WashingtonVotes NEWS: Friday, January 21, 2022

House passes bill to delay controversial long-term care payroll tax. Leading Senate Democrat introduces bill to cut state sales tax

Washington lawmakers appear ready to consider state tax and spending bills during this short, 60-day election year session, now headed into its third week.

On Wednesday, the House passed HB 1732 by a 91-6 vote and sent it to the Senate. The bill would delay payroll tax collections for “WA Cares,” a mandatory state long-term care program funded by an added 0.58% payroll tax on workers. The program came under heavy criticism after it was established in 2019, because of the heavy tax and because many workers would receive no benefits under the program. Payroll tax collections were to have begun this year, but if the bill is approved by the Senate and the governor, the collections will be delayed until July 2023.

House Republicans offered several amendments but these were ruled out of order and no vote was taken on them. Separately, Republicans have proposed HB 1913, a bill to repeal the unpopular “WA Cares” program.

On Thursday, in what many observers saw as a surprise move, Senate Democratic Majority Caucus Vice Chair Mona Das (D-Kent) proposed a bill to cut the state sales tax. SB 5932 would reduce the state sales tax by one percentage point, lowering the rate from 6.5% to 5.5%. If passed the bill would provide $3 billion in tax relief per year. State economic forecasters project the state currently has an $8 billion surplus.

Senate Republicans have proposed a tax cut plan of their own. SB 5769 would enact a range of property and business tax cuts. It was introduced by Senator Lynda Wilson (R-Clark County) and is scheduled for a public hearing in the Senate Committee on Business, Financial Services and Trade at 8:00 a.m. on January 25th.

Meanwhile, the Senate Committee on Housing and Local Government held a public hearing Thursday morning on SB 5554, to allow local income taxes in Washington state. The bill, introduced by Senator Bob Hasegawa (D-Seattle), would authorize a county, city, or town to impose a graduated tax on personal or business net income if the jurisdiction makes a corresponding reduction in the amounts collected in other, uniform local taxes.

Seven Washington counties and 12 cities have passed local income tax bans in response to a 2019 State Court of Appeals ruling that opened the door to a flat 1% local income tax. The state Supreme Court has let this ruling stand. It is likely that more local governments will pass such bans in response to income tax bills like SB 5554.

On the spending side, Representative Jim Walsh (R-Aberdeen) has introduced HB 1999, to re-establish the state government spending limits applied during Washington state’s years of its greatest economic expansion in the 1990s.

Rep. Walsh says Washington’s government spending has increased by 74 percent since 2013 and nearly doubled since 2011. “Our state doesn’t just have a tax problem. It has a spending problem,” said Walsh. “House Bill 1999 resolves this problem by bringing back a good public policy that Washington should never have abandoned: reasonable and rational state government expenditure limits.”

HB 1999 is currrently before the House Appropriations Committee. No public hearing has been scheduled for it as yet.

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