I'd like to call to order the city council study session of April 28th, 2026.

Clerk, please call the roll.

Deputy Mayor Bushnell.

President.

Councilmember Diaz.

Absent Councilmember Heinz.

Councilmember Palmer.

Councilmember Rumba.

Here.

Councilmember Sidalgay.

Absent Councilmember Scott?

Councilmember Walker?

Mayor Ibsen.

Here.

We have one agenda modification.

Item number four, Pierce County Flood Control, Zone District Advisory Committee appointment, and that will be discussed at a later time.

Our first agenda item is our 2026 legislative update.

I'd like to call on senior government relations advisor Alex McBain to begin the presentation, and Brianna Murray from Gordon Thomas Honey was also present.

Thank you and uh uh appreciate the ability to give this presentation.

Very happy that Brianna um from our state lobbyist is here.

Her team does so she and her team do so much to help us.

Uh so and she'll be here to help answer any questions.

Um forward on the slide.

So um I wanted to start with a quick review of the process we use to develop the 2026 uh legislative agenda, in part because we'll be beginning that process shortly here for the 2027 uh legislative agenda.

So um last summer through the fall and summer uh we had discussions about issues and priorities with individual uh council members based on those conversations and other issues that were before council, we crafted drafts of the legislative policies or legislative priorities and the policy doc the policy positions documents.

Um we followed up with two study sessions where we discussed those priorities and policies.

Um and then finally in November, the council formally adopted the state legislative priorities and the policy positions document.

Um we'll talk a little bit more about those uh policy position those priorities when we get into the discussion of the outcomes, but just quickly, the priorities for this last session were response to the federal government, fiscal sustainability, we had a capital request for a trickling filter at the wastewater treatment plant, and then we had identified three issues, or you had identified three issues of importance.

One was wastewater treatment plant nutrient regulation, route jurisdiction transfer, and then the issues around infrastructure funding and sidewalk utility.

Uh the policy positions document was a longer uh document that identifies policy priorities and the government relations office uses that as a guide for advocacy work in the fast-paced session.

Um with the priorities identified, um the we began the work of um connecting with our legislative delegation in addition to individual discussions with uh individual delegation members in December prior to session, we had a briefing on the city's priorities with our legislative delegation members, and then it followed up with a dinner in Olympia um with our uh delegation members in February.

Um debrief, I would just say the uh March 12th um marked the very end of a very challenging session.

Um there were more bills introduced than um than a normal uh second year session, so it was very active.

There were over 1200 uh new bills introduced, and then 268 bills were passed.

There were the major themes in the session were response to federal government and tax structure reform, and all of that was with the large state budget deficit as the sort of backdrop of the entire session.

Um in terms of the tax structure um reform, um, we wanted to highlight that there was historic legislation in the form of millionaires tax that was unveiled by House and Senate leaders and the governor at the very start of session, and that took a lot of bandwidth out of the uh throughout the session.

Uh the taxes and 9.9% levy on adjusted gross income uh above one million dollars per year that would take effect in January 2028.

The major features include funding to expand the working tax uh working families tax credit, five percent of the proceeds would support the fair start for kids, which is supporting child care and early learning programs.

There was a series of tax changes, including implementing exemptions for businesses under 300,000 gross income from BO, eliminating sales tax on many over-the-counter drugs, diapers and certain personal care products, and then rolling back some of the sales tax services that were sales tax on services that were enacted in 2025.

The bill did include an emergency clause, so it wasn't eligible for a referendum, but there are legal challenges forthcoming, and it will likely be the subject of a ballot initiative.

In terms of the city's legislative priorities, I'll start with the response to the federal government and immigration and detention issues.

Around immigration and detention, there were a slate of immigration detention related bills that were introduced and then our Tacoma elected officials testified five times on many on these bills.

And then I just highlight the these bills that did pass.

The first was HB 2105 regarding uh immigrant worker protections, 2165, which increases the penalties for impersonating law enforcement, SB 5855, which protects uh prohibits law enforcement from wearing masks, and then uh SB6602, which uh concerns driver privacy protections.

Um in terms of the fiscal sustainability, um, because of the state's large budget deficit, there was a focus on encouraging the ledge to um sustain historical um revenue sharing partnerships between state and local government, and then to support proposals that would provide local governments with sustainable, progressive, and equitable tax system, including new revenue tools and flexibility with uh existing revenues.

Um, some of the better news related to the outcomes on the fiscal sustainability were most of the state share revenues were preserved with some minor exceptions.

Um there was the legislature did pass uh the a local government flexibility bill that provides additional flexibility around existing revenues and additional sales tax authority.

Uh it included a one-tenth of a percent councilmatic sales tax uh for child care perinatal support before and after uh school use services.

It provided some flexibility with housing sales tax, the HB 5990 funds.

It expands the usage of REIT 2 to um revenues to include nuisance abatement.

Uh it extends the maximum length that a levy lift can be approved by voters to 10 years.

It authorizes uh new county property tax for public health clinics and then allows the creation of a municipal fire district uh with an independently elected board of fire commissioners within two years of the district's formation.

Um of the less optimal outcomes related to the fiscal sustainability issues.

Uh there was another diversion from the public works uh assistance account.

It should not impact projects that are currently funded, but it would potentially put at risk future projects or funding for future projects.

Um then assuming the sales the million year sales tax is upheld, uh city revenue will be reduced from the sales tax exemptions that were included as part of that bill.

Um and so the four-year balance sheet that the legislature authorized um it does assume 200 million dollars to cities and counties uh for local impacts, um, but it does not mitigate all the sales tax on services and and um that were enacted in 2025.

Some of the takeaways and next step steps on this are to highlight with legislative continue to highlight with legislators the cities are facing significant budget shortfalls and deficits.

Um, and to highlight the fact that as the city taxes grow more aggressive as the state has been working to make the state's taxes more progressive.

So in the short term, we need to continue that dialogue that the state has made efforts for making a less regressive stack tax system, and examples include the um the capital gains tax that they've done and then this millionaires tax this last year.