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Sales-tax gains drive most of the forecast bump; staff attributes much of it to recent legislative reclassification
Summary
Forecast office staff told the council that sales-tax collections account for nearly $20 million of the 2026 general-fund upward revision, largely due to a reclassification enacted in recent legislation (referred to in the presentation as "ESSB 58 14") and a new 0.1% public-safety sales tax.
Jan Duras said that changes in state legislation and a new city public-safety sales tax account for the majority of the forecast's upward revision to 2026 revenues. "Again, the revenue collection to date has significantly benefited from the ESSB 58 14 which reclassified some activities from service to retail and essentially expanding the tax base, for the sales tax," Duras said during the presentation.
Staff quantified the effect: roughly $19.9 million of the $24.5 million 2026 general-fund increase comes from higher sales-tax collections, and an additional ~ $4 million contribution was attributed to the new 0.1% public-safety sales tax. The presentation noted that legislative reclassification has a mechanical, asymmetric effect: some activity moved from business-and-occupation tax to sales tax, reducing B&O collections while expanding sales-tax receipts.
