Legislative Update Feb. 19th, 2024

Budget Week to reveal what tax measures will be brought forward

Several hearings are set this week for the Washington State Legislature’s budget hearings, a first indication of where lawmakers plan to add new tax revenue. An updated state revenue forecast gives Democratic budget writers in the House and Senate a little more money to spend than anticipated. (link)

The good news for lawmakers is that Washington’s economy is now projected to $67 billion for the two-year budget cycle, up $122 million from the last forecast in November. Overall, collections are now up $1.3 billion since lawmakers adopted the budget in the 2023 session. It’s important because Washington is on a two-year budget cycle – meaning lawmakers will allow each chamber to adjust, rather than rewrite the current budget. Of note, when added to previous forecasts, revenue is now up nearly $3.3 billion over enacted budgets in just the past few years.

As a result, there are three key housing related tax bills that could be resurrected in what the legislature calls “needed to implement the budget,” or NTIB.

They are:

In addition to an increase, this bill also adds a new “transfer tax” concept to real estate transactions. The Washington REALTOR® Legislative committee voted to push back against this bill and has launched an advertising campaign to oppose it.

Reestablishing a business and occupation tax while offering a tax exemption from landlords participating in rent control measures

  • Raising the Property Tax Lid SB5770

Lifts the property tax lid to up to 3% (from 1%) of value. Also allows for excess funds to be banked for high inflation years.

Additionally, there are several housing bills, both good and bad, still alive.

Key Washington REALTOR® Bills


Allow Administrative Lot Splitting to Create New Buildable Lots HB1245 DEAD

Despite HB1245 passing quickly out of the House, it appears to be DEAD in the Senate, where there are concerns landowners could make two density lots out of one.


Allow Detached Accessory Dwelling Units in Rural Areas 2126/6029 both DEAD

Accessory Dwelling Units (ADU’S) remain a key challenge outside of cities. While attached units can be built in rural areas, detached ADUs cannot be legally built.  The result is an increase in illegally converted garages, barns, or sheds – and a clear inequity in housing supply for rural areas of Washington State.  Futurewise launched a KEY campaign to kill this bill.


Increase Housing Supply Through Transit-Oriented Development HB2321 & HB 2160 ALIVE

This bill allows for more flexibility with cities wanting to build locally-developed programs that reflect market conditions, with state funding support, and by using successful incentive programs like the Multi-Family Tax Exemption (MFTE).  Cities deserve state financial support for local TOD planning and infrastructure needs, to ensure that TOD areas have a mix of residential and commercial development, while also providing community services and amenities. Unfortunately, the “affordability threshold” in the current legislation makes this measure unworkable, in the eyes of Washington REALTORS®


Co-Living Bill HB 1998

Requires jurisdictions to allow co-living as permitted in any zone that allows multi-family.


Rent Control HB 2114

Limits rent and fee increases, requiring notice of rent and fee increases, limiting fees and deposits, establishing a landlord resource center and associated services, authorizing tenant lease termination, creating parity between lease types, and providing for attorney general enforcement. Variations of between 5% and 7% caps are being debated.


Banning Natural Gas HB1589

HB 1589 has passed a modified version of this bill. This bill is alive, but several expected modifications are expected.


Creating a Washington State Department of Housing HB 2270

This bill would create a new Washington State Department of Housing.


Spokane REALTOR® Bills of Note               


Modifying the state’s HB1110 Infill requirements HB2321

This measure helps fix the issues we saw surface with 5-and-6-plexes in the City of Spokane.


Incentives for Affordability and Building Conversions SB 6175

A key favorite by several Spokane area lawmakers, this measure would offer incentives such as the Multi-Family Tax Exemption for the Conversion of Existing Office Space into Residential Housing. Local commercial reports show Spokane has a 31% vacancy rate for commercial office space.


UGA Swaps SB 5834

Sen Short’s bill has passed the Senate.

Allows for GMA swaps during a County’s annual review process. Has passed the Senate and heads to the House.


Wildfire Recovery Building Standards HB1899

Has passed the House, but as a substitute bill that would set up a fund for just the cost of a heat pump and offers no assistance for charging stations and solar panels.


Promoting Bee Habitat SB 5934

SB 5934 has passed.

Sen Mike Padden’s bill. Has been modified to say at least 25% of code required landscaping be set aside for Bee friendly habitat.. adding “to the extent practicable.”

Additionally, lawmakers will hold public hearings on three of six voter initiatives.

  • I-2111 Prohibiting state and local personal income taxes
  • I-2113 Restoring vehicle pursuits for officers
  • I-2081 Establishing a Parent’s Bill of Rights

Three initiatives will not receive public hearings.

  • I-2117 Repealing the Carbon Tax
  • I-2124 Opting out of the state long-term care program
  • I-2109 Repealing the capital gains tax

Lawmakers are set to wrap up this session on March 7th.