In the midst of the hoopla surrounding bills waging war on self-employed workers, circumventing the landmark U.S. Supreme Court Janus ruling, creating an income tax and a carbon tax, banning plastic grocery bags, and more, one bill is sailing through with surprisingly little attention or opposition.

HB 1087/SB 5331 would impose a $1 billion annual payroll tax on most workers in the state to fund the creation of a Long-Term Services and Support (LTSS) program that would provide benefits for workers to help pay the cost of long-term care they may need in the future.  The bills are moving right along; this week the House version passed out of the Appropriations Committee and the Senate version was heard in the Ways & Means Committee.

The new state-run LTSS program would provide up to $36,500 in lifetime benefits for eligible workers to apply to the cost of their long-term care. That lifetime benefit would increase by 3% every year.  The bill doesn’t specify a corresponding schedule or formula for how the payroll tax may be increased to fund the annual increase, only that the new commission created to oversee the program must report annually on the adequacy of that tax rate and advise lawmakers on actions necessary to ensure solvency of the program. 

The payroll tax that funds the program would start off at .58 percent of the wages of every employee in the state who works “at least 10% of full time employment status.”  The bill does not define full time employment, but the Department of Social and Health Services defines full time employment as 32 hours per week or more, so we’ll go with that.  So anyone who works more than 3.2 hours per week will be on the hook to pay the new tax.  Those workers would begin paying the tax in 2022, and long-term care benefits would become available in 2025.  

In order to qualify for the LTSS benefits, a worker would have to pay into the fund for either three years within the last six years, or for a total of 10 years, with at least five of those years paid without interruption.  The Department of Social and Health Services (DSHS) must also determine that individual is a Washington state resident and requires assistance with at least “three activities of daily living,” such as bathing, dressing, medication administration, personal hygiene, or other health-related tasks.  Keep in mind the requirement that an individual be a Washington resident in order to qualify to collect LTSS benefits means a worker could pay into the program their entire working life, but would not be eligible to collect any benefits if they later moved to another state to retire. 

Once approved, the benefits could be used to pay for a comprehensive list of services ranging from adult day services, to home delivered meals, to in-home personal care, to name a few.

The massive new program would be managed and administered by a triumvirate of state agencies—the Employment Security Department, Health Care Authority, and the Department of Social and Health Services. 

A complete fiscal note from the state’s Office of Financial Management (OFM) for the proposed LTSS program is not yet available, but the fiscal note for a nearly identical bill from last year (HB 2533/SB 6238) determined that proposal’s new payroll tax would generate nearly $1 billion in tax revenue from workers for the program each year.  And that bill proposed a lower tax of .49% of wages, albeit on a larger net of workers since that tax would have been levied on every worker, not just those who work more than 3 hours per week.  That bill never made it to a full vote.  As the saying goes, if at first you don’t succeed, try, try again.

Interestingly, the new LTSS program (and the corresponding payroll tax) is rumored to be the #1 priority of the Service Employees International Union this legislative session.  Indeed, SEIU testified in favor of both the House and Senate versions of the bills.  

What does SEIU stand to gain?  More dues dollars is the most likely answer. 

More money for long-term care means higher wages for paid caregivers, which equals more union dues, since SEIU dues are based on wages.  It also means more of those paid caregivers.  More paid caregivers mean more workers paying SEIU dues.  It also means more workers who must complete the state’s training requirements, and SEIU gets paid by the state to provide the training required to be a caregiver. 

So workers pay $1 billion in new taxes every year, and SEIU rakes in the money. One has to give SEIU credit for creativity and dogged determination in figuring out new ways to make money from workers.

As a side note, the new LTSS payroll tax is in addition to the new payroll tax every worker, and many employers, began paying this year to fund the state’s new Paid Family and Medical Leave program (which SEIU long championed).  OFM estimates that will generate upwards of $600 million in new taxes each year, with workers paying close to $400 million of that and employers paying the rest. 

If lawmakers pass HB 1087/SB 5331, workers in our state will soon be paying nearly $1.4 billion in new taxes every year.

Maybe that’s why SEIU pushed so hard to increase our state’s minimum wage to $13.50 per hour.  They needed workers to be able to afford all the new payroll taxes they had planned.