A Conversation with Washington State Senator Mike Padden

Washington State Senator Mike Padden of Washington’s 4th Legislative District serves Colbert, Greenbluff, Liberty Lake, Millwood, and Spokane Valley.  He was first elected to the state House in 1980 where he served more than 14 years, and then returned to the state Senate in 2011.  During that time, he has held several key leadership roles in the state legislature.

Senator Padden was the lead sponsor of Senate Bill 5096, which aids businesses looking to adopt an ESOP.  The bill creates the Washington Employee Ownership Program at the state Department of Commerce to offer technical support and other services to certain businesses considering certain employee ownership structures and forms the Washington Employee Ownership Commission to oversee the program.  The bill also provides a business-and-occupation tax credit for costs related to converting a qualifying business to an employee ownership structure.  The measure was unanimously approved by both the state Senate and House and signed by Washington’s governor, Jay Inslee, in May of 2023. 

Below is a brief Q+A with Senator Padden about his interest in employee ownership and his role in the passage of the legislation.

1. What sparked your interest in employee ownership and prompted your efforts in the legislature in this area?

A constituent contacted me, Gellert Dornay, who had recently transitioned a mortgage company with roughly 400 employees to an Employee-Owned Business. Mr. Dornay was very passionate about the benefits of Employee-Owned Businesses, not just for the employee or employer, but for families and society as a whole. 

2. What were the efforts like to pass the legislation?

Preliminary work took place, looking to what other states have done, as well as contacting stakeholders and state agencies about the proposed legislation. I was surprised by the new support that appeared during the legislative process. SB 5096 – Concerning employee ownership passed unanimously out of both the Senate and House Chambers. 

3. Can you share a little bit about how the Washington EO Commission is doing in terms of getting off the ground?

Our Employee Ownership Commission is off to a good start. The inaugural meeting was held in May 2024. Joey Nestegard was elected Chair of the Commission. Mr. Nestegard is the Chief Financial Officer for Schweitzer Engineering Laboratories, the largest Employee-Owned Business in Washington State. He has valuable experience with Employee-Owned Businesses through his work with Schweitzer Engineering. The Commission plans to meet again in September and November. 

In collaboration with the WA Department of Revenue, the Tax Incentive Credit was launched. This tax credit will cover up to 50% of the first $100,000 for ESOPs and $25,000 for worker cooperatives and EOTs, with an annual cap of $2 million.  WA Department of Revenue June 6, 2024 Special Notice (PDF).

4. What are the identified goals of the Commission and some of the things it’s working on long term?

The current goals are to expand the number of Employee-Owned Businesses in Washington State and to provide legal and financial experts to help facilitate a business becoming a ESOP or Co-op. The Commission will also provide ongoing input to the Washington Employee Ownership Program as the revolving loan fund to provide financial support for transitions to employee-owned structures is developed. 

5. Where can interested people in Washington State contact or share their experience with the Commission?

Interested people in Washington State can contact the commission through our WA State Employee Ownership Program Director,  Lorena Lowell, with the Department of Commerce. Lorena.Lowell@Commerce.wa.gov You can also view the webpage at https://www.commerce.wa.gov/program-index-2/employee-ownership-program/