Legislature adjourns after adding taxes, securing pandemic relief

Apr 29, 2021
Written by Mark Johnson, Senior Vice President of Policy and Government Affairs

The 2021 Legislature adjourned Sunday night after completing a first-of-its-kind, 105-day virtual session.

The biggest and most significant piece of legislation was the two-year operating budget totaling $59 billion – a 12.6 % increase from the last biennium. Unfortunately, the new budget relies heavily on using the “rainy day” fund to balance – setting the state up for a potential shortfall in the future.

Of note to retailers was the adoption of a capital gains tax of 7% on proceeds over $250,000. The measure was promoted as only impacting the wealthiest Washingtonians. This is false. Small retailers that sell their business, often as part of their retirement plan, will be stuck paying the state an additional 7% – after already paying years’ worth of property tax, business and occupation tax, employee taxes, and collecting the state sales tax. This bill is the wrong direction for our state. WR opposed the measure.

Two other monumental tax increases are coming in the form of a low carbon fuel standard and cap-and-trade laws that will add to our already high fuel tax rate. This will impact almost every aspect of our lives. The costs of goods and services will increase as delivery prices will have to go up. The cost to get to work or go on vacation will go up. Most unfortunate is that these new taxes will hurt hard-working lower wage earners in our state who often are forced to drive greater distances in less fuel-efficient vehicles to get to work. These regressive taxes are the wrong way for Washington state. WR opposed these bills.

New and costly regulations were also adopted. Enacted was a bill to allow wage liens to be placed on retailers and other business owners’ operations. This will only hurt small businesses trying to survive. New workers’ comp regulations during an emergency were put into place that will ensure costs increase for our already strained system. The decriminalization of drug possession was passed. How will this impact the employer/employee relationship?

Most importantly, several very important pandemic relief measures were passed with wide bipartisan support. Nearly $500 million was appropriated to help targeted businesses with their unemployment insurance taxes – many of which skyrocketed during the pandemic. Property tax relief was approved for struggling businesses. Business and occupation tax exemptions for businesses that accepted federal and state pandemic relief were enacted early in the session. These will all help many small businesses recover.

The Governor has 20 days from adjournment to “take action” on bills that make it to his desk. Taking action can include signing the bill into law, vetoing the whole bill, or vetoing a section. If the Governor doesn’t take action, the bill automatically becomes law. Bills have varying effective dates, so it is important to review the actual law to see when you need to comply.

WR will be sending to all dues-paying members a comprehensive Law Review covering the new regulations and taxes that passed – and those that failed. Please keep in mind that all bills introduced in an odd, budget year have a two-year life span – so those that didn’t make it – such as data privacy regulation – will be back again for another try in 2022.

WR also produces a Voting Record. We pick the top issues that we actively engaged in – both for and against – and we score the legislators on how supportive they were for the retail industry. This helps WR members decide who to support in the 2022 elections and others who might need to be better educated on the priorities of retailers.

During the interim, WR will work closely with state agencies on the rules that are often written to implement the new laws and taxes. We need to ensure that the agencies don’t stray from the original legislative intent. WR also will work diligently preparing for next session. Many of the major policy issues that didn’t make it will be discussed over the Summer and Fall – for example, the data privacy regulation and consumer product theft and safety protection.

WR thanks all the Legislators and elected officials for their service to our state during these trying times.