Washington Business 2019 Legislative Review & Vote Record | Page 5

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Employers Hit with Higher Taxes
Gary Chandler
AWB Vice President, Government Affairs
From an employer’s perspective, the 2019 session was one of the worst legislative sessions we’ve seen in decades.
Lawmakers began the session in January with $4.5 billion in new revenue — based on the strength of the economy
— and yet they still devoted much of their time to debating new and higher taxes.
By the time the session ended in late April, the amount came to Olympia and remained engaged throughout the
of additional revenue coming into the state’s coffers had session. But the issues are not going away, and we expect
risen to an unprecedented $5.6 billion. to see many of them come up again in the next session.
And yet it wasn’t enough. One of the most upsetting attacks on employers was
The final budget agreement was rushed through the a bill targeting the agriculture community. Substitute
legislative process at the 11th hour without time for Senate Bill 5693 would have required dairy farmers and
proper study or debate, and included more than $1 billion fruit growers to report to retailers whether they use
in tax increases. slaves or human trafficking. As a former farmer, I will tell
Most of the burden will fall on Main Street employers you the bill was deeply offensive and should never have
in the form of real estate excise taxes and a business and received a hearing.
occupation (B&O) surcharge on service businesses. Taken as a whole, the employment law bills that we
The two-year $52.8 billion operating budget amounts to saw in 2019 had the potential to dramatically alter the
an 18.3% growth in spending, one of the highest growth way business is done in Washington state, making it more
rates in decades. The B&O tax increase will impact challenging for employers and making the state less able
thousands of small businesses in every part of the state, to compete with other states and around the world.
including the small towns outside of the urban core that Expect to see many of the issues return in the 2020 session.
have struggled to fully recover from the recession. And expect to see the debate over taxes continue as well.
It’s a disappointing outcome and one that raises concerns Even though spending rose by more than 18% in 2019,
about the long-term sustainability of Washington’s there will be continued debate about restructuring
spending. When – not if – the next downturn occurs, Washington’s tax system and raising taxes even higher,
revenue from tax collections will naturally fall, putting including adopting a capital gains tax or an income tax.
pressure on lawmakers to raise taxes even higher just to For all the attacks on employers in the 2019 session,
break even. there were some bright spots. The brightest of them all
In addition to raising taxes on employers, lawmakers was the grassroots rallying by the state’s hair stylists.
proposed a number of bills targeting small businesses, from They got the attention of lawmakers and set an example
legislation aimed at making it virtually impossible for hair that all industries should follow.
stylists and other entrepreneurs to work as independent With growing concern about a recession in the next
contractors to legislation that would restrict scheduling year or two combined with a continued push for new
and reduce flexibility for both employers and employees. taxes, employers need to speak with one voice, urging
Many of the most harmful employment law bills failed lawmakers to live within their means. Advocating for
to pass this year thanks in part to the incredible grassroots sustainable budgets may not be popular or fun, but it’s
rallying of more than 1,000 cosmetologists and stylists who the best route to long-term prosperity.
special edition 2019
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