Association of Washington Business – Updated Weekly

Support for income tax legal challenge: AWB is contributing financial support to the lawsuit challenging Washington’s new income tax. The decision follows AWB’s strong opposition to the income tax bill during the 2026 legislative session — and aligns with the association’s historical position on the income tax issue going back to the 1930s.

“Washington’s economy has been built largely on three key competitive advantages – a best of class workforce, our low-cost electricity, and the lack of an income tax,” AWB President Kris Johnson said. “We are hopeful this lawsuit will be successful in retaining one of these key advantages.”

The lawsuit. Filed by former Washington Attorney General Rob McKenna, former Washington Supreme Court Justice Phil Talmadge, and the Citizen Action Defense Fund, the lawsuit argues the income tax violates Article VII of the Washington Constitution in two key ways:

• It imposes a non-uniform tax on property, taxing similar income at different rates; and exceeds the constitutional 1% limit on property taxes, with a top rate of 9.9%.

• The lawsuit also notes Washington voters have rejected various income tax proposals 10 separate times over the past 92 years, the last time being in 2010 when Initiative 1098 was soundly defeated.

Real-world impacts: Chelan County entrepreneurs Lauren and Ben Petter — the lawsuit’s lead plaintiffs — write in The Seattle Times that “for most business owners, what is reported as “income” isn’t money sitting in a personal account. It’s capital reinvested back into the business — hiring, new projects, better systems and the ability to weather tougher seasons.”

“In stronger years, that income is what builds stability and future opportunity. Policies like this risk disproportionately impacting small and growing businesses, where that reinvestment is essential to survival and growth.”

What’s next: AWB’s Spring Summit in Vancouver will feature a special discussion on the income tax and the legal challenge. Learn more and register (and see details below).

The new state income tax: Learn how the new state income tax could affect you and your business — and hear the latest updates on the legal challenges to this new law— during a special panel, sponsored by Expedia Group, at the 2026 AWB Spring Summit, May 5-7 at the Hilton Vancouver Washington.

• Bill Brady, an experienced CPA and the president at Brady & Company, will join AWB tax and fiscal government affairs director Max Martin to discuss compliance with the income tax law passed this year.

• Rob McKenna, former attorney general and a litigator with Orick, will then join Martin to discuss the status of the newly filed legal challenge that aims to overturn the income tax.

Tickets still available: Don’t miss this chance to attend AWB’s 2026 Spring Summit, co-presented by BECU and The Boeing Company, for other top content and networking time with other state business and policy leaders:

• Election insiders: Political strategists Peter Graves and Sandeep Kaushik will share expert political analysis about the upcoming elections, thanks to sponsor Riverview Bank.

• Navigating Family Enterprise: How can a business succeed over the decades and pass successfully through the generations? Hear insights from leaders of multi-generational family businesses in this session sponsored by TigerStop.

• Straight talk from the Capitol: Hear from legislators about the recently completed legislative session and what’s ahead, sponsored by 1-800-GOT-JUNK.

• Leadership in a changing world: National leaders bring it home in a bipartisan talk with former Maryland Gov. Larry Hogan and former U.S. Ambassador Rahm Emanuel, co-presented by Alaska Airlines and Google.

• And much more. View the updated agenda.

Support employer-friendly candidates: AWB will host a PAC fundraiser reception at 5:30 p.m. Tuesday, May 5 in the Discovery Ballroom section DE at the event hotel. This is a chance to meet with candidates and support them in the upcoming elections. It’s free and open to all AWB members — and bring a guest. Register here for free.

State’s credit rating at risk: Moody, one’s of the three major credit agencies, has revised the outlook for Washington state’s finances from stable to negative, “signaling deep concern with the state’s propensity to enact budgets that spend more money than it takes in, and uses reserves and other measures to make ends meet,” the Washington State Standard reports.

“A check engine light just flashed on our state finances,” state Treasurer Mike Pellicciotti said. “Credit rating agencies have warned for years that reliance on reserves to balance an otherwise structurally imbalanced budget could result in a negative credit action.”

50 out of 50: The Legislature adopted a budget in March that withdraws $800 million from the rainy day fund. “No state has a lower percentage of financial reserves. The state is dead last — 50 out of 50,” The Seattle Times editorial board writes. In other words, the state has enough reserves to cover just 12.8 days of state government operations.

Why it matters: If Washington’s credit rating is lowered, it could increase the state’s borrowing costs for projects. This would be a direct hit on the state budget, adding roughly $60 million a year in debt costs, according to the treasurer’s office.

“This red flag could signal worse consequences if state leaders don’t change their overspending ways,” Seattle Times editorial page editor Kate Riley writes.

Celebrating excellence: Nominations are due May 29 for AWB’s 2026 awards, which recognize Washington’s top employers in a variety of categories, from workforce development and supporting veteran employees to best new business of the year. Check out this new nomination video for a flavor of the event and some of its dynamic winners.

Free nomination: Click to view the award categories and fill out the nomination form now. It’s free to nominate and receive an award.

• Self-nominations are accepted and encouraged to recognize the quality in your own company. We also have many nominations come in as employers recognize clients and partner businesses.

WA unemployment rate rises slightly in February

Washington’s unemployment rate rose to 5.1% in February — the fourth straight monthly increase — signaling a potential shift in the labor market, said Anneliese Vance-Sherman, chief labor economist with the state Employment Security Department (ESD).

“We’re seeing the unemployment rate increase, we’re seeing workers more likely to hang onto their jobs; a little bit less turnover than we saw when the labor market was really favorable for job seekers,” she told McClatchy newspapers.

Data releases are running behind due to a partial government shutdown earlier this year. The state expects to release March data on Wednesday and return to normal timing in May.

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Spokane, Renton to host team base camp sites during World Cup

The Egyptian Men’s National Soccer Team will train at Gonzaga University in Spokane during this summer’s FIFA World Cup, while the Belgium team is expected to use the Sounders’ training facility in Renton as its base camp.

Teams will use their base camps to train and recover during the five-week tournament that includes 104 matches across the U.S., Canada and Mexico — the largest World Cup ever. Egypt and Belgium will face off in a group-stage match on June 15 at Lumen Field.

The Spokesman-Review reports that Spokane soccer fans may have a chance to observe team Egypt’s training sessions. “As a coach, player, referee, and fan, I am ecstatic our community will have the rare opportunity to watch some of the world’s best soccer players prepare for the World Cup,” said Sen. Marcus Riccelli, D-Spokane.

Build a return-to-work culture: A strong return-to-work program isn’t just a policy — it’s a game-changer for both organizations and employees. Join AWB CompWise for a free webinar at 10 a.m. Tuesday, May 12 for strategies to transform your approach to return-to-work.

Expert guides: Sedgwick representatives Laura Oslund and Tara Withrow will share practical steps to make return-to-work a proactive, organization-wide priority. 1 SHRM/1 HRCI credit pending.

In the one-hour webinar, safety experts will cover:

• Reducing injury-related costs and lost time

• Improve employee engagement and morale

• Create consistent, proactive practices

• Protect operational continuity

• And much more

Protect your pet: AWB members and their employees now have access to pet insurance to protect pet owners from costly vet bills. A small monthly payment can help you prepare for those unexpected vet expenses down the road.

MetLife Pet Insurance offers: 

• Flexible coverage with up to 100% reimbursement

• Optional preventive care coverage

• 24/7 access to telehealth concierge services

• Discounts and offers on pet care

• Coverage of pre-existing conditions when switching providers

• MetLife Pet mobile app to submit and track claims and manage your pet’s health and wellness

Get a quote: Members and your employees can get a quote by visiting http://www.metlife.com/getpetquote and entering ProPoint in the employer drop down menu at the bottom of the website. Feel free to forward this information to other employees at your company.

“We believe Washington can continue to be a place of innovation, opportunity and responsible growth, but only if we protect the conditions that made it that way in the first place.” ~ Lauren and Ben Petter, entrepreneurs from Chelan County who are the lead plaintiffs in the lawsuit challenging the state income tax.