Ahead of the last week of the legislative session, Democratic senators on Saturday passed several bills as part of a $12 billion tax package, including expanding the capital gains tax, hiking tax rates on large corporations and big banks, and beginning to collect sales tax on a variety of services.
The regular session is set to end on Sunday, April 27, but the final gavel won’t fall until the Legislature passes an operating budget as required by law. (The Legislature is also obligated to enact a budget for transportation and capital needs.)
Democrats used their majority status to advance several bills, much to the chagrin of Republicans.
“It’s hard to see how they pull this all together in the last seven days, but they are certainly pushing,” Senate Minority Leader John Braun, R-Centralia, told The Center Square on Monday. “I think we made the better argument about why this is not necessary, and they just kept their heads down, charging ahead because they have the votes.”
Engrossed Second Substitute Senate Bill 5814 generated the most intense debate.
The legislation extends retail sales and use tax to certain specified services, increases taxes on cigarettes, and extends the tobacco tax to other products. It also imposes a “one-time prepayment of retail sales tax collection for businesses with $3 million or more in taxable retail sales during calendar year 2026,” according to the bill summary.
Republicans offered several amendments, including one to exempt the tax for security systems used by retail establishments.
“It’s about affordability for retail customers. Everyone on this floor knows how difficult retailers have had it with theft,” said Sen. Judy Warnick, R-Moses Lake.
Noel Frame, D-Greenwood, urged a “no” vote on the amendment.
“This whole bill is about modernizing the tax code, and to reflect that we are moving from a goods-based to a service-based economy,” Frame explained. “If retail establishments have in-house security guards that are on their staff, they’re not paying sales tax on them.”
Sen. Jim McCune, R-Graham, rose in response to Frame’s comment about security guards.
“Great news, you’ve got a thriving huge business, probably a Wall Street traded company, and you can afford security guards,” he said. “But for the mom-and-pop store, you've got to have a video security system, tough break. That’s the route we’re going in this state.”
The amendment failed.
Sen. Phil Fortunato, R-Auburn, offered another amendment to exempt security monitoring companies from the excise tax, arguing domestic violence victims often put in security systems to protect themselves.
“This is kind of adding insult to injury,” he said. “In the whole scheme of things, this is not a significant amount of money on the state budget, but it is a significant amount of money on a woman’s budget trying to take care of her family.”
Sen. Nikki Torres, R-Pasco, rose in support of the amendment, sharing a personal family story.
“My daughter went through a terrible scenario, and one of the first things I did was I provided her some funding to help her purchase a security system,” she said. “So I ask you to reconsider this amendment.”
The amendment failed on a party-line 19 to 30 vote.
Sen. Ron Muzzall, R-Oak Harbor, offered an amendment to exempt health care providers from the excise tax.
“This is not going to help with either access or cost,” he said, noting that access to care and increasing costs are the two biggest issues in health care that lawmakers have been working to address.
Sen. June Robinson, D-Everett, spoke against the amendment.
“All of these amendments today are chipping away and taking away revenue that our state needs,” Robinson noted.
Sen. Braun responded after Robinson urged a “no” vote on the amendment.
“Fundamentally, the argument here is if we take more of the taxpayers’ money, we can spend it more wisely than they can, and I just don’t think that is true,” he said. “Charging health care providers more in taxes so that we can somehow reallocate that to support health care providers and to somehow think that’s going to be a net positive is just wrong, and we know that’s wrong.”
A handful of amendments from either side were included in the legislation ahead of final passage on a 27 to 22 vote.
Democrats also had the votes to pass Senate Bill 5813 concerning the capital gains tax. The current law levies a 7% tax on gains over $270,000 for long-term assets, including stock and bonds.
SB 5813 adds another 2.9% for gains in excess of $1 million.
The bill passed on a 27 to 21 vote.
Senate Bill 5794 passed the Senate on a 26 to 22 vote.
The legislation repeals several tax breaks for businesses. Republicans tried without success to exempt some businesses from the final bill as approved.
“They seem determined to place a heavy burden on our economy with a staggering amount of taxes,” Braun observed. “To put it in perspective, it’s 13-and-a-half billion over four years in state taxes, but then there’s another five billion proposed in local taxes that aren’t getting all that much attention. In any other year, if we had a billion in new taxes, it would be considered a huge deal, and now we’re 10 to 20 times bigger than that, and they just keep plowing forward without any consideration for what it’s going to do to our state’s economy.”
Braun told The Center Square he’s hopeful Gov. Bob Ferguson, who has expressed some skepticism about hiking taxes, will reject the bills.
“He’s been pretty consistent that he does not believe this level of taxation is a good thing for the state of Washington and that the budgets proposed by the majorities are just too much…I mean, I hope he’s firm on that,” Braun said.
