By / Kathleen Collins • SMACNA Legislative Consultant
The 2021 Legislative session will be like no other session before it. Because of the continuing pandemic, the session will be conducted for the most part using virtual platforms like Zoom and Teams and even YouTube. Most of the legislators will work from their homes or district offices. Legislators who don’t have good internet connections will be allowed to come to Olympia and use their legislative office but may not be able to access other legislative buildings. In the House only the leadership from each caucus will be allowed on the floor during floor action. In the Senate no more than 25 Senators and staff can be in the Senate chamber during floor action. For most legislators, floor debate and voting will be done remotely.
All of the committee hearings will be virtual, requiring signing up to testify at least a day ahead of the hearing. Committee staff and legislative assistants will work remotely. No members of the public or lobbyists will be allowed in any of the legislative buildings.
The 2021 session will last 105 days, starting on January 11 and concluding on April 25. The main task for the 2021 session it to adopt new two-year budgets for the state general fund as well as budgets for transportation and capital expenditures. But they have a lot more planned than that.
Big Issues on the Agenda
Despite the awkward logistics for the 2021 session, the Democrat controlled Legislature has ambitious plans for issues they want to tackle. At the top of their list are bills that address the impacts of the pandemic and police accountability. The other issue areas mentioned include economic recovery, climate change, childcare, transportation, and education. An overarching theme for all subject areas is social and racial equity. We will also see bills on land use, plastic recycling, and new environmental review standards. The concern of many is how carefully these issues will be vetted in a virtual environment.
The transportation budget has a current deficit because its traditional fund sources have been slowed by the pandemic. Legislators in both the House and the Senate are looking at a carbon tax or fee to shore up this budget. This carbon fee would be imposed on all fossil-based fuels, including natural gas. The general fund budget, despite early dire warning about a large deficit, is in balance for the remainder of this biennium. It is projected to have a modest deficit for the 2021-23 biennium. The state has a reserve of $3 billion that could be tapped, plus there will likely be federal pandemic relief money coming in.
One would think with all of the economic impacts on business and the relatively good news for the general fund, that taxes would be off the table. But they aren’t. The House Democrats plan to pass a capital gains tax, not because they need the money now or even next biennium. They want to pass it to get the expected lawsuit under way. This law suit will determine if our current Supreme Court will affirm a former ruling that a capital gains tax is a form of income tax and therefore not constitutional. The House Democrats are also discussing a high earner employment tax fashioned after Seattle’s tax. The tax would be statewide and apply to “world-wide” businesses. “World-wide” business is not defined. At this writing, it would not preempt Seattle’s tax, although a credit for those subject to both is possible.
Governor’s Climate Agenda
Governor Inslee is proposing an ambitious climate change agenda. He wants to pass a clean transportation fuels bill. This is not a new issue. Recent attempts have met strong opposition out of fear that it will raise the price of gasoline and diesel. California and Oregon have clean fuel laws. Second on the Governor’s agenda is an economy wide Cap and Trade (C&T) bill. This is also not a new issue. A C&T bill will require entities that emit CO2 to either reduce their emissions or buy allowances from the state to mitigate them. The Governor plans to use the proceeds from the sale of the allowances to fund several clean energy efforts and to give rebates to low-income families impacted by the expected increased costs.
The proposal that will be of most interest to SMACNA contractors is the Governor’s Health Homes and Clean Building proposal. He will introduce a bill to require new buildings to be zero-carbon by 2030 and put the state on a path to eliminate fossil fuels from existing buildings by 2050. His bill will create a heat pump and electrification program to support clean electricity for space and water heating and authorizes public utilities to provide incentives for high-efficiency electric equipment. We have not seen the language for this proposal at the time of this writing. It is unclear whether the 2030 mandate will apply to only new commercial buildings or will include new residential buildings as well. Included in the bill is $141 million to weatherize low-income housing, retrofit public buildings and pay for transition to heat pumps away from fossil fuel heat. SMACNA will discuss our position on this bill. The Building Trades Council said they support the Governor’s agenda.
Unemployment Insurance and Contractor Bills
We will see an unemployment insurance bill aimed at lessening the expected increase in employer taxes used to fund the system. Not surprising, the surge of out of work employees has strained the unemployment insurance fund to the point of near insolvency. Employers in some industries like hospitality and retail who have had traditionally low turnover now have laid off much of their workforce. They will see dramatic increases in their unemployment taxes, as much as 500%. The impact on construction contractors will be mixed, depending on how soon they were able to get their employees back to work. The Employment Security Department will propose a bill to smooth out the impact for these employers. We expect to have details before session starts.
We expect relatively few contractor bills. There will be a bill to reauthorize the Capital Project Advisory Review Board. It will include some improvements to the GC/CM and Design Build construction processes in current law. There could be proposals to encourage the hiring of women and minority owned businesses.
SMACNA will keep you informed of the issues that impact you during the 2021 session. It is possible that not many bills pass, but it is likely those bills could have big impacts. Stay tuned. ▪
