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Bill would let counties impose up to 3% public utility tax; supporters say counties need same tool cities already have
Summary
House Bill 1702 would authorize counties to impose a public-utility tax of up to 3% on gross utility income within county borders, allow some exemptions for business customers and credit city taxes against county levies; supporters said counties need revenue tools while utilities and low-income advocates warned the tax is regressive.
House Finance heard House Bill 1702 Feb. 21, which would authorize county legislative authorities to impose a county public utility tax of up to 3% of gross utility income derived from customers within the county. The tax would apply to electric, gas, telephone, water, sewer, solid waste and cable services utilities; utility bills would be required to separately state the county public-utility tax line.
Proponents said counties require more diversified revenue sources. Jill Johnson, an Island County commissioner, told the committee local cost pressures — insurance, technology, law enforcement contracts and staff costs — have forced counties to use fund balances to balance budgets and that counties need new authorities to fulfill statutory responsibilities. Paul Jewell of the Washington State Association of Counties said the bill simply asks counties for parity with cities, which already may levy utility taxes at higher rates.
Public-utility providers and associations registered opposition, warning that a county utility tax would be regressive and would increase costs for low-income households. Bill Clark of the Washington PUD Association and Scott Hazelgrove of the Washington Association of Sewer and Water Districts said public, locally owned utilities operate essential services and imposing additional utility taxes would raise rates for customers and increase pressure on low-income assistance programs. The wireless and telecom sector warned the state already ranks high for telecom taxes and another utility tax would worsen the burden on telephone and broadband services.
Proponents argued counties face fiscal constraints tied to statutory responsibilities and property-tax limitations. The bill allows counties to authorize exemptions for business customers and to credit taxes imposed by cities for the same taxable events.
Staff said the statewide revenue potential is indeterminate but estimated approximately $5 million per year if all counties imposed the tax; details would depend on county choices and exemptions. No final action was taken at the hearing.
The committee received testimony from multiple county commissioners and local-government associations supporting the option and from utilities associations opposing the measure on equity and affordability grounds.
