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2023 Legislative session wraps-up

2023 Legislative session wraps up – Over the weekend, the Washington State Legislature finished its work for the 2023 session without including any new taxes. Tax proposals being considered in 2023 included real-estate excise tax (REET), property-tax increase from 1% to 3%, margin tax to replace the B&O tax, and a wealth tax. We anticipate that many of these proposals will be back again next year.

Several bills that will impact the construction industry passed the Legislature and have been sent to the governor for his action. These bills include construction-worker sick leave, cannabis and employment, ergonomics, apprenticeship requirements for municipalities, highway safety cameras and retainage cap on private work. Two bills having to do with family and medical-leave insurance passed. One would establish rates for the program and the other bill provides employers access to a limited amount of claim information held by the Employment Security Department.

Your team in Olympia was also successful at killing several bills this session such as prevailing wage on private refineries, expanding the definition of public works, requiring environmental product declarations, Puget Sound Energy’s anti-consumer legislation that eliminated the use of natural gas and guaranteed their profit share, and the bill that would have required corporations to send a letter to the Public Disclosure Commission when contributing to a candidate or PAC. We anticipate these bills will also be back next year.

During this season, AGC, along with many others in the business community, asked legislators to address the issues of increasing crime and public safety. The Legislature passed a bill that allows police pursuit of suspects upon reasonable suspicion, rather than probable cause, that certain crimes have been committed. They failed to pass a bill to deal with the state Supreme Court’s Blake decision. That ruling invalidated the state’s felony drug-possession law and, previously, the Legislature adopted a stopgap bill that made drug possession a misdemeanor; that bill sunsets in July 2023.  The Governor has indicated that he would like legislators to keep working on the issue and have some ready for a special session before July 1, 2023. If no law is passed by July 2023, then local jurisdictions could adopt their own laws on drug possession.

The operating budget that passed the Legislature spend a record $69.8 billion in the next biennium, an increase of 8.8 percent over the prior biennial budget. Major categories of spending include K-12 schools, prisons and the state’s mental-health system, as well as social services, wildfire response and climate programs. Also included in the operating budget was the funding for Core Plus. AGC thanks Senator Lynda Wilson and Rep. April Berg for sponsoring the Core Plus budget proviso. The budget proviso does many things for Core Plus, including increasing the funding for grants Core Plus Construction from $350,0000 to $550,000, which helps schools and skill centers that have adopted curriculum with their equipment and materials. The budget balances without general tax increases, instead relying on a variety of fund transfers from various reserve and dedicated accounts. The budget does assume approximately $1 billion in revenue from the state’s new tax on capital gains, which was upheld by the state Supreme Court in March. All told, the budget leaves $3 billion in the state’s reserve account.

The capital budget was adopted unanimously and spends $8.9 billion over the next two years, with primary investments including $717 million in environmental protection, addressing floodplain resilience, acquisition and restoration of habitat areas around Puget Sound, removal of fish-passage barriers and other Department of Ecology projects; $694 million in affordable-housing projects; $613 million for a new forensic hospital at Lakewood’s Western State Hospital; and $588 million for K-12 school construction and seismic-safety projects. The capital budget also included a directive for state agencies to look at environmental product declarations (EPDs) when evaluating structural materials for construction projects. In addition, a proviso was included for the Washington State Institute for Public Policy to study and report to the Legislature on the costs and benefits to public construction to transition to a six-year building-code cycle. The report is due July 1, 2024. 

The transportation budget passed both chambers on a mostly unanimous vote. It plans to spend $13.5 billion over the next two years, with an emphasis on eliminating delays on highway projects, investing in the state’s ferry system, improving traffic safety, reducing carbon emissions, and transportation-related workforce recruitment. $5.4 billion is directed to highway projects, $1.3 billion to the ferry system, $1 billion for continued work on fish passage, and $2.6 billion to improve recruitment and retention efforts at the Washington State Patrol. The bill spends roughly $1 billion in Climate Commitment Act auction dollars on reducing emissions from the transportation sector.   

Once Governor Inslee finishes acting on the bills that passed the Legislature, your Government Affairs team will host a Legislative-session recap. More information on this virtual meeting will be available soon. If you have any questions, please contact AGC’s Michele Willms.

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