The proposed bill seeks to reform property tax regulations in Washington State by revising limitations on property tax revenue growth for local governments. It introduces a new definition for "banked inflation balance," which captures the accumulated annual inflation exceeding three percent from previous years. The bill also amends the definition of "inflation" to align with the annual percentage increase in the consumer price index for urban consumers in the western region, replacing the previous method based on the implicit price deflator. A new limit factor for taxing districts is established, allowing for a maximum increase of 103 percent, while repealing the prior authorization for a limit factor of 101 percent or less. Additionally, the bill reduces state property taxes by 25 percent for participants in the Senior Exemption Program and eliminates nonsupplant restrictions for local government property tax lid lifts within King County.

Furthermore, the bill amends existing laws regarding county property tax funding for hospitals, granting county legislative authorities the ability to establish and maintain hospitals for the indigent. It allows counties to purchase or lease property, construct necessary buildings, and utilize county funds, including taxes and bonds, for hospital operations. The language has been updated to specify that counties can "pay, finance, or refinance" costs related to hospitals, including maintenance and capital expenses. The bill clarifies that the initial increase in a county's general expense levy based on hospital operations will not be subject to certain tax rate limitations and allows proceeds from the hospital tax levy to compensate taxing districts for any reductions in their levies due to the new hospital levy. This act is set to apply to taxes levied for collection starting in 2025.

Statutes affected:
Original Bill: 84.55.005, 84.04.140, 84.36.381
Substitute Bill: 84.55.005, 84.04.140, 84.36.381, 84.55.050, 36.62.010, 36.62.090