Reps. Joshua Penner and Michael Keaton: The next revolution is here. Will Washington nurture it or neuter it?
The Artificial Intelligence revolution will surpass the internet revolution and the manufacturing era that defined our region for the last 100 years. Beyond our region, it will fundamentally transform the international economy, workforce, and opportunities in ways as impactful as the introduction of electricity.
As the birthplace of titans like Microsoft and Amazon, we often grow complacent. We assume that the business climate we live in today matches the environment that gave birth to those plucky startups decades ago. In truth, we did not build this economy or benefit from the massive windfall of the internet revolution through a strict regulatory regime. Instead, previous generations of Washingtonians embraced a light regulatory touch in this area. As a result, our state became a global technology hub.
However, no guarantee protects that inheritance. Complacency now threatens our legacy. Poorly designed policy risks leading us into a digital version of Detroit, watching the rust eat away at our potential while the rest of the world embraces the progress we were too blind to see. At risk is not just great jobs, but also the direct support we provide to social services, schools, transportation projects, and the institutions that make us uniquely special.
Despite these high stakes, the majority party in Olympia has introduced a slate of legislation this session that risks undermining our nascent AI sector before it can even take root. If we fail to foster the next generation of industry, our past success will not save us. By pursuing litigation, regulation, and taxation, the majority risks overconfidence in the government’s ability to engineer prosperity. They believe prosperity is an inherent property of living where we live and that it is to be pruned unless it checks every political box.
Neither is true. The future economy is not ours to have by right of legacy. Policies ranging from the misguided to the catastrophic will result in a quickly diminishing quality of life. We are currently watching a self-created economic doomsday strategy unfold in three stages.
The bad: Legislating without understanding
This session, we see a government that cannot agree on a basic definition of “Artificial Intelligence” attempting to micromanage it. Proposals like HB 2157 define AI so broadly that even a modernized thermostat could fall under state regulation. When the state defines technology poorly, it sends a clear message to engineers and investors: “Don’t iterate here.”
The worse: The bureaucratic Christmas tree
The majority also hangs unrelated political mandates on every policy tree. Proposals like HB 1170 burden our technology strategy with unrelated requirements. These mandates demand that the AI sector solve climate change or meet specific social goals before the law allows it to function.
AI is a tool, like electricity. We don’t have a “Department of Climate-Aware Electricity.” We have power standards. Forcing our tech sector to serve a bureaucratic narrative rather than market needs signals that innovation is welcome in Washington only if it serves the government first.
The catastrophic: A startup exit tax
Perhaps the most surgical strike against our local economy is HB 2292. This bill targets “Section 1202” small business stock. Federal law currently excludes these gains from taxation to encourage people to take the massive risk of starting or joining a small business. It is the primary incentive for the next generation of garage-born startups.
By taxing these gains at the state level, the majority effectively places an additional tax burden on the startup lifecycle. They tell every founder and early employee that their years of sweat equity and risk deserve a unique penalty. If this passes, the message to the next Microsoft or Amazon is simple: Start your company in a state that actually wants you to succeed.
Litigation-driven incentives
Simultaneously, we see a drift toward aggressive litigation. The majority pushes policies that create a “private right of action” against content creators (HB 2503). Under the guise of consumer protection, these proposals allow individuals to sue innovators if a disclaimer label lacks “prominence.” This creates incentives for litigation rather than a safety standard. It builds a legal minefield where the safest business decision is to launch a startup in another time zone.
The alternative: The Spark Act
There is a better way. HB 1833: The Spark Act, introduced by Rep. Michael Keaton. It stands on a fundamental truth of American history: Prosperity for all comes from democratizing innovation.
The Spark Act triggers growth by focusing on three pillars:
Investment in builders, not bureaucrats: Rather than spending millions on a new “Office of Algorithmic Regulation,” the Spark Act proposes a grant program to put AI tools into the hands of small businesses, local governments, and nonprofits. Eastern Washington farmers, already incentivized by access to water, should be enabled to optimize water use with emergent AI tools. Rural hospitals, already struggling to stay open due to staffing and regulatory overhead, should be enabled to help develop innovative diagnostic uses of emergent AI. Contrary to funding the technology’s administration, we should be funding innovative applications of it.
Solving real problems: Rather than inventing perceived harms, the Spark Act focuses on tangible solutions. It prioritizes grants for projects addressing critical challenges: predicting wildfires, strengthening cybersecurity, and improving public health. This is real innovation for the truly impactful and costly problems we face today.
Defining the rules, not freezing them: Rather than locking in rigid technical definitions that will become obsolete in six months, we should foster a “regulatory sandbox.” We should learn what works by watching real-world deployments and regulating based on evidence, not anxiety.
The choice
Washington stands at a crossroads. One path leads to a future where our state becomes the place where AI goes to die, strangled by litigation and compliance costs. The other path leads to a future where every small business, farm, and school in our state utilizes the most advanced tools in human history to produce the best economy we’ve ever experienced.
The majority favors restriction. We should be building a spark. Washington used to build the future. It is time we get back to the business of earning it.
