The state Legislature adjourned its 105-day Session early Monday morning. The main achievement of members was approval of a $52.4 billion, two-year spending plan.
Unfortunately, the spending plan is propped up with billions in new taxes setting the stage for deep cost-cutting once the economy cools down. Legislators in future years will be stuck with the unenviable choice of either cutting programs, raising taxes or both.
This year our state has enjoyed extraordinary revenue growth from the robust economy. Sadly, the Governor and majority Democrats didn’t think it was enough growth. This budget is $8 billion or 17.5% higher than our last operating budget – it is simply unsustainable. It would have been a prudent move to look for efficiencies, adopt a budget within existing revenues and make a significant investment in our “rainy day” fund for the impending slowdown.
Here are the top retail issues from the session and related outcomes:
SB 5581 – requiring remote sellers to collect and remit sales tax passed and went into effect March 14, 2019. This bill stems from the U.S. Supreme Court “Wayfair vs. South Dakota” case that said states had the authority to require sales tax collection from out-of-state, remote sellers. This bill has been decades in the making and will lead to a more level playing field between brick-and-mortar and online retailers.
SB 5997 – turns the non-residence sales tax exemption into a remittance program. It passed and goes into effect July 29, 2019. Unfortunately, $850 million in sales by Washington businesses, especially along our border with Oregon, will see the negative impacts of this misguided decision.
HB 2158 – increasing the service business and occupation tax rate by 20% to 66% passed and goes into effect on January 1, 2020. Many small retailers depend on these service businesses to run their operations. The new costs will undoubtedly be passed on.
SB 5998 – increasing the real estate excise tax passed and will lead to a more than doubling of the tax for property sales over $3 million. The rate will go from 1.28% to 3%. This will have a chilling effect on real estate transactions, especially commercial.
SB 5717 and HB 1491 – regulating and imposing penalties on employers for changing an employee’s schedule 14 days before a shift, failed. This flawed regulation was adopted in Seattle and has led to fewer hours being offered to employees and a reduction in customer service levels.
SB 5513 and HB 1515 – declaring independent contractors as employees of the company they contract with, failed. These bills would have required employers to pay workers comp, unemployment insurance, paid sick leave and paid family leave for their contractors.
SB 5376 and HB 1854 – regulating and imposing penalties and creating a legal private right of action or Attorney General enforcement for the maintenance and use of customer information, both failed. These bills were poorly written and rushed through the process with little stakeholder input, especially from the retail industry that would have been impacted the most.
Washington Retail will be preparing and distributing a comprehensive Law Review and Voting Record for all dues-paying members in the coming weeks.