By Carolyn Logue, NWHPBA Lobbyist
When the 2020 Legislature began on January 13, most thought it would be a fairly typical short, non-budget year session. Although it was fast moving with thousands of new bills and big ideas being discussed, as we hit the first cut off dates it was proving to be a fairly normal legislative session. The mid-February budget announcement brought a revenue forecast that showed over $1 billion extra in revenue coming in for the current biennium with nearly $4 billion extra for the four-year forecast. Things looked pretty good.
But things changed quickly as it became clear that a looming health crisis had moved across the ocean and our state became the epicenter of the first major wave of deaths attributed to COVID-19. This changed the dynamics in the Legislature – both in terms of budget negotiations and in terms of bills that were priorities. In the end, although the Legislature had planned to end on time anyway, the final days appeared to have a very different set of urgency.
The Legislature adjourned Sine Die on March 12, the constitutionally required day for adjournment. The next day Governor Jay Inslee announced the first of many major proclamations closing schools, shutting down businesses and urging residents to stay at home to battle the novel coronavirus. In addition, Governor Inslee announced an end to public bill signings.
The Operating Budget that finally passed the Legislature increased spending by 961 million for a total budget of $53.5 billion in 2019-21. This included increased spending for special education, homelessness and various programs for Children, Youth and Family Services. The final budget also included $100 million to cover costs associated with the coronavirus outbreak. The budget left a fairly high level in reserve – nearly $3.5 billion which will hopefully help our state better weather the coming budget crisis.
When the final budget was signed by Governor Inslee on April 3, he was forced to do some significant vetoes to ensure more money was available for the battle against COVID-19. The $445 million vetoed included projects that were directed at Department of Health – because the Governor felt that Department of Health needed to focus on the coronavirus fight instead. In addition, Inslee vetoed $100 million that was dedicated to additional K-12 school counselors.
The Capital and Transportation budgets did not suffer the same veto fate as the operating budget because the projects funded will provide jobs and revenue as we move out of the crisis. The Capital budget appropriated $89.5 million total, increased bonding capacity and authorized $75.6 million in expenditures from dedicated accounts. The focus for the Capital budget included Housing and Homelessness programs, early learning, behavioral health, education construction projects, environmental clean up projects and habitat conservation.
The Transportation budget had a $453 million loss of revenue this biennium. It made up for this loss by delaying funding for projects that were not ready to start yet, reducing rail capital projects until the next budget cycle and delaying WSDOT Public Transportation program grants until the 21-23 biennium.
NWHPBA EMERGES MOSTLY UNSCATHED (FROM THE SESSION AT LEAST)
After the battles of 2019, it was nice to see that no bills were directly leveled at the hearth products industry. Sponsors of the woodstove emissions bill opted to not run that bill again because the EPA had not changed its standards for the Phase II of the NSPS. Although we did expect to see some movement on increases to the woodstove education fee, that did not pan out as we moved through the session.
The Capital budget maintained the $2 million for this biennium in woodstove changeout dollars.
In addition to the victories achieved while working with the various business coalitions and construction coalitions, NWHPBA worked hard to stop several bills that would have either provided incentives for municipalities to move away from natural gas or done the same through other Clean Air regulations. Some of the bills we were able to DEFEAT included:
SHB 2586/SB 6496 – Electrification
: This bill would have authorized a municipal electrical utility or PUD to adopt “beneficial electrification plans to accelerate the electrification of their customer’s homes. This would have created incentives for more natural gas bans in cities.
SHB 2957/SSB 6628 (and other similar bills) – Greenhouse Gas Emissions
: This bill, and others like it, would have given the Department of Ecology carte blanche authority to draft regulations regulating greenhouse gas emissions for the state. This was not only an unprecedented grant of authority to a state agency, it also took out any ability for the checks and balances of the legislative process.
In addition to defeating bills, NWHPBA was also happy to help get the following bills PASSED:
E2SHB 2528 – Forest products/climate change
: This bill recognizes the contributions of Washington’s forest products sector as part of the state’s global climate response. States the intention of the Legislature to support industry sectors that act as sequesterers of carbon such as the forest products industry. This helps the wood pellet industry and other parts of the forest products industry that support the woodstove industry.
Effective June 11, 2020
SSB 6135 – System Reliability/Energy
: This bill, sponsored by Senator Tim Sheldon, directs the Department of Commerce and Utilities and Transportation Commission (UTC) to jointly convene meetings of utilities at least once every 12 months to discuss the adequacy of energy resources to serve Washington’s electric needs. A report of these meetings must be presented to the Governor and the Legislature. This will help provide a forum for concerns regarding system reliability as a result of the Clean Energy Transformation Act.
Effective June 11, 2020
Unfortunately, despite our best efforts, we were unable to get the following bills through the process:
HB 2372/SSB 6464 – Building Code Membership
: These bills would have made the four legislative members of the State Building Code Council as voting members rather than just ex-officio. This would have increased legislative oversight of the State Building Code Council’s activities.
HB 2667/SB 6681 – Residential Energy Code
: This bill would have removed design goals for the Washington State Energy Code pertaining to increasing energy efficiency and other items. It also would have allowed the State Building Code Council to amend the State Energy Code for residential structures to decrease construction costs, rather than to increase energy efficiency. In addition, it would have delayed implementation of the 2018 edition of the State Energy Code for residential structures, and directed the State Building Code Council to review and amend the code to reduce constructions costs and to provide the least burdensome alternatives to compliance.
Other Bills that passed that we need to watch:
E2SHB 2311 – Greenhouse Gas Emissions
: This is the one big energy bill that passed this year. It amends the state’s greenhouse gas emission reduction targets. It establishes a net-zero emissions target for 2050 both for state government and the state as a whole. It directs the Departments of Ecology and Commerce to include additional information in their greenhouse gas emissions reports…including the quantity of greenhouse gas emissions from wildfires in the state and the quantity of greenhouse gas emissions from key sectors of the economy. Requires more state agency reporting on how they are meeting their goals and establishes that it is the policy of the state to promote the removal of excess carbon from the atmosphere through carbon sequestration activities. We will need to watch the activities and reports resulting from this bill very carefully to determine any negative effects to our industry. Effective June 11, 2020.
SB 6170 – Plumbing
: After many years of trying, the bill to put all plumbing requirements under one certification passed this session. This version of the bill merges all current plumbing requirements under one certification statute. It also creates a new “residential plumbing” certification that will require fewer hours to obtain. Nothing in the bill does not impact fuel gas piping and – according to proponents and bill analysis – should not significantly change any existing requirements. This will be important to watch as it goes into effect to see what happens in the actual implementation. Most of the bill will take effective in June, 2020 except for provisions surrounding incidental plumbing work by electricians and local permits, which take effect January 1, 2021 and the section requiring specialty electrician training which takes effect July 1, 2023.
Business Under Threat All Session
As with the 2019 session, many of the bills introduced were directly focused on increasing costs and regulations for businesses. While we were successful in fighting many of these, many also passed – but not before we had a chance to mitigate the negative impacts for businesses.
Some of the general business bills that passed included:
SB 6492 – Services B&O Tax:
Last year the Legislature passed a surcharge on certain service businesses to fund workforce and higher education. That bill was confusing, both for businesses trying to figure out if they had to pay the surcharge and for the Department of Revenue. In addition, it was shown that it would not bring in the money needed to fund the dedicated program. In response, the 2020 Legislature repealed the increase from last year and replaced it with a general increase in the service B&O rate from 1.5% to 1.75%. Businesses grossing less than $1 million per year would stay at the 1.5% rate.
The bill PASSED THE LEGISLATURE and went into effect on April 1, 2020.
SHB 2409 -- Workers’ Compensation Penalty Increases
: This bill started out the session tripling the penalties for workers’ compensation violations and adding in requirements that could have resulted in thousands of dollars being paid directly to injured workers by employers. In the end we were able to mitigate the penalty increase to just a doubling and putting place a process of review prior to any additional increases. Also eliminated were any specific requirements for employers and direct payments to workers. Instead the Department of Labor & Industries will create a licensing process for third party administrators to better track their claims management activities.
The bill PASSED THE LEGISLATURE and takes effect on September 1, 2020.
SHB 2614 – Paid Family and Medical Leave
: This bill was a mixed bag for business. On one hand it made some needed changes and clarifications to the state’s paid family and medical leave laws – including exempting casual labor from covered employment and giving the Employment Security Department proper authority for enforcement. However, the bill also authorizes employees to bring a private right of action to recover damages for an employer’s “unlawful acts” rather than requiring an administrative remedy first. Attempts to modify this provision were unsuccessful.
The bill PASSED THE LEGISLATURE and takes effect immediately.
Other New Laws for Businesses
EHB 2188 – CDL Testing Waivers
: Military veterans may have the skills and knowledge CDL testing fees waived based on prior knowledge obtained during military service –
Effective January 1, 2021
HB 2266 – Expressing Breastmilk
: Employers are prohibited from requiring written certification from a health care provider for an employee to be provided reasonable accommodation when expressing breast milk.
Effective June 10, 2020
SHB 2308 – Job Title Reporting
: Employers are required to include standard occupational classifications or job titles of all workers in their quarterly unemployment insurance reports.
Effective October 1, 2021
HB 2474 – Sales Commissions
: This bill prohibits conditioning the earning of a sales commission on whether the contract was terminated after the efforts that resulted in the sale
. Effective June 10, 2020
HB 2602 – Hair Discrimination
: Race-related hair styles are added to the definition of unlawful discrimination.
Effective June 10, 2020
SHB 2613 – Unemployment Charges
: An employer is eligible for relief from benefit charges if a claimant was discharged because they were unable to satisfy a job prerequisite required by law or rule
. Effective June 10, 2020.
ESB 5165 – Citizenship or Immigration Status
: An employer, potential employer, labor organization, or employment agency commits and unfair employment practice if it discriminates against a person based on their citizenship or immigration status unless state or federal law, regulation, or a government contract requires it.
Effective June 11, 2020
SB 6034 – Pregnancy Discrimination
: State law is updated to extend the time allowed to file a complaint with the human rights commission for a claim related to pregnancy discrimination from six months to one year.
Effective June 10, 2020
SSB 6037 – Business Corporation Board Diversity
: Corporate boards must have a minimum of 25% female directors on the board no later than January 1, 2022.
Effective June 10, 2020
Bad Bills that Business Defeated:
Several bills were defeated that could have had devastating impacts on businesses either generally or specifically. These included:
HB 1110 – Low Carbon Fuel Standards:
This bill would have put into place aggressive clean fuel standards that studies showed could increase the price of fuel by over 50 cents per gallon and disrupted fuel supply for some industries.
2SHB 1965 – Workplace Violations/Qui Tam:
This bill would have allowed whistleblowers to bring actions against employers on behalf of the state for workplace violations. This would have negated years of work with agencies to ensure enforcement included attention to special circumstances and appropriate due process. It also would have allowed individuals not affected or not even working for the business to bring actions.
SHB 1515/SB 5513—
Employer-Employee Status: This bill would have eroded current independent contractor statutes and would have made more independent contractors employees under the law.
HB 1172/SB 5314
– Capital Gains Tax
: Once again business was able to defeat attempts to establish a capital gains tax in the state.
HB 1395/SB 5565 – Direct Contractor Liability:
This bill would have made contractors directly liable for payment of wages and benefits to sub contractors.
SSB 6053 – Wage Liens:
This bill would have given preference to liens put on wages owed during disputes. This would have jeopardized the ability for businesses to obtain financing.
SB 6516 – Thirty-two Hour Work Week:
This bill would have reduced the standard workweek to 32 hours and would have required overtime pay above that amount of not less than one and one half times their regular rate.
SSB 6552 – Workers Comp Waiting Period
: This bill would have eliminated the three day waiting period for receiving industrial insurance compensation. This would have led to increased costs in the workers compensation system and thus increased premiums.
Special Sessions are Likely
As of this writing, it is very likely that the Legislature will be called in for a special session to deal with budget items as well as longer term planning for the COVID-19 crisis than can be done using emergency proclamations only. Whether this session will be in Olympia or done remotely is still up in the air as the Constitutionality of a remote legislative session is reviewed.
We also are expecting the current crisis to carry into the next legislative session and budget cycle. The amount of lost revenue and the state of the economy will drive discussions that will most likely include tax increases. But if small businesses are still suffering, there may be a need for further economic stimulus and regulatory changes to accommodate what is needed to get people back to work. At this point it is up in the air but hopefully we will have more answers as we move into the summer.
2020 is Still an Election Year
The other factor determining the direction of next year’s legislative session is the fact that 2020 is an election year. Not only will we be voting on all statewide elected offices, the entire House of Representative and half of the Senate will be running for office. With several retirements this year, we expect to see the face of the Legislature change once again. Whether that means we will see a change in the current Democratic majorities in the House, Senate and Governor’s office is yet to be determined. All of you are encouraged to evaluate your local candidates thoroughly. Now, more than ever, it will be important to elect candidates who understand what it takes to run a business and employ people.
Attached is a final bill report with bills that passed the Legislature and signed by the Governor listed first and bills that died after those. Links to bills are included in this list so you can see all of the information and actual language of the legislation.
Thank you for all of your help this session!