Sales tax sourcing impact

AN ACT Relating to authorizing funding tools to mitigate the 1
impact of sales tax sourcing and enhance community vitality in 2
certain cities that host industrial and warehousing industries that 3
are vital to the statewide economy; adding a new section to chapter 4
82.14 RCW; creating a new section; and declaring an emergency.5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:6
NEW SECTION. Sec. 1. The legislature finds that additional 7
funding tools are needed to improve community vitality in the 8
industrial and warehousing valley located near the port of Seattle 9
and the port of Tacoma. Sales tax sourcing laws created a significant 10
negative fiscal impact on this community thereby impacting the 11
quality of life of residents in the valley. The valley is a vital job 12
center to Washington state's economy and is one of the most diverse 13
communities in the state. At the same time, with a concentration of 14
warehousing, manufacturing, and shipping businesses, this community 15
experiences negative impacts on resources that other communities do 16
not experience. Furthermore, the legislature recognizes the dedicated 17
funding in RCW 82.14.545 for the manufacturing and warehousing job 18
centers account, RCW 82.14.550, is scheduled to expire on July 1, 19
2026. The legislature hereby authorizes new funding tools for these 20
S-0696.2
SENATE BILL 5518
State of Washington 69th Legislature 2025 Regular Session
By Senators Kauffman, Orwall, and Nobles
Read first time 01/27/25. Referred to Committee on Ways & Means.
p. 1 SB 5518
communities to generate revenue necessary to improve community 1
vitality. 2
NEW SECTION. Sec. 2. A new section is added to chapter 82.14 3
RCW to read as follows: 4
(1) The legislative authority of any city with a population over 5
120,000 and located in a county with a population of 1,500,000 or 6
more, may authorize, fix, and impose a sales and use tax in 7
accordance with the terms of this chapter. The tax is in addition to 8
other taxes authorized by law and is collected from those persons who 9
are taxable by the state under chapters 82.08 and 82.12 RCW upon the 10
occurrence of any taxable event within the city. The rate of tax may 11
not exceed 0.3 percent of the selling price in the case of a sales 12
tax or value of the article used in the case of a use tax.13
(2) The tax may only be imposed by a city if more than 25 percent 14
of the total assessed valuation of the city is zoned for either 15
industrial or warehousing uses, or both. 16
(3) The tax imposed under subsection (1) of this section is 17
credited against the state tax under chapters 82.08 and 82.12 RCW. 18
The department must perform the collection of such taxes on behalf of 19
the city at no cost to the city and must remit the tax to the city as 20
provided in RCW 82.14.060. 21
(4) The tax imposed by this section may only be imposed at the 22
beginning of a fiscal year and continue for no more than 20 years 23
from the date the tax is first imposed. 24
(5) Moneys collected under this section may be used for the 25
purpose of improving the vitality of the community in the same manner 26
that general fund revenue may be used. 27
(6) No tax may be imposed under this section before July 1, 2025.28
(7) A city imposing the tax authority under this section must 29
engage in the following public process each time it adopts a biennial 30
budget: 31
(a) The city shall hold a minimum of three town hall meetings 32
within the city, each at a different geographical location and at a 33
different time of the day, explaining the budget process to the 34
public and providing opportunities for community member dialogue;35
(b) The city shall provide a webpage outlining the budget 36
development process, the dates for scheduled budget hearings, and 37
where to find budget information; and 38
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(c) The city shall conduct a survey to solicit input from the 1
public on budget priorities. 2
NEW SECTION. Sec. 3. This act is necessary for the immediate 3
preservation of the public peace, health, or safety, or support of 4
the state government and its existing public institutions, and takes 5
effect immediately.6
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p. 3 SB 5518