Bellevue council opposes statewide payroll and B&O surcharges and votes to oppose property-tax lift in draft letters to legislators

Bellevue City Council held a late-added study session March 25 to review competing House and Senate proposals for state revenue changes, and then voted to direct staff to prepare letters opposing two statewide tax proposals and to oppose a broad property-tax lid lift as drafted.

City staff presented high-level summaries of proposals released that week. The House package referenced in the briefing would add a 1% surcharge to the business-and-occupation (B&O) tax on very large companies (revenues above $250 million) and a financial-intangibles ("wealth") tax on investment assets; it would also propose a property-tax lift capped at 3% in some formulations. The Senate draft included a payroll excise (a so-called head tax) set at 5% on wages above the Social Security wage base ($176,100 in 2024), a financial-intangibles tax variant, and a property-tax lift tied to population plus inflation without an explicit 3% cap. Staff estimated the House and Senate packages could raise roughly $15–17 billion over four years and stressed these were initial proposals in a long budget process.

Why it matters: City staff advised that some statewide options—specifically the Senate payroll excise (Senate Bill 5796) and the House B&O surcharge (House Bill 2045)—could disproportionately affect Bellevue because the city hosts a high concentration of large employers. Staff said a statewide payroll excise would apply to Bellevue as an employer and could cost the city modestly as an employer (preliminary estimate: roughly $153,000 annually) while also risking businesses relocating or reducing local hiring. Staff emphasized the proposals were early and subject to revision.

Council members voiced consistent concerns about the payroll excise and the large-employer B&O surcharge, warning that either measure could discourage companies from expanding or remaining in Washington and could ripple into job losses, reductions in local philanthropy and weaker long‑term tax bases. Councilmember Dave Hamilton called the payroll excise “devastating” for Bellevue; Councilmember Conrad Lee flagged potential consequences for residents and small businesses if large employers left the state.

After discussion the council approved two separate directives: one directing staff to prepare a city letter opposing the statewide payroll excise and the large-employer B&O surcharge, and a second directive opposing the Senate/House property-tax lid changes as they were presented in the briefs. City staff said they will draft a letter for the mayor’s signature to be shared with Bellevue’s state legislators and indicated staff will also pursue a joint letter with neighboring cities.

What staff recommended and the council asked for: Staff recommended (1) sending a city-level letter to Bellevue’s legislators emphasizing concerns about taxes that target large employers and may have destabilizing economic effects, and (2) continuing negotiations on property-tax relief with attention to senior and disabled exemptions and to appropriate caps. Councilmembers asked staff to use stronger language where council consensus existed (staff revised draft language from "may" to "will" discourage large employers).

Next steps: City staff will draft the mayoral letter opposing a statewide payroll excise and B&O surcharge and will prepare additional communications on the property-tax proposal consistent with council direction. Staff also signaled intent to coordinate with other jurisdictions on a joint letter.