The bill creates a new section in chapter 82.14 RCW authorizing counties and cities to impose an additional local sales and use tax of up to 1 percent to offset costs and revenue losses from substantially reducing or eliminating certain local impact fees. The tax is collected from persons taxable under chapters 82.08 and 82.12 RCW when a taxable event occurs within the imposing jurisdiction, is additional to other taxes, and need not be credited by a county for a city tax imposed within the county. The authority to impose the tax is conditional: a county or city must first adopt by ordinance or resolution a “substantial reduction” or elimination of impact fees authorized under RCW 82.02.050 through 82.02.110, with “substantial reduction” defined as reducing impact fee collections on development activity by 50 percent or more. Taxes collected must be expended for the same types of public facilities for which the reduced or eliminated impact fees were originally imposed, specifically earmarked and retained for each facility type described in RCW 82.02.070. The governing body must set a tax rate commensurate with anticipated facility costs less anticipated impact fee collections and must review the rate every three years. A local public vote is required before implementation, approved by a simple majority of those voting. The bill is a procedural and fiscal change creating a new local tax authority and funding and earmarking rules; it does not change criminal penalties. Important details are not included in the provided text: no effective date or implementation timeline is stated here, and administrative procedures, enforcement mechanisms, and more detailed revenue distribution rules beyond the earmarking requirement are not specified.

If enacted, counties and cities could cut development impact fees by at least half and then ask voters to approve an extra local sales and use tax (up to 1%) to replace the lost fee revenue. That tax would be charged to people and businesses already subject to Washington sales and use taxes on transactions inside the jurisdiction, must be earmarked for the same types of public facilities the impact fees would have paid for, and the local government would set the rate to match expected facility costs minus projected impact fee collections and review the rate every three years. The practical effect would likely shift more of the cost for new public facilities from developers (through impact fees) to purchasers and businesses (through higher sales/use tax); cities and counties would gain a new revenue option but must get voter approval by a simple majority and follow the earmarking requirement, and a county does not have to credit a city’s tax if both are imposed. Key details such as an effective date, specific fee schedule changes, and administrative or distribution procedures are not included in the extracted facts.