WBA Legislative Session Recap

At the start of this year’s 60-day Legislative Session, lawmakers had a long wish list of items they hoped to accomplish despite a short window of opportunity.

They were required to draft and pass a supplemental budget, and thanks to a continued strong economy, they could balance the budget this year without new revenue.

Thank you to the WBA’s Government Relations Committee, Legislative Ambassadors, Board of Directors, and Bankers Day on the Hill attendees for their input and time this year. WBA’s Advocacy team relies on many people to provide feedback and intel; it wouldn’t have been a successful year without them.

Knowing it was an election year, lawmakers drafted and introduced many “messaging bills” that had little chance of moving but signaled possible future intent. 

Another significant sign of an election year is the number of lawmakers announcing their intentions to run for another seat or retire. Sixteen lawmakers in the House and Senate are either retiring or running for another office and will not return to their current seat, while five are running for other office but would return to their current seat if not elected.

Now that the session has adjourned, here is a look at the legislation WBA monitored this year and the outcomes.

Taxes

The 2024 session was the second of the two-year biennium, meaning any bill introduced in 2023 was automatically available for consideration.

For the banking industry, we’ve closely watched SB 5493, the proposal to eliminate the B&O tax exemption for interest income on first mortgage loans. This year, the bill failed to have a single hearing. 

Much of the conversation during the session around taxes revolved around an update to the Real Estate Excise Tax (HB 2276), which was reworked to include a transfer tax for homes over $3.025 million while lowering the lowest rate category. 

While the bill remained in play until the final week of the session, there was never enough consensus to push it forward. 

Another tax proposal would have allowed local governments to triple the growth rate of property tax collections from 1 percent to 3 percent. It also was a point of discussion for much of the 60 days but failed to gain traction.

We expect some form of these proposals to return in 2025.

Special Deposits

In the interim last year, WBA worked with local members of the Uniform Law Commission on SB 5801 concerning special deposits. The legislation provides legal clarity to deposits that wouldn’t otherwise fit into a specific category and are often held for a determined amount of time before being dispersed. This includes security deposits for an apartment, where the landlord may eventually return part or all of it to the tenant. The bill, which is model language, was opt-in, so banks in Washington can choose to participate if they want to, but it is not required. The bill passed both Chambers and was expected to be signed by the Governor. 

Financial Education

Long a WBA priority, this year, Washington State Treasurer Mike Pellicciotti sponsored legislation (HB 1915) to add a financial education graduation requirement for Washington students. The bill passed the House unanimously and the Senate 47-1; however, the Senate amended it, changing it to not be a mandatory graduation requirement. The House did not concur with the changes, and the Senate was also unwilling to discuss them, and the bill died as the session adjourned. 

Artificial Intelligence

Artificial intelligence was expected to be one of the most significant topics during the session. While lawmakers did not end up introducing the 10-plus bills that were anticipated, several were the focus of great debate.

Most agreed early on that a substantive bill related to AI needed to wait until more technology details were determined. That meant most lawmakers focused on two bills that would create a task force to study AI and its implications. The task force aimed to develop a study and recommendation for new regulations.

SB 5838 started with a large task force of over 40 members but was amended to a much smaller group of nine. That group included elected officials or other government employees but not business community members. 

When the Senate bill moved into the House, it was amended to add a few new members to the task force, including members of the business and technology communities, which the Senate agreed to.

While the discussion around generative AI is just beginning, we continue to remind lawmakers that many in the industry have been using some form of AI for decades and that new regulations or laws should be consistent with federal rules. 

Greenhouse Gas Emissions

After California passed a law in 2023 requiring businesses to report their greenhouse gas emissions, it was expected that Washington would introduce something similar. 

SB 6092, aligned with the California version, would require any business making more than $1 billion in revenue to report to the state emissions on scope 1, 2, and 3, covering direct and indirect greenhouse gas emissions. Following the bill’s passage last year in California, Gov. Newsome said significant amendments would be needed and did not include any funding for the new reporting regime in his budget.

The Senate amended the bill to study the implementation of such a rule and its impact on the state and businesses. 

While it passed out of the Senate in mid-February with a vote of 30-19, it failed to be called to the House floor before the final policy deadline. 

The Legislature has focused on climate over the last few years, and we expect similar bills to return in 2025. Similarly, the SEC released its long-awaited rule for publicly traded companies, driving the conversation. Notably, the SEC rule did not include scope 3, indirect emissions.

Initiatives to the Legislature

Six initiatives to the legislature were filed with the Secretary of State at the end of 2023 and into early 2024. Initiatives to the Legislature require that during the session, the Legislature either adopt the measure as proposed. It becomes law, the legislature can reject it, and the initiative is placed on the ballot, or lawmakers can propose a different measure on the same subject, called an alternative, and then both the original initiative and alternative are on the ballot for voters to choose between. 

During most of this year’s session, lawmakers debated what an alternative was or could include. In the final two weeks, lawmakers agreed to hear three of the six initiatives. Lawmakers passed the following, which means these will not appear on the ballot in November.

• Reasonable police pursuit (I-2113)
• Clarifying prohibition on state/local income tax (I-2111)
• Establishing the parental bill of rights in public education (I-2081)

That leaves the other three initiatives (eliminating the capital gains tax, rescinding the Climate Commitment Act cap and trade program, and making the state's long-term care payroll tax an optional opt-in program) on the ballot.

Other Topics

Throughout the 60 days, lawmakers considered a wide variety of other legislation, including:

• HB 1589, which passed both Chambers in the final 48 hours of the Session, allows Puget Sound Energy to combine natural gas and electric services into a combined rate structure, which was previously not allowed. It also will enable PSE to move away from natural gas use and increase costs for customers using it. 
• HB 1893 would have provided unemployment benefits for striking workers or those locked out. The business community strongly opposed the bill, and while it passed the House, it failed to advance beyond the last cutoff in the Senate. 
• HB 2094 and HB 2095 were bills dealing 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. One of the bills required companies to keep a registry of who purchased gift cards to be notified when an unused balance would be given to the state as unclaimed property, despite Washington law that gift cards never expire. The business community raised serious concerns with both bills, highlighting the logistical and administrative challenges the legislation would create. Neither bill advanced to the opposite Chamber this year, but we expect similar proposals to return.

Again, thank you to everyone who helped the WBA Advocacy team this year. We look forward to working with you in the interim!