HOUSE BILL REPORT
HB 1650
As Reported by House Committee On:
Finance
Title: An act relating to the addition of airport capital projects as an allowable use of local real estate excise tax revenues.
Brief Description: Concerning the addition of airport capital projects as an allowable use of local real estate excise tax revenues.
Sponsors: Representatives Dent, Fey, Barkis, Bronoske, Eslick, Zahn and Graham.
Brief History:
Committee Activity:
Finance: 2/13/25, 2/26/25 [DPS].
Brief Summary of Substitute Bill
  • Adds small airports to the definition of capital projects that are allowable uses of local real estate excise tax revenue.
HOUSE COMMITTEE ON FINANCE
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass.Signed by 15 members:Representatives Berg, Chair; Street, Vice Chair; Orcutt, Ranking Minority Member; Jacobsen, Assistant Ranking Minority Member; Abell, Chase, Mena, Parshley, Penner, Ramel, Santos, Scott, Springer, Walen and Wylie.
Staff: Kristina King (786-7190).
Background:

Real Estate Excise Tax.

Real estate excise tax (REET) applies to real estate transactions, including the sale of property and the transfer of controlling interest in property.  The rate applies to the selling price and is usually paid by the seller.  The REET is due and payable to the county treasurer in which the property is located on the date of the sale, regardless of the date of recording, except in a controlling interest transfer.  The REET is imposed at the following rates:

  • 1.1 percent if the selling price is equal to or less than $525,000;
  • 1.28 percent on the portion of the selling price that is greater than $525,000 but equal to or less than $1.525 million;
  • 2.75 percent on the portion of the selling price that is greater than $1.525 million but equal to or less than $3.025 million; and
  • 3 percent on the portion of the selling price that is greater than $3.025 million.

 

Local governments are authorized to impose a local REET in addition to the state rate.  The two main local REET options are:

  • REET 1:  A local government may levy a 0.25 percent REET.  The revenues from REET 1 are primarily to be used for capital projects and limited maintenance.
  • REET 2:  An additional 0.25 percent REET may be imposed by cities and counties that are fully planning under the Growth Management Act.

 

Local REET capital projects are local government public works projects for planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of:

  • streets, roads, highways, and sidewalks;
  • street and road lighting systems and traffic signals;
  • bridges, domestic water systems, storm and sanitary sewer systems;
  • judicial, parks and recreational, administrative, law enforcement, and fire protection facilities;
  • trails and libraries;
  • certain housing projects;
  • river flood control projects and certain other waterway flood control projects; and
  • technology infrastructure that is integral to the capital project.

 

Additionally, there are several other local REET options for local governments:

  • A local government not levying the optional 0.5 percent sales tax under RCW 82.14.030 may levy an additional local REET of up to 0.5 percent.
  • A county may impose an additional local REET of up to 1 percent for the acquisition and maintenance of conservation areas.
  • A county that imposed the full 1 percent for conservation areas prior to January 1, 2003, may also impose a local REET of up to 0.5 percent for affordable housing. 
Summary of Substitute Bill:

Airports included in the most recent Washington aviation system plan published by the Washington Department of Transportation Aviation Division and airports included in the National Plan of Integrated Airport Systems with less than 10,000 annual enplanements as determined by the most recent enplanement data published by the Federal Aviation Administration are included under the definition of capital projects for which local REET 1 and 2 revenues can be used.  These airport capital projects do not include the installation or improvement of fuel systems for the distribution of leaded fuel. 
Substitute Bill Compared to Original Bill:

The substitute bill:

  • delineates two categories of small airports that are included under the definition of capital projects for which local REET 1 and 2 revenues can be used; and 
  • specifies that the airport capital projects do not include the installation or improvement of fuel systems for the distribution of leaded fuel. 
Appropriation: None.
Fiscal Note: Available.
Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:

(In support) This bill adds two types of small airports to allowable uses of local REET revenue.  This doesn't force any counties to use the money for airports, but simply allows them to spend money on the airports if they would like to.  Local governments operating small airports find it difficult to secure funding for the upkeep of their airports even as they are becoming increasingly busy due to business growth across the state.  The Tacoma Narrows Airport is estimated to contribute $160 million annually to Washington's economy.  Regional airports are used for children's aviation education, for business travel, and are hubs for emergency services and disaster response, including medivac operations that save people's lives.  These airports are also used to train aviation students, but many students leave the state due to the inability of regional airports to provide suitable training environments.  There are many deferred maintenance and staffing issues at regional airports that need to be addressed to meet the current needs of regional airports.  When local governments have problems securing matching funding for Federal Aviation Administration grants, they lose out on many important funding sources for upkeep and improvements.  This bill will empower local governments to preserve economically important airports across the state.  This bill does not raise taxes.  It is a practical solution that allows local governments flexibility to invest in local infrastructure. 

 

(Opposed) None.
Persons Testifying:

Representative Tom Dent, prime sponsor; Robyn Denson, Pierce County Council; Carl Hicks, Tacoma Narrows Airport Advisory Commision (Commision Chair); Kelsey Parke, Peninsula School District 401; Alexander Denny, Testifying on behalf for first responders use of the airport.; Dave Morell, Pierce County Councilmember; and Colleen Meiners, City of Moses Lake.
Persons Signed In To Testify But Not Testifying: None.