January 31, 2024
Bill Report

Legislators have completed three weeks of the 2024 session, and Wednesday, January 31, is the first procedural cutoff, the deadline for bills to pass out of policy committees in their house of origin. The next cutoff, the deadline for bills -- other than those deemed "necessary to implement the budget" -- to pass out of fiscal committees is Monday, February 5. The supplemental budget deliberations, intended to be the primary focus of a short session, will begin in earnest after the publication of the next revenue forecast on February 14. In the meantime, plenty of bills are under consideration, and the WBA lobbying team is keeping a close eye on them. Here are some of the bills we are monitoring:  

Taxes: Several tax proposals have been introduced. These include:  

• SB 5493, this year's version of the proposal to eliminate the B&O tax exemption for interest income on first mortgage loans, remains a top priority. So far, it hasn't gotten any action, but we have learned over the years not to take anything for granted, so we will continue to watch it closely. 
• HB 2276 and SB 6191 would increase the real estate excise tax on transactions over $3.025 million. They are being pitched as a "mansion tax," but actually would have a greater impact on sales of raw land, apartment buildings, and the already struggling commercial real estate sector. Both bills have had hearings, but neither chamber wants to be the first to pass the higher tax. There is a business community opposition coalition, and we are watching their activities. 
• SB 5770 would allow local governments to triple the growth rate in their property tax collections from 1% to 3%. It was heard in the Ways & Means Committee, but a vote hasn't yet been scheduled. This could impact many of our customers, and we will be watching it closely. 
• HB 2308 would allow local governments to offer tax incentives for converting excess commercial property into housing or converting multi-family housing to affordable housing. It has been heard and voted out of the Housing Committee, so it remains alive for further consideration. 

Artificial Intelligence: Lawmakers are feeling the need to do something to show that they are keeping up with rapid advances in artificial intelligence technology. The most prominent proposals are: 

• SB 5838 would establish an AI task force, but the exact composition continues to evolve. The latest version would have nine members, all of whom are elected officials, supported by a series of subcommittees, presumably including some tech industry experts. It has moved out of the Environment, Energy & Technology Committee and been referred to Ways & Means. Meanwhile, the House version, HB 1934, which varies from the Senate bill in terms of task force composition and timelines, has been heard in the House Consumer Protection & Business Committee and is scheduled for a committee vote on January 31. We have yet to see a rumored Executive Order from Gov. Inslee, which could make these bills moot before they pass.  
• HB 1951 would impose additional requirements on any entity that uses algorithms in "consequential decisions." Our concern is that some analytic tools banks use could fall under an overly broad definition of artificial intelligence, even though we have been assured that this is not the intent of the bill sponsor. Additionally, we will be pointing out that most, if not all, of the requirements the bill would impose are already addressed by our compliance with various federal regulations, making an exemption like the one we have obtained in multiple data privacy bills appropriate. While the bill doesn't appear to have strong momentum, internal House Democratic caucus politics may determine whether it receives further consideration this session. 
• SB 6299 deals with the impact of AI in the workplace and is an attempt to protect existing jobs from being eliminated through AI technologies. Our concern with this bill is that its definition of artificial intelligence is very broad, and nearly any automation or technology might fall under it. The bill was scheduled for a vote in the Senate Labor & Commerce Committee yesterday. 

Other Issues: As always, the range of issues on our radar is wide: 

• HB 2094, HB 2095, and SB 5988 bills deal with administering and regulating consumer gift cards and loyalty programs and setting out conditions under which the state could claim outstanding balances as unclaimed property. The public hearing on this issue pointed out several problems with the bill, and the feeling in Olympia is that they don't have the votes to move forward. We will continue watching them just in case, however.  
• HB 2081 / SB 5968 regarding home equity sharing agreements. There are concerns that many of these programs represent anti-consumer and predatory lending schemes. We will monitor the legislative response to ensure it does not disrupt the mainstream lending market. The Senate version has already passed the policy committee and moved to the Rules Committee, while the House version is set for a committee vote on January 31. 
• SB 5855 proposes requiring "plain language" user agreements, and SB 6081 is an even more restrictive bill covering contract language. We understand that any version of these bills will exempt financial institutions in recognition of our federal regulatory requirements. Neither bill seems to have the support needed to move forward. 
• SB 5509 would create a statewide infrastructure bank. This doesn't seem to have any momentum this session, but we are simply monitoring to ensure it doesn't gain any. 
• HB 1915 is WBA-supported legislation that would expand state financial literacy programs and requirements for high school graduation. It has met the policy committee cutoff and has moved on to the Rules Committee. 
• HB 1885 would prohibit "foreign-influenced" corporations from making political contributions in the state. The bill's definition of "foreign influence" is so restrictive that it would effectively prohibit any publicly traded corporation from engaging in the electoral process in Washington. Fortunately, it doesn't appear that this bill will move ahead.  
• HB 2149 would prohibit sharing or selling consumer data gathered at "the point of sale" unless expressly authorized by the customer. The sponsor has indicated many problems with the bill and intends to work on the issue in the interim. We will continue to share input to ensure it will not impose an additional compliance burden on banks. 
• HB 2072 is AG request legislation to increase penalties imposed on organizations that violated anti-trust laws substantially. While the proposal would not expand the definition of anti-trust behavior, just the penalties imposed, this is typically a federal issue, so we will be working to understand the practical implications of the legislation. The bill has passed out of the policy committee and moved to the Rules Committee. 
• SB 5801 deals with the regulation of special deposits. We are comfortable with the clarifications in the bill, which has moved to the second reading calendar, a step before the bill moves to the floor. 

Finally, it's worth noting that all six initiatives to the Legislature have been certified. These include measures to (1) repeal the capital gains tax, (2) repeal the state's Carbon Commitment Act cap & trade system, (3) allow employees to opt out of the state-sponsored long-term care program withholding requirement, (4) reinforce the prohibition on a state income tax, (5) give police more latitude in determining when vehicle pursuits are appropriate, and (6) create a parent's "bill of rights" regarding educational materials and school health care. Lawmakers have the option of approving the measures as submitted, failing to act, in which case the measure as submitted is placed before voters at the November general election, or passing alternative legislation, in which case both versions are placed on the November ballot. We do not expect much action on these initiatives during the session. 

As the session progresses, we will continue providing you with weekly updates on these and other bills. As always, if you have any questions or your bank is concerned about an issue that isn't mentioned here, please contact me. Thanks for all you do to support WBA.