Legislature approves streamlined sales tax mitigation funds for Kent

Legislators have approved restoring streamlined sales tax mitigation funds to the city of Kent and six other cities.

The Senate voted 44-6 on April 6 to approve House Bill 1521. The House passed the bill 97-0 in March. The bill, which supports warehousing and manufacturing job centers in Kent, Auburn, Fife, Issaquah, Sumner, Tukwila and Woodinville, now goes to Gov. Jay Inslee to sign.

If signed by Inslee, Kent will receive about $12.1 million over the next five years, according to city communications manager Bailey Stober.

“That is big news for the city of Kent,” Mayor Dana Ralph said at the April 6 City Council meeting when she announced the Senate had passed the bill. “We are really grateful for all our representatives and senators that helped this make it over the finish line and the ton of work they did on our behalf. I’m really excited that streamlined sales tax will continue.”

Ralph traveled to Olympia to testify in favor of the measure. City leaders set restoring the streamlined sales tax mitigation funds as their second highest priority this legislative session behind social justice reform. The city has received mitigation funds each year after the Legislature in 2007 changed the state to a destination-based sales tax, taking away lots of tax revenue Kent had received from the many warehouses in the city.

Under the approved bill, the amount of funds Kent receives will decrease by 20% each year through 2026, Stober said.

“Streamlined sales tax revenue will be used to fund one-time capital projects through 2026,” Stober said in an April 7 email about how the funds will be spent. “Since the state fiscal year begins halfway through our fiscal/calendar year, the first year (2021) we will receive half of the annual amount or about $1.8 million.”

An Inslee spokesperson said in an email on Monday, April 12 that the governor’s office had not yet received the bill.

“If it’s not governor-request legislation, our process is to abstain from comment until the bill has been transmitted to our office and staff have had time to give it a final review before recommending the governor sign,” said Mike Faulk, deputy communications director for Inslee.

At the beginning of COVID-19 in March 2020, Inslee vetoed the measure along with most legislation that added new spending in anticipation of decreased tax revenue.

HB 1521, sponsored by State Rep. Debra Entenman, D-Kent, and approved by the House on March 3, is virtually identical to HB 1948, which passed the Legislature in 2020 to approve the funds. The bill creates a warehousing and manufacturing job centers account to provide mitigation funds for communities who received substantial mitigation funds from the closed streamlined sales tax mitigation account.