HomeMy WebLinkAboutWORKSHOP re Options for local government re HB 2442 choices
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JEFFERSON COUNTY
BOARD OF COUNTY COMMISSIONERS
AGENDA REQUEST
TO: Board of County Commissioners
Josh Peters, County Administrator
FROM: Jeff Chapman, Assessor
Lauralee Kiesel, Assessor’s Levy Technician
Stacie Prada, Treasurer
Apple Martine, Public Health Director
DATE: 10/19/2026
SUBJECT: HB 2442 Options for Local Government
STATEMENT OF ISSUE:
House Bill (HB) 2442, passed in the 2026 Legislative Session, grants authority and allows local
governments to explore new revenue options, such as expanded property or excise taxes, to help keep pace
with the cost of providing services. The Board held a workshop on HB 2442 tools on 4/27/2026. This is a
follow-up workshop to further explore pending decisions around tax levy rates and sales tax options.
Summary of HB 2442 tools and options for local governments:
• Changed how county legislative authorities (CLA) may fund Veterans’ Assistance (VA) and
Mental Health/Developmental Disabilities (MH/DD) programs through independent levies.
o The focus of this workshop is on these tax levy choices, as there are pending timelines for
local government action.
o For each program, a county may choose to:
1. Keep the funding within the county regular levy as an earmarked amount for that
program; or
2. Levy the tax separately as an independent property tax levy.
o Separating these levies does not reduce the county's regular general levy capacity. Instead,
it changes how the taxes are accounted for and how the increased funding requirements
affect the other portions of the county's regular general levy.
o See the attached guidance from the State Department of Revenue (DOR) for detail and
Assessor’s calculations for taxation and revenue impacts associated with different choices.
• Levy Lid Lifts: Extends the maximum duration of a multi-year permanent property tax levy lid lift
from 6 to 10 years.
• Children and Family Services: Allows councilmanic adoption of a local sales and use tax of 0.1%
for children and family services, focused on early intervention, mental health, and well-being.
o Note: Current statute contains a scrivener’s error showing the tax as 0.01%. Counties have
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been informed that the legislature intends to fix this error in the 2027 legislative session.)
• Housing and Public Health:
o Expands the use of existing 0.1% affordable housing and related services sales and use
taxes and state-share affordable and supportive housing sales tax to include additional
affordable housing and mental health services.
o Allows counties to either levy a separate public health clinic levy (5 cents per $1,000 of
assessed value) in addition to their county's general property tax levy or allocate a portion
of their county's general property tax levy to public health clinics.
• Real Estate Excise Tax (REET): Expands the use of REET for capital projects, including housing
and homeless services.
ANALYSIS:
Jefferson County faces stark budget choices with potential substantial impact to services our communities
rely on. The set of tools in HB 2442 have complex implications for Jefferson County and must be considered
carefully. For decades, the arbitrary 1% cap on property tax revenue growth has proven to be a structural
problem that hinders the county’s ability to keep up with basic costs. While inflation has been 2.5-5+% in
the past few years, one of our main sources of revenue has been artificially suppressed at 1% (plus new
construction). We are being asked to run a 2027 county, with rising public defense and risk management
costs to name just two, on a 2001 revenue model, and the math simply does not work without new tools. HB
2442 was an effort by our state legislature to help.
For additional information, see that attached guidance from DOR, as well as the following webpages:
• Legislature bill page for HB 2442:
https://app.leg.wa.gov/billsummary?Year=2025&BillNumber=2442
• MRSC article entitled, “Significant Changes Coming to Levy Lid Lifts in 2026”:
https://mrsc.org/stay-informed/mrsc-insight/april-2026/levy-lid-lift-changes
FISCAL IMPACT:
TBD.
RECOMMENDATION:
Review, discuss, and consider pursuing one or more of these new tools. For the VH and MH/DD levies,
decide whether to keep the funding within the county regular levy as an earmarked amount for that program
or levy the tax separately as an independent property tax levy. Refer to the attached Assessor’s calculations
for taxation and revenue impacts associated with different choices.
REVIEWED BY:
______________________________________ ________________
Josh Peters, County Administrator Date
10/15/2026
Guidance for separation of Mental Health and
Developmental Disability, Veterans’ Assistance,
and County Public Health Clinic levies.
To legally separate these levies from the County Regular levy, the county legislative
authority (CLA) must exercise its explicit choice to impose them as standalone,
independent levies rather than continuing them as earmarked funds. Below are the steps
necessary for the CLA to execute this separation.
1. Legal Authority:
Engrossed Substitute House Bill 2442 authorizes the CLA to choose how these levies are
structured. For each, the CLA must take formal action to separate the levy from the County
Regular property tax under RCW 84.52.043(1)(b). For each levy, the specific statutory
authority should be cited.
County Public Health Clinic Property Tax: RCW 84.52.115(1)(a) authorizes the
CLA to impose the levy as a separate levy, independent of the regular property tax
levy authorized in 84.52.043(1)(b).
Developmental Disabilities or Mental Health Services Levy: RCW
71.20.110(1)(b)(i) allows the CLA to impose the levy as a separate levy, independent
of the regular property tax levy authorized in RCW 84.52.043(1)(b).
Veterans' Assistance Property Tax Levy: RCW 73.08.080(1)(b)(i) allows the CLA to
impose the levy as a separate levy, independent of the regular property tax levy
authorized in RCW 84.52.043(1)(b).
2. Steps to Separate:
Step 1: Adopt Formally Worded Resolutions or Ordinances
The county legislative authority must pass distinct resolutions or ordinances and explicitly
cite the statutory intent to separate for the tax year (i.e. 2027 TY).
Drafting Requirements: State that the CLA is exercising its authority under the
above RCWs as amended by ESHB 2442 to establish these as separate,
independent regular property tax levies. These resolutions or ordinances must
include specific language and which levy the CLA is formally separating from the
general fund. The statutory authority to do so, as outlined above, should also be
listed.
Step 2: Instruct the County Assessor for Tax Roll Segregation
The county legislative authority must oƯicially certify each separated levy to the County
Assessor.
Tax Roll Instruction: Instruct the Assessor to extend these levies onto the tax rolls
as distinct line items.
Certification of levies: For each separated levy, the CLA must certify an amount to
the Assessor in order for each levy to be calculated within statutory limits.
Prorationing Protection: Certification as an independent levy, means it is not
subject to the $5.90 aggregate limit, but is subject to the constitutional 1% limit.
Step 3: Separately track Levy Limits and Statutory maximums
Upon separation of any of the above levies, the county assessor must track and limit them
according to their individual statutory limits:
Public Health Clinic Levy: Statutory maximum of 5 cents per $1,000 of assessed
value.
Developmental Disabilities/Mental Health Levy: Set at exactly 2.5 cents per
$1,000 of assessed value.
Veterans' Assistance Levy: Set between a statutory minimum of 1.125 cents and a
maximum of 27 cents per $1,000 of assessed value unless authorized to reduce by
the exception listed in RCW 73.08.080(3).
Step 4: Establish Segregated Revenue Funds
The county treasurer must place the proceeds from these separated levies into dedicated,
restricted accounts:
Public health clinic levies must solely fund the operations, maintenance, and
capital expenses of public health clinics.
Veterans' levies must flow directly into the veterans' assistance fund.
Mental health/disability levies must be restricted to community services or
transferred to DSHS for federal matching funds.
Washington State law ESHB 2442 changed how county legislative authorities (CLA) may fund
Veterans’ Assistance (VA) and Mental Health/Developmental Disabilities (MH/DD) programs
through independent levies.
What Changed:
For each program, a county may choose to:
1. Keep the funding within the County Regular levy as an earmarked amount for that program;
or
2. Levy the tax separately as an independent property tax levy.
Separating these levies does not reduce the county's regular general levy capacity. Instead, it
changes how the taxes are accounted for and how the increased funding requirements affect the
other portions of the county's regular general levy.
Why this Matters
In many counties, the amounts historically levied for VA and MH/DD have been below the new
statutory minimum rates.
As a result, counties that continue to fund these programs as earmarked amounts within the
County Regular levy may need to redirect money what would otherwise be allocated to the Current
Expense or for other county purposes.
A county that instead establishes VA and/or MH/DD as separate levies can raise the required
amounts separately which allows the county to maintain the Current Expense and other funds
without impact.
Because ESHB 2442 requires counties to fund each levy at the required minimums, some counties
may face unanticipated budget impacts. If these continue as earmarked fund programs within the
regular general levy, failure to meet the amounts generated by statutory minimums may require
shifting funds from other services.
The following examples illustrate how the two approaches can affect county revenues. The
examples use actual 2026 collection amounts and assumptions for 2027.
Assumptions used in the Examples:
Assessed values increased by 2%.
The maximum amount the county could levy increased by 1%, plus applicable add-ons for
a total increase of 1.5%.
The VA and MH/DD were levied at the statutory minimum in 2027.
The maximum regular county levy was levied in 2027.
Bolded fund names indicate levies that are being collected separately from the County
Regular levy.
County A:
In 2026, County A included both VA and MH/DD as earmarked funds within its County Regular levy.
The amounts raised for each were well below the statutory minimums.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total $0.9191640935 $9,394,715.38
Current Expense $0.9034619479 $9,234,224.79
Veterans’ Assistance $0.0052777810 $53,943.85
MH/DD $0.0104243646 $106,546.74
For 2027, County A has two options.
Option 1: Keep VA and MH/DD within the County Regular levy as earmarked funds.
Under this option, the county must increase the earmarked amounts for VA and MH/DD to generate
what would be raised by the statutory minimum rates.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total $0.9146583871 $9,535,636
Current Expense $0.878408387 $9,157,717
Veterans’ Assistance $0.0112500000 $117,285
MH/DD $0.0250000000 $260,633
The total amount collected through the County Regular levy increased by approximately $200
thousand. However, because more of that levy must now be allocated to VA and MH/DD, the
amount available for Current Expense is decreased by just under $100 thousand.
In other words, the county is collecting more through the regular levy overall, but a larger portion of
that revenue must go to VA and MH/DD.
Option 2: Separate the VA and MH/DD levies
Under this option, VA and MH/DD are collected as separate levies. The required amounts are the
same, but they are no longer earmarked within the County Regular levy. By separating these levies,
County A can use the full regular county levy rather than earmarking amounts necessary to meet
the statutory minimums for VA and MH/DD.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total $0.9146583871 $9,535,636
Current Expense $0.9146583871 $9,535,636
Veterans’ Assistance $0.0112500000 $117,285
MH/DD $0.0250000000 $260,633
Total Collected $9,913,555
County B
In 2026, the county levied more than the minimum required for VA, but the MH/DD rate was slightly
below the statutory minimum.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total 0.919335561048 $16,700,000
Current Expense 0.875980191440 $15,912,437
Veterans’ Assistance 0.019269053159 $350,028
MH/DD 0.024086316449 $437,535
For 2027, the county is deciding between keeping both levies within the County Regular or
separating only the VA levy.
Option 1: Keep both VA and MH/DD within the County Regular levy
Because County B previously earmarked a combined amount to VA and MH/DD that was above the
new statutory minimum, bringing VA down to the minimum rate while increasing MH/DD to the
minimum rate results in more of the regular county levy being available for Current Expense.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total 0.914829014212 $16,950,500
Current Expense 0.878579014212 $16,278,838
Veterans’ Assistance 0.011250000000 $208,446
MH/DD 0.025000000000 $463,214
Option 2: Separate the VA levy
Under this option, County B separates VA from the regular county levy but continues to earmark
amounts for MH/DD within the regular levy.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total 0.914829014212 $16,950,500
Current Expense 0.889829014212 $16,487,285
MH/DD 0.025000000000 $463,214
Veterans’ Assistance 0.011250000000 $208,446
Total collected $17,158,946
Separating the VA levy allows County B to retain the amount that would otherwise have been
earmarked to VA within the regular county levy. Under this example, County B's Current Expense
increases by more than $500 thousand from 2026, while total taxes collected increase by just
under $450 thousand.
County C:
County C represents a larger county and includes another earmarked fund, Conservation Futures,
within the regular county levy. Like County A, County C is considering whether to continue funding
VA and MH/DD within the regular county levy or establish them as separate levies.
For this example, the amount allocated to Conservation Futures is assumed to increase by the
same 1.5% as the regular county levy in 2027.
In 2026, County C levied the following amounts for each fund within the regular county levy.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total 0.48298364752 $114,881,376.70
Current Expense 0.45364386734 $107,902,684.24
Veterans’ Assistance 0.00295104959 $701,929.85
MH/DD 0.00655789692 $1,559,846.24
Conservation Futures 0.01983083367 $4,716,916.37
In 2027, If County C’s CLA decides to continue funding these levies within the regular county levy.
Option 1: Keep VA and MH/DD within the regular county levy
Under this option, County C continues to earmark fund amounts for all three programs within the
regular county levy.
Fund name Rate/$1,000 AV Taxes collected
County regular levy total 0.4806160806 $116,604,597.35
Current Expense 0.4246324569 $103,022,139.00
Veterans’ Assistance 0.0112500000 $2,729,417.04
MH/DD 0.0250000000 $6,065,371.20
Conservation Futures 0.0197336237 $4,787,670.11
Because the historical VA and MH/DD rates were substantially below the statutory minimums, a
much larger portion of the regular county levy must be shifted to those programs in 2027.
As a result, although the total regular county levy increases by approximately $2 million, the
amount available for Current Expense decreases by approximately $5 million.
Option 2: Separate the VA and MH/DD levies
Under this option, County C establishes VA and MH/DD as separate levies while the Current
Expense and Conservation Futures remain earmarked funds within the regular county levy.
Fund name Rate/$1,000 AV Taxes collected
County Regular levy total 0.4806160806 $116,604,597.35
Current Expense 0.4608824569 $111,816,927.23
Conservation Futures 0.0197336237 $4,787,670.11
Veterans’ Assistance 0.0112500000 $2,729,417.04
MH/DD 0.0250000000 $6,065,371.20
Total collected $125,399,385.59
Separating VA and MH/DD allows County C to retain more of its regular county levy for Current
Expense and other funds that remain within the levy.
Under this example, the Current Expense portion of the regular county levy increases by
approximately $4 million from 2026, while the total regular county levy increases by only
approximately $2 million.
Conclusion
These examples illustrate how the new minimum funding requirements can aƯect county budgets,
particularly for counties that have historically levied VA and MH/DD at rates below the statutory
minimums.
When VA and MH/DD remain as earmarked amounts within the County Regular levy, increasing
those amounts to the statutory minimums reduces the portion of the levy available for Current
Expense and other county purposes.
When one or both programs are established as separate levies, the county can raise the required
amounts separately from the regular county levy. This can preserve more of the regular levy
capacity for Current Expense and other earmarked funds.
The financial impact will vary from county to county depending on the rates the county has
historically levied, the amount of its regular levy, assessed value changes, and the other funds
included within the regular county levy.
HB2442 JEFFERSON COUNTY OPTIONS
Veterans Assistance Levy MH/DD
Min Max Min Max
0.0125 0.27 0.025 0.025
Jefferson County
2026 AV Levy Rate Tax
Current Expense 10,220,933,831 0.9034619479 $9,234,224.79
Veterans 10,220,933,831 0.0052777810 $53,943.85
MH/DD 10,220,933,831 0.0104243646 $106,546.74
County Levy Total:10,220,933,831 0.9191640935 $9,394,715.38
Jefferson County Baseline change if HB2442 hadn't been enacted.
2027 AV Levy Rate Tax
Current Expense 10,301,434,139 0.9133635414 $9,408,954.37
Veterans 10,301,434,139 0.0053356132 $54,964.47
MH/DD 10,301,434,139 0.0105385914 $108,562.61
County Levy Total:10,301,434,139 0.9292377460 $9,572,481.44
Statutory Changes to Veterans and MH/DD levy amounts
2027 Pre-HB 2442 Under HB 2442
Statutorily
Required Minimum
Increase
Veterans Levy (minimum)$54,964.47 $115,891.13 $60,926.67
MH/DD Levy $108,562.61 $257,535.85 $148,973.25
OPTION A If Vet and MH/DD left in County Levy
2027 AV Min Levy Rate Tax CE Change
Current Expense 10,301,434,139 0.8929877460 $9,199,054.45 -209,899.91 Loss to CE
Veterans Levy 10,301,434,139 0.0112500000 $115,891.13
MH/DD Levy 10,301,434,139 0.0250000000 $257,535.85
County Levy Total:0.9292377460 $9,572,481.44
OPTION B If VET moved out of County Levy
2027 AV Min Levy Rate Tax CE Change
County Levy (CE Only)10,301,434,139 0.9042377460 $9,314,945.59 -94,008.78 Loss to CE
Veterans Levy 10,301,434,139 0.0000000000 $0.00
MH/DD Levy 10,301,434,139 0.0250000000 $257,535.85
County Levy Total:0.9292377460 $9,572,481.44
New Taxpayer funded Veterans Levy 10,301,434,139 0.0112500000 $115,891.13 $115,891.13 Inc to Taxpayers
OPTION C If MH/DD moved out of County Levy
2027 AV Min Levy Rate Tax Change
County Levy (CE Only)10,301,434,139 0.9179877460 $9,456,590.31 47,635.94 Added to CE
Veterans Levy 10,301,434,139 0.0112500000 $115,891.13
MH/DD Levy 10,301,434,139 0.0000000000 $0.00
County Levy Total:0.9292377460 $9,572,481.44
New Taxpayer funded MH/DD Levy 10,301,434,139 0.0250000000 $257,535.85 $257,535.85 Inc to Taxpayers
OPTION D If Vet and MH/DD out of County Levy
2027 AV Min Levy Rate Tax Change
Current Expense 10,301,434,139 0.9292377460 $9,572,481.44 163,527.07 Added to CE
Veterans Levy 10,301,434,139 0.0000000000 $0.00
MH/DD Levy 10,301,434,139 0.0000000000 $0.00
County Levy Total:0.9292377460 $9,572,481.44
New Taxpayer funded Veterans Levy 10,301,434,139 0.0112500000 $115,891.13 $115,891.13
New Taxpayer funded MH/DD Levy 10,301,434,139 0.0250000000 $257,535.85 $257,535.85
$373,426.99 Inc to Taxpayers
Public Health Clinic Option 10,301,434,139 0.0500000000 $515,071.71 $515,071.71