Remembering Senator Bill Ramos 

The Washington Retail Association joins others across the state in remembering Senator Bill Ramos for his steadfast dedication to public service and his thoughtful leadership in Olympia. Senator Ramos was a strong advocate for both workers and businesses, always striving to find balanced solutions that supported economic growth while protecting community values. His respectful approach and collaborative spirit left a lasting impact on the legislative process and those who had the privilege to work alongside him. We extend our deepest condolences to his family, friends, and colleagues.

IN THIS ISSUE

ON THE LOCAL FRONT

• Seattle Times editorial board urges cautious budgeting for Seattle
• Tensions surface in Seattle City Council
• New budget shortfall leads Mayor Harrell to consider cuts and new progressive taxes
• King County Executive Constantine resigns to become Sound Transit’s CEO
• Puget Sound mayors warn against business tax hikes

POLICY

• Public safety bill heading to the Governor
• Lawmakers to vote on $12 billion tax package that raises costs on retail
• Governor cautions against $12 billion tax proposal amid budget uncertainty
• Judge strikes down Washington’s Natural Gas Initiative
• House passes unemployment insurance for striking workers
• House approves packaging recycling bill, rejects environmental crimes bill
• WR urges caution on Paid Leave rate cap increase
• WR advances Right to Appraisal proposal for collision repair members
• Expanded military definition in unemployment rule now includes Space Force
• Curbing escalating payroll expenses for Washington employers
• Controversial "Crimes Against the Environment" bill passes committee by one vote

ECONOMY

• Apparel retailers grapple with higher-than-expected tariffs
• Tariffs and inflation slow retail outlook for 2025

Seattle Times editorial board urges cautious budgeting for Seattle

As economic uncertainty looms due to weak job growth and the potential impact of new tariffs, The Seattle Times editorial board commended the Seattle City Council for adopting the most conservative revenue forecast provided by the Office of Economic and Revenue Forecasts.

The board pointed to troubling signs in the local economy. Employment in the Seattle area grew by just 0.8% last year, well below the national average of 1.3%. The region also lost more than 5,000 construction jobs over the past year, a decline linked to the glut of commercial office space in downtown Seattle. Meanwhile, government jobs led the region’s employment growth in 2024.

The City’s JumpStart payroll tax on large employers underperformed last year, bringing in $46.7 million less than anticipated. Projections now show the tax falling short by $81 million in 2025 and $86 million in 2026.

The editorial board warned against overreliance on taxing major employers, writing: “It should not be lost in the discussion that Seattle must remain competitive with the region and other states, or it will hemorrhage good-paying jobs.”

Seattle Council President Sara Nelson’s leadership as council president has caused divides among the Seattle City Council. (Kevin Clark / The Seattle Times)

Tensions surface in Seattle City Council

As 2024 began, Councilmember Sara Nelson transitioned from a lone moderate voice to Council President, elected by a new slate of pragmatic colleagues, many of whom she helped get elected in 2023. But a recent vote to expand housing in SODO near the stadiums has exposed growing tensions within the Council.

Nelson’s rezone proposal passed 6-3, but not without friction. Councilmember Dan Strauss, the Council’s longest-serving member, criticized her for using her administrative power to influence legislation by assigning it to specific committees. He also voiced frustration at being removed from the committee responsible for long-term housing policy.

Nelson, however, remains undeterred. “I’m fine if people disagree with my policy positions, but I’m not going to shy away from taking on powerful institutions that want to preserve the status quo,” she said. “Because it’s not working, in so many ways, for the majority of our constituents.”

She’s not without support. Councilmember Maritza Rivera praised her as a leader who “brings people from across the city to solve the city’s toughest problems.”

Jon Scholes, president and CEO of the Downtown Seattle Association, commended Nelson for pushing forward even in an election year, saying she “wants to get things done.”

New budget shortfall leads Mayor Harrell to consider cuts and new progressive taxes

Seattle is facing a projected $240 million shortfall in tax revenue for the 2025–2026 biennium, prompting Mayor Bruce Harrell to direct city departments to reduce or eliminate spending on “travel, nonessential equipment upgrades, and new consultant contracts.” The Mayor indicated that additional project cuts will be considered on a “case-by-case basis”, and the city’s existing hiring freeze will remain in effect.

Mayor Harrell also suggested that he could include new progressive taxes in his 2026 budget plan. The Council considered a local capital gains tax while deliberating on the 2025 budget but ultimately decided it needed additional study. A higher JumpStart tax, the payroll tax on large companies, could also surface in the Mayor’s budget proposal.

A number of factors are driving the projected revenue shortfall. After years of out-performing projections, the JumpStart tax is expected to perform below the forecasts used to develop the 2025 and 2026 budgets. Given the current glut of commercial office space in the city, construction-based tax receipts are trending downward, while sales tax revenue from personal and business spending is flat after years of growth.

Broader economic concerns are compounding the city’s financial outlook. Potential federal tariffs and a possible decline in international tourism, critical to Seattle’s trade-dependent economy, are raising alarms. With the 2026 World Cup on the horizon, tourism-related worries may intensify. Additionally, ongoing reductions in federal grants and spending are contributing to the city's budget challenges.

These factors, combined with uncertainty about the national and local economies, led the Seattle Office of Economic and Revenue Forecasts to take an unusual step – it urged City government to use the most pessimistic of the three budget projections it developed.

Image credit: (Peter Bohler / King County)

King County Executive Constantine resigns to become Sound Transit’s CEO

On March 27, the Sound Transit governing board unanimously selected King County Executive Dow Constantine as the agency’s new CEO. In addition to 15 years as County Executive, Constantine has served as a leader on the Sound Transit board.

With the move, Constantine’s salary will increase from just under $250,000 as County Executive to $450,000 plus bonuses as Sound Transit’s CEO. The Seattle Times editorial board has challenged him to demonstrate that Sound Transit made the right choice in selecting him over candidates with direct experience managing a transit agency.

For the first time in 15 years, King County has a new Executive. On April 1, Shannon Braddock, a longtime senior staffer to King County Councilmember Joe McDermott and later Deputy County Executive under Constantine, stepped in as interim County Executive.

This appointment makes her the first woman to serve as the leader of the state’s largest county. The King County Council is expected to take action soon to select Braddock as the acting County Executive, filling that role until the next County Executive is elected in the November general election.

Mayors from Bellevue, Federal Way, Kirkland, Redmond, Des Moines, and Renton gathered for a joint news conference on March 28, 2025.

Puget Sound mayors warn against business tax hikes

A coalition of mayors from a dozen Puget Sound cities is cautioning lawmakers against proposed tax increases, arguing they could lead to job losses and economic decline. Bellevue Mayor Lynne Robinson, along with leaders from Federal Way, Kirkland, Redmond, Des Moines, and Renton, expressed concerns that higher business taxes would push companies out of Washington, reducing revenue rather than increasing it.

Among the proposals is a 1% business and occupation surcharge on companies earning over $250 million, introduced by House Majority Leader Joe Fitzgibbon, and a 5% payroll tax from Sen. Rebecca Saldaña, which would apply to businesses with over $7 million in wage expenses. The Seattle payroll tax, a similar initiative, has already contributed to job cuts, with Amazon scaling back its local workforce and tax revenue falling $47 million short of projections.

The mayors emphasized that tech-sector jobs act as economic multipliers, supporting employment across industries. They also warned that, given existing economic pressures, such taxes could accelerate a downturn. As Washington navigates an uncertain economy, lawmakers should consider the long-term consequences of these policies before imposing further burdens on businesses.

Public safety bill heading to the Governor

HB 2015 was approved by the House on Tuesday night and now heads to the Governor, who has indicated his intent to sign it into law. WR is grateful to the House, Senate, and all stakeholders for advancing this important piece of legislation.

Sponsored by Rep. Deborah Entenman (D-47), HB 2015 establishes a grant program for cities and counties to apply for funding to hire and retain law enforcement officers, prosecutors, public defenders, treatment specialists, and community resource officers. The bill also enables local governments to approve ongoing funding for public safety and criminal justice initiatives.

The next step is for the Legislature to fully fund the grant program in the final Operating Budget, ideally at the Governor’s requested $100 million level. WR strongly supports this effort.

Public safety, retail theft, and organized retail crime remain top priorities for WR and its members. HB 2015 represents a significant, long-term step toward addressing these critical issues.

Lawmakers to vote on $12 billion tax package that raises costs on retail

Lawmakers are preparing to vote on SB 5814, HB 2081, and SB 5786, as part of their $12 billion tax package over six years. Washington’s retail sector and burden consumers already grappling with inflation, rising operating expenses, and narrow profit margins.

SB 5814, recently passed by the Senate, would: 

• Extend the sales tax to critical services like security, IT, and armored transport, increasing costs for core operations and infrastructure. 
• Eliminate exemptions for digital automated advertising, potentially crippling marketing budgets and threatening state competitiveness. 
• Increase taxes on cigarettes and nicotine products, risking declining revenues in future budget cycles.
• Require a one-time sales tax prepayment, creating cash flow challenges and administrative complexity.

HB 2081, passed by the House, imposes a 6.1% increase in the Business & Occupation (B&O) tax rate for retailers, rising from 0.471% to 0.50% starting in 2027. It also includes a 5% B&O surcharge on advanced computing, affecting Washington’s tech and innovation sectors. 

SB 5786 significantly raises license fees for grocery and convenience stores that sell alcohol, disproportionately impacting small retailers.

In total, the tax package includes: 

• A 6.1% B&O tax hike for retail businesses (HB 2081) 
• A 5% B&O surcharge on advanced computing (HB 2081) 
• Up to 10.4% state and local sales tax on services like IT, security, custom software development, advertising, and more (SB 5814) 
• A $975 increase in grocery beer/wine licensing fees (SB 5786) 
• A 10% prepayment penalty for sales tax (SB 5814)

These cumulative costs amount to a tax on consumers, increasing the risk of higher prices, more inflation, and deeper economic instability.

Governor Ferguson previously warned the tax package is “unsustainable, too risky, and fails to adequately prepare Washington state for the crisis that looms ahead.” Despite this, lawmakers appear determined to push the package forward, potentially forcing the Governor to consider a veto.

Governor cautions against $12 billion tax proposal amid budget uncertainty

In response to a proposed $12 billion in new taxes, Governor Bob Ferguson acknowledged the Legislature’s hard work addressing a $16 billion state budget shortfall, while expressing concerns about the state’s fiscal future amid federal uncertainty.

Ferguson warned that ongoing and potential cuts to federal funding, Impacting Medicaid, education, disaster relief, and public health, pose serious risks to Washington’s economy. He cited the recent denial of FEMA emergency funds and possible reductions in public health support as examples of federal unpredictability.

He also emphasized the impact of tariffs on Washington’s trade-reliant economy, highlighting how increased costs on imported goods could burden families and farmers across the state.

While praising legislative efforts to reduce reliance on a wealth tax and make the tax system more equitable, Ferguson concluded that raising $12 billion in new taxes is “too risky” during a time of economic instability. He called for a balanced solution that combines measured revenue increases with spending reforms to maintain economic resilience.

Governor.wa.gov

Judge strikes down Washington’s Natural Gas Initiative

A King County Superior Court judge has overturned I-2066, a voter-approved measure aimed at preserving natural gas access in Washington. Judge Sandra Widlan ruled that the initiative violated the state’s single-subject rule and failed to fully outline changes to existing laws, making it unconstitutional.

I-2066 sought to prevent local and state restrictions on natural gas by undoing recent energy code updates and repealing provisions of HB 1589, which supports Puget Sound Energy’s transition away from natural gas. The measure also mandated continued natural gas access for customers.

Opponents, including Climate Solutions and Washington Conservation Action, argued that the initiative improperly combined unrelated issues, a tactic known as "logrolling." Environmental advocates hailed the ruling as a victory for clean energy, while initiative supporters, including the Building Industry Association of Washington (BIAW), vowed to appeal to the state Supreme Court.

With the court’s decision, the legal battle over natural gas access is far from over.

House passes unemployment insurance for striking workers

In a narrow vote, the House of Representatives passed SB 5041, which would extend unemployment insurance (UI) benefits to workers on strike, a move that challenges the fundamental purpose of the UI system. Historically, unemployment insurance is intended to support individuals who are out of work through no fault of their own and are actively seeking employment. This bill threatens that longstanding principle.

Though the House amended the bill to limit benefits to four weeks and require mediation services, these changes fall short of addressing the broader risks to employers and the integrity of the UI system. WR has cautioned lawmakers that this policy could destabilize the unemployment insurance fund and drive-up costs for businesses, school districts, and public agencies.

If enacted, Washington would become the third state to provide UI benefits to striking workers, setting a concerning precedent. This policy could encourage more frequent and prolonged strikes while undermining the very foundation of unemployment insurance. Employers already facing economic pressures may be forced to cut jobs, reduce employee hours, or pass higher costs onto consumers.

The bill now returns to the Senate, where lawmakers must decide whether to accept the House’s four-week benefit cap or push for the original Senate version, which allows up to twelve weeks of benefits.

Photo by Washington State Standard

House approves packaging recycling bill, rejects environmental crimes bill

This week, the House Appropriations Committee approved SB 5284, which establishes extended producer responsibility for product packaging. The bill now heads to the full House for consideration. If passed, it will return to the Senate for concurrence with House amendments.

In contrast, the committee declined to advance SB 5360, also known as the “crimes against the environment” bill. While there is broad agreement on the importance of protecting the environment, this measure went too far. It proposed civil and criminal penalties for individuals and businesses, while notably exempting government entities, which can also be significant contributors to environmental harm.

Under the bill, someone could be fined or even charged with a felony for relatively minor actions, such as spilling a can of paint or producing excess smoke from a backyard BBQ. Meanwhile, the state continues to fall short in holding retail thieves and other criminals accountable.

WR is encouraged by the committee’s decision not to move SB 5360 forward this session.

WR urges caution on Paid Leave rate cap increase

The Paid Family and Medical Leave (PFML) program was established through a landmark compromise among business, labor, and policymakers. Two core principles were embedded in statute (RCW 50A.05.030(6)(b)(ii)): ensuring fund solvency and limiting premium rate volatility through a statutory cap of 1.2%.

WR supports the Senate version of SB 5292, which implements with JLARC’s recommendation to adopt a forward-looking rate-setting model to address projected solvency issues anticipated in 2029. However, the House amendment proposing to raise the premium cap from 1.2% to 2% threatens the program’s long-term financial sustainability, especially for single parents and small businesses already facing rising costs.

Given the current economic uncertainty, including inflation and unpredictable business conditions, WR urged the House Appropriations Committee to pause this legislation. Taking no action at this time may be the most responsible choice to avoid further strain on workers’ paychecks and employers’ operating expenses.

Washington is confronting budget shortfalls, in part due to overly optimistic fiscal assumptions. A more cautious approach is needed.

WR remains committed to the long-term health of PFML and supports thoughtful solutions to ensure its solvency. We urge lawmakers to preserve the original intent of the program: a balanced, stable, and sustainable benefit for both workers and employers.

Image credit: TVW

WR advances Right to Appraisal proposal for collision repair members

WR successfully helped advance SB 5721, a long-awaited Right to Appraisal proposal, on behalf of its collision repair members, many of whom are small, family-operated businesses with deep ties to their communities.

For years, collision shop owners have sought a more equitable process when insurance companies undervalue repair estimates. This year, they banded together to secure companion bills SB 5721/HB 1645 which will require all personal auto insurance policies to include a Right to Appraisal. This right allows consumers to seek a third-party assessment when there's a dispute over repair costs and sets timelines to prevent prolonged settlement delays.

When the Senate-passed version of the bill stalled in the House without a scheduled hearing, WR stepped in to request action from the House Consumer Protection & Business Committee. Behind the scenes, WR also helped coordinate negotiations between stakeholders, most notably insurers and repair shops, to reach agreement on key provisions.

WR commends the Houses for their bipartisan support in advancing the bill. Thanks to the efforts of members on the House Consumer Protection and Business Committee, SB 5721 has moved forward and, as of April 8, is now placed on second reading in the House Rules Committee.

Expanded military definition in unemployment rule now includes Space Force

The Employment Security Department has adopted a final rule amending WAC 192-150-110, which outlines eligibility for unemployment benefits due to mandatory military transfers. The revision ensures that individuals who leave their jobs to relocate with a spouse or domestic partner transferred under military orders now have expanded protection, explicitly including those serving in the U.S. Space Force.

Previously, the regulation did not recognize the Space Force, a distinct military branch established in 2019, as part of the armed services for the purposes of this rule. With over 14,000 personnel, the Space Force operates under the Department of the Air Force but functions as a separate entity.

The updated rule aligns the definition of "military" with all branches of the U.S. Armed Forces, ensuring fair and consistent application of unemployment benefits.

This change goes into effect on May 2, 2025. For more details, visit the Employment Security Department’s rulemaking homepage.

Curbing escalating payroll expenses for Washington employers

Earlier this month, WR highlighted the mounting regulatory costs burden on retailers. To further illustrate these challenges, the March 2025 Washington State Employer Impact Report provides detailed data illustrating why Washington employers face some of the highest payroll expenses nationwide. The financial strain is particularly severe for retailers operating on slim profit margins of 1-3%.

A few highlights from the report on payroll expenses: Seattle's minimum wage rose to $20.76 per hour in 2025, with small businesses feeling the impact of losing the compensation credit for benefits and tips, raising their labor costs by $3.51 per hour. Additionally, lawmakers are considering raising the statewide minimum wage to $25 per hour by 2031, which could further strain businesses.

On top of rising wages, small businesses face an average 11.9% increase in health insurance premiums for 2025, the largest jump in a decade. WR strongly opposes these measures, as they impose undue burdens on employers already struggling with rising costs. WR will continue to advocate for balanced solutions that support both workers and employers, emphasizing the need for legislation that considers the broader economic impact. Policymakers must carefully consider the economic consequences to avoid potential job losses and higher consumer prices.

Controversial "Crimes Against the Environment" bill passes committee by one vote

SB 5360, dubbed the "Crimes Against the Environment" bill, narrowly passed the House Environment Committee on Monday by a single vote.

While likely well-intended, this legislation, sponsored by Senator Yasmin Trudeau (D-27), introduces unprecedented legal uncertainty and exposure beyond any existing law.

Under the bill, the Attorney General could bring criminal charges against both businesses and individual employees for alleged environmental violations, regardless of their awareness. The bill applies the lowest legal standard of proof, an inappropriate threshold for cases of this nature.

Adding to concerns, the legislation explicitly exempts government entities. As one legislator noted before the vote, “What is good for the goose should be good for the gander.”

With any luck, House leadership will set this bill aside before it reaches a full vote.

Apparel retailers grapple with higher-than-expected tariffs

The tariffs announced April 2 are steeper and broader than expected and affect almost every apparel and footwear retailer. Nearly all manufacturing is abroad, mostly in Asia, according to Wells Fargo analysts led by Ike Boruchow, who calculate that tariffs on softline goods like apparel rose from just under 7% to over 37% on a weighted basis. “This puts all 2025 guidance at risk,” they said.

Brands and retailers couldn’t really devise strategies until the policy was announced, and most were likely caught off guard, William Blair analysts led by Dylan Carden said. Especially hard hit are brands like On, Lululemon, Deckers and Gap Inc.’s labels that switched manufacturing to Vietnam, according to Evercore ISI analysts led by Michael Binetti.

Off-price retailers, because they offer value and often source domestically, are sheltered somewhat, according to Jefferies analysts led by Corey Tarlowe. “However, even Off-Price can be subjected to pressures from higher prices,” they said.

Tariffs and inflation slow retail outlook for 2025

Retail sales are expected to grow at a slower pace in 2025, with projections ranging from 2.7% to 3.7%, according to the National Retail Federation (NRF). While a strong labor market continues to support spending, new tariffs are fueling inflation concerns and dampening consumer confidence.

The NRF warns that consumers, particularly lower-income households, have little room left to cut back after years of managing rising prices. Many have already shifted to budget retailers and discounted options. New trade policies, including a baseline 10% tariff announced by President Trump, are likely to hit the apparel industry hard and increase costs across the board.

Retailers and small business owners are bracing for uncertainty. “The pressure on small business right now is significant,” said Sarah Wells, founder of a maternity apparel brand. “Tariffs threaten our livelihood.”

Despite past resilience fueled by stimulus savings and wage growth, NRF Chief Economist Jack Kleinhenz cautions that hard data now points to a “slower trajectory for consumer spending”, making 2025 a year of cautious navigation for retailers of all sizes.