SB 6218
In CommitteeSenate
State-federal payments
Directing the withholding of state payments to the federal government if federal funding is withheld due to the existence of a valid Washington state law.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill requires Washington to track and respond when the federal government withholds funds from the state due to state laws that are still valid or under legal challenge. If the federal government withholds money, Washington must withhold an equal amount of payments it owes to the federal government—such as taxes or grant repayments—and hold those funds in a special escrow account until courts resolve the legal dispute.
- The state treasurer must submit an initial report within 60 days of the bill’s effective date—and update it monthly—detailing federal funds withheld from Washington due to state laws or court rulings, and projecting future payments the state owes to the federal government.
- The Office of Financial Management (OFM), in consultation with the state treasurer, must direct state agencies to withhold payments to the federal government in amounts equal to federal funds withheld from the state.
- Withheld payments must be prioritized first from agencies directly affected by federal nonpayment, and if needed, from other agencies; and management/senior staff payments must be prioritized before other employee payments.
- Payments withheld due to unresolved legal challenges to state laws must be placed into a new escrow account called the RECOURSE Act Escrow Account.
- Funds in the RECOURSE Act Escrow Account can only be spent after a final court ruling: either to repay the federal government (if the state law is invalidated) or to release the withheld federal funds to Washington (if the state law is upheld).
- The bill declares itself an emergency, making it effective immediately upon becoming law.
Who is affected
- State of Washington (via state agencies and the Office of Financial Management and State Treasurer) — The state may withhold payments it owes to the federal government (e.g., federal taxes, employment taxes, grant repayments) if the federal government withholds funds from Washington due to a state law that is still valid and unchallenged in court or is being challenged but not yet ruled on.
- Federal government — Federal government may receive reduced or delayed payments from Washington (e.g., tax withholdings, debt offsets) while legal disputes over state laws are pending.
- State employees (particularly management-level) — State employees—especially senior leadership—may see delayed or withheld payments to the federal government (e.g., payroll taxes) as part of the state’s offset strategy, per the bill’s prioritization rules.
- State agencies receiving federal funding — Agencies that receive federal funding (e.g., health, education, transportation) may face reduced federal reimbursements and must comply with directives to withhold payments to the federal government to balance those losses.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The bill establishes a legally binding escrow mechanism to protect state revenue when the federal government withholds funds in violation of state law or court rulings—ensuring that Washington does not lose money while legal disputes are resolved, thereby preserving state resources for public services.
Local GovernmentPeopleRef: Sec. 2(3)(a) & Sec. 3(1)(a)-(b)The bill mandates monthly public reporting of federal fund withholdings and projected state payments to the federal government, increasing transparency and enabling legislative oversight—helping prevent arbitrary or politically motivated federal funding cuts and empowering Washingtonians to hold both state and federal officials accountable.
Local GovernmentPeopleRef: Sec. 1(1)(c) & Sec. 1(2)By allowing withheld funds not placed in escrow to be made available for state appropriation (up to the amount of federal funds withheld), the bill provides a fiscal backstop that could partially offset losses from federal defunding, supporting continuity of essential state services.
Local GovernmentPeopleRef: Sec. 2(4)The bill’s tiered approach—first targeting agencies directly affected by federal nonpayment, then expanding to others—ensures a proportional and targeted response to funding disruptions, minimizing collateral damage to unrelated state functions.
Local GovernmentLean peopleRef: Sec. 2(2)(a)The emergency clause ensures immediate implementation, allowing Washington to respond swiftly to federal funding withholding actions—preventing irreversible budgetary harm before courts can rule on legal disputes.
Local GovernmentLean peopleRef: Sec. 5
Potential Concerns (5)
The bill creates a complex administrative mechanism requiring state agencies to withhold payments to the federal government (e.g., payroll taxes, grant repayments) when federal funds are withheld from the state, which may strain intergovernmental relations and create operational friction between state and federal agencies during legal disputes.
Local GovernmentRef: Sec. 2(3)(a)By prioritizing withholding of payments attributable to senior management before other employees, the bill may indirectly increase the risk of delayed tax filings or compliance issues for state employees—especially lower-wage workers—who rely on timely payroll processing and may face penalties if tax withholdings are misaligned with actual pay cycles.
Business & EmploymentRef: Sec. 2(2)(b)Funds withheld but not placed in the escrow account become available for state appropriation, up to the amount of federal funds withheld—this creates a potential incentive for the state to escalate legal conflicts with the federal government to unlock additional discretionary funds, undermining fiscal discipline and intergovernmental cooperation.
Local GovernmentRef: Sec. 2(4)The bill’s requirement to first withhold from agencies directly affected by federal nonpayment—and then expand to other agencies—may disproportionately impact human services, education, and transportation agencies that rely heavily on federal funding and employ large numbers of frontline workers, potentially disrupting service delivery and causing indirect job instability.
Business & EmploymentLean peopleRef: Sec. 2(2)(a)If federal funds withheld relate to public safety programs (e.g., law enforcement grants, emergency management), the state’s offset strategy could delay critical reimbursements to local governments and create cash-flow uncertainty for agencies responsible for community safety, especially in rural or under-resourced jurisdictions.
Public SafetyRef: Sec. 2(3)(a)
Who Is Most Affected
State agencies that receive federal funding (e.g., health, education, transportation) may face reduced federal reimbursements and be required to withhold payments to the federal government, creating administrative burden and potential service delays. However, they gain protection against net revenue loss if state laws are upheld in court.
State employees—especially management—may experience payroll tax withholding delays as part of the offset strategy, but the bill explicitly prioritizes senior leadership, suggesting the state intends to minimize disruption to frontline workers. The impact is mostly administrative, not financial, for most employees.
Local governments that receive federal grants administered through the state may face delays in federal fund disbursement if the state uses offset mechanisms, potentially affecting local service delivery (e.g., roads, housing, public health). However, they benefit from the state’s ability to recover lost funds if court rulings favor Washington.
The federal government may experience delayed or reduced inflows of taxes and repayments from Washington during active legal disputes, but the bill ensures full repayment if courts invalidate state laws—so the net fiscal impact is neutral over time.
Washington residents benefit from the state’s ability to resist federal overreach by preserving state-level policy autonomy—especially in areas like environmental regulation, labor standards, or housing policy—where federal funding has been used as leverage to coerce state compliance. The escrow mechanism protects public resources while legal challenges proceed.