A House proposal currently under negotiation authorizes counties with a population of at least 2 million to impose an annual payroll expense tax on employers engaging in business within the county, to be used for addressing affordable housing and homelessness.

Discussions began with the introduction of HB 2907, sponsored by Rep. Nicole Macri (D–Seattle).

However, legislators decided it would be best to introduce a new bill, HB 2948, with significantly revised language in a number of areas.

Here are some of the major highlights of the new bill, based on our current understanding of the language:

• Authorizes King County to impose a .25 of 1% tax on payroll expenses for certain employers on salaries over $150,000
• .10 of 1% tax will go to "participating cities" which are cities over 60,000 population that have voted to participate (Section 8). The funds will be distributed to the participating cities proportional to where the revenue is generated
• The remaining funding from the .25 of 1% will be distributed as follows (Section 9):
  • 20% of the funding from the .25 of 1% will be distributed directly to the largest cities (those over 60,000) in King County
  • 10% of the funding will be set aside for grants to smaller cities in King County
  • 60% of the funding will be set aside for affordable housing and distributed to the subregions with a dedicated amount for housing serving 0-30% AMI
    • Seattle subregion will receive 45% of the funding
    • The other subregions will receive 27.5% each
  • 10% of the funding will be set aside for behavioral health
• There will be an Advisory Committee that makes recommendations on expenditures. It will include city representatives from each of the subregions
• There is non-supplant language
• The eligible uses of the funds are defined in Section 7

Currently, the bill does not include preemption language around cities' ability to implement business taxes. However, we believe that preemption will still be part of the negotiations on the bill.

Dates to remember

HB 2948 will have a public hearing in the House Finance Committee on Thursday, February 27 at 3:30 pm.