2023 Washington State Legislative Report – Week 7

Week Seven

Week 7 is now complete and we are approaching the midpoint of the 105-day 2023 legislative session. Friday, February 24th was the last day to move bills out of fiscal committees in their house of origin. This week, fiscal committees met for several very long public meetings in order to hear and vote on bills before Friday’s cutoff. Several priority pieces of legislation survived cutoff including nurse staffing (SB 5236), middle housing (HB 1110), transit oriented development (SB 5466), clean energy siting (HB 1216), the WRAP Act (HB 1131), Blake legislation (SB 5536), and vehicular pursuits (HB 1363). As a reminder, bills are never truly ever dead until the end of the biennium as parts of it can be resurrected in various ways and bills that are deemed necessary to implement the budget, including all revenue proposals, are not subject to cutoff.

Beginning on Monday, February 27th legislators will spend the majority of their time on the floor debating and passing bills out of their respective chambers until the March 8th house of origin cutoff. All bills must be voted out of their house of origin (either the House or Senate) by March 8th in order to stay alive this session. After March 8th, legislators will return to their policy committees to consider bills that have been passed by the opposite chamber.

On Tuesday, the House Committee on Finance met to discuss HB 1628 (Rep. Chopp, D-43) which aims to increase affordable housing by modifying the state and local real estate excise tax (REET). The bill would establish a new threshold of $5m in 2025, with the portion of the selling price above $5m taxed at 4%. The bill would also allow a county or city to impose an additional REET up to 0.25% for the construction and support of affordable housing. The bill drew strong support from housing advocates who say that the bill will help to build affordable housing for low wage workers and individuals suffering from mental illness that will not be built by the private sector. On the other hand the bill attracted strong opposition from realtors and builders who stated that Washington already has one of the highest REETs in the nation and this proposal will push up rents and discourage future developments.

Next week on Tuesday February 28th, the Department of Ecology will hold its first quarterly allowance auction as established under the Climate Commitment Act. At the auction, regulated businesses with greenhouse gas emissions will have an opportunity to purchase emissions allowances. The revenue generated through the quarterly auction process is anticipated to reach as much as $1 billion per year. The results of the first auction will be posted on March 7th. You can view the auction calendar here.

Following the release of the March revenue forecast the House and Senate will release their respective Operating, Capital, and Transportation budget proposals for the 2023-25 biennium. The biggest uncertainty as it relates to the state budget is the new capital gains tax the state is currently collecting. The new capital gains tax is expected to generate hundreds of millions of dollars to pay for early learning and childcare; however the tax is currently being challenged in the state Supreme Court. If the Supreme Court strikes down the new tax that would result in a large hole in the budget. This year the House is expected to release their budget first, the Senate will release their own version soon after and then negotiations will begin.

We will be working on expanding awareness of the thermal RECs issue and concept during the interim (HB 1836).

Read the full report here