Springtime in Olympia: Politically Charged Votes

A politically dicey vote on the B&O tax

Lawmakers in the House took a series of politically charged votes Monday evening on House Bill 2081, a broad increase in taxes on the state’s businesses, culminating in a razor-thin vote to pass the measure in the wee hours of Tuesday morning.  

The bill would impose a temporary surcharge on some of the largest businesses in the state and a broad permanent increase on all but the smallest businesses. That’s going to make a lot of folks mad, perhaps mad enough to do something come campaign season. So, some political caution was on display in the final vote, which as with House Bill 2049 was 50-48. 

Nine members of the Democratic majority voted against the measure. Here’s a breakdown of some of the politics in play. 

• Appointed freshmen. Reps. Edwin Obras, D-SeaTac, and Osman Salahuddin, D-Redmond, have to run for election later this year as both were appointed to replace members who were appointed to the Senate. While both lawmakers represent districts generally considered safe for Democrats, either could theoretically be vulnerable in the primary over such a large tax vote. Salahuddin’s 48th District in particular includes many of the fancier communities along the eastern shore of Lake Washington, where taxing business might be viewed with suspicion.
• Swing-district caution. Reps. Adison Richards, D-Gig Harbor; Dave Paul, D-Oak Harbor; Clyde Shavers, D-Clinton; Alicia Rule, D-Blaine; and Joe Timmons, D-Bellingham, each represent one of the dwindling number of swing districts left in Washington. Richards won his first term in the 26th District on the Kitsap Peninsula last year and will surely face a tough challenge next year. Paul and Shavers both represent the Whidbey Island-centric 10th District. Although both survived challenges last year, Shavers was fortunate in his opponent; Dave Paul’s and Shavers’ seatmate, GOP Sen. Ron Muzzall, also won reelection. Whatcom County’s 42nd is also theoretically a shade of purple. While Blaine’s Rule is a reliable “no” vote on this kind of thing and a favorite of the business lobby, Bellingham’s Timmons likely gets a challenger next year. 
• An intriguing Senate race. Rep. Amy Walen, D-Kirkland, is expected to challenge Sen. Vandana Slatter, D-Bellevue, who was appointed over Walen to the 48th District seat vacated when Patty Kuderer was elected insurance commissioner. That’s a highly anticipated moderate vs. progressive throwdown that will likely play out over exactly this kind of issue. 

“Tesla tax” passes House 

In a move likely to prove popular with Elon Musk haters, House Democrats also passed a tax on the sale of zero-emission vehicle credits, which will fall almost entirely on Tesla in the short term. 

House Bill 2077, sponsored by House Majority Leader Joe Fitzgibbon, D-Burien, passed 52-45. Tesla makes bank on these credits, which are in high demand because the car-buyers aren’t buying enough EVs to meet the state’s goals so traditional automakers need the credits to make up for selling petroleum-powered vehicles. The tax is expected to raise about $100 million per year, the fiscal note shows. 

While picking a fight with one of the world’s richest and most vindictive men might seem a tad risky, Musk’s DOGE antics of late will likely earn Democratic legislators some attaboy/attagirl love from the left. 

Republican opponents noted that taxing the most lucrative part of the EV business would likely drive up the cost of an EV and thus discourage people from buying them, undermining the whole idea behind the credits. 

Fitzgibbon on low-carbon fuel standard

Longtime readers will remember a shotgun compromise that led to the passage of the low-carbon fuel standard back in 2021. 

The program’s sponsor, Rep. Joe Fitzgibbon, D-Burien, was compelled by a bloc of Senate moderates to include provisions that tied the standard’s increasing requirements for low-carbon fuels to the growth of a homegrown biofuels industry, including development of a big new refinery. 

That development hasn’t emerged, and uncertainty about the program has suppressed demand for the credits generated by selling lower-carbon fuels, including electricity.  

Enter House Bill 1409 from Fitzgibbon, who has since become House Majority Leader. Now headed to Gov. Bob Ferguson’s desk, the bill strips out most of the provisions related to a homegrown biofuel industry and significantly ratchets up the requirement to decarbonize fuels.

The low-carbon fuel standard is designed to incentivize individuals and businesses to move to cleaner fuels or electric vehicles by gradually increasing the cost of traditional gasoline and diesel. Many of the credits under the plan are earned by electric utilities for selling electricity to owners of electric cars. In California, a similar program has driven broad adoption of biodiesel for trucking.

This can be viewed as a victory for Fitzgibbon over the receding legislative shadow of former Sen. Mark Mullet. The business-friendly Issaquah moderate was a leader of the faction that forced the compromise. Most of that faction’s members have since left the Legislature.