HB 1397
In CommitteeHouse
Local property tax levies
Imposing local property tax levies wholly credited against the state property tax to provide support and services for veterans' assistance and for persons with developmental disabilities or mental health needs.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill creates two new local property tax levies—one for veterans’ services and one for mental health and developmental disability services—funded by assessments on property taxes. The taxes are offset against the state property tax, so they do not raise overall tax bills, and counties can transfer funds to the state to access federal matching dollars. The bill also sets rules for adjusting the levies based on changes in the overall county tax levy.
- Requires each county to levy 2.5 cents per $1,000 of assessed property value to fund community services for people with developmental disabilities or mental health needs.
- Requires each county to levy between 1.8 and 27 cents per $1,000 of assessed value (with flexibility set by county legislative authority) to create a Veterans’ Assistance Fund.
- Both levies are deducted from the state property tax collection—meaning they do not increase the total property tax bill—so counties collect less for the state in exchange for collecting the local levies.
- Allows counties to transfer all or part of the mental health/disability levy funds to the Department of Social and Health Services (DSHS) to help qualify for federal matching funds, which are then distributed to local service providers.
- Establishes rules for adjusting the levy amounts based on changes in the county’s overall property tax levy (e.g., if the overall levy goes up or down, the new levies must change proportionally, with some exceptions for voter-approved increases).
- Requires counties to annually calculate and cap administrative costs for managing the Veterans’ Assistance Fund, and allows those costs to be reimbursed from the fund itself.
Who is affected
- Property owners — Residents of Washington counties who own taxable property will see a portion of their property tax bill redirected to support veterans' services and services for people with developmental disabilities or mental health needs. The tax is calculated per $1,000 of assessed property value and is offset against the state property tax, so it does not increase the total tax burden.
- County governments — Counties must adjust their annual property tax levies to include the new local taxes for veterans and disability/mental health services, and must ensure the levies are deducted from the state tax collection at no added administrative cost to the county.
- State agencies (e.g., Department of Social and Health Services) — State agencies—specifically the Department of Social and Health Services (DSHS)—will receive transferred funds from counties (if chosen) to help secure federal matching dollars for community-based services for people with developmental disabilities or mental health needs.
- Service providers (e.g., community agencies, boards) — Community-based service providers and county-level boards that serve veterans, people with developmental disabilities, and people with mental health needs will receive state or county funds to deliver authorized programs and support services.
Pro/Con Analysis
Potential Benefits (5)
By enabling counties to transfer funds to DSHS for federal matching dollars, the bill significantly expands access to community-based mental health and developmental disability services—especially for vulnerable populations—without raising net property taxes. Federal matching rates (often 50–75%) mean each county dollar leverages additional state/federal resources, increasing service capacity broadly.
HealthcarePeopleRef: RCW 71.20.110(2) and RCW 73.08.080(2)The Veterans’ Assistance Fund provides dedicated, scalable funding for veteran-specific services—including burial assistance, emergency aid, and program administration—which directly supports a historically underserved group of residents and enhances community recognition of military service.
Public SafetyPeopleRef: RCW 73.08.080(1)The statutory requirement that levies be maintained or increased when the overall county levy is unchanged provides a floor for service funding, helping prevent erosion of mental health and veterans’ services during flat-budget years and promoting program stability.
Local GovernmentPeopleRef: RCW 71.20.110(3)(a)(iii) and RCW 73.08.080(5)(a)(iii)The proportional adjustment mechanism (linking local levies to overall levy changes) helps maintain revenue neutrality across the system and prevents unintended tax increases when property values rise, supporting predictable local budgeting.
Local GovernmentRef: RCW 71.20.110(3)(a)(ii) and RCW 73.08.080(5)(a)(ii)By allowing administrative costs to be reimbursed from the Veterans’ Assistance Fund, the bill supports local government capacity to manage programs efficiently, potentially enabling smaller counties to contract with community agencies and create local jobs without new general fund appropriations.
Business & EmploymentPeopleRef: RCW 73.08.080(3)
Potential Concerns (5)
Property owners—especially those with lower-valued homes—will see a fixed per-$1,000 assessment that disproportionately burdens them relative to their property value, since the tax is not progressive and applies uniformly regardless of income or ability to pay. While the total tax bill is not increased, the *composition* shifts toward a regressive local levy, reducing equity in the property tax system.
HousingPeopleRef: RCW 71.20.110(1)Counties must absorb administrative complexity and potential legal risk in managing dual levy structures, including calculating proportional adjustments, verifying federal match eligibility, and ensuring compliance with statutory caps on administrative costs. Smaller counties with limited staff may struggle with implementation, especially given the requirement to deduct levies from the state collection at no cost to the county.
Local GovernmentPeopleRef: RCW 71.20.110(2) and RCW 73.08.080(2)The automatic increase mechanism tied to overall levy growth may pressure counties to raise levies beyond statutory minimums during periods of high property value growth, potentially reducing local fiscal flexibility and creating political tension when voters approve targeted levies that should be excluded from the proportional adjustment but are difficult to isolate administratively.
Local GovernmentPeopleRef: RCW 71.20.110(3)(a)(ii) and RCW 73.08.080(5)(a)(ii)The bill enables counties to transfer mental health/disability funds to DSHS to access federal matching dollars, which expands service capacity—but only if counties choose to participate. Since transfers are optional and subject to county discretion, uptake may be uneven, and some counties may forgo federal matches due to administrative burden or ideological opposition, limiting the overall public safety impact.
Public SafetyRef: RCW 71.20.110(2) and RCW 73.08.080(2)Low- and middle-income homeowners (especially seniors on fixed incomes, renters in owner-occupied homes, and residents of older, lower-valued neighborhoods) will bear a disproportionate burden relative to their income, as the per-$1,000 assessment applies regardless of income or household composition, and no low-income exemption is provided.
HousingPeopleRef: RCW 71.20.110(1) and RCW 73.08.080(1)
Who Is Most Affected
Property owners—especially those with lower-valued homes, seniors on fixed incomes, and residents in older neighborhoods—will face a regressive per-$1,000 assessment with no income-based exemption, increasing their relative tax burden despite no net increase in total tax liability.
Counties must implement complex new levy structures, calculate proportional adjustments annually, and manage optional federal transfers—adding administrative burden, especially for smaller counties with limited staff.
DSHS gains new authority to receive transferred funds and distribute federal matches, expanding its role in coordinating community services—but success depends on county participation, which may be inconsistent.
Community service providers (agencies, boards) stand to gain significant new funding through county transfers and federal matches, improving service capacity for mental health, developmental disabilities, and veterans—though funding levels vary by county participation.