HB 2528
In CommitteeHouse
Real estate excise taxes/GMA
Creating uniformity for the process by which cities planning under the growth management act implement real estate excise taxes.
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 allows cities and counties that follow the Growth Management Act to impose a 0.25% real estate excise tax on property sales without voter approval, with strict rules on how the money can be spent—primarily on infrastructure like roads and parks, and up to a cap on housing for people experiencing homelessness. It also ties the tax’s continuation to the jurisdiction’s compliance with state planning laws.
- Cities and counties that plan under the Growth Management Act (GMA) can now impose a 0.25% real estate excise tax on property sales in unincorporated county areas or city limits—without needing voter approval.
- Tax revenue must be used only for capital projects listed in the city or county’s comprehensive plan, such as roads, parks, airports, and housing for people experiencing homelessness.
- Local governments must show in their budget that the tax is in addition to other available funds for capital projects, and must document which projects the tax will fund.
- Up to $100,000 or 25% of available funds (whichever is greater) may be used for homelessness housing, unless the jurisdiction had already used the tax for that purpose before June 30, 2019—in which case the cap doesn’t apply.
- If the governor finds a city or county is not complying with the Growth Management Act, the authority to collect the tax is temporarily suspended until compliance is confirmed.
- Revenues pledged or committed to specific projects before March 1, 1992, may continue to be used for those projects until the debt or project is complete.
Who is affected
- Cities and counties planning under the Growth Management Act — Cities and counties that plan under the Growth Management Act (GMA) gain the ability to impose a local real estate excise tax of up to 0.25% on property sales in unincorporated areas (for counties) or within city limits (for cities), without requiring voter approval—unlike before this bill.
- Homebuyers and property sellers — Residents and property buyers in affected cities and counties may face an additional 0.25% tax on property sales, which funds local capital projects including infrastructure and housing for people experiencing homelessness.
- Local government officials and planners — Local governments must allocate tax revenue to specific capital projects (e.g., roads, parks, airports, or homelessness housing) and document how the tax complements other available funding. They must also ensure other essential infrastructure projects are still funded.
- People experiencing homelessness — People experiencing homelessness may benefit from increased funding for shelters and supportive housing, especially through interlocal collaborations, if local governments choose to use part of the tax for that purpose.
Pro/Con Analysis
Potential Benefits (5)
The bill explicitly authorizes use of tax revenue for homelessness housing and interlocal collaborations, enabling scalable, locally tailored shelter and supportive housing projects that may not otherwise be funded through traditional capital budgets.
HousingPeopleRef: Sec. 1, RCW 82.46.035(4)(d), (5)By allowing counties and cities to fund critical infrastructure (roads, bridges, stormwater systems) without voter approval, the bill helps prevent deferred maintenance that could lead to public safety risks—e.g., bridge failures, flooding, or road collapses—particularly in rapidly growing areas under the GMA.
Public SafetyPeopleRef: Sec. 1, RCW 82.46.035(2), (3)Funding for parks and airports supports environmental resilience (e.g., green infrastructure, stormwater management in parks) and sustainable transportation access—especially in unincorporated areas where such services are often underfunded.
EnvironmentPeopleRef: Sec. 1, RCW 82.46.035(4)(b), (c)The requirement to identify specific projects and demonstrate fiscal complementarity promotes transparency and prevents double-counting of funds—helping local governments manage capital planning more responsibly and avoid budget shortfalls.
Local GovernmentPeopleRef: Sec. 1, RCW 82.46.035(1), (7)Jurisdictions that previously used the tax for homelessness housing before June 30, 2019 retain full flexibility, enabling continuity of proven programs—this benefits communities that already have robust interlocal housing collaborations in place.
HousingLean peopleRef: Sec. 1, RCW 82.46.035(6) (grandfather clause)
Potential Concerns (5)
The 0.25% real estate excise tax increases transaction costs for homebuyers and sellers in affected jurisdictions, potentially reducing housing affordability and market activity—especially for first-time buyers and lower-income households who are more sensitive to closing costs.
FinancialRef: Sec. 1, RCW 82.46.035(2)The requirement that jurisdictions document availability of funds for roads and parks *before* using tax revenue for homelessness housing creates administrative burden and may delay or reduce funding for urgent shelter needs, especially in cash-strapped or overburdened local governments.
Local GovernmentRef: Sec. 1, RCW 82.46.035(7)The $100,000 or 25% cap on homelessness-related spending disproportionately constrains jurisdictions with high homelessness needs but limited overall capital funding—many rural and smaller counties will be unable to meaningfully expand shelter capacity, while wealthier suburbs may hit the cap only after minimal investment.
HousingPeopleRef: Sec. 1, RCW 82.46.035(6)Suspension of tax authority upon GMA noncompliance creates uncertainty for long-term infrastructure planning, as jurisdictions may lose a predictable funding source mid-cycle if the governor determines noncompliance—even if the jurisdiction is actively working toward compliance.
Local GovernmentRef: Sec. 1, RCW 82.46.035(8)Eliminating the voter approval requirement for this tax reduces direct democratic oversight over a new local tax, weakening accountability—especially since the tax is regressive in practice (as real estate excise taxes fall disproportionately on lower- and middle-income sellers in tight housing markets).
Rights & LibertiesLean peopleRef: Sec. 1, RCW 82.46.035(2) (removed voter approval requirement)
Who Is Most Affected
First-time homebuyers and lower-income sellers face higher transaction costs due to the 0.25% tax, which may delay homeownership or force them to absorb reduced net proceeds—especially in competitive markets where price sensitivity is high.
Local governments gain a new, voter-free funding tool for infrastructure and homelessness services, but must navigate strict documentation and compliance requirements that may limit flexibility—especially for smaller or under-resourced jurisdictions.
People experiencing homelessness may benefit from increased shelter and supportive housing funding, but only if their jurisdiction chooses to spend up to the cap and has the capacity to implement programs—larger urban jurisdictions are more likely to do so than rural ones.
Large real estate developers and investors benefit less directly, but may gain from improved infrastructure in growth areas—while also facing slightly higher transaction costs when selling commercial or investment properties.
Rural counties with limited capital project pipelines may find the tax less useful—many lack large-scale infrastructure needs, and the $100K/25% cap may represent a meaningful portion of already-tight budgets without proportional benefit.