Legislative Session Update: Week 4 (February 2-6, 2026)

By Jim Hedrick, GSI WA State Lobbyist and Spokane Regional Advocate

Got Million?

The highlight of the week for those both for and against it was the long-awaited formal introduction of SB 6346 (Pedersen, D-Seattle) / HB 2724 (Fitzgibbon, D-Seattle), the “Millionaire’s Tax.” As currently drafted, the bill would impose a 9.9% state income tax on household income above $1 million a year. Lawmakers estimate it would impact about 20,000 households and raise roughly $3.7 billion annually. 80% of the revenue would go into the general fund, and 20% would fund tax relief for small businesses and low-income families and repeal some sales taxes. The tax would not take effect until at least 2028 and will undoubtedly face legal challenges. The bill has strong Democratic support in the Legislature, but after the release, Gov. Bob Ferguson (D) announced he will not support this version of the bill, saying it does not do enough to return money to taxpayers to make life in Washington more affordable.

Tuesday in Governor Ferguson’s media availability he reiterated his full support for a millionaire’s tax because “the state’s tax system is upside down and unfair.” Ferguson noted that, “working families in Washington State pay a higher percentage of their income than wealthy Washingtonians.” However, the governor offered his own take wanting a significantly larger percentage of revenue going back to working families than was presented in the Senate bill. The governor explained that the Senate version puts $44 million a year towards the Working Families Tax Credit, $76 million to exempt sales tax on personal hygiene products, and $104 million for tax credits for small business for a total of $230 million representing 7% of the overall package. Ferguson explained that is “not close to the objective” and that more built in relief for working families and a $1 billion relief package for small busines was needed to garner his signature on the bill. Ferguson went on the praise aspects such as removing the age restriction on children for families to qualify for the WFTC and moving up the termination date on the business and occupation (B&O) tax surcharge placed on businesses last year.

Homeless Bill Of Rights

House Bill 2489 (sometimes referred to as the “Homeless Bill of Rights”) passed out of the House Housing Committee by a 9-8 vote on Monday afternoon. It would require local governments to ensure an expansive version of shelter is available to the homeless before any local anti-camping ordinance could be enforced. The Martin v. City of Boise case in the U.S. 9th Circuit Court of Appeals from 2018 held that a city law prohibiting sleeping in public places could not be enforced unless the city had enough homeless shelter beds available to serve the homeless population. The Boise case was effectively overruled by the U.S. Supreme Court in 2024, when it ruled in City of Grants Pass v. Johnson that the enforcement of an anti-camping ordinance does not constitute cruel and unusual punishment and thus allowed enforcement of such ordinances regardless of whether shelter space was available or not.

In both of the last two sessions, bills have been offered in our state to create a legislative standard on enforcement of anti-camping ordinances closer to the Boise ruling than the Grants Pass ruling. This year’s version is HB 2489.

HB 2489 prohibits local governments from adopting or enforcing laws that criminalize, penalize, or otherwise prohibit a person from engaging in “life-sustaining activities” on public property unless the local government can demonstrate that “adequate alternative shelter space” was available at the time and place of the conduct. It also creates a private cause of action (PRA) for injunctive or declaratory relief to challenge the enforcement of a local law that violates the bill.

The definition of “available shelter space” in HB 2489 includes requirements that a shelter accommodate pets, partners, family members, other support persons, and the individual’s personal property to be considered “available.” HB 2489 effectively would allow individuals to camp in public spaces unless the very particular type of shelter defined in the bill was available at the moment a local government sought to enforce an anti-camping ordinance.

STEP Housing

Housing legislation limiting local authority over STEP housing has resurfaced this session. The original versions of the bills sought to significantly curtail cities’ ability to regulate permanent supportive housing, transitional housing, and indoor emergency shelters and housing.

As introduced, both bills would have required cities to allow STEP housing in any zone not zoned for industrial use; prohibited cities from imposing development standards, conditions, or requirements more restrictive than those applied to other residential uses in the same zone; barred cities from entering into operating agreements with shelter sponsors; and included additional provisions that raised concerns for many local governments.

On Monday afternoon, the House Housing Committee passed an amended version of HB 2266 (Peterson, D-Edmonds) on a party-line 10–7 vote. The amended bill narrows but does not eliminate preemption of local land use authority. Under the amended version cities must allow transitional housing and permanent supportive housing in zones where residential dwellings or hotels are permitted. Indoor emergency shelters and indoor emergency housing must be allowed in zones where hotels are permitted, and cities must allow indoor emergency shelters and housing in additional zones when necessary to meet projected needs identified in their comprehensive plans.

One of the most contentious issues for cities remains the treatment of operating agreements often referred to as codes of conduct or “good neighbor agreements” between cities and shelter sponsors. The original bill prohibited operating agreements entirely. The amended version replaces that prohibition with a limited self-certification process, applicable only to indoor emergency shelters and indoor emergency housing. Under this approach, cities may require shelter sponsors to self-certify in writing that they have notified residents within 500 feet of the site, conducted no more than one community meeting, designated a point of contact, and provided documentation of policies or procedures addressing health, fire, safety, and occupancy.

While the amended bill reflects some narrowing from the original proposal, cities continue to express concern that the self-certification framework eliminates meaningful local oversight and limits the ability of local governments to respond to neighborhood impacts, operational issues, or noncompliance once a facility is established.

Labor

Over the last two weeks, majority Democrats have made a coordinated effort to extend labor protections to workers excluded from full coverage under state and federal labor law. SB 6045 (Saldaña, D-Seattle) grants agricultural workers formal collective bargaining rights under state law, creating a PERC-administered framework for organizing, representation, and dispute resolution in a sector excluded from the federal NLRA. This comes after the policy committee passage last week of HB 2355 (Thomas, D-West Seattle) which focuses on domestic workers, establishes baseline employment standards such as minimum wage, overtime, written agreements, anti-retaliation protections, and enforceable remedies while addressing the unique vulnerabilities of work performed in private homes.

The Health Care Market

This week majority Democrats also took aim at addressing health care market oversight, financial accountability of nonprofit insurers, and funding mechanisms to support health care programs through three bills. HB 2548 (Taylor, D-Federal Way) was voted out of the House Committee on Civil Rights & Judiciary. The bill requires that significant transactions such as mergers, acquisitions, affiliations, or major asset transfers be reported to the Attorney General, who is authorized to collaborate with other state agencies on data collection and enforcement. HB 2073 (Parshley, D-Olympia) received a hearing in Appropriations this week as well. This targets nonprofit health insurance carriers, requiring insurers to annually report their surplus to the state insurance commissioner, beginning July 1, 2026. If a carrier’s surplus exceeds 600 percent of its risk-based capital requirements, the commissioner can deem it “excessive,” triggering a payment of 3 % of the excess to the state health care affordability account, which funds premium assistance programs. Carriers retain the right to request hearings to reduce the payment if it would jeopardize financial stability. Also heard this week was HB 2626 (Parshley, D-Olympia), which increases the insurance premium tax from 2 % to 3 % for health maintenance organizations, health care service contractors, and certain self-funded plans, starting with taxes due March 1, 2027. The bill directs most of the revenue to the general fund, with a portion allocated to the health benefit exchange account, funding state-administered health programs. These bills could be considered “necessary to implement the budget,” thus extending their timeline in the process.

Corporate Practice of Medicine

SB 5387 (Robinson, D-Everett) addresses the corporate practice of medicine and targets private equity–backed, Medical Services Organization (MSO)–driven, and corporate-managed care models. Introduced last year, the bill was unexpectedly scheduled for action in the Senate Ways & Means Committee, with a hearing on Thursday.

The bill represents a significant structural overhaul of how hospitals and physician practices are organized and managed. It is premised on a model of health care delivery that treats physicians as operating independently, despite the reality that modern health care is delivered by integrated, multidisciplinary teams. Unlicensed professionals play essential and inseparable roles in scheduling, compliance, billing and coding, information technology, quality assurance, and care coordination. These operational functions are foundational to patient care and clinical efficiency.

While SB 5387 attempts to balance broad prohibitions with enumerated exemptions, the bill creates substantial legal and operational uncertainty. Ambiguities and internal conflicts between what is prohibited and what is exempt make compliance unclear and risk unintended consequences for health care organizations that are not engaged in private equity ownership or control.

Notably, the bill places responsibility and potential professional discipline on individual physicians for enterprise-level business and operational decisions that are typically outside their control. Physicians are clinicians, not administrators, yet SB 5387 would effectively make them accountable for corporate governance, contracting, and management structures they do not direct.

Following a contentious hearing that included testimony from non–private equity health care organizations, health care providers, and private equity–backed delivery entities, the bill is expected to advance to a committee vote next Monday. Amendments are anticipated and may narrow the bill’s scope to focus solely on prohibiting non-clinicians from participating in clinical decision-making, in an effort to keep the legislation moving forward.

The Week Ahead

More on the process, the 2026 legislative session has now passed the first cutoff of the session, the deadline by which bills must be voted out of their respective policy committees in their house of origin. Legislation that failed to advance by this point is generally considered stalled, while bills that cleared the cutoff remain alive and eligible to continue moving through the legislative process. Those measures will next be considered by fiscal committees if they carry a budget impact, or advance directly to the floor for further debate and votes. In short session years such as this one, the timeline is especially compressed. Bills with fiscal implications face a particularly tight turnaround, as they must be voted out of fiscal committees by Monday, February 9 to remain viable.