Property Tax—Limit Factor. All real and personal property is subject to a tax each year based on the highest and best use, unless a specific exemption is provided by law. The annual growth of all regular property tax levy revenue is limited as follows:
For purposes of the revenue growth limit factor, inflation means the percentage change in the implicit price deflator (IPD) for personal consumption expenditures for the United States as published for the most recent 12-month period by the United States Department of Commerce by September 25th of the year before the taxes are payable. Taxing districts other than the state may adopt a resolution of substantial need to levy up to 101 percent if the IPD is less than 1 percent.
The value of the following add-ons are in addition to the limit factor:
The state collects two regular property tax levies. The revenue growth limit applies to both state levies and all regular local property tax levies. Excess levies are not subject to this limit and require voter approval.
Local School Enrichment Levies. Local enrichment levies can be approved by voters within a school district as a property tax for enrichment beyond the state's statutory program of basic education. Enrichment levy collections are capped for school districts at the lesser of $2.50 per $1,000 of assessed property value in the district, or $2,500 per pupil adjusted for inflation—$3,149.69 in 2024—for school districts with less than 40,000 students. School districts with 40,000 or more students, subject to a per-pupil limit, are allowed to collect up to $3,000 per pupil adjusted for inflation—$3,779.63 in 2024. The inflation measure used is the consumer price index for all urban consumers, Seattle area (Seattle CPI).
Local Effort Assistance. The state provides additional Local Effort Assistance (LEA) funding to school districts that would not generate an enrichment levy of at least $1,550 per student based on prior year enrollment when levying at a rate of $1.50 per $1,000 of assessed value. An eligible school district's maximum LEA is the difference between the district's per-pupil levy amount based on a rate of $1.50 per $1,000 of assessed value and $1,550 per student multiplied by the district's prior year enrollment. The $1,550 per student limit, also known as the state LEA threshold, is adjusted annually by the Seattle CPI.
Special Education Excess Cost Multipliers and Enrollment. The state allocates funding for a program of special education (SPED) for students with disabilities using an excess cost formula. For eligible students in kindergarten through age 21 (K-21), the formula multiplies a school district's base allocation by an excess cost multiplier up to an enrollment limit of 16 percent of a school district's full-time student enrollment. A multiplier of 1.12 is provided for SPED students that spend at least 80 percent of the school day in a general education setting. For students in a general education setting less than 80 percent of the time, districts receive a 1.06 multiplier.
Beyond allocations from excess cost multipliers, the Office of the Superintendent of Public Instruction (OSPI) may provide safety net funding if a school district has one or more high-need individual students or is in a community impacted by large numbers of families with children eligible for SPED, such as communities with group homes, regional hospitals, or military bases.
General Apportionment Funding Used for Special Education. The K-21 students receiving SPED services generate funding through both general apportionment, also referred to as the basic education allocation (BEA), and excess cost formulas. OSPI is required to develop an allocation and cost accounting methodology to ensure general apportionment funding is prorated and allocated to a student's SPED program and accounted for before calculating SPED excess cost when services are provided outside of the general education setting. A portion of the BEA amount based on the least restrictive environment (LRE) percentage of time a student is outside of a general education setting is redirected from general apportionment and dedicated to SPED purposes by OSPI.
For purposes of the revenue growth limit for state and local property taxes, the limit factor of 101 percent is replaced with a limit factor of 100 percent plus population change and inflation, with a cap of 103 percent.
Inflation is defined as the annual percentage increase in the consumer price index for all urban consumers in the western region for all items as provided for the most recent 12-month period by the United States Department of Labor by July 25th of the year before the taxes are payable.
“Population change” means the percent increase in the population of a taxing district between the two most recent years provided in the official population estimates published by the Office of Financial Management in April of the year before the taxes are payable. If population decreases, the population change is zero.
By September 1st of each year, the Department of Revenue (DOR) must provide the limit factors to county assessors. By October 1st of each year, county assessors must determine how the limit factor applies to each taxing district and notify each taxing district.
The ability for taxing districts with regular levies and a substantial need to adopt a resolution to use the growth factor of 101 percent instead of the IPD if the IPD is less than 1 percent is repealed.
The changes are applicable for taxes levied for collection in 2026 and thereafter.
Enrichment Levies. Beginning in the 2026 calendar year (CY), a school district's maximum per-pupil limit for enrichment levy purposes is increased as follows:
Local Effort Assistance. Beginning in CY 2026, the state LEA threshold is increased as follows:
Special Education. Beginning in the 2028-29 school year:
If a school district's SPED expenditures exceed state funding provided by excess cost formulas, the SPED safety net, and redirected general apportionment revenue, the remaining portion of the BEA amount for SPED students must be used prior to other funding sources. Language specifies that the methodology does not prohibit other funding and state allocations from being used for SPED programs.
Improving Equity in Kindergarten Through Grade 12 Funding. The Superintendent of Public Instruction (SPI) is required to convene a kindergarten through grade 12 (K-12) funding equity workgroup to analyze options for revising K-12 funding formulas to be responsive to students' needs, including economic, demographic, and geographic differences. The SPI is authorized to contract with higher education and public, nonpartisan research entities to support the workgroup's analysis. The SPI may determine the composition and meeting frequency of the workgroup, provided that it includes representation from education and community partners that are demographically and geographically diverse and groups representing educators, school and district administrators, labor unions, families, students, community partners who support groups disproportionately impacted by inequities, and legislators.
The workgroup's analysis must address:
The SPI must use the workgroup's analysis to consider options for revising school funding formulas. By November 1, 2025, and annually thereafter, the SPI must report progress and any proposed options to the fiscal and education committees of the Legislature, which must include options that address:
Any option or group of options proposed by the SPI must not exceed the amounts provided by the additional state property tax revenues generated under the bill, when combined with the other K-12 funding increases in the bill for SPED and LEA. DOR must provide relevant data and analysis to the SPI to support the requirement.
The statute establishing the workgroup expires December 1, 2027.
PRO: Many school districts across the state are in financial crisis, with looming uncertainty surrounding federal funding. Lifting the levy lid will help some districts, and Levy Effort Assistance (LEA) is a critical equity tool for districts that don't have levy capacity. Bellevue School district is facing a $20 million budget shortfall. School districts like Yakima are facing a severe budget crisis, and matching funds through the LEA are needed as matching funds for local levies. The changes in the bill may not help all districts, so funding basic education is important. The adjustments in the bill creates a more reasonable funding stream to meet students needs over the long term. Cities provide critical services like police and fire and the costs to provide services exceeds the 1 percent limit. The modest increase in the bill is a more realistic option that allows local officials to make decisions that work best for the community. The outdated 1 percent property tax cap has created a structural deficit making it difficult to provide services. The change in the bill does not triple property taxes. Local leaders need the flexibility to balance the needs for their communities. Counties are facing structural budget deficits and need revenue growth that fits population growth and service needs. Counties have been looking for additional revenue options for years, and they are primary implementation providers of services. Low income Washingtonians rely on robust publicly funded schools and child care.
CON: This bill allows tripling property tax increases every year by all property tax districts including the state, counties, cities, and fire districts. Sixty percent of voters and 90 percent of legislators supported the 1 percent limit. This is a bad time for taxes to increase threefold. There is a theme that we need more housing, yet this bill increases costs. Property owners on fixed incomes, especially seniors, can't afford any more taxes.
Homeownership is hard to attain, and increased costs will tax people out of their homes. Increasing taxes does not result in better educational outcomes.
The impacts of the bill will increase costs for contractors and builders. Washington ranks 45th in business tax climate and 46th in housing affordability. Businesses pay nearly 50 percent of all taxes, much higher than our neighboring states. Housing costs are a large part of a family budget, and this increase will hit homeowners and renters. Increased property taxes will increase multifamily housing costs and impact rents and supply. Policies that incentivize housing should be considered. Increased costs will discourage new investments in housing supply.
OTHER: Some districts don't receive any benefits under the bill without levying local taxes. There are alternative LEA proposals being considered. MSOC funding should be increased. Please reconsider shifting funding between basic education and special education, rather increase MSOC and Special Education funding. Removing the cap on special education does not increase funding for the majority of school districts.
PRO: Clifford Traisman, Seattle, Highline, Northshore and Bellevue Public School Districts; Dr. Kelly Aramaki, Superintendent, Bellevue School District; Amy Ockerlander, Mayor, City of Duvall & AWC President; Fred Brink, Mayor Pro Tem, West Richland & AWC Vice President; Candice Bock, Association of Washington Cities; Simone Boe, Washington Education Association; Frances Guerrero, Yakima Education Association/WEA; Adam Aguilera, Evergreen Education Association/WEA; Regen Lorden, Washington Education Association; Megan Dunn, Snohomish County Council; Carolina Mejia, Thurston County Commissioner; Molly Gallagher, Washington Statewide Poverty Action Network; Eli Taylor Goss, WA State Budget and Policy Center; Dr. Trevor Greene, Yakima School District; Mark Ozias, Clallam County Board of Commissioners.