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POLICY
ECONOMY
ON THE LOCAL FRONT
RETAIL THEFT & PUBLIC SAFETY
IN THE NEWS
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Legislature adjourns on time
The 2025 Legislative Session officially adjourned on time at 6:30 p.m. on Sunday, April 27, concluding the 105-day budget year marathon. In the final days leading up to adjournment, known as Sine Die, the Legislature was a flurry of bill passages, conference committees, floor debates, and the familiar "hurry-up-and-wait."
Most importantly, the House and Senate approved a two-year, $77.9 billion Operating Budget, which now heads to the Governor for consideration.
All bills not yet signed are now before the Governor, who has until May 20 to act. He may sign a bill into law, veto it entirely, veto specific sections, or take no action, in which case the bill becomes law automatically.
WR ended the session with mixed results. A major victory for retailers, and for public safety overall, was the Legislature’s approval of $100 million in grant funding for local governments to hire additional law enforcement officers, prosecutors, public defenders, treatment specialists, and community resource officers. This funding represents a significant step toward creating safer workplaces and shopping environments.
However, the passage of $12.4 billion in new taxes was a major disappointment. These tax increases will impact every retailer and Washingtonian. Several new policy measures also passed that could threaten the state's financial stability, including a bill that grants unemployment benefits to striking workers and another that expands paid family and medical leave benefits, breaking the original agreement made when the program was first established.
WR’s team is preparing a comprehensive Legislative Law Review, which will be sent to all dues-paying members shortly after the Governor concludes his bill reviews.
One looming question remains: Will the Legislature be forced to return to Olympia before the 2026 session begins next January? If federal funding is cut, withheld, or denied for any number of programs or agencies, the state may find itself short on resources and require a special session to address the gaps. Time will tell.
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Governor Ferguson reflects on 2025 legislative session
Governor Bob Ferguson commended legislators and his team for their work during the 2025 session, which addressed a $16 billion budget shortfall. Key accomplishments include the adoption of a balanced budget that aligns with his priorities, including investing in K-12 education, affordable housing, and public safety.
Ferguson emphasized the importance of maintaining the state’s Rainy Day Fund reserves, noting the need for financial resilience amid federal uncertainties. He also rejected several large tax proposals, advocating for sustainable revenue solutions.
Several bipartisan initiatives were signed into law, such as Rep. Tom Dent’s bill for fuel exemptions for farmers and Rep. Lisa Callan’s proposal to improve youth mental health. Additionally, House Bill 2015, providing $100 million in grants to local law enforcement agencies, is seen as a significant step toward enhancing public safety.
The session also saw substantial investment in housing, with a historic commitment to the Housing Trust Fund, and a transportation budget that focuses on maintenance, mobility, and key projects like the I-5 Bridge Replacement. Ferguson thanked the legislature for its work in addressing the state’s most pressing needs while making strides in economic resilience and public welfare.
Governor Ferguson’s full statement
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Consumers would bear the cost of increased B&O taxes
Published by Washington Research Council
By: Emily Makings
April 26, 2025
In an editorial, the Seattle Times writes that the tax increases proposed by legislators “will in the end hit those residents they say they’re trying to help.”
The Institute on Taxation and Economic Policy (ITEP) agrees. A recent ITEP post considers a business and occupation (B&O) tax proposal that would add a surcharge on income over $250 million. (The ITEP post is based on an early version of the proposal. The House has passed ESHB 2081, which is expected to be part of the operating budget deal.)
According to ITEP, “Because the B&O tax is so broad and is based directly on sales – rather than profits – businesses account for such a tax by raising prices in proportion to the tax. So although it does not appear on the customer’s receipt (as does a sales tax), it is passed to the customer in the form of higher prices. And the customers of large businesses (e.g. shoppers at big box retail stores) are not necessarily any higher income than the customers of smaller businesses. In other words, the tax ultimately comes out of the consumer’s pocket, not the business owner’s, so much of the tax is paid by middle- and low-income families.”
The B&O is not, in fact, a sales tax. Nevertheless, the general point stands. As the Tax Foundation writes about gross receipts taxes (like the B&O), “Gross receipts taxes do not only impact business owners and shareholders. Consumers and workers also bear the tax incidence, in the form of higher prices and lower wages.”
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Legislative “trash talk” leads to passage of litter control bill
Before adjournment, lawmakers passed HB 1293 to amend existing laws regarding litter control and the use of plastic bags in Washington state. The bill:
- Raises the penalty for littering from a class 3 civil infraction to a class 2 civil infraction and specifies that this is in addition to any penalty imposed for materials thrown or dropped onto state highways.
- Delays the increase to 4 mils in the allowable thickness of reusable plastic carryout bags from January 1, 2026, to January 1, 2028.
- Allows the sale of reusable plastic carryout bags of 4 mils thickness with an additional $0.04 until December 31, 2027.
Under current law, the thickness of reusable plastic carryout bags was scheduled to increase to 4 mils starting January 1, 2026. This bill delays that requirement to January 1, 2028, allowing retailers to continue using bags with a thickness of 2.25 mils until the new deadline.
However, the bill imposes a new fee for retailers to collect when offering reusable plastic bags with a 4 mils or greater thickness until December 31, 2027. Retailers must collect a four-cent penalty per bag and the 12-cent pass-through charge, which is scheduled to increase on January 1, 2026. The revenue from the fee will be deposited into the waste reduction, recycling, and litter control account to fund environmental initiatives.
If signed into law, retailers using 4-mil-thick reusable plastic bags must carefully manage their inventory or be prepared to collect the additional fee, which must be itemized on customer receipts.
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Washington introduces new rules to phase out high-impact greenhouse gases
Washington State is updating its hydrofluorocarbon (HFC) regulations to reduce climate pollution. HFCs, found in products like air conditioners, refrigerators, and aerosol sprays, trap significantly more heat than carbon dioxide. Adopted by the Department of Ecology in late 2023, the new rules ban or limit products with high global warming potential (GWP). Businesses that manufacture, sell, lease, rent, or distribute affected products must comply or face penalties up to $10,000 per day, per violation.
While Ecology finalizes updates to Chapter 173-443 WAC, it is clarifying how sell-through provisions apply to refrigeration and air conditioning equipment listed in Tables 2 and 3. Originally, Ecology intended for a limited sell-through window starting on each restriction’s effective date, but rule language was unclear. Effective immediately, sellers may sell equipment manufactured before the restriction date for a short period beginning on the date the restriction takes effect.
Ecology is developing industry-specific resources to assist with compliance. More information is available at ecology.wa.gov. For questions, contact Karissa Stuto at Karissa.Stuto@ecy.wa.gov or 564-233-1983.
Washington Hydrofluorocarbons Restrictions
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U.S. imports from China face shifting trade dynamics
In 2024, the U.S. imported over $400 billion in goods from China, with electronics, machinery, toys, sports equipment, and furniture leading the list, according to a Supply Chain Dive analysis. These five categories made up more than half of all imports from China, which accounted for 11% of total U.S. trade last year.
Recent tariff increases, up to 145% on some goods, have altered trade patterns between the two nations. While there are discussions about adjusting these tariffs, many businesses have already responded by pausing shipments, diversifying suppliers, or raising prices.
The World Trade Organization (WTO) warns that ongoing uncertainty and elevated tariffs could significantly dampen global trade and economic activity. Some product categories are especially reliant on Chinese suppliers, including baby carriages and umbrellas, with China providing about 96% of U.S. imports in these areas.
As trade policies continue to evolve, retailers and manufacturers alike are closely monitoring supply chains to navigate the shifting landscape.
What does the US Import from China?
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Consumer spending remains resilient despite economic concerns
Despite growing unease about the economy, Americans continue to spend at a steady pace, helping to sustain economic momentum. Retail sales rose 1.4% in March, with gains across auto sales, restaurants, and clothing stores. Recent data from Bank of America shows spending growth persisted through April, even after the announcement of potential tariffs.
Consumers are adjusting their buying habits, cutting back on travel while accelerating purchases of goods that could be impacted by tariffs. Higher-income households, bolstered by wage growth, have remained key drivers of spending. However, consumer confidence indices from the University of Michigan and the Conference Board show a sharp decline in sentiment.
While inflation and market volatility are creating financial pressures, many Americans report spending about the same as before. Economists caution that a spending slowdown could be on the horizon if higher prices and weaker stock portfolios persist. Businesses across sectors are preparing for potential shifts by adjusting pricing strategies and focusing on value-conscious consumers.
Retailers should stay attentive to evolving consumer behavior as economic uncertainty continues.
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Mother’s Day spending to top $34 billion in 2025
Consumer spending for Mother’s Day is expected to reach $34.1 billion this year, according to a new survey by the National Retail Federation (NRF) and Prosper Insights & Analytics. Despite ongoing economic uncertainty, 84% of U.S. adults plan to celebrate, with an average spending of $259.04 per person, about $5 more than in 2024.
Popular gifts remain consistent, with flowers (74%), greeting cards (73%), and special outings like brunch or dinner (61%) leading the way. Jewelry ($6.8 billion) and special outings ($6.3 billion) are among the top spending categories. Notably, many shoppers are seeking gifts that create lasting memories, with nearly half prioritizing unique and meaningful presents.
Online shopping continues to dominate at 36%, followed by department stores (32%), specialty shops (29%), and local businesses (25%). Gifts of experience, such as concerts or wine tastings, are growing in popularity, particularly among male shoppers.
The NRF survey, conducted among nearly 8,000 U.S. adults, highlights Mother’s Day as one of the highest spending holidays, second only to the winter holidays.
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Trade war disruptions impact Seattle ports and PNW retail
The US-China trade war continues to disrupt maritime shipping and retail supply chains, with significant implications for the Seattle area and the Pacific Northwest. Recent reports show that up to 40% of container ships departing from China to the US are sailing nearly empty. This, combined with a surge in blank sailings, has impacted shipping volumes to Seattle and Tacoma, with container arrivals down 12% in April compared to 2024.
Retailers, particularly those in the Pacific Northwest, are already feeling the strain, with some businesses delaying or canceling orders due to concerns over high tariffs. This has resulted in fewer goods arriving at port and possible shortages in stores by late May. Exporters of key PNW products like apples, hay, and frozen French fries are also seeing a decline in demand due to China’s retaliatory tariffs.
Port officials warn that the effects of the trade war, coupled with rising tariffs, may lead to a further slowdown in cargo traffic. While forward buying temporarily masked some of the impact, the long-term outlook suggests even steeper declines in shipments, raising concerns for workers in logistics and retail sectors dependent on trade.
SeattleTimes.com
| | From left: Councilmembers Rod Dembowski, Sarah Perry, Girmay Zahilay and Claudia Balducci listen during a Metropolitan King County Council meeting in January. Some members are advocating for a new sales tax to help fund... (Ellen M. Banner / The Seattle Times) | | |
King County considers sales tax to support legal system
King County Councilmembers are proposing a new 0.1% sales tax to help address a projected $160 million budget shortfall and support critical public safety services. The proposed tax would help fund sheriff’s deputies, public defenders, court operations, and behavioral health diversion programs. Council Chair Girmay Zahilay and Councilmember Rod Dembowski, chair of the Budget Committee, are leading the effort, citing long-standing limits on property tax revenue growth that have made it difficult to keep up with rising costs.
The proposal aligns with newly passed HB 2015, which allows counties and cities to adopt a sales tax to support law enforcement and legal systems, provided certain training standards are met. The legislation also includes a state grant program aimed at enhancing police hiring across Washington.
Supporters argue the measure is necessary to prevent cuts to essential services, while critics warn it adds to Washington’s already regressive tax system. Because the County Executive initiates all budget proposals, Councilmembers Zahilay and Dembowski are holding off on introducing the legislation as they engage in discussions with County Executive Shannon Braddock, who has not taken a public stance on the tax proposal.
The outcome could have implications for retail and consumer behavior in King County, as it would increase the overall sales tax rate for all purchases by 10 cents for each $100 spent. WR will monitor developments closely and provide updates.
| | Image: Washington State Legislature | | |
Legislature approves $100 million for public safety
WR is pleased to share that the Legislature has approved $100 million in local government grant funding through its final Operating Budget. These funds will support the hiring of law enforcement officers, prosecutors, public defenders, treatment specialists, and community resource officers, a significant step forward in addressing public safety needs. This funding was a key priority for Governor Ferguson.
In addition, HB 2015, sponsored by Rep. Debra Entenman (D-47), provides local governments with new tools to support the long-term funding of public safety improvements. Governor Ferguson has also expressed support for this measure.
Notably, the original proposal, SB 5060 by Senator Jeff Holy (R-6), also called for $100 million, but focused solely on hiring law enforcement officers. With Washington currently ranking last in the nation for per capita law enforcement staffing, WR strongly supported SB 5060. We also believe HB 2015 represents an improvement by broadening the eligible positions and offering a more sustainable funding mechanism for cities and counties.
Public safety is a core function of government and must remain a top priority. WR commends the Governor and Legislature for making this critical investment in the safety and well-being of our communities.
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Retail leaders discuss tariff concerns with President Trump
Executives from Walmart, Target, and Home Depot met with President Trump this week to discuss the impact of tariffs on imported goods, especially ahead of the critical back-to-school, Halloween, and holiday shopping seasons. Retailers described the meeting as constructive and reaffirmed their commitment to delivering value for American consumers despite ongoing trade uncertainties.
Retailers are steadily working through existing inventories but warn that new tariffs could increase costs just as peak shopping periods begin. Some industry experts are calling the tariffs an effective “holiday tax,” with potential consequences for both pricing and product availability.
President Trump acknowledged that high tariffs, some as steep as 145%, could make certain goods harder to sell. Retailers emphasized their efforts to diversify supply chains and mitigate price increases, although many have cautioned investors about possible future adjustments.
Tensions between the U.S. and China remain high, with Chinese officials stating that no current negotiations on tariffs are underway.
Retailers continue to advocate for policies that balance fair trade practices while minimizing consumer impact.
RetailDive.com
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The power of small retail businesses in Washington
Small retail businesses are the heart of Washington’s economy and the soul of our communities. As we celebrate Small Business Month this May, WR proudly recognizes the essential role these businesses play across our state.
From bustling main streets to small-town storefronts, Washington’s small retailers provide more than just goods and services, they create jobs, fuel local economies, and contribute to the character and vibrancy of our neighborhoods. Nearly half of America's workforce is employed by small businesses, and the dollars spent locally help fund critical services like education, emergency response, and infrastructure.
Supporting small businesses means investing directly in the future of our communities. Every purchase helps a local entrepreneur succeed, keeps tax dollars close to home, and strengthens the connections that make Washington a great place to live and work.
During Small Business Month, we encourage everyone to shop local, share the stories of your favorite small retailers, and recognize the lasting impact they have on our lives. When we support small businesses, we’re not just investing in products or services, we’re investing in the well-being and future of our communities.
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WR diversity statement
WR is committed to the principles of justice, equity, diversity, and inclusion. We strive to create a safe, welcoming environment in which these principles can thrive.
We value all people regardless of race, ethnicity, gender, religion, age, identity, sexual orientation, nationality, or disability, and that is the foundation of our commitment to those we serve.
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Renée Sunde, President/CEO — 360.200.6450 — Email
Mark Johnson, Sr. VP of Policy & Government Affairs — 360.943.0667 — Email
Crystal Leatherman, Dir of Local & State Government Affairs — 360.200-6453 — Email
Rose Gundersen, VP of Operations & Retail Services — 360.200.6452 — Email
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