2025 Session Review

Budget

The 2025-27 budget appropriates $77.9 billion to the operating budget and $150.4 billion in total funds, reflecting a $4.4 billion operating budget increase and $6.8 billion total increase at maintenance level, driven mainly by K-12 salary inflation and rising costs in childcare, medical assistance and long-term care. Policy changes add $1 billion to operating expenses and $5 billion total.

The 2025 supplemental budget for the 2023-25 biennium appropriates $72.7 billion NGF-O and $142.4 billion total, with a $855.3 million NGF-O and $2.5 billion total maintenance increase, and a policy-level decrease of $103.5 million NGF-O and $1 billion total.

The 2025-27 ending balance is projected at $225 million in operating reserves and $2.3 billion total reserves, including $2.1 billion in the Budget Stabilization Account (Rainy day fund). By 2027-29, reserves are projected to reach $3.6 billion, including $3 billion in the Budget Stabilization Account.

The adopted budget includes $9.4 billion in tax increases – by far, the largest tax increase in state history. Below is an overview of the taxes that were levied this year, and we have additional details following in this summary.

Tax Bills

(Oppose) HB 2081: Business and Occupation Tax – HB 2080 includes industry impacting B&O tax increase for the retailing B&O rate, increasing from 0.471 to 0.5, and increases the “contests of chance” rate from 1.5 to 1.8, a 30% increase. Importantly, the bill also includes a 0.5% surcharge for businesses with more than $250 million – which impacts nearly every major food supplier for our industry, increasing from 0.484 to 1%. The legislature rejected the opportunity to exempt food suppliers from this additional surcharge four separate times.

(Oppose) SB 5794: Eliminating Tax Preferences – SB 5794 eliminates a number of preferential tax rates. The hospitality industry receives a “tax preference” as a B&O rebate for pop syrup tax paid. This tax preference was not eliminated and will continue.

(Oppose) SB 5814: Excise taxes – As originally introduced, SB 5814 imposed sales tax on services that do not currently assess sales tax and also required a pre-payment of sales tax in June 2027 for businesses with more than $3 million in annual sales. Your team worked to remove the pre-payment of sales tax, and the bill imposes sales tax on:

• Information technology technical consulting services
• Information technology training services and support
• Custom website development services
• Custom software and custom computer software
• Investigation, security services, security monitoring services and armored car services
• Temporary staffing
• Advertising

(Oppose) SB 5786: Liquor license fees – As originally introduced, SB 5786 included an across the board 50% increase in all liquor license fees. The hospitality industry pays disproportionally higher liquor license fees, in some cases 10 times higher than retailers selling the same product. Your team worked diligently to oppose the bill and ask for a more equitable option that first brought other license fees up to the same level restaurants and hotels pay. Below is a chart of the increases the legislature adopted.

(Support) HB 2061: Concession fees for duty free sales – This bill establishes a 10% concession fee for sales made by duty-free enterprises in Washington state. The bill raises $4.5 million in the 2025-27 biennium and $7 million in the 2027-29 biennium. The funds are split between the statewide tourism marketing account and sustainable aviation fuel account.

(Oppose) HB 2049: Funding K-12 education – As originally introduced, HB 2049 lifted the annual property tax increase from 1% to 3%. After vigorous opposition, the bill was significantly amended. The 1% increase was maintained, and the bill increases the maximum per-pupil limit for school levies and changes the inflation factor for local effort assistance to the “implicit price deflator”.

Bills that passed

Alcohol

(Support) HB 1515: Modernizing the regulation of alcohol service in public spaces – This bill allows for the Seattle, Spokane and local jurisdictions designated as “Fan Zones” to hold special liquor licensed events during the World Cup. It will also allow restaurants to have expanded outdoor alcohol service similar to the allowances during COVID. This allowance sunsets in 2027 for the legislature to review the outcomes and next steps.

Business operations

(Support) HB 1562: Increasing the availability of diaper changing stations – HB 1562 would require newly constructed public facilities and existing public facilities that conduct a renovation of $15,000 or more done to their bathroom to have diaper changing stations available in an on-site bathroom to both men and women. The bill exempts facilities that are 18+ establishments and buildings that have ADA compliant restraints due to the size of their restrooms and allows a business to remove the diaper changing station without penalty if there are safety concerns. This policy has been introduced several years in a row, and your team had been unable to secure the necessary amendments on renovation costs. This version finally included our requests, so we supported the bill, and the bill passed with necessary language.

Employment law

(Support) HB 1121: Concerning restrictions on the working conditions and hours of sixteen- and seventeen-year-olds – Allows exemptions for 16- & 17-year-old minors to work beyond school year hour restrictions should they be enrolled in certain approved workforce education programs. Your team worked to reduce many of the overly restrictive regulations in this space.

(Oppose) HB 1213: Expanding protections for workers in the state Paid Family and Medical Leave program – The PFML program requires employers to reserve a position and continue health care benefits while an employee is on leave only when the federal government requires it under FMLA (the employer has more than 50 employees and the employee on leave has worked for that employer for 12 months and at least 1,250 hours). As introduced, HB 1213 required all employers to reserve the position and continue health care benefits after the employee has worked for only 90 days. Your team was able to secure amendments that increase the amount of time to 180 days, and provides a tiered implementation of 25 employees, 15 employees, and ultimately employers with fewer than eight employees will be exempt. The bill also includes a provision that changes the way employee count is calculated. Your team maintained its opposition, but the bill passed.

(Oppose) HB 1308: Concerning access to personnel records – HB 1308 adds a private right of action to the requirement for employers to provide personnel files to employees upon request. Your team was able to secure an amendment that removes ambiguous “catch all” language, that will significantly reduce the liability for lawsuit abuse. We maintained opposition, but the bill passed.

(Neutral) HB 1524: Concerning workplace standards and requirements applicable to employers of isolated employees – HB 1524 further defines what qualifies as an isolated worker (janitor, security guard, hotel or motel housekeeper, or room service attendant), adds annual training for supervisors and isolated employees, and adds an L&I enforcement mechanism if employers are out of compliance. The bill was amended moving out of the Appropriations committee to strip the section that made it a violation of the Washington Law Against Discrimination, which included uncapped private right of action. When this provision was removed our position changed to neutral.

(Oppose) HB 1644: Concerning the safety and health of working minors – This bill increases penalties for repeated violations of minors granted student-learner conditions. While the penalties are steep for repeat offenses, most of the impacts do not affect our industry.

(Concerns) SB 5217: Expanding pregnancy-related accommodations – SB 5217 requires an employer to pay an employee for break time, and travel time if the business does not have a private location other than a bathroom, to express milk during work at the employee’s regular compensation rate. An employer may not require an employee to use paid leave during break or travel time to express milk. It would remove the employee threshold for enforcing pregnancy accommodation law from 15 to one and add additional requirements for paid breaks for breastfeeding.

(Support) SB 5408: Allowing for corrections to wage and salary disclosures – SB 5408 provides a five-day right to cure before a lawsuit can be filed for failure to post salary and benefit information in job postings.

(Oppose) SB 5041: Concerning unemployment insurance benefits for striking or lockout workers – SB 5041 extends unemployment insurance benefits to workers who choose to go on strike. The bill charges the benefits back to the employer in the form of increased tax rates over four years. However, once the employer reaches the maximum allowable rate, the charges will be socialized across all employers. The team was able to secure an amendment that caps benefits for striking workers at six weeks, significantly reducing the likelihood that benefits would be socialized to other employers. We maintained opposition, and the bill passed.

(Support) HB 1722: Reviewing state restrictions affecting students participating in secondary career and technical education programs and other state-approved career pathways – This bill rolls back restrictions on prohibited duties for 16- & 17-year-olds. While not directly impacting our industry, it is part of a broader movement in the Labor and Industry space of allowing career opportunities for trained young professionals.

Environment

(Oppose) SB 5284: Improving Washington’s solid waste management outcomes –After years of killing the EPR proposal, the legislature was finally able to get it across the finish line and now the bill heads to the governor’s desk for signature. As a reminder, this proposal is aimed at trying to improve our solid waste management outcomes by holding producers accountable for packaging they distribute, sell and bring into the state. While our team has been able to adjust the producer definition to help exempt small businesses, we are still concerned about the unknown costs associated with implementing this program. Under this version of the bill, companies with branded products that gross $5 million or less (this amount excludes revenue from alcohol sales) are exempt from producer obligations. Franchisees are also exempt from these obligations. Companies that gross more than $5 million and have branded packaging will need to join the Producer Responsibility Organization that will be set up in 2026. The first fees paid by the PRO will be due to the state in the Fall of 2026.

Tourism

(Support) SB 5492: Concerning sustainable state tourism promotion – SB 5492 is the hospitality industry’s proposal to create a sustainable funding model for a robust statewide tourism marketing and promotion effort. The bill will create a stakeholder process to create a self-assessment model for tourism funding.

Bills that failed to pass

Tax

(Oppose) SB 5796: Enacting a payroll tax on large employers – SB 5796 created a 5% payroll tax on businesses with more than $7 million in annual payroll on wages above the social security threshold. The bill would have impacted about 80 businesses in the hospitality industry, costing $20 million annually. The bill was heavily opposed by the business community and failed to gain the necessary support to be included in the final tax package.

AI

(Concerns) HB 1168: Increasing transparency in artificial intelligence – This bill aimed to increase transparency in the use of artificial intelligence (AI) by requiring “developers,” a broadly defined term, to publicly post high-level summaries and sources of datasets used in the generation of AI. A $5,000 civil penalty per day violation would have been enforced by the attorney general, however a private right of action was not explicitly excluded.

(Oppose) SB 5422 / HB 1622 – Allowing bargaining over matters related to certain uses of artificial intelligence for public employees – This bill would have required public employers to bargain over the decision to adopt, or modify current uses of, artificial intelligence technology if the adoption or modification affects employee wages or performance evaluations. It may have set a precedent for the private sector.

(Oppose) HB 1887: Creating a data broker registry for the purpose of imposing a data broker severance tax – This bill would have required most businesses collecting data online to register as a broker and pay a progressive tax rate on the number of users’ data gathered, up to $0.55 per user. Your team worked with our state’s technology industry in stopping this bill from advancing.

(Oppose) HB 1671: Protecting personal data privacy – This bill would have restricted what consumer data could be shared or sold to third party entities. A private right of action was included. Your team worked as part of a coalition to demonstrate the adverse effects this would have on Washington state, particularly the loyalty programs of many lodging establishments.

Alcohol

(Oppose) SB 5067 / HB 1315 : Concerning impaired driving (BAC) – This bill would have decreased the blood alcohol concentration (BAC) limit from 0.08% to 0.05%. Your team, with strong support from our members and other industries, again defeated this bill. It has already been noted by the majority leadership that they intend to bring this bill back in future sessions.

(Oppose) SB 5330: Protecting consumers from spiked drinks – This bill would have required those holding Tavern, Nightclub, Hotel, or Sports Entertainment liquor licenses to provide drug testing devices for spiked drinks. Signage that our industry viewed as problematic would have also been required. There was no penalty for non-compliance. Your team worked to disprove the efficacy of these devices, and the bill did not advance.

(Support) SB 5368 / HB 1624 : Studying taxes and fees related to alcohol – Directed to the Department of Revenue to review Washington’s current alcohol tax and fee structure from the past five years. The senate version made it through the house committees, but it was not brought up for a final vote.

(Support) HB 1807 : Regarding catered events with alcohol – This bill would have expanded businesses to allow serving alcohol at public events beyond nonprofits.

Business operations

(Oppose) HB 1735: Banning foie gras – This bill prohibited the cultivation of bird liver beyond normal size as well as the sale, possession transportation and distribution of foie gras and established civil penalties. Your team worked to educate lawmakers about the farming practice of duck liver and the bill ultimately died.

Employment law

(Oppose) HB 1764 / SB 5578: $25/hr minimum wage – These two companion bills would have increased the state’s minimum wage to $25 per hour by 2031. They would have also mandated three weeks of paid vacation leave and five days of bereavement each year. Your team engaged heavily in opposition, and the bills did not advance past their hearings in their respective chambers.

(Oppose) HB 1128 / SB 5062: Establishing a childcare workforce standards board – This bill would have created the childcare workforce standards board and required the board to adopt minimum standards for compensation and the workplace. It also required childcare employers to comply with the standards. This bill modeled California’s FAST Act but targeted a different industry.

(Oppose) HB 1623: Prohibiting deductions for credit card transaction processing fees from employee tips – HB 1623 prohibited charging a processing fee on the portion of electronic payment transactions that constitute tips, gratuities or service charges. Your team engaged heavily in opposition and were able to stop the bill.

(Oppose) HB 1739: Regulating the use of self-service checkout stations – HB 1739 required “retail” stores that primarily sell food to have at least one staff operated check out station, require self-checkout stations to be limited to 15 items or less and have at least one staff member with no other duties to monitor self-checkout stations. Your team worked to oppose the bill.

(Oppose) SB 5292: PFML rate setting – SB 5292 removed the 1.2% rate cap for PFML insurance premiums and increased the rate to 2%. Your team was able to stop this bill from moving forward and increasing PFML rates for both workers and employers.

(Oppose) HB 1843 / SB 5540: Concerning students’ eligibility to receive unemployment insurance benefits – Claimants enrolled in school are currently disqualified from receiving unemployment benefits unless they can demonstrate they are able and available for work. HB 1843/SB 5540 removed the automatic disqualification. The bill failed to receive the necessary support to advance.

Environment 

(Oppose) HB 1607: Concerning recycling and waste reduction – HB 1607 aimed to establish a bottle deposit system in Washington state. While the bill sought to exempt transactions at the commercial level (from distributors to hospitality businesses) from the 10-cent charge per beverage container (including all cans, water bottles, alcohol bottles, wine bottles and other beverage containers), the exemption language allowed this fee to be passed down if it was embedded in the product’s cost. We would still have been required to charge and remit these fees to our customers, whether for on-site or off-site consumption, and pay sales tax on these charges. 

(Support) HB 1071: Implementing strategies to achieve higher recycling rates within Washington’s existing solid waste management system –  This legislation was our industry’s preferred vehicle in the “Extended Producer Responsibility” legislative agenda. It implemented a needs–based assessment before a costly overhaul to our state’s recycling program was implemented. Your team worked hard to move this forward, but it failed to advance. 

Lodging 

(Neutral) HB 1080: Lodging fee disclosure – HB 1080 required all mandatory fees charged for lodging to be disclosed in the advertised price, excluding government-imposed taxes and fees. The bill also applied to short-term rentals. The bill was pre-filed the day before the FTC released their final rule covering the same topic. We worked to amend the bill to align the bill with the FTC rule, which changed our position to neutral. The bill ultimately did not move past a cut off and died. 

(Oppose) SB 5251: Concerning lodging tax revenues – Senate Bill 5251 expanded the use of local lodging taxes to capital investments for tourism related non-profits. We raised concerns with expanding the use of lodging taxes and the sponsor agreed not to move the bill further. 

(Oppose) HB 1882: Temporary tax on lodging – This bill would have imposed a temporary 2% lodging tax during the FIFA World Cup next year. Imposing a tax like this AFTER our successful bid to attract an epic event like the FIFA World Cup would permanently damage the state’s destination reputation and credibility, greatly hindering Washington state’s ability to ever recruit another global event in the future. Your team opposed the bill and it did not advance past the initial hearing. 

Public safety 

(Support) HB 1407: Concerning offenses involving graffiti or other damage to property – HB 1407 would have increased the penalties for property damage up to a class C felony for repeated offenses.  

(Support) SB 5060: Law Enforcement Personnel – SB 5060 aimed to increase the number of law enforcement personnel in Washington state by creating a $100 million grant program to local and tribal agencies for the purposes of hiring officers and behavioral health co-responders. An alternative funding was moved forward by the house to meet this request by the governor.

Other 

(Support) SB 5070: Prohibiting interchange fees on sales tax and gratuities – 

SB 5070 would have prohibited issuers, payment card network and acquirer banks from imposing credit card interchange fees on sales tax and gratuities. The bill was heavily opposed by financial institutions and credit card companies and failed to receive necessary support to move forward.