Association of Washington Business – Updated Weekly

Big hearing this week: A major payroll tax proposal will get a hearing Thursday in Olympia. House Bill 2100, sponsored by Rep. Shaun Scott, D-Seattle, imposes a 5% payroll tax on private employers with workers earning more than $125,000 a year. It applies to companies with more than 20 employees, payroll in excess of $7 million and gross receipts of more than $5 million.

• AWB opposes this tax. It is a direct hit to job creation and wages, reduces Washington’s competitiveness, and could result in unintended consequences — employers may respond by slowing hiring, shifting jobs out of state, or capping wages to avoid triggering the tax.

• AWB Action Alert: Please tell lawmakers you oppose this tax by noting your position as CON on the bill. You can also submit written testimony.

Governor’s speech: In his State of the State address last week, Gov. Bob Ferguson touched on flood recovery, building more housing, and investing billions into road preservation. He also reiterated support for an income tax on Washingtonians earning more than $1 million a year. However, no bill has been introduced yet proposing the tax.

Quick recap: Last week, AWB’s employer advocates testified on a number of bills, including support for proposals that would:

• Improve efficiency and accountability for state permitting and licensing

• Restore financial aid for Washington private college students

• Encourage housing development on underutilized commercial land

• Expand carbon capture technologies, like the one being pioneered by Spokane’s CarbonQuest

Coming up: See the Legislation of Note section for bills to watch this week.

Limited tickets available: There’s just a few days to register for AWB’s Legislative Day & Hill Climb, Tuesday, Jan. 27 in Olympia. Ticket sales end Friday for this members-only event — don’t miss your chance to connect with policymakers and other business leaders on issues that matter to you.

The agenda includes:

• Face-to-face meetings with lawmakers on hot topics, including taxes, employment law, housing and more

• A lunchtime keynote with Gov. Bob Ferguson, Attorney General Nick Brown, and Your Washington leader Jesse Jones

• A networking reception at Anthony’s Homeport Olympia

View the full agenda and register now!

Speaking up for financial aid: A bill to restore funding for the Washington College Grant and College Bound Scholarship programs for students at Washington’s private, not-for-profit colleges received a hearing Thursday. It comes after the Legislature drastically reduced aid for students attending private Washington colleges in last year’s session.

• Students from Gonzaga, Saint Martin’s, Whitworth and other universities told lawmakers the cuts would negatively impact educational opportunities — especially for women, students of color and first-generation students.

• AWB also testified, along with Katia Passerini, president of Gonzaga University, and Terri Standish-Kuon, president and CEO of the Independent Colleges of Washington, in support. “Students that graduate from these campuses are some of our state’s top talent in demand by our members,” AWB’s Emily Wittman said.

Read more in AWB News.

Add your voice: AWB has launched its winter employer survey. The quarterly poll is a critical tool to gauge employers’ views on the economy, taxes and regulations, policy priorities, and other important issues.

New questions: The survey includes new questions on the impacts of recently enacted tax increases.

Economic north star: AWB and employer leaders briefed a Senate committee last week on Washington in the Making 2040, a 15-year vision to guide the state’s economy. The plan, launched last summer by AWB and the Washington Roundtable, is shaped by input from more than 4,200 Washingtonians. Read more in AWB News.

Setting goals: The four pillars of WA 2040 set measurable targets, including creating 10,000 new work-based learning opportunities a year, adding 1 million new housing units by 2040, and ensuring affordable, reliable energy.

“Just as our business has a strategic plan to guide our operation, our state needs a strategic plan for its economy,” Erika Frayser, a sixth-generation leader of Seattle-Tacoma Box Company, told lawmakers.

What’s next: Implementation is already underway. AWB held its first solutions summit on energy in October, with a report due soon. The next summit, coming in July, will focus on improving Washington’s business climate.

Clean energy bill: On the first day of session, AWB joined employers to testify in support of House Bill 2285, which recognizes carbon capture under the Clean Energy Transformation Act. This would allow innovative companies like CarbonQuest, a national leader in carbon capture technologies based in the Spokane region, to help more employers cut emissions while supporting energy reliability.

“House Bill 2285 is a critical step toward meeting Washington’s clean energy goals while ensuring grid reliability and affordability,” testified CarbonQuest CEO Shane Johnson.

Read more in AWB News.

LAND USE & HOUSING

Updates from Ken Short, lead on transportation, land use and housing:

• Building homes in commercial corridors: Senate Bill 6026, sponsored by Rep. Emily Alvarado, D-Seattle, and requested by Gov. Ferguson, aims to encourage housing development on underutilized commercial properties. AWB supports this bill because it gives communities the option to unlock new development opportunities for housing, while protecting valuable industrial land. In a hearing Friday, Lt. Gov. Denny Heck discussed a recent report highlighting the potential to add thousands of new homes on underused or vacant commercial land, noting that the state needs to add 55,000 housing units a year to reach the projected need. “We need to be bold. We have to build a lot more homes, of all kinds, for all our neighbors.” The commercial-to-residential concept is also supported by former Gov. Christine Gregoire, as part of her work with Challenge Seattle, and was featured at the 2024 Cascadia Innovation Corridor Conference. The Seattle Times editorialized in support of the bill: “This one should be a slam-dunk.”

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REGULATORY REFORM

Updates from Emily Wittman, director for education, workforce, child care, health care & federal affairs:

• Regulatory efficiency: House Bill 2198, sponsored by Rep. Adison Richards, D-Gig Harbor, and requested by Gov. Ferguson, creates transparency and accountability for state permitting and licensing. It also requires state agencies to provide refunds for application fees if they fail to meet a published decision time for a completed credential application. The bill has a hearing at 8 a.m. Friday in the House State Government & Tribal Relations Committee. Last week, AWB testified in support on the Senate companion bill, sharing real-world examples of how slow and unpredictable permitting timelines impact businesses. This bill, which has support from trade associations, labor unions and government, is an important step for regulatory reform.

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EMPLOYMENT LAW

Updates from James Crandall, lead on legal affairs, labor & employment law:

• Banning noncompetes: Senate Bill 5437, sponsored by Sen. Derek Stanford, D-Bothell, is the same bill we saw last year proposing to ban all noncompete agreements. AWB outlined concerns about the bill in a hearing this morning in the Senate Labor & Commerce Committee. AWB supports the current law that limits the use of noncompete agreements to high-wage earners, striking a balance between worker mobility and legitimate business interests. “Without the availability of narrowly tailored noncompetes, employers may be less willing to invest deeply in employee development,” AWB’s James Crandall testified.

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TAX & FISCAL POLICY

Updates from Max Martin, tax and fiscal policy lead:

• Payroll tax: House Bill 2100, sponsored by Rep. Shaun Scott, D-Seattle, imposes a 5% payroll tax on private employers with workers earning more than $125,000 a year. It applies to companies with more than 20 employees, payroll in excess of $7 million and gross receipts of more than $5 million. This would be a direct hit to job creation and wage growth. It would punish employers for growing and succeeding, and encourage them to outsource jobs, slow down hiring, shift jobs out of state or cap wages to avoid triggering the tax. The bill has a hearing at 1:30 p.m. Thursday in the House Finance Committee. Sign in CON to register your opposition to the bill.

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ENERGY & ENVIRONMENT

Updates from Peter Godlewski, AWB’s lead on energy, environment and water legislation:

• Data centers: Senate Bill 6171, sponsored by Sen. Sharon Shewmake, D-Bellingham, creates new requirements for large energy-using facilities, such as data centers. AWB opposes this bill because it would restrict the ability to attract new data centers and create challenges for existing industrial customers. The bill has a hearing at 10:30 a.m. Friday in the Senate Environment, Energy & Technology Committee. The House version, House Bill 2515, is scheduled for a hearing at 8 a.m. Thursday in the House Environment and Energy Committee.

Seattle small businesses in ‘state of invisible crisis,’ survey finds

Small brick-and-mortar businesses are under more financial stress than they were during the Covid-19 pandemic, according to a new survey conducted by Intentionalist, a Seattle-based guide to small businesses.

• More than 67% of respondents said that they were under more financial stress now than in 2020 and 2021

• 71% say foot traffic is lower, while 63% report declining sales compared to a year ago

• Costs are rising for rent, labor, goods and supplies, insurance premiums and more

Read more in The Seattle Times.

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Cross-border collaboration wine comes to fruition

During AWB’s 2024 trade mission to Canada, we heard first-hand about the impacts of a devastating freeze that destroyed 90% of the grape crops in British Columbia’s Okanogan region. AWB joined with Lt. Gov. Denny Heck and state Department of Agriculture Director Derek Sandison to support a temporary fix that leverages WA’s availability of grapes to allow Canadian wineries to continue to produce wine.

Last week, Craig Weichel, Canada’s consul general in Seattle, presented the first bottle produced under that partnership — a Pinot gris from the Poplar Grove Winery that features Washington-grown grapes.

“This is a great example of the problems we can solve when we come together,” AWB President Kris Johnson said on LinkedIn. “A win-win solution.”

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Grid Storage Launchpad opens doors for grid-scale battery testing

Battery companies can now have their grid-scale energy storage systems independently tested at the Grid Storage Launchpad, housed at the Pacific Northwest National Laboratory in Richland.

The Grid Scale Launchpad opened in 2024 to accelerate the development of grid-scale energy storage solutions. The launchpad offers testing facilities for batteries—one for systems up to 10 kW and one for systems up to 100 kW. Learn more and find out how to apply for testing.

Stay up-to-date, earn credits: AWB’s six-month HR & Employment Law webinar series kicks off Feb. 11 with a session on pre-hire, hiring and job descriptions. Over the six-part series, Washington’s top law firms will share practical guidance and legislative updates in the areas of handbooks, wage and hour, performance management, workplace safety and more.

Virtual training: Webinars will take place on Zoom at 10 a.m. PST on Wednesdays February through July. Each 90-minute session includes Q&A, plus a wrap-up package with slides, video links, and sample documents. View the full topic list and dates.

Bundle & save: Get the best value by purchasing the full six-month series. Individual webinars are also available for purchase.

Credits available: Earn HRCI, SHRM and CLE credits for each course.

10 years on the road: We’ve already starting planning AWB’s 2026 Manufacturing Week bus tour, which will visit shop floors across the state Sept. 30-Oct. 7. We’d love to visit your business as we celebrate the 10th anniversary of the tour!

• If you are interested in becoming a tour stop, fill out this application of interest form

• Check out our manufacturing tour stop guide to learn more about becoming a stop

Time to shine: Nominations for AWB’s 2026 awards program are open now! We recognize employers in 11 categories, from excellence in family-owned business and environmental practices to entrepreneur and employer of the year. Fill out the nomination form.

• Self-nominations are accepted and encouraged to recognize the quality in your own firm. We also have many nominations come in as employers recognize clients and partner firms.

As you plan your employee benefits for 2026, consider AWB’s HealthChoice Trust. More than 2,500 small employers participate, with 24 competitive, comprehensive benefit plan designs tailored to meet your needs. PPO plans provide 100% coverage for in-network labs, X-rays and diagnostics.

HealthChoice offers broad access to physicians throughout Premera Blue Cross’s extensive provider networks. Coverage is available to companies with as few as two employees in the following industries: agriculture, automotive services, construction, communications, hospitality, manufacturing, professional services, retail/wholesale, technology and transportation.

For a quote, talk with your insurance producer or visit our website at www.propointservices.com You can also contact Billy Sangster at ProPoint: 866.448.9577.

Save the date: AWB’s 2026 Spring Summit is coming back to the Hilton Vancouver Washington, May 5-7.

More information to come on registration and room block information for this popular annual event.

“There’s a perception that things are better post-pandemic. They’re not.” ~ Efrem Fesaha, founder of Boon Boona, a Seattle coffee roaster and cafe, one of the many small businesses grappling with across-the-board higher costs and slower consumer spending post-pandemic.