impact on very small and start-up businesses

— caps BLS service fees DOR can charge

— provides a mechanism to reduce fees when a $1 million fund balance is reached.

SJR 8212, a proposed constitutional amendment to allow Long-Term Care program premiums to be invested, passed the Senate and is awaiting referral to a House committee. Payroll taxes collected over the next couple of years are intended to build a reserve to help fund future benefits created under last year’s Long-Term Care Trust Act. A healthy reserve will help minimize payroll tax increases, and may prevent an additional assessment on the state’s employers.

The Bad

HB 1888, exempting public employee information from public disclosure, passed the House with surprisingly strong bipartisan support, 91-7. At its core, the bill seeks to thwart the efforts of the Freedom Foundation from contacting public employees to inform them of their constitutional right to leave or refuse to join a union. The media were given special allowances in the bill for greater access than the public to information about these public servants. The bill was sent to the Senate State Government, Tribal Relations & Elections Committee for consideration.

HB 2758, creating a new workers’ compensation benefit for 9-1-1 dispatchers suffering PTSD. NFIB, and most of the rest of the state’s employer community, opposes the creation of any new workers’ compensation entitlement or benefit. Bill sponsor Rep. Chris Corry reached out to NFIB, and included some important sideboards on the bill. Namely, a pre-employment PTSD screening will be required in order for a PTSD claim to be assessed against the worker’s current employer. While this bill primarily impacts public employers, changes like this invariably find their way into the State Fund system where all small businesses are required to purchase government-run workers’ compensation insurance.

SB 5740, enacting the Secure Choice Retirement Saving Program, is still awaiting action in the House Consumer Protection & Business Committee. NFIB worked with the Employment Security Department and proponents on several amendments to the House version of this bill. We are optimistic those amendments will again be included when SB 5740 is heard and acted upon in committee next week. This bill changes the existing, but underutilized, voluntary Small Business Retirement Marketplace with a mandatory paycheck deduction program for many small-business employees. The bill does include a worker opt-out clause.

The Ugly

HB 1110, establishing a Low Carbon Fuel Standard, passed the House early in session. It was referred to the Senate Energy, Environment & Technology Committee. The bill has not been scheduled for public hearing, but is slated for executive action next week. That could indicate a repeat of last year’s decision by that committee to send the bill to the Senate Transportation Committee for consideration. An LCFS is one of several components, along with a gas tax hike and carbon tax, rumored to be potential pieces of a new transportation funding package.

HB 2409, increasing workers’ compensation penalties on employers, passed the House despite bipartisan opposition. Five Democrats joined House Republicans voting no on the bill. Proponents claim fines haven’t been increased in 35 years, and this is little more than inflationary adjustment. In reality, trial lawyers initiated this bill and tucked a little provision in it containing a new, undefined standard of care over which they can sue employers. This is a priority oppose bill for the state’s employer community. Nevertheless, the bill is already scheduled for a hearing and vote in the Senate Labor & Commerce Committee early next week.

HB 2948, authorizing King County to impose a payroll tax on high-income earners, replaces HB 2907. This version diverts a tiny percentage of the proposed tax to the State for audit and technical assistance purposes, thereby tying it to the state budget and, thus, exempting the bill from the normal legislative deadlines. Starbucks, Expedia, Big Labor, and King County appear to be the primary negotiators meeting behind closed doors to hammer out a deal. Amazon and Microsoft are involved, but it’s unclear to what extent. Cities located in King County also have representatives participating in the negotiations, but they have been excluded from at least some of the talks. Bill sponsor Rep. Larry Springer has been meeting with NFIB and other (small-) business interests, but we’ve so far been limited primarily to offering feedback related to the definition of “small business,” which are partially exempted from the bill. Given the $1.5 billion increase in anticipated state revenues above last year’s budget forecast, one must wonder whether this massive new tax scheme is really needed to address homelessness, mental health, and related issues in King County. The bill was sent to the House Finance Committee for consideration.

The House and Senate will also be releasing their respective supplemental operating and transportation budgets next week. NFIB will be on the look-out for other tax and regulatory changes contained in those spending plans.

With less than three weeks to go, small business still has big challenges facing it in the Legislature.