2020 Legislative Session Wrap Up
(Interested in the 2019 Session Recap? Click Here)

In 2019, the Legislature adopted its biennial budget without approving significant new revenue. This means that although there were no cuts in major programs, and there were even some enhancements in some programs, new initiatives were largely not possible. The proposed carbon tax and capital gains tax were not approved and neither were major changes to the tax exemptions that could have increased revenue.

The second half of the legislative biennium is typically used for making relatively small adjustments to budgets approved in the first half of the biennium and to further develop policy.  This year, the Legislature introduced a record number of new bills and worked on major budget revamping with the revenue forecast update that anticipated new revenue of $600+ million resulting from economic upturns.

The League was among those in a coalition who tried once again to get a change in tax policy that could make this state’s tax structure less regressive and provide more revenue for needs that would still be unmet even with the upswing in revenue forecast.  The primary proposal was a combination of the capital gains tax with an increase in the working families tax credit.  Unfortunately, the Legislature did not choose to adopt these measures. The supplemental budget appropriation adopted by the 2020 Legislature did not contain any major state tax changes, although a number of local tax opportunities were provided for affordable housing and homelessness.

The Legislature dealt with the sudden economic emergency resulting from the COVID 19 virus by appropriating $200 million from the State’s Budget Stabilization Account (rainy day fund) plus $25 million pass-through from the federal government for addressing the state’s response to the virus.

One significant change, which was announced too late to be included in the revenue forecast, was the Boeing announcement that because of WTO tariff restrictions, they wanted to have their tax preference removed.  This tax change was passed and adds to the available revenue that will become the base for next year.

After the Legislature adjourned, the COVID-19 pandemic raged quickly through Washington State, dramatically changing funding needs and the economy, making the State’s most recent revenue forecast invalid.  With shelter-in-place requirements and huge layoffs, the State’s unemployment rate will not only create much greater demands for service but also huge revenue losses, particularly in the sales and B&O tax revenues.

By the time the Governor was able to sign the state budget, many changes were necessary, and there is a very strong likelihood of a special Legislative session in the near future to further address this economic crisis.  The Governor’s partial veto of the budget included removal of 147 separate expenditure items across a broad range of program areas, reducing state spending by nearly $445 million over the next three years — $235 million in the current budget and $210 million in the next biennium.  Additionally, a number of policy bills that supported the need for certain budget items or would have required additional expenditures were vetoed.  Read the list of the vetoed budget items.     

Click on Bill # for detailed information.  See UPDATES below.

Bills League Supported That Have Been Signed Into Law

• SB 6492 Addressing workforce education investment funding through business and occupation tax reform would amend the three-tiered workforce education investment surcharge established in 2019 as part of the B&O tax dedicated to the Workforce Education Investment Account also established in 2019 to fund additional higher education programs for career development.  The amendments in this bill would replace the surcharge with an increased B&O tax rate for service businesses generating revenue over $1 million annually and more for advanced computing industries.  The tax credit for small businesses is increased as well.  Governor has signed and it was effective Feb. 10, 2020.
• SB 6660 Improving fiscal responsibility and budget discipline by replacing the spending limit with additional four-year balanced budget requirements, is not actually a revenue bill.  Rather, it indirectly affects revenue because it requires the Governor to submit a balanced four-year operating budget.  It allows the Budget Stabilization Account (rainy day fund) to be s revenue source under limited circumstances. This bill has passed the Legislature and was signed into law by the Governor on March 27, 2020.
• HB 2945 /SB 6690 Concerning aerospace business and occupation taxes and world trade organization compliance would rescind the tax preference (exemption) for the Boeing Company, per their request.  Boeing has determined that the tariffs to which they would be subject if this tax preference remains in place would be more financially detrimental than paying the B&O tax in Washington State.  The bill is structured to retain the tax preference if the US and European Union resolve their differences regarding large civil aircraft manufacturers. SB 6690 was passed with amendments that established a larger tax, 0.484 percent (up from 0.294 percent) on commercial aircraft manufacturing, with a lower rate for apprenticeship programs.  It also establishes an aerospace workforce council in the department of Labor and Industries to establish a framework for apprenticeship utilization reporting and target achievement. This bill is expected to generate more than $100 million annually in revenue. SB 6690 was signed by the Governor on April 2, 2020.
• SB 6168  Making 2019-2021 fiscal biennium supplemental operating appropriations establishes the supplemental budget for the state started as the Governor’s request and was amended by both chambers and passed the Legislature.  The Governor signed this bill with many partial vetoes as noted above.

Bill League Supported That Governor Vetoed

Bills the League Supported That Did Not Pass