Budget & Taxes (Local Government)

HB 2502 removes sales tax exemptions for certain products and services that currently only exclude state sales tax but not local sales tax. This change will increase revenue for local governments (cities and counties) by requiring these items to pay both state and local sales taxes. The bill specifically targets exemptions listed in the tax code that previously allowed businesses to avoid paying local taxes on qualifying purchases. As a result, local governments will gain additional funding to support essential services like roads, public safety, and community programs.

HB 2442 allows Washington counties and cities to impose specific real estate excise taxes to fund local capital projects and affordable housing. It authorizes a 0.25% tax on real property sales for general capital projects (like streets, parks, and sewer systems), with strict usage rules requiring projects to align with comprehensive plans. Additionally, it creates a separate 0.5% tax exclusively for affordable housing development, including acquisition, construction, and maintenance for low- and moderate-income residents. Local governments must document funding plans for future projects and follow voter approval processes for new taxes, while funds must be managed through competitive grant processes for housing initiatives. The bill directly affects local governments by expanding their tax tools for infrastructure and housing priorities.

SB 5544 creates a new "county local road trust account" within the motor vehicle fund to finance improvements on county roads not classified as arterial or collector roads. It requires counties to spend all road revenues solely on road projects (with limited exemptions) to qualify for funding, prioritizing projects in overburdened communities, environmental health disparities areas, near Indian reservations, or for pedestrian facilities. Allowed projects include road reconstruction, bridge replacements, fish passage removal, and access improvements to community facilities. The program mandates joint planning with cities/towns for adjacent projects and requires counties to provide matching funds based on board-established rules. The bill takes effect July 1, 2025.

HB 1852 requires cities, counties, and code cities in Washington to receive fair market value (or equivalent compensation) when transferring or selling real property to non-government entities or individuals. The bill applies to all local government-owned real property transfers, ensuring such transactions cannot occur at below-market rates without justification. It exempts state forestlands, federally granted educational lands, and properties subject to bond covenants. This policy change directly affects local governments' ability to dispose of surplus public land, mandating fair compensation to prevent undervalued sales.

Senate Bill 5775 expands the authority for counties and cities to impose local sales and use taxes to fund public safety and community protection programs. Counties can impose a sales and use tax up to 0.3%, either through voter approval or by ordinance until January 1, 2028. Cities can also impose a tax, with the total combined county and city rate not exceeding 0.3%. Depending on how the tax is adopted, either one-third or all of the revenue must be used for purposes such as criminal justice, fire protection, community protection, or public safety, including behavioral health and diversion programs. The bill also specifies how these tax revenues are shared between local governments.