Legislative Report – 2015
Washington 2015 Legislative Profile
Governor: Jay Inslee (D) – up for election in 2016Legislative Majorities:
Washington 2015 Session Overview
Washington’s 2014 election cycle tightened up the vote count in the House between Democrats and Republicans, but kept the Democrats in control by two votes. In the Senate, the Majority Coalition maintained its control, even as it had a Democrat member retire. During the 2014 elections, the Republicans picked up an additional Republican vote in the Senate. Because of the party split – House Democrats in charge of the House, and the Majority Coalition Caucus in charge of the Senate – it was difficult for the House and Senate to resolve their issues philosophically or politically.
While this split was advantageous in some ways, especially in preventing negative legislation from passing into law, it made it extremely difficult to pass either an operating budget or a transportation package. In the end, the session adjourned July 10, the longest session in Washington history, finishing after 176 days.
Impact to Industry: These three bills would all have increased the minimum wage in Washington state for all employees, even those covered under a CBA. Each bill had a different method, with the House bill offering a straight increase with no credits for other benefits, and no local preemption. The Senate bills offered differing approaches, both offering credits to employers either with a reduction in the B&O tax (SB 6029) or by offering credits for other benefits offered (SB 6087.)
NWGA will be working during the interim to determine whether legislation could be developed to increase the minimum wage but provide credits for the benefits offered by our members, and also include a preemption on wage and hour issues for local municipalities.
Budget and Taxes
The battle between the House and Senate proved very contentious, with lawmakers unable to reach a final agreement until the final days before the June 30 deadline. The Governor did not sign the bill until 11:40 p.m. June 30, minutes before a full government shut down.
The final agreement included no new taxes on the grocery industry, or our supply partners. The agreement did decrease the dividends provided to retailers for the sales of Lottery tickets from 6% to 5%; it is unclear whether this reduction must be done across the board, or if it can be taken more significantly from tickets issued from machines and less from tickets issued by customer service (where labor costs are more intensive.) The retail community is working with the Lottery Commission to determine details.
Impact to Industry: All of these bills would have substantially increased the cost of tobacco and nicotine products in stores. The taxes on tobacco products would have pushed the price of cigarettes to the highest in the nation, ahead of New York. The vapor regulation bill (HB 1645) would have nearly doubled the cost of e-cigarettes, which are sold by some of our members. Additionally, there would have been Washington-specific labels developed for these products, and a Washington-regulated ingredients list, both of which could be changed by rule at the Board. With no federal standards on these products, these changes would have made these products cost-prohibitive in Washington State, and shift sales to other states and to the internet. (Even with the internet prohibition, there would be no way to enforce the law without a national standard.)
It is the intent of the prevention community to increase the cost of these products to provide additional funding for cancer research, and to also make these products extremely expensive for consumers. Washington State currently leads the nation in black market importation of tobacco products at a loss of $350 million in tax revenue for the last few years. Additionally, native tribes are able to sell these products without many of the taxes imposed by retailers. These bills would have significantly impacted Washington retailers, and put our stores at a competitive disadvantage to the tribes and other retail outlets. It was the recommendation of NWGA that the WA Liquor and Cannabis Board be given additional resources to go after black market importation of these products, and use that revenue to fund cancer research programs.
This bill would have provided an opportunity for the Office of the Insurance Commissioner to act as a third party in the mediation of a dispute between a pharmacy and a PBM for the reimbursement of costs of a prescription. There is no requirement that the OIC rule in favor of one party or another, just that there is a forum for both sides to present. The law would require review of costs based on the regional wholesalers used by pharmacies; PBMs could not use examples of prices from another part of the country.
The PBMs actively opposed this legislation. Additionally, they involved the labor unions, convincing them that by allowing a mediation service between pharmacies and PBMs, costs for the unions’ Taft trusts would increase. The pharmacy community disputed that finding, but we were unable to move the bill forward before the end of session. There will be continued work on this issue during the interim to determine whether there would be increase cost to trusts and Tafts. The state insurance providers – the Uniform Medical Plan and Medicaid – both identified their costs as zero.
Over the six month session, industries including NWGA worked with the Governor’s office to see if a reasonable compromise could be reached. One of the most critical components for retail was a bright line to determine who was responsible for providing information to the WA DOE if a chemical was identified as being part of an alternative assessment – would it be the retailer, the distributor, the importer? Whoever was determined to be responsible would also be responsible for the costs associated with that alternative assessment. For a smaller retailer, it would be nearly impossible for that retailer to determine what was in a product or to push a company abroad to provide that information.
NWGA worked to provide clarification in the definitions of which companies/distributors would be affected, what data needed to be provided, the costs associated with an alternative assessment, and other key components of the bill. While NWGA did not support the legislation, it was important to work with lawmakers and the various agencies in case the bill did pass.
In the end, lawmakers themselves scuttled the bill. In the last hours of one of the special sessions, a couple of lawmakers attempted to expand the scope of the legislation broadly and include the original language from HB 1174 (flame retardants) into HB 1472, the water quality bill. Certain lawmakers wanted to hang an amendment to the bill to give the Department of Ecology the authority to ban flame retardants by rule – a “deal killer” for the business community and some lawmakers. As a result of this last-minute effort and other actions by lawmakers the bill failed.
It is unclear how the Governor intends to proceed on the water quality rule. Businesses have contact the Governor and asked him to submit the rule to the EPA even though HB 1472 didn’t pass. The bill failed because of lawmakers, not because of business. However, it is unclear whether the Governor will allow the rule to move forward, or allow the EPA to step in with its own rules instead.
If this proposal does not pass in 2016, it is highly possible some kind of cap and trade proposal will be on the 2016 ballot. There are already initiatives filed with the Secretary of State to begin the process, and signature gatherers are out there on one or two of the proposals already.
The Governor has also announced his intention to have the Washington Department of Ecology develop the cap and trade program by rule, without legislation. He believes the agency has the authority to implement the program under existing laws, although it is unclear whether the authority exists to require businesses to pay fees and taxes as part of the program.
Download Full Report Below:
NWGA Lobby Team:
Legislative Director & Oregon Lobbyist