State lawmakers hit the gas on multi-year spending spree

By Kris Johnson

Looking back at the 2022 state legislative session, it’s hard not to be disappointed at the missed opportunities.

Yes, lawmakers accomplished some things that are good for the economy, like shoring up the unemployment insurance trust fund, lowering the B&O tax threshold for the smallest of small businesses and passing a transportation package that will invest billions in infrastructure, mostly on the west side of the state.

But it would have been the perfect time to give more of Washington’s astonishing surplus back to taxpayers, something we’ve seen other states do as state treasuries have swelled during the pandemic era. Bills to lower the state sales tax rate or reduce the B&O tax for manufacturers were introduced, but failed to even get a hearing as lawmakers appeared more intent on spending.

Even modest proposals for a three-day sales tax holiday and free Discover Passes for state parks and recreation sites fell by the wayside amid the spending spree.

The supplemental budget lawmakers approved this year tacks on an additional $5 billion to the current two-year budget, bringing it to $64.1 billion. That’s 24% larger than the previous two-year budget. Since 2017, Washington’s budget has increased an astounding 50%.

One of the best things lawmakers did for employers is bring an end to a streak that saw 22 new or higher taxes adopted over the previous three legislative sessions. But given the size of the state budget surplus they had to work with this year — more than $14 billion — the lack of a major tax increase is hardly an accomplishment.

The transportation package that lawmakers passed this year, which will invest nearly $17 billion over 16 years, is another missed opportunity. It will make much-needed investments in things like the Interstate 5 bridge over the Columbia River, and improvements to Highway 18, Highway 167 and I-405. It also invests in maintenance and preservation of existing roads and provides funding for fish passage barrier removal.

But funding for the package includes nearly $2.5 billion in new and higher fees — fees that will fall on Washingtonians at the same time that inflation is rising. And the major new projects funded by the package are almost entirely located on the west side of the state. This represents a departure from the way lawmakers have historically addressed the issue of transportation, and it’s a missed opportunity to invest in all of Washington.

Washington’s long-term care program is yet another missed opportunity. The program received attention last year as people realized that every employee in the state, except those who were able to opt-out, would be subject to a new payroll tax scheduled to start in January. Lawmakers did the right thing when they agreed to modify and delay implementation of the program, known as WA Cares, but they stopped short of addressing all of the issues with the program. It’s critical they use the extra time to work with employers, regulators, and private-sector insurance providers to find solutions to all of the issues surrounding this program.

Employers were relieved that some proposals failed to pass, including an attempt to regulate nurse staffing, a revival of the kind of ergonomics rules voters rejected nearly two decades ago, and multiple bills aimed at limiting or banning natural gas.

In the end, though, it’s the spending decisions that stand out. Any legislative session will have hits and misses, but lawmakers’ failure to give back more of the state’s historic $14 billion surplus is regrettable. In particular, a boost for the state’s manufacturing sector would have been especially timely following passage last year of a bill aimed at doubling the size of the sector in a decade.

Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association.