2019 Legislative Session Recap

The 2019 Legislative session ended on April 28 with a flurry of activity on budgets and new taxes as well as several new environment and contracting laws. The Democrats had increased majorities in both the House and the Senate giving them the bandwidth to be more aggressive on fiscal and policy issues.

The state’s 2019-21 operating budget grew 17.5 percent above the current budget. The Legislature started the session with an additional $6 billion more from growth in current revenues but still added $1.9 billion in new taxes by the end of session. These new taxes are:

• A 20 percent increases in the services category for Business and Occupation (B&O), dedicated to education related costs.
• A three-tiered real estate excise tax on the sale price of the property; the new maximum rate is 3% on properties over $3 million.
• An increase the toxics tax on a barrel of oil imposed at the refinery level.
• A doubling of the B&O tax rate for large banks.

Some of these new taxes will get passed on directly or indirectly to SMACNA contractors. Contractors who pay B&O in the services category for part of their business will pay more. The increased tax on oil will likely will get passed on as an increase in the price of gas.

The Legislature passed several bills related to construction and contracting.

• SB 5334 changes the condominium warranty provisions by applying building codes that were in place at the time of construction, requiring the breach of warranty to be significant and setting up new standards for proving damage. SMACNA supported this bill because it will reduce the risk of law suits that has been a recurring problem for contractors who build condominiums.
• HB 1295 changes provisions for public owner construction projects. It removes the limitations on design build projects between $2 million and $10 million, makes job order contracting available to any public entity, and requires apprenticeship utilization for any contract over $350,000 and exceeding 600 hours in a single trade.
• SB 5418 increases the bid limits for selected local governments and requires a study by the Capital Projects Advisory Review Board. SMACNA opposed the bid limit increases in this bill.

There are new laws dealing with prevailing wage and collective bargaining.

• SB 5035 increases penalties for prevailing wage violations and increases the time to file a complaint. This new law also requires contractors to keep a certified payroll for all public projects and to submit the information to Labor and Industries at least once a month. SMACNA can provide resources to find out how to comply with the certified payroll requirement.
• HB 1743 creates an exception from the law passed in 2018 that requires using the collective bargaining agreement to set the prevailing wage. The exceptions are for: affordable housing, homeless and domestic violence shelters, low-income weatherization, and home rehabilitation public works. For these types of programs, the wages will be set by surveys. This compromise bill was negotiated by the Building & Construction Trades Council.
• SB 5233 allows an exception from the state paid sick leave law for construction workers. This new law allows construction workers who are covered by a collective bargaining agreement and participate in an approved referral union program (hiring hall) to waive paid sick leave requirements if they will be covered by equivalent leave that meets the requirements in state law. Payment for the leave may occur before usage. The terms of the waiver must be negotiated with the employer. This new law describes the type of program agreed to by the Mechanical Contractors Association. SMACNA was neutral on this legislation.

Governor Inslee had an aggressive climate change agenda in 2019. Three bills that passed as part of that agenda will be of particular interest to SMACNA contractors.

• HB 1112 phases out hydrofluorocarbons and requires the use of a safe replacement. Several types of refrigerated equipment are included and are phased in at different dates. Of particular interest to SMACNA contractors is the requirement to use of an alternative refrigerant in new and retrofitted commercial AC units and in new and retrofitted refrigerated food storage. The new law goes into effect January 1, 2020. SMACNA joined others in asking for a date extension to ensure adequate supply of the replacement, but we were not successful.

• HB 1257 requires large commercial buildings to retrofit their buildings to meet new state energy performance standards. The requirements for building owners to comply start in 2026 for the largest commercial buildings and will go into effect for buildings 50,000 square feet or larger in 2028. The Commerce Department is charged with writing the new energy performance standards for building retrofits by November 1, 2020. Commerce says there are no other similar codes in the country, so they will be relying on energy performance experts to assist them with developing the requirements. Commerce is still sorting out which buildings are included as the new law has several exceptions. Buildings owners that have not complied by the deadlines will pay a penalty. SMACNA supported this bill.
• SB 5116 is the Governor’s 100 percent clean electricity bill. By 2045 all electric utilities must produce electricity from only renewable resources. There are interim targets and exceptions when a utility can’t comply. This new law does not affect residential and commercial use of natural gas.

The 2019 session was a busy one. Besides the new laws mentioned above, the Legislature tackled housing, behavior health, and education. If you need more detailed information about any of the bills described here, please contact the SMACNA office.

By Kathleen Collins, SMACNA Legislative Consultant