June 1, 2021

Extraordinary 2021 legislative session one for the books

From sweeping police reform to massive COVID-19 relief, Washington State’s 2021 primarily virtual legislative session was extraordinary—and a boon for economic development.

“People are using the word ‘historic,’” said Michael Transue, lobbyist for the Tacoma-Pierce County Chamber of Commerce. “I’d use the word remarkable. In December, people weren’t sure they could pull off Zoom meetings and remote voting.”

The Washington Economic Development Association noted big wins during the 105-day session. WEDA is Washington State’s only trade organization focused specifically on economic development. With COVID-19 at the forefront, WEDA’s 2021 Economic Recovery Legislative Agenda focused on the most critical actions lawmakers can take to recover, retain and grow living wage jobs, foster vibrant communities, support equity and opportunity for all, and spark re-investment across Washington State. The results were positive. Legislation will revitalize small businesses, fund critical infrastructure, promote investment in workforce development and more.

Big budgets

The session yielded a two-year $59.2 billion operating budget that will fund a range of state programs around schools, health care, housing, rental assistance and other areas. The $6.3 billion biennial capital construction budget, the largest in the state’s history, includes funding in several critical areas including broadband, K-12 school construction, public works, and other local and community projects that will spark economic growth.

A stronger economic ecosystem

A robust economic development ecosystem at the state, regional and local levels is crucial for sustained economic recovery. Funding from the 2021-23 operating budget will:

  • Support economic development. Funding levels were largely maintained with a few increases, including funding for a work group focused on developing the creative economy and a sector lead for creative industries. In addition, $2.7 million was budgeted to create a new state goal of doubling the manufacturing employment base and number of manufacturing businesses.
  • Fund economic development organizations, such as the EDB, had been dramatically reduced since 2008. It was partially restored in the 2019 session. The 2021 session yielded $8.6 million for ADOs from the state’s General Fund—a $2 million increase over the previous biennial appropriation.

Job recovery and growth

Investments in state infrastructure financing tools and programs catalyze business recovery, retention, expansion and recruitment at the regional and local levels. Here are some results of WEDA’s focused effort:

  • Direct small business support and enhanced technical assistance. Funding includes $50 million for small business grants and $138 million in anticipated federal funding for the State Small Business Credit Initiative (SSBCI).
  • Tax Increment Financing (TIF) captures a property’s appreciated value by using its increased property taxes to finance infrastructure improvements that benefit a designated area. Local jurisdictions that use TIF benefit from improved public infrastructure, increased economic development and local job growth.
  • $12M to support tourism. Funding will assist recovery for tourism-related businesses, generate tourism demand for Washington State communities and recover market share with competing western states.
  • $411M for broadband, including $25M for the Community Economic Revitalization Board (CERB) to finance infrastructure projects to provide high-speed, open-access broadband services to rural, underserved communities.
  • Infrastructure investment, including $129M for public works projects and $40M to finance local public facility projects.
  • $5M to protect the Economic Development Strategic Fund…

Increased prosperity across the state  

WEDA supports policies and investments that ensure that all parts of the state, and all people, benefit from increased prosperity through inclusive economic development. Gov. Inslee’s $6.6 million Small Business Equity package allots funds for the Small Business Resiliency Network, small business online tools and equity development staff.

Other significant legislation

Additional legislation that aligns with WEDA’s legislative priorities includes:

  • Capital gains tax. A 7 percent tax on Washington’s top investment earners will generate a $415 million gain for the state, much of it for early education programs.
  • Police reform. Prompted by last year’s response over the deaths of George Floyd in Minneapolis and Manuel Ellis in Tacoma, the 2021 session yielded a dozen bills that comprise one the nation’s most ambitious packages of police reform laws. The legislation includes a ban on choke holds and creates an independent office to review the use of force by police. Gov. Inslee signed the bills at a ceremony at Tacoma’s Eastside Community Center.
  • Equity. Funding for a new Washington Equity Office will help state agencies develop and implement diversity and equity plans.
  • Working families tax exemption. Starting in 2023, an estimated 420,000 lower-income families and individuals will receive rebates of between $300 and $1,200.
  • Climate change and environmental legislation. Two major bills are designed to curb greenhouse gases and fight climate change. The cap-and-trade bill will set a statewide cap on greenhouse gas emissions. Another will require cleaner fuels for cars and trucks as part of an effort to reduce carbon emissions from transportation.
  • $40M for local public facilities projects that encourage business development and expansion in areas seeking economic growth.
  • $1.2B for high education facilities, including community, technical and four-year institutions.
  • COVID19 relief. A total of $2.2 billion in federal funding will combat the economic fallout from the COVID-19 pandemic, including:
    • $714M to K-12 schools
    • $618M for public health, including vaccination and contact tracing efforts
    • $365M for emergency eviction rental and utility assistance
    • $240M for business assistance grants
    • $50M for child care
    • $26M for local food banks
    • $91M for income assistance

Falling short

There is still work to do in some critical areas of interest:

  • Transportation budget not there yet. A transportation budget has not yet been finalized. Among the major projects slated for funding is the SR 167 and SR 509 Puget Sound Gateway Program. There is some talk of a special session to pass a package.
  • Rural data bill shelved for now. Legislation to establish a statewide data center sales and use tax incentive policy was not successful. Pierce County would have benefited from the exemption, which would apply to rural counties with a population density of less than 100 persons per square mile or those smaller than 225 square miles. Washington is the only state that restricts incentives geographically. Watch for more on this next session.

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