The 2026 legislative session begins next week and even though it is a “short session” and a “supplemental budget” year, major issues will be in play. Here’s some of what is under consideration:
Taxes!
Yes, despite passing the largest state tax increase in history last year, taxes are once again on the table. That is because it is estimated that the state operating budget has a shortfall of $4.3 billion over the four-year outlook. Washington Research Council elaborates on this situation in this article. Governor Ferguson’s Supplemental Operating Budget proposal raises a small amount from taxes (none on construction or general business) as well as money from the rainy day fund.
Nevertheless, big tax increase proposals have already been introduced by legislators, including a payroll tax (HB 2100), and a bill to allow counties to implement their own B&O taxes (HB 2097). Wealth tax bills (SB 5797 and HB 2046) were introduced last year and could be resurrected in 2026.
But also…be on the lookout for an income tax proposal. While not a part of his budget requests, Gov. Ferguson recently expressed support for an income tax for those earning more than $1 million per year.
AGC opposes all of these proposals.
Contractor liability
As there has been in several past legislative sessions, there will be legislation that makes general contractors liable for any unpaid wages and benefits of subs. The 2026 version (HB 2191) is a little different compared to previous versions, but AGC will remain strongly opposed. This bill would make private owners (but not public owners) jointly liable for the unpaid wages. It also allows for a waiver of some of its provisions for employees covered by a CBA, under only certain circumstances.
PLAs/CWAs
In the wake of the Governor’s Executive Order implementing Project Labor Agreements on some WSDOT and DES projects, the Legislature is likely to take another run at PLA legislation that failed to pass last year, including bills (HB 1723 and SB 5572) requiring PLAs on many school construction projects, and HB 1210 requiring PLAs on certain energy projects that receive tax incentives. All are opposed by AGC.
Prevailing wages
Although it failed to pass last year, the prevailing wage cost escalator bill (SB 5061) is expected to be back. The measure prevents the freezing of prevailing wage increases during a project. AGC will continue to oppose it.
Immigration
Attorney General Nick Brown is proposing legislation (HB 2105 and SB 5852) that would, among other things, require employers to notify all employees within 72 hours of receiving notification from a federal agency of any inspections of I-9 forms or worker records. AGC opposes the legislation in its current form.
Hazard notices
A good bill that AGC supports is HB 2107, which requires L&I to notify construction employers within 10 days that a hazard that could cause injury to a worker was identified during an inspection, as opposed to allowing the issue to linger longer term as is often the case now. Such notification is already on the books for residential construction and this bill expands the required notification to commercial.
AGC members can stay up to date regarding these and other bills during the legislative session by participating in Legislative Huddle calls with AGC government affairs staff. Our weekly member-only Legislative Huddles will begin Thursday, January 15, at 7:30 a.m. and continue through mid-March. These sessions are your direct line to what’s happening in Olympia. Get real-time updates on legislative activity and provide valuable feedback on proposals that impact construction!
If you haven’t yet but would like to sign up for the Huddle calls, email AGC’s Michele Willms.