This bill amends existing law (RCW 82.08.020, 82.12.020, and 46.68.090) to change where certain retail sales and use tax revenues on motor vehicles are deposited and how motor vehicle fund receipts are distributed. Beginning July 1, 2025, retail sales tax collected on each new and used retail sale of a vehicle in Washington (including private-party sales and excluding retail car rentals taxed under RCW 82.08.020(2)) and use tax on the use of new and used vehicles must be deposited into the motor vehicle fund and may be used only for “highway purposes” as defined in RCW 46.68.130, with “preservation” explicitly included. The bill leaves the separate 5.9% additional tax on retail car rentals in place and directed to the multimodal transportation account, and preserves the existing 0.16% dedication of certain retail sales tax to the performance audits of government account. The act changes distribution and expenditure procedures for motor vehicle fund moneys: refunds of refundable fuel tax and specified administrative expenses of the state treasurer, state auditor, and department of licensing are to be paid first, then the remaining net tax amounts are distributed monthly under amended percentages. Under the amendments, 44.387% of the remaining net tax amount collected under RCW 82.38.030(1) is distributed to the motor vehicle fund for state highway purposes and 3.2609% is deposited to a new special category C account for high-cost projects; moneys in that special category C account may be used to pay debt service on bonds financing those projects. The bill also specifies multiple percentage distributions to accounts and jurisdictions (for example, Puget Sound ferry operations 2.3283%, Puget Sound capital construction 2.3726%, transportation improvement account 7.5597% plus an additional 5.6739% for RCW 47.26.086, cities and towns 10.6961%, counties 19.2287%, county arterial preservation account 1.9565%, rural arterial trust account 2.5363%, and various allocations among transportation 2003, transportation partnership, and connecting Washington accounts) and creates a county arterial preservation account with distribution and use rules administered by the county road administration board. The bill adds or confirms definitions by reference (for example, “vehicle” by RCW 46.04.670 and “motor vehicle” by RCW 46.04.320) and lists exclusions (farm tractors/vehicles, off-road vehicles, nonhighway vehicles, bicycles, snowmobiles, except limited exceptions noted). It sets priority criteria for certain special category C projects (including accident experience, fatal accident experience, capacity and continuity of the highway network) and requires the county road administration board to adopt rules and a pavement management requirement for county arterial preservation funds. The act declares an emergency and takes effect July 1, 2025. Some parts of the bill text and certain distribution subsections and criteria were not included in the provided extracts, so complete subsection language and any additional changes not shown here are uncertain.

If enacted, the state will start directing the retail sales and use tax on every new and used vehicle sale or use in Washington into the motor vehicle fund beginning July 1, 2025, and those revenues can only be spent on highway purposes, including preservation. Practically that channels a steady, dedicated stream of money to statewide and local highway programs while keeping the separate rental car tax in the multimodal account; the law also requires that fuel‑tax–related receipts first cover refundable fuel tax claims and administrative costs for the treasurer, auditor, and Department of Licensing before monthly distributions are made. A small portion (0.16%) continues to fund performance audits, and a new 3.2609% carve‑out can be used to pay debt service on bonds for very large “special category C” projects. The most affected parties are state and local transportation recipients and administrators: the Department of Transportation, Puget Sound ferry and capital accounts, the transportation improvement and partnership accounts, cities and towns (about 10.6961%), counties (about 19.2287%), and new county arterial preservation and rural arterial trust accounts (with specified percentage shares) will receive fixed shares of the redistributed revenue, which is likely to change their expected funding levels and direct more money toward preservation and bond‑financed projects. County road administration board responsibilities increase because it must allocate county arterial preservation funds by paved arterial lane miles, adopt rules, and require pavement management systems. Some allocation details and the full priority criteria for special category C projects are not included in the provided facts, so the exact final distribution mechanics and project eligibility rules remain uncertain.