As Washington Legislature Wraps Up, Lawmakers Pass a New Budget, Capital Gains Tax and Clean-Fuels Standard


OLYMPIA — A full slate of legislation to overhaul policing. A pair of major climate-change bills. A new budget that expands child care, public health programs and a tax credit for low-income Washingtonians. A slew of equity initiatives. A capital gains tax.

In any other year, one or of two of those sets of victories could be considered a major success for Washington's Democratic state lawmakers and Gov. Jay Inslee.

But even before the Washington Legislature on Sunday completed its regular 105-day session, it had become clear that 2021 was no ordinary year.

In recent weeks, Democratic lawmakers scored wins across the board. Many of those were priorities that stalled and sputtered at the Capitol for years, even as they held unified control of the Legislature and governor's office.

They put the finishing touches on that work Sunday, sending to the governor's desk a new capital gains tax, a clean-fuels standard and a new, two-year $59 billion state operating budget.

Beset by the COVID-19 pandemic and rocked by sustained protests over law enforcement killings of people of color, legislators from the outset pressed an ambitious agenda. This year, as they worked largely remotely through the pandemic, Democratic lawmakers had a more diverse and progressive membership in their ranks, helping them cinch such victories.

"We listened. We acted," said Democratic Senate Majority Leader Andy Billig of Spokane in a statement Sunday evening. "The 2021 legislative session saw the end of incremental change and the beginning of a fundamental transformation to institutions that were always intended to work for people but too often fell short."

Republicans — who are in the minority in the House and Senate — looked on as a parade of policies they've criticized for years first passed one chamber and then the other, creeping closer to Inslee's desk.

GOP lawmakers warned the carbon-cap and clean-fuels legislation could bring higher gas prices and hurt family-wage jobs. They protested the new capital gains tax as unconstitutional and unnecessary.

And they cautioned against a big increase in the budget. Lawmakers noted that the state is spending billions of federal COVID-19 aid dollars this year on top of the money spent in the new budget.

"Not prudent fiscal management," said Rep. Andrew Barkis, R-Olympia. "Especially with the fact that we're just coming out of the pandemic, and we don't know what the next six months or a year looks like."

Expansion of taxes and spending

Democrats have long bemoaned Washington's regressive tax system, and the new capital gains proposal — if it survives a legal challenge — marks perhaps the biggest step toward raising taxes on the wealthy.

Approved by the Legislature on Sunday, Senate Bill 5096 will put a new 7% tax on capital gains of more than $250,000 from the sale of stocks and other investments.

That tax is intended to help fund the new 2021-23 operating budget, which spends about $5 billion more than the spending blueprint that passed two years ago.

It boosts funding for a host of Democratic priorities: child care programs, a tax exemption for low-income families and funding for wildfire-response capabilities.

Legislators also increased spending for the state's sagging public health system, which has for years been underfunded and faced deep pressure during the pandemic.

And the budget funds some equity and diversity initiatives, such as a state office of equity, and establishing Juneteenth as a state holiday, which comes atop other policies passed this year in that arena.

The final budget represented a striking turnaround after dire projections of budget shortfalls last year as the state shut down amid the pandemic. Since then, the recovering economy brought a strong return of tax collections.

Meanwhile, the federal government sent billions in COVID-19 aid. That combined surge of money reduced the need for budget writers to make otherwise difficult decisions on spending priorities.

The 1,100-page budget agreement, first made public Saturday afternoon, also directs the spending of an additional $10 billion in federal COVID-19 aid to help businesses and families recover from the public-health and economic travails.

The budget's late arrival allowed lawmakers and members of the public less than 30 hours to read through it before final votes.

"The general public have a fundamental right to fair notice of what their elected leaders are proposing to do," said Toby Nixon, president emeritus of the Washington Coalition for Open Government. "So that they have the ability to understand it and to provide feedback to their elected representatives before action is taken."

Another win for Inslee and Democratic lawmakers came Sunday afternoon, as lawmakers approved House Bill 1091, which creates a low-carbon fuels standard.

It came shortly after Democratic lawmakers also passed a bill intended to put a price on carbon pollution. That bill would only take effect, however, if lawmakers return to pass a new transportation-spending package that includes a gas-tax hike of at least 5 cents.

Inslee applauded those measures in a video message released Sunday evening.

"We finally have meaningful climate legislation that reflects the values and priorities of Washingtonians, and that respects the science of climate change," the governor said, adding later: "These policies also create good, local jobs and better position our state to lead in a cleaner and more just economy."

Policing legislation

After a year of protests near and far over the killing by law enforcement of people of color, lawmakers enacted a slate of bills geared at reforming policing.

Those bills, among other things, ban law enforcement from employing neck restraints, chokeholds and no-knock warrants as well as restrict the use of tear gas and officers' use of deadly force. One makes it easier to decertify officers for bad actions; another requires officers to intervene when witnessing another officer using excessive force.

Other successful bills included the creation of an independent officer to review uses of deadly-force by police, and collecting data on those instances of force.

In a news conference Sunday at a church near the Capitol building, family members of people killed by police celebrated the passage of those bills.

"We did it!" said DeVitta Briscoe, the sister of Che Taylor, who in 2016 was shot and killed by Seattle police. "I celebrate this moment with my fellow comrades in our fight for equality, for justice and for police accountability."

During the news conference, Rep. My-Linh Thai, D-Bellevue, thanked those advocates for helping to elect a more diverse group of lawmakers, which she credited as part of the success.

"Representation matters," said Thai, who was born in Vietnam and in 2018 was the first refugee to be sworn in as a lawmaker in Washington. "The people who have that lived experience and that understanding and who live within the communities that are being hurt, those voices must be lifted."

The Legislature will have more to do on this front, said Democratic lawmakers and community advocates, who are also watching to make sure the new policies are fully implemented.

"We're going to have to make sure things are enforced on the ground," said Rep. Jesse Johnson, D-Federal Way, in a news conference Sunday evening.

But, "I'm confident we're going to see huge changes in our state," added Johnson, a sponsor of two of the key measures that passed.

Criticism from GOP, business

Earlier this year, GOP lawmakers, joined by a handful of Democrats, proposed changes to the state's sweeping emergency powers that have allowed Inslee to manage the COVID-19 pandemic with little input from the Legislature.

Those bills stalled earlier, with neither Inslee nor Democratic leaders showing any interest.

Senate Republicans made a last-ditch attempt to raise the issue Sunday, sending a letter to Billig, the Senate majority leader, urging action before lawmakers adjourn.

"The lockdown orders have come at great cost to our state, as many businesses have been forced to close permanently after months of little to no income," stated the letter.

Meanwhile, in a statement Sunday, Kris Johnson of the Association of Washington Business criticized the capital gains tax and climate legislation.

"We're disappointed lawmakers chose to raise taxes and adopt other policies such as a cap-and-trade program and low-carbon fuel standard that will place new hurdles in front of employers and employees struggling to survive the pandemic by adding cost to traveling," said Johnson, the organization's president.