Legislative Session Update: Week 10 – March 17-21, 2025
By Jim Hedrick, GSI WA State Lobbyist and Spokane Regional Advocate
This week, regular legislative activity primarily revolved around policy committee hearings, where lawmakers reviewed and debated bills that recently advanced from the opposite chamber. Some of these include high profile bills like Unemployment Insurance for Striking Workers (5041), Waste Management (5284), Firearm Restrictions in Sensitive Places (5098) and Rent Stabilization (1217). These hearings are part of the lead up to the April 2 deadline for bills to be passed out of policy committees.
Ferguson Administration Updates
Just two months into his first term, Governor Bob Ferguson’s administration is experiencing significant staffing challenges. Key staff members, including Legislative Director Joyce Bruce, Deputy Legislative Director Shawn Lewis, Chief Strategy Officer Mike Webb, and several others in his office have resigned. These departures follow reports of internal concerns, including complaints about a hostile work environment. In response, Governor Ferguson’s office indicated they plan to restructure their leadership approach to address these issues. There is an internal investigation occurring and it’s possible there may be more fallout and resignations.
The timing of these leadership changes presents unique challenges, especially given the current stage of the legislative session. Next week, the House and Senate will release their budget proposals. Governor Ferguson’s proposed spending cuts, including eliminating teacher bonuses and furloughing state employees one day per month over two years, sparked considerable criticism among his fellow Democrats. Former Senator and senior policy aide David Frockt was very visible on capitol hill this week sparking speculation that Frockt, well-known and popular figure with legislators may be Ferguson’s most prudent choice for a new Chief of Staff.
March 18 Revenue Forecast
Budget writers, who are putting the finishing touches on budgets that will be released Monday, March 24, received more bad news on Tuesday with the latest revenue forecast. State revenue was increased by $54 million in the current 2023-25 biennium that ends June 30, 2025 and decreased $479 million in the 2025-27 biennium, the 2-year period the legislature is currently budgeting in this session. Washington’s chief economist, Dave Reich, noted that the state’s revenue collections have yet to fully stabilize since the pandemic. Representative Timm Ormsby (D-Spokane), chair of the House Appropriations Committee, released a statement following the forecast that strongly foreshadows revenue proposals, “With revenue growth slower than it has been in about a decade, and the continued impacts of inflation being felt across the budget, we know what we need to do. House Democrats are taking a balanced approach to reducing the budget where we can and addressing our regressive tax structure to ask the wealthiest in our state to help us keep people alive.”
Democrat Revenue Proposals Released
On Thursday, the Majority Senate Democrats released their revenue proposals; Friday, the Majority House Democrats released theirs.
Senate
5797 (Frame, D-Seattle) Financial Intangibles Tax — a tax of $10 on every $1,000 of assessed value of certain financial assets (stocks, bonds, exchange-traded funds, and mutual funds) held by individuals with more than $50 million of these assets, paid by about 4,300 individuals. It generates approximately $4 billion per year starting in fiscal year 2027 for public schools.
5796 (Saldana, D-Seattle) Removing the Cap on Employer Payroll Taxes — a 5% tax on large employers on the amount of payroll expenses above the Social Security threshold — currently $176,100 per year. This tax is limited only to companies with $7 million or more in payroll expenses— about 5,289 companies. The proposal is similar to the city of Seattle’s “JumpStart” tax and includes a full credit for businesses already paying that tax. It would raise about $2.3 billion per year once fully implemented, going to public schools, health care, basic needs assistance for seniors and those with developmental disabilities.
5798 (Pedersen, D-Seattle) Allowing Property Tax to Grow by Population and Inflation — raising the property tax growth limit for the state’s common schools levy and for cities and counties, as well as special purpose districts, from the current 1% cap to the combined rate of population growth plus inflation. Local governments have the option to take a lower growth rate if they so choose. Instead of being tied to an arbitrary number, it would allow the growth limit to reflect the actual cost of providing public safety and related services. The proposal also completely exempts participants in the “Property Tax Exemption for Senior Citizens and People with Disabilities” program from paying the state property tax. The state property tax is dedicated to public schools, with about $779 million in additional funding over the full four-year budget cycle, while increased funding in cities and counties would go to public safety, criminal justice, and community protection.
5794 (Salomon, D-Shoreline) Repealing Tax Preferences — repealing 20 tax exemptions where the public policy objective was not met, it is unclear whether the policy objective was met, or the exemption is legally obsolete, according to nonpartisan auditors at the Joint Legislative Audit & Review Committee, including for in-state hauling, gold bullion, prescription drug wholesalers, and more. This generates just over $1 billion over the full four-year budget cycle for public schools, health care, and social services.
5795 (Krishnadasan, D-Gig Harbor) Cutting Sales Tax – a half-point sales tax reduction, from 6.5% to 6% – a decrease in revenue of approximately $1.3 billion per year.
House
2046 (Berg, D-Mukilteo) Financial Intangible Assets Tax – imposes a property tax of $8 on every $1000 of assessed value on certain financial intangible assets, such as stocks, bonds, mutual funds, and index funds, with the first $50 million in assessed value exempt from the tax. Other exemptions include pensions, retirement accounts, and education savings accounts. The Department of Revenue estimates around 4,300 Washingtonians will pay the tax, generating approximately $2 billion per year, beginning in fiscal year 2027, which will be dedicated to the Education Legacy Trust Account.
2049 (Bergquist, D-Renton) Increasing State and Local Flexibility to Fund Schools and Public Safety – would modify the state and local property tax authority and adjust the school funding formula. The bill maintains the 1 percent cap on property tax growth but allows for increases based on inflation and population changes, not to exceed 3 percent. The bill also adjusts levy equalization methods. The Department of Revenue estimates the change will increase funding for state investment in K-12 schools by $50 million in fiscal year 2026 and $150 million in fiscal year 2027.
2045 (Majority Leader Fitzgibbon (D-Seattle) Surcharge on High-Grossing Corporations and Financial Institutions – introduced legislation imposing a 1% Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million. This surcharge applies to approximately 400 businesses statewide. The bill also includes an increase to the surcharge on specified financial institutions (approximately 200) with annual net income of $1 billion or more from 1.2% to 1.9%. Under this proposal, Washington will generate nearly $600 million in fiscal year 2026 and nearly $2 billion in fiscal year 2027.
The Week Ahead
Next week will be completely consumed with the budget process as majority Democrats are set to release their proposed budgets. Both the House and Senate Operating and Transportation budgets are scheduled for a public hearing on Tuesday March 25th. All budgets will be placed to committee and floor markups and votes later in the week. Passing off the budget bills will set the stage for budget negotiations between Senate and House budget writers to reconcile differences between the spending and revenue plans. You can expect the bills in the revenue packages not to advance until the final budget is agreed upon so as not to open up legislators to multiple tax increase votes. Budgets are not subject to any cutoffs so budget negotiators have until near the end of session to determine a final budget. It will be the last votes they take prior to adjournment on April 27.
About the Author
Jim Hedrick is GSI’s State Lobbyist and Owner of H2 Government Relations. Jim has advocated on behalf of our community for more than 20 years and has 25 years of experience in the Washington State legislative and public policy venue as a fiscal analyst, legislative advocate, and political advisor to the Governor, state agency directors, and legislative officials.
About this Blog
As part of GSI’s year-round work with our community to advance policies that support the success of local businesses, we’re active in Washington State’s current legislative session – tracking bills, advocating on behalf of our community, planning our annual trip to Olympia, communicating our State Agenda, and working with our lobbyist, our Regional Advocacy Committee, and our elected officials, to advance priorities that support local businesses and enhance our community. Learn more about what we do to create a greater voice for the future of our region and view this year’s State Agenda.
