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Bothell hears state legislative wrap-up as council weighs local fiscal impacts
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Summary
State lobbyist Shelley Holder told the Bothell City Council that the 2026 Legislature adopted three supplemental budgets and passed measures likely to affect local revenues, including a new income tax on millionaires that could reduce sales-tax receipts; the city will work with its delegation to mitigate local impacts.
State lobbyist Shelley Holder briefed the Bothell City Council on the outcomes of the 2026 Washington legislative session, telling council members the short, 60-day session passed three supplemental budgets and roughly 268 bills with ties to city government.
Holder said the supplemental operating budget increased spending by about $2.4 billion and the transportation and capital supplements added roughly $1.2 billion and $889 million respectively, with much of the transportation funding focused on maintenance rather than new local projects. "The supplemental operating budget increases spending by 2,400,000,000," she said, noting the state used a mix of the budget stabilization account and transfers to balance the package.
Holder reviewed items of direct interest to Bothell: the legislature awarded $1.5 million to the Woodcrest utility-improvement project (a prior city request), the capital budget increased the Housing Trust Fund by $123 million this session (on top of prior investments), and the city's bike-plan request was reduced to a single prioritized design request after legislative feedback.
On housing policy, Holder described two bills the city tracked: a discussion-starting bill on factory-built housing plans and model local ordinances (not passed this year) and House Bill 2304, which expanded condominium liability and coverage to buildings with up to 12 units and four stories.
Holder also flagged several public-safety and fiscal items. She noted Senate Bill 6002, which governs allowable uses of automated license-plate reader (ALPR) cameras and sets retention limits (21 days except in specified circumstances). She described Senate Bill 6346, the so-called "millionaire's tax," which imposes a tax on incomes over $1 million and is paired in legislative documents with an intent to offset local revenue losses through a $200 million local government fiscal health account over a multi-year outlook. "That monumental tax policy change does have the effect of reducing local sales tax revenue," Holder said, adding that the provision appears in the budget outlook and that legal challenges and an initiative process are likely.
Council members asked how the $200 million would be distributed to cities and counties and whether Bothell should seek different carve-outs. Holder said distribution details will be part of interim work by local-government champions and committee members and that the tax does not go into effect until 2028, giving cities time to plan.
Why it matters: the policy and budget changes the Legislature adopted this year could reduce some local revenue streams and change the state's fiscal relationship with cities. Holder urged continued engagement with the delegation and recommended the city begin planning now to implement and track policy changes and funding opportunities.
What's next: Holder and city staff said they will return with more detailed technical memoranda and analyses to quantify Bothell's exposure and to propose follow-up steps the council may want to take with its state delegation.
