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Evergreen Ledger

ESHB 2442

Signed

House

Local government fund use

Providing local governments tax resources and fund flexibility.

How does a bill become law?
  1. Introduced: The bill is filed and assigned a number.
  2. Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
  3. Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
  4. Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
  5. Governor: The Governor reviews the bill and decides whether to sign or veto it.
  6. Signed: The bill has been signed into law.
Introduced: January 28, 2026
Last Action: March 25, 2026
Status: C 221 L 26
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AI Analysis

This analysis was generated by AI and may contain errors. It is not legal advice. Always refer to the official bill text for authoritative information.
People & CommunitiesPeople-leaningCorporate & Wealthy Interests

This bill expands local governments’ authority to raise revenue through new and modified taxes—including sales, utility, and real estate excise taxes—and adjusts property tax rules to support housing, behavioral health, youth services, and veterans’ programs. It also tightens rules on how local governments must use and report tax funds.

  • Allows counties and cities to impose a new local sales and use tax of up to 0.01% to fund services for children and families—including child care, mental health support, and workforce training.
  • Expands the existing real estate excise tax (up to 0.25%) to fund capital projects including infrastructure, parks, airports, and—newly—homelessness and affordable housing projects, with a requirement that at least $100,000 or 25% of funds go to housing.
  • Permits counties and cities to impose a new 0.5% real estate excise tax for affordable housing development, subject to voter approval or local resolution, with revenues placed in a dedicated affordable housing account and distributed via competitive grants/loans.
  • Authorizes counties to impose a utility excise tax of up to 3% on gross utility income in unincorporated areas, with 0.2% of proceeds required to assist low-income residents with utility bills.
  • Amends property tax levy limits to protect certain existing levies (e.g., veterans’ assistance, mental health services) and clarifies the order in which levies are reduced when total taxes exceed legal caps.
  • Allows local governments to increase property tax levies beyond normal limits for up to 10 consecutive years if approved by voters, with new transparency and purpose restrictions.

Who is affected

  • Residents and property owners — Residents of counties and cities that choose to impose the tax; those who buy or rent real property or utility services may pay higher fees, but communities may gain new or expanded services.
  • Local governments — Local governments (counties and cities) gain new authority to impose taxes and must follow new rules for how the money is spent and reported.
  • Housing and behavioral health service providers — Nonprofit and public housing providers, housing authorities, and behavioral health service agencies can apply for competitive grants or loans to fund affordable housing and mental health facilities.
  • Low-income and vulnerable populations — Low-income utility customers may receive bill assistance in counties that adopt the utility tax; residents in areas with high homelessness or mental health needs may benefit from expanded services.
  • Veterans and individuals with disabilities — Veterans and people with developmental disabilities or mental health conditions may benefit from increased funding for community services through property tax levies.
Effective: July 1, 2026Fiscal impact: The bill enables new local taxes (sales, utility, real estate excise) that could generate hundreds of millions of dollars in new local revenue over the biennium; it also modifies property tax limits and allows for multi-year levy increases, potentially increasing local government revenue capacity. Fiscal impact details are not specified in the bill text, but the changes affect how much revenue counties and cities can collect and how they allocate funds.Sunset: January 1, 2027
Model: Intel/Qwen3-Coder-Next-int4-AutoRoundGenerated: Mar 19, 2026 at 8:00 PM

Pro/Con Analysis

Stronger case for benefits

Potential Benefits (5)

  • The 0.01% local sales tax for children and families services explicitly funds mental health therapies, crisis stabilization, prevention programs, and culturally appropriate services—targeting critical gaps in youth behavioral health and likely reducing long-term public costs through early intervention.

    HealthcarePeopleRef: Sec. 402(2)

  • The 0.5% real estate excise tax for affordable housing, with revenues placed in a dedicated account and distributed via competitive grants/loans to nonprofit and public housing providers, creates a sustainable, transparent pipeline for new affordable units—especially for vulnerable populations (veterans, seniors, disabled, homeless).

    HousingPeopleRef: Sec. 201(1), (3), (5)

  • The utility excise tax allows counties to exempt business customers (e.g., manufacturing, data centers), protecting local industry competitiveness, while requiring 0.2% of proceeds to assist low-income residents—balancing economic development with equity.

    Business & EmploymentPeopleRef: Sec. 301(7)

  • Allowing voter-approved property tax levies for up to 10 consecutive years provides long-term revenue stability for critical services (e.g., mental health, housing, veterans’ programs), enabling multi-year planning and program sustainability that short-term levies cannot support.

    Local GovernmentPeopleRef: Sec. 701(2)

  • The bill codifies a 2.5-cent-per-$1,000 property tax levy for mental health and developmental disabilities services, protects it from automatic reduction under property tax caps, and prioritizes its funding in the reduction hierarchy—ensuring baseline, ongoing investment in community-based care.

    HealthcarePeopleRef: Sec. 601(1), Sec. 602–605
Potential Concerns (5)

  • The 0.25% real estate excise tax expansion for homelessness and affordable housing includes a requirement that at least $100,000 or 25% of funds go to housing, but this minimum is low and may not meaningfully increase housing investment in small or high-cost jurisdictions; in practice, many counties may meet the minimum with minimal reallocation, reducing overall housing impact.

    HousingRef: Sec. 101(2), (4)(d), (5), (6)

  • The 0.5% real estate excise tax for affordable housing requires voter approval via ballot measure or petition (10% of prior electorate), which creates a high barrier to implementation—especially in jurisdictions where organizing infrastructure is weak—limiting uptake despite statutory authority.

    Local GovernmentRef: Sec. 201(5)(a)

  • The utility excise tax includes a requirement that 0.2% of proceeds assist low-income residents with utility bills, but this is only a fraction of the total tax (3% max), and utility bill assistance is not means-tested or guaranteed to reach households most at risk of utility disconnection.

    HousingRef: Sec. 301(7)

  • The 0.01% local sales tax for children and families services and the 0.1% housing/behavioral health sales tax are capped at very low rates, limiting total revenue generation—especially in low-population or low-spending counties—making it unlikely to significantly expand service coverage without substantial local political will.

    EducationRef: Sec. 402(1), Sec. 501(2)(a)

  • The property tax reduction hierarchy prioritizes state, county, and city levies over mental health and veterans’ levies, meaning that when levies exceed caps, those services are among the first to be cut—undermining the bill’s stated goals despite new funding mechanisms.

    Local GovernmentRef: Sec. 604 & Sec. 605, subsection (3)(a)(ix), (b)(ix)

Who Is Most Affected

Low- and moderate-income residentsMixed Impact

Low- and moderate-income residents in counties that adopt the 0.5% housing tax or 0.01% children’s services tax may gain access to affordable housing units, youth mental health programs, or utility bill assistance—especially if they qualify for targeted services (veterans, seniors, disabled, homeless). However, those in counties that do not adopt the taxes see no direct benefit.

Local governmentsMixed Impact

Local governments gain new revenue tools but face voter approval barriers and complex reporting requirements. Small counties may lack resources to implement ballot measures or grant programs, while larger jurisdictions may more easily leverage the new authority—potentially widening service disparities between urban and rural areas.

Housing and behavioral health service providersPositive Impact

Nonprofit housing providers and behavioral health agencies gain access to new funding streams via competitive grants/loans, but must compete for limited resources and navigate bureaucratic application processes. Larger, well-resourced nonprofits may have an advantage over small community-based organizations despite the bill’s equity goals.

Veterans and individuals with disabilitiesMixed Impact

Veterans and people with disabilities benefit from protected property tax levies and targeted housing/behavioral health services, but only if their county opts in. In counties that do not adopt the new taxes, these groups may see no improvement in services—despite statutory protections.

Utility customersMixed Impact

Utility customers in unincorporated county areas may face a 3% gross income tax passed through to rates, but 0.2% of proceeds funds low-income bill assistance. The net effect depends on local adoption: in adopting counties, low-income residents benefit; in non-adopting counties, no change occurs.