HB 2098
In CommitteeHouse
Higher education funding
Adjusting higher education funding.
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 a new tax on large tech companies to fund need-based college grants and expand computer science and engineering enrollment at state universities. It also expands the Washington College Grant to more low- and middle-income students and reduces tuition for resident undergraduates over time.
- Imposes a workforce education investment surcharge on select large tech companies: 1.22% on gross income from certain tech activities from 2020–2025, rising to 7.5% starting January 1, 2026 (on income taxed under RCW 82.04.290(2) only).
- Limits the surcharge to companies in an affiliated group with over $25 billion in global revenue, and excludes hospitals, health clinics, financial institutions, and telecom infrastructure providers.
- Requires quarterly reporting and payment of the surcharge, with a 50% penalty for intentional noncompliance (e.g., hiding group affiliation).
- Expands the Washington College Grant starting in the 2026–27 academic year: students with family income up to 100% of state median income receive the full grant; those up to 150% receive prorated amounts (e.g., 70% for incomes between 101–110%).
- Mandates automatic enrollment increases in computer science and engineering programs at state universities if demand exceeds capacity by 100 students, funded by the surcharge revenues.
- Reduces tuition operating fees for resident undergraduates at state universities by 10% per year from 2027–28 through 2029–30, then limits future increases to the 14-year average growth in Washington’s median hourly wage.
Who is affected
- Select advanced computing businesses — Large tech companies with over $25 billion in global revenue that design or develop software/hardware, operate cloud services, or run online marketplaces, search engines, or social platforms — they will pay a new surcharge on certain business income.
- Students applying for the Washington College Grant — Low- and middle-income Washington students applying for the Washington College Grant — they will receive higher grant amounts based on family income, with full grants going to families earning up to 100% of state median income.
- Students in computer science and engineering programs — Residents of Washington enrolled or planning to enroll in computer science or engineering degrees at state universities — they may benefit from increased enrollment slots if demand outpaces supply.
- Community and technical college students — Community and technical college students — they may benefit from tuition reductions for resident undergraduates starting in 2027–28, and from increased state funding for higher education.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Expanding the Washington College Grant to families earning up to 100% of state median income (and prorating up to 150%) will significantly reduce net tuition costs for low- and middle-income students — especially benefiting first-generation and working-class students who previously fell just above current eligibility thresholds.
EducationPeopleRef: RCW 28B.92.205 (2026–27 expansion)Funding from the 7.5% surcharge on large tech firms will directly expand computer science and engineering enrollment at state universities when demand exceeds capacity by 100 students — increasing access to high-demand, high-wage fields for Washington students without requiring new general fund appropriations.
EducationPeopleRef: RCW 82.04.299(1)(a)(ii) and (4)Mandating 10% annual tuition fee reductions for resident undergraduates (2027–30) and tying future increases to 14-year median wage growth will make college more affordable over time — especially for families whose incomes grow slower than tuition inflation, helping stabilize long-term student debt burdens.
EducationPeopleRef: RCW 28B.15.067(2)Directing all surcharge revenues into the dedicated workforce education investment account ensures that the tax burden on large tech firms funds targeted higher education benefits — reducing reliance on general fund revenues and creating a transparent link between corporate activity and public investment.
FinancialPeopleRef: RCW 82.04.299(3)The surcharge’s progressive structure — starting at 1.22% (2020–25) and rising to 7.5% (2026+) — targets only the largest tech firms (>$25B global revenue), meaning most Washington small businesses, startups, and local employers face no new tax burden while the state gains substantial new revenue for education.
FinancialPeopleRef: RCW 82.04.299(1)(a)(i) and (ii)
Potential Concerns (5)
The 7.5% surcharge on gross income (not profit) starting in 2026 will significantly increase compliance and operational costs for affected tech firms, potentially leading to reduced investment, hiring, or expansion in Washington — especially for mid-sized tech firms operating in affiliated groups near the $25B threshold.
FinancialLean industryRef: RCW 82.04.299(1)(a)(ii)The $25B global revenue threshold and exclusion of hospitals, health clinics, financial institutions, and telecom infrastructure providers means the surcharge targets only a narrow set of large, primarily out-of-state tech firms — limiting spillover harm to local small businesses and preserving jobs in exempt sectors.
Business & EmploymentIndustryRef: RCW 82.04.299(1)(a)(ii) and (f)(vi)Mandatory disclosure and 50% penalty for intentional noncompliance (e.g., hiding group affiliation) creates a strong deterrent against tax avoidance but may also impose administrative burdens on firms attempting to comply with complex affiliated-group rules — particularly for mid-sized firms with ambiguous affiliation status.
Business & EmploymentLean industryRef: RCW 82.04.299(1)(d)(i)The tuition fee reduction (10% annually 2027–30) and cap on future increases tied to 14-year median hourly wage growth may reduce state university revenue, potentially leading to longer-term constraints on faculty hiring, program expansion, or infrastructure investment — especially if surcharge revenues fail to fully offset lost tuition revenue.
EducationLean industryRef: RCW 28B.15.067(2)While the expanded Washington College Grant helps low- and middle-income students, the prorated benefit structure (e.g., 10% grant for incomes 141–150% SMI) may create a steep cliff effect, discouraging incremental income gains and creating administrative complexity for families near the thresholds.
FinancialRef: RCW 28B.92.205 (2026–27 eligibility expansion)
Who Is Most Affected
Large tech firms with >$25B global revenue and core activities in software/hardware development, cloud services, or online platforms will pay a significant surcharge — especially from 2026 onward. While most are out-of-state, their Washington operations (e.g., data centers, offices) may see reduced growth or hiring as compliance costs rise.
Families earning up to 150% of state median income (≈$100K–$150K for a family of 4) will see expanded grant eligibility and larger awards — especially those between 100–150% SMI who previously received no grant. This directly reduces net college costs and student debt for working- and lower-middle-class students.
Students in CS/eng programs at state universities will benefit from automatic enrollment increases when demand exceeds supply — easing admission bottlenecks and improving access to high-demand, high-wage degrees. However, long-term quality depends on whether surcharge revenues fully fund expansion without cutting other programs.
Community and technical college students benefit indirectly from tuition reductions for resident undergraduates (which include some associate degrees) and from increased state higher education funding. However, the bill’s primary focus is four-year universities, so benefits here are more modest and less direct.
State universities and the Evergreen State College will face mandated tuition reductions (10% annually 2027–30) and long-term wage-indexed caps — potentially straining budgets if surcharge revenues fall short of projections. However, they gain guaranteed funding for CS/eng enrollment expansion and may see improved student diversity and graduation outcomes.