SESSION ADJOURNS

TAXES AND MORE TAXES SESSION ADJOURNS

LAWMAKERS’ RECORD-BREAKING BUDGET AND TAXING SPREE GIVE LITTLE RELIEF FOR BUILDERS

With one minute to spare, a record-breaking $52.4 billion budget was passed along party-lines by lawmakers. It is an $8 billion increase, or 17 percent, more than the current two-year budget cycle. This budget also completely exhausts a $5.6 billion (tax collection) windfall, and includes an additional $2.5 billion in new taxes.

DID WE MENTION TAXES?

The budget includes a graduated Real Estate Excise Tax (REET), giving Washington state the highest rate in the country for certain properties. We will also see massive B&O taxes (on services and large banks) as well as gas // JAN HIMEBAUGH and energy tax increases. GOVERNMENT The legislaAFFAIRS DIRECTOR ture also dismantled last year’s McCleary fix, the K12 education lawsuit that required the state to fund basic education to address local educational inequalities. Unfortunately, on the last day of session, lawmakers passed a “levy lid lift” bill that allows school districts to return to “pre-McCleary” days where they can use additional local property tax levies to fund education. The state should expect to find themselves back in a McCleary- type lawsuit once those levies are bargained

BIAW Government Affairs Director Jan Himebaugh (right of the Governor) and MBA of King and Snohomish Counties Executive Director Kat Sims (far right) attend the signing of SB 5334, Condo Liability Reform.

into teacher salaries, only this time it’ll be even more expensive.

Also, tucked into the budget, is funding for an Environmental Justice Task Force. We will be working with the Governor’s office with regard to the mission and makeup of this committee to ensure the homebuilding industry is represented.

TWO SMALL CONSOLATIONS

What didn’t make the tax hike cut? The proposed capital gains tax. Ruled by the IRS and multiple courts as an income tax, unconstitutional in the state of Washington, lawmakers failed to pass it. However, millions of dollars have been allocated to the Department of Revenue for the implementation of new taxes, as well as to study ways to make Washington state’s tax code more “fair.”

What also failed, was a proposal to increase the insurance premium tax which would have helped to fund wildfire suppression and prevention. This would have increased the cost of purchasing all nonmedical related insurance–from auto to homeowners to general liability, and contractor bonds.

SOME BRIGHT SPOTS

Not all news is bad in Olympia. BIAW would like to thank Senators Jamie Pederson (D-Seattle) and Mike Padden (R-Spokane Valley) for their leadership on SB 5334, Condo Liability Reform, which passed the House and Senate unanimously. BIAW staff were in attendance when Governor Inslee signed the bill April 30. This bill will help revise overreaching condo warranty liability from the 90s and allow for new condo construction in Washington. It’s not a silver bullet to the housing crisis in our state, but it is another option for consumers seeking a path to affordable homeownership, by increasing supply and options for families of all sizes and incomes. Condo liability reform was a

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EVP VIEWPOINT

HOME COSTS TO RISE AFFORDABLE HOMEOWNERSHIP OPPORTUNITIES FALL SHORT THIS SESSION // GREG LANE EXECUTIVE VICE PRESIDENT LEGISLATIVE SESSION ENDS The best thing I can say about the 2019 Legislative session is that it is over. This session was a difficult one for our industry by any standard, but BIAW Government Affairs Director Jan Himebaugh and our contract lobbying team did a phenomenal job fighting on your behalf. Along with all of your help, we were successful in killing the contractor liability bill, as well as a litany of other anti-housing policy legislation. Jan also led the effort to shepherd through condo liability reform to become law. The session’s final weekend, however, was the low point, as lawmakers approved a budget that jumped spending $8 billion–a whopping 17 percent increase over the last biennium. This included not only exhausting a $5.6 billion tax revenue windfall, but also imposing an additional $2.5 billion in new taxes. Frankly, the mindset that taxes should be increased despite record revenues is of grave concern. The appetite to spend without regard to taxpayers–or the price of homes–is simply insatiable. Two-thirds of Washingtonians opposed tax increases, but they were raised regardless. From a graduated Real Estate Excise Tax (REET) to a massive B&O increase, and from a new gas tax to allowing local school districts to once again increase local property tax levies (undoing the historic McLeary levy reforms after just one year), what do all of these tax increases have in common? All will increase the price of homeownership. Lawmakers began the 2019 session by voicing concern for the skyrocketing cost of housing. Then they spent all session long making the problem worse. Layer upon layer of additional taxes on businesses, taxpayers, and families seeking a path to affordable homeownership. With the average cost of a new home in Washington now at $505,729, sadly, only families in the upper income brackets can afford to own a home in our state. We need to keep asking our state lawmakers, “How do you make housing more affordable by making it more expensive?” R.O.I.I.® SELECT OUTPERFORMS AGAIN The close of April brings with it our final adjusted R.O.I.I.® Select plan numbers and we are excited to announce the results. R.O.I.I.® Select earned a 43 percent first adjustment refund for the 2017-2018 plan year (PY)! Additionally, R.O.I.I.® Select’s second adjustment for the 2016-2017 PY came in at an impressive 41 percent, and finished the 2015-2016 PY with a 36 percent refund. I want to thank R.O.I.I.® Select Director Mark Shaffer and his team for all of their hard work to deliver this result! As the oldest and largest construction retro group in Washington state, R.O.I.I.® Select has returned more than $500 million in refunds to participating members since 1982. We’ve delivered consistently for members and in our 37-year We need to keep asking our state history, not one R.O.I.I.® Select participant has ever paid a penny of lawmakers, “How do you make housing more affordable by additional premium (penalty). R.O.I.I.® Select is managed in-house at BIAW, with no third-party fees and no extra service fees charged to member participants. making it more expensive?” And we have consistently had higher returns than all competing construction retro programs in the state. If you are not enrolled in a retro program, or if you are a member of a competing program, you are missing out on the highest refunds in the industry. Go to BIAW.com/ ROII to learn how to join. Open enrollment continues through May 17.

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