Sponsored by
Building on last week’s GAC update about Washington’s looming budget crisis and the topics discussed at the Spokane regional fly‐in, this update delves into additional legislative measures that could reshape Washington’s business climate.
This week’s briefing offers a detailed look at new bills and a deeper dive into some of the taxes Washingtonians could face. With the legislature’s balance sheet deeply in the red, lawmakers are focusing on measures that target high-net-worth individuals and high-performing businesses to balance their budget.
Taxation and Revenue Policies
This bill would impose a 1% tax on worldwide wealth exceeding $100 million if passed. It is projected to generate $3.38 billion in FY 2027 and affect approximately 3,400 taxpayers.
Business Impact & Concerns:
- Will drive wealthy investors and business owners out of Washington, reducing local investment.
- May slow economic development and limit capital inflows into startups and major projects.
Implements phased tax hikes for service businesses with over $1 million in gross revenue—as well as for manufacturing, wholesaling, general service, and retail sectors—with projected collections reaching $8.2 billion over the next decade.
Business Impact & Concerns:
- Higher tax rates will lead to increased costs passed on to consumers.
- Will reduce Washington’s competitive edge, prompting local businesses to consider relocation or expansion elsewhere.
Currently treated as real estate leases and exempt from certain taxes, self-storage rentals would be reclassified as retail transactions under this bill. This would subject them to state sales tax and a retail B&O tax on gross receipts.
Business Impact & Concerns:
- Operational costs for storage facility owners will rise, leading to higher rental rates.
- Sets a precedent for taxing other real estate leases, potentially broadening the tax base and disadvantaging Washington businesses compared to neighboring states.
Business and Industry Regulations
This bill would extend UI benefits to striking workers and those locked out by employers—currently a group ineligible for unemployment support.
Business Impact & Concerns:
- Will encourage prolonged strikes, disrupting business operations and supply chains.
- Could result in higher UI tax rates for all Washington employers due to inordinate, massive benefit payouts.
Under this proposal, penalties for child labor violations would increase substantially—from fines as low as $1,000 up to a maximum of $71,000—accompanied by additional mandatory safety inspections.
Business Impact & Concerns:
- Elevated fines and extra inspections will raise operational expenses and heighten liability risks, discouraging businesses from employing minors.
- The included “three strikes” rule may result in the rapid loss of a minor work permit, even for relatively minor infractions like delayed paperwork.
Public Safety and Local Governance
Redistributes 911 excise tax revenue within Spokane County to equalize funding between the City of Spokane and the county, altering the financial dynamics for regional emergency services.
Business Impact & Concerns:
- Will lead to diminished emergency service funding available to the Spokane Regional Emergency Communications.
- Potentially weakens response times and overall coordination.
What's next:
The session presents several bills with significant financial implications. Business leaders should prepare for potential cost increases from new taxes, compliance requirements, and/or adjustments to operational practices. We will discuss these legislative topics and others at our upcoming Government Action Committee meeting on March 11 at 8 a.m.
