SHB 1702
In CommitteeHouse
Public utility tax, counties
Authorizing counties to impose a public utility tax.
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 lets Washington counties impose a local tax on utility companies—such as electric, gas, phone, water, cable, sewer, and waste providers—based on the utilities’ gross income from services in the county, up to 3%, with specific rules for billing, exemptions, and coordination with city taxes. The tax would take effect in July 2025.
- Allows counties to impose an excise tax on utilities operating within the county, up to 3% of the utility’s gross income from services provided to county residents.
- Requires utilities to separately state the tax amount on customer bills and collect it as part of service charges.
- Limits tax implementation to the first day of a calendar quarter, and only after the county waits 75 days from adopting the tax ordinance or resolution.
- Permits counties to exempt certain business customers—such as manufacturing facilities, aircraft repair sites, industrial parks, farms, and data centers—but prohibits exempting residential customers unless businesses are also exempted.
- Requires counties to give utilities a credit for any similar city or town utility tax already paid on the same service, up to the total tax owed.
Who is affected
- County governments — Counties gain the authority to impose a local excise tax on utilities operating within their borders, which could increase local revenue but also require administrative effort to implement and collect.
- Utility companies — Utilities (e.g., electric, gas, phone, water, cable, sewer, and waste companies) must collect and remit the tax to counties and may pass the cost to customers through higher rates.
- Business customers (e.g., manufacturers, farms, data centers) — Business customers—especially large industrial, agricultural, or data center users—may benefit from optional county exemptions, potentially lowering their utility bills if exemptions are granted.
- Residential customers — Residential customers may see slightly higher utility bills if utilities pass the tax on to them, unless the county provides a residential exemption (which would require exempting businesses too).
Pro/Con Analysis
Stronger case for concerns
Potential Benefits (3)
Counties gain new revenue authority up to 3% of utility gross income, which could fund essential local services (e.g., schools, roads, emergency response) without raising property or sales taxes. This is especially valuable for counties facing budget constraints or growth-related infrastructure demands.
Local GovernmentPeopleRef: Sec. 1(1)The optional exemption for large business customers (e.g., data centers, manufacturing) may help counties retain or attract high-value industrial employers by reducing their utility costs, potentially supporting job retention in key sectors. However, this is not guaranteed and depends on county discretion.
Business & EmploymentRef: Sec. 1(5)The credit for city-level utility taxes reduces double taxation and encourages cooperation between counties and cities, potentially simplifying tax administration in jurisdictions with overlapping utility service areas.
Local GovernmentRef: Sec. 1(6)
Potential Concerns (5)
The bill permits counties to exempt certain business customers (e.g., manufacturing, data centers, farms, industrial parks), but prohibits residential-only exemptions unless businesses are also exempted. This creates a complex, uneven regulatory landscape where large industrial users may receive preferential treatment depending on county policy, while residential customers and small businesses without exemption eligibility bear the tax burden. This could distort competition and create administrative complexity for small businesses trying to understand whether they qualify for exemption.
Business & EmploymentRef: Sec. 1(5)Counties must wait 75 days after adopting a tax ordinance before implementation and can only impose the tax on the first day of a calendar quarter. This delays revenue generation and adds procedural complexity for county finance and legal staff, especially for smaller counties with limited resources to manage timing and coordination with cities.
Local GovernmentRef: Sec. 1(4)The requirement for counties to grant credit for city-level utility taxes creates administrative burden and potential disputes over tax allocation between counties and cities, especially in areas with overlapping utility service boundaries. This could lead to litigation or intergovernmental conflict over tax base allocation.
Local GovernmentRef: Sec. 1(6)Utilities must separately state the tax on customer bills and collect it as part of service charges. This imposes new billing and accounting costs on utility companies, which may be passed to customers—including small businesses and residential users—through higher rates or administrative fees.
Business & EmploymentRef: Sec. 1(3)Because counties cannot exempt residential customers without also exempting businesses, low- and middle-income households cannot receive targeted relief from the tax, even if a county chooses to prioritize affordability. This limits local policy flexibility to protect vulnerable populations from regressive utility cost increases.
HousingRef: Sec. 1(5)
Who Is Most Affected
Counties gain new taxing authority and potential revenue, but face administrative costs and coordination challenges with cities. Smaller counties may benefit less due to limited resources and lower utility gross income.
Large utilities (e.g., PSE, Avista, Comcast) face new compliance and collection responsibilities and may pass costs to customers. They may benefit from predictable, county-level tax rules replacing patchwork local regulations.
Large industrial, agricultural, and tech-sector businesses may benefit from optional exemptions, reducing operating costs. Small businesses without exemption eligibility face higher utility bills unless they qualify under narrow exemptions.
Low- and middle-income households may see modest utility bill increases unless counties adopt business-wide exemptions (which would reduce revenue). They cannot receive targeted relief under current language.