wa-law.org > bill > 2025-26 > HB 2297 > Original Bill
The legislature finds that access to affordable, nutritious, and culturally relevant food is essential to health, economic stability, and community well-being. Yet many Washington residents, particularly low-income households, communities of color, rural residents, immigrants and refugees, and people with limited transportation options continue to face barriers to food access due to store closures, uneven infrastructure, and long-standing patterns of disinvestment.
It is the intent of the legislature to provide locally controlled tools to preserve existing grocery stores and support the development and retention of grocery stores in underserved communities where market forces alone have not met community needs. By reducing structural cost barriers, this act is intended to strengthen community-serving food retailers and support local jobs and neighborhood stability. The legislature further intends that these incentives be implemented in a manner responsive to local conditions and as part of a broader effort to promote health equity, economic justice, and long-term community stability.
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The cities, working through the association of Washington cities, shall form a model ordinance development committee made up of a representative sampling of cities that as of July 27, 2003, impose a business and occupation tax. This committee shall work through the association of Washington cities to adopt a model ordinance on municipal gross receipts business and occupation tax. The model ordinance and subsequent amendments shall be adopted using a process that includes opportunity for substantial input from business stakeholders and other members of the public. Input shall be solicited from statewide business associations and from local chambers of commerce and downtown business associations in cities that levy a business and occupation tax.
The department of commerce shall contract to post the model ordinance on an internet website and to make paper copies available for inspection upon request. The department of revenue and the department of licensing shall post copies of or links to the model ordinance on their internet websites. Additionally, a city that imposes a business and occupation tax must make copies of its ordinance available for inspection and copying as provided in chapter 42.56 RCW.
The definitions and tax classifications in the model ordinance may not be amended more frequently than once every four years, however the model ordinance may be amended at any time to comply with changes in state law. Any amendment to a mandatory provision of the model ordinance must be adopted with the same effective date by all cities.
A city that imposes a business and occupation tax must adopt the mandatory provisions of the model ordinance. The following provisions are mandatory:
A system of credits that meets the requirements of RCW 35.102.060 and a form for such use;
A uniform, minimum small business tax threshold of at least the equivalent of twenty thousand dollars in gross income annually. A city may elect to deviate from this requirement by creating a higher threshold or exemption but it shall not deviate lower than the level required in this subsection. If a city has a small business threshold or exemption in excess of that provided in this subsection as of January 1, 2003, and chooses to deviate below the threshold or exemption level that was in place as of January 1, 2003, the city must notify all businesses licensed to do business within the city at least one hundred twenty days prior to the potential implementation of a lower threshold or exemption amount;
Tax reporting frequencies that meet the requirements of RCW 35.102.070;
Penalty and interest provisions that meet the requirements of RCW 35.102.080 and 35.102.090;
Claim periods that meet the requirements of RCW 35.102.100;
Refund provisions that meet the requirements of RCW 35.102.110; and
Definitions, which at a minimum, must include the definitions enumerated in RCW 35.102.030 and 35.102.120. The definitions in chapter 82.04 RCW shall be used as the baseline for all definitions in the model ordinance, and any deviation in the model ordinance from these definitions must be described by a comment in the model ordinance.
Except for the deduction required by RCW 35.102.160 and the system of credits developed to address multiple taxation under subsection (2)(a) of this section, a city may adopt its own provisions for tax exemptions, tax credits, preferential rates, and tax deductions.
Any city that adopts an ordinance that deviates from the nonmandatory provisions of the model ordinance shall make a description of such differences available to the public, in written and electronic form.
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"Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of their business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than a sale to a person who:
Purchases for the purpose of resale as tangible personal property in the regular course of business without intervening use by such person, but a purchase for the purpose of resale by a regional transit authority under RCW 81.112.300 is not a sale for resale; or
Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates real or personal property of or for consumers, if such tangible personal property becomes an ingredient or component of such real or personal property without intervening use by such person; or
Purchases for the purpose of consuming the property purchased in producing for sale as a new article of tangible personal property or substance, of which such property becomes an ingredient or component or is a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale; or
Purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon; or
Purchases for the purpose of providing the property to consumers as part of competitive telephone service, as defined in RCW 82.04.065; or
The term includes every sale of tangible personal property that is used or consumed or to be used or consumed in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property is resold or used as provided in (a)(i) through (vi) of this subsection following such use.
The term also means every sale of tangible personal property to persons engaged in any business that is taxable under RCW 82.04.280(1) (a), (b), and (f), 82.04.290, and 82.04.2908.
The term "sale at retail" or "retail sale" includes the sale of or charge made for tangible personal property consumed and/or for labor and services rendered in respect to the following:
The installing, repairing, cleaning, altering, imprinting, or improving of tangible personal property of or for consumers, including charges made for the mere use of facilities in respect thereto, but excluding charges made for the use of self-service laundry facilities, and also excluding sales of laundry service to nonprofit health care facilities, and excluding services rendered in respect to live animals, birds and insects;
The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for consumers, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, and also includes the sale of services or charges made for the clearing of land and the moving of earth excepting the mere leveling of land used in commercial farming or agriculture;
The constructing, repairing, or improving of any structure upon, above, or under any real property owned by an owner who conveys the property by title, possession, or any other means to the person performing such construction, repair, or improvement for the purpose of performing such construction, repair, or improvement and the property is then reconveyed by title, possession, or any other means to the original owner;
The cleaning, fumigating, razing, or moving of existing buildings or structures, but does not include the charge made for janitorial services; and for purposes of this section the term "janitorial services" means those cleaning and caretaking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery. The term "janitorial services" does not include painting, papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting;
Automobile towing and similar automotive transportation services, but not in respect to those required to report and pay taxes under chapter 82.16 RCW;
The furnishing of lodging and all other services by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it is presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same. For the purposes of this subsection, it is presumed that the sale of and charge made for the furnishing of lodging for a continuous period of one month or more to a person is a rental or lease of real property and not a mere license to enjoy the same. For the purposes of this section, it is presumed that the sale of and charge made for the furnishing of lodging offered regularly for public occupancy for periods of less than a month constitutes a license to use or enjoy the property subject to sales and use tax and not a rental or lease of property;
The installing, repairing, altering, or improving of digital goods for consumers;
Persons taxable under (a), (b), (c), (d), (e), (f), and (g) of this subsection when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property, labor and services may be resold after such use or consumption. Nothing contained in this subsection may be construed to modify subsection (1) of this section and nothing contained in subsection (1) of this section may be construed to modify this subsection.
The term "sale at retail" or "retail sale" includes the sale of or charge made for personal, business, or professional services including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, received by persons engaging in the following business activities:
Abstract, title insurance, and escrow services;
Credit bureau services;
Automobile parking and storage garage services;
Landscape maintenance and horticultural services but excluding (i) horticultural services provided to farmers and (ii) pruning, trimming, repairing, removing, and clearing of trees and brush near electric transmission or distribution lines or equipment, if performed by or at the direction of an electric utility;
Service charges associated with tickets to professional sporting events;
The following personal services: Tanning salon services, tattoo parlor services, steam bath services, turkish bath services, escort services, and dating services;
Information technology training services, technical support, and other services including, but not limited to, assisting with network operations and support, help desk services, in-person training related to hardware or software, network system support services, data entry services, and data processing services;
Custom website development services. For the purposes of this subsection (3), "website development services" means the design, development, and support of a website provided by a website developer to a customer;
Temporary staffing services. For the purposes of this subsection (3), "temporary staffing services" means providing workers to other businesses, except for hospitals licensed under chapter 70.41 or 71.12 RCW, for limited periods of time to supplement their workforce and fill employment vacancies on a contract or for fee basis;
Advertising services. (i) For the purposes of this subsection (3), "advertising services" means all digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements including, but not limited to:
(A) Layout, art direction, graphic design, mechanical preparation, production supervision, placement, referrals, acquisition of advertising space, and rendering advice concerning the best methods of advertising products or services; and
(B) Online referrals, search engine marketing and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign.
ii. "Advertising services" do not include:
(A) Web hosting services and domain name registration;
(B) Services rendered in respect to the following:
(I) "Newspapers" as defined in RCW 82.04.214;
(II) Printing or publishing under RCW 82.04.280; and
(III) "Radio and television broadcasting" within this state as defined in RCW 82.04.281; and
(C) Services rendered in respect to out-of-home advertising, including: Billboard advertising; street furniture advertising; transit advertising; place-based advertising, such as in-store display advertising or point-of-sale advertising; dynamic or static signage at live events; naming rights; and fixed signage advertising. Out-of-home advertising does not include direct mail;
l. Live presentations including, but not limited to, lectures, seminars, workshops, or courses where participants attend either in-person or via the internet or telecommunications equipment that allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time; and
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i. Operating an athletic or fitness facility, including all charges for the use of such a facility or for any associated services and amenities, except as provided in (m)(ii) of this subsection.
ii. Notwithstanding anything to the contrary in (m)(i) of this subsection (3), the term "sale at retail" and "retail sale" under this subsection does not include:
(A) Separately stated charges for the use of an athletic or fitness facility where such use is primarily for a purpose other than engaging in or receiving instruction in a physical fitness activity;
(B) Separately stated charges for the use of a discrete portion of an athletic or fitness facility, other than a pool, where such discrete portion of the facility does not by itself meet the definition of "athletic or fitness facility" in this subsection;
(C) Separately stated charges for services, such as massage, nutritional consulting, and body composition testing, that do not require the customer to engage in physical fitness activities to receive the service. The exclusion in this subsection (3)(m)(ii)(C) does not apply to personal training services and instruction in a physical fitness activity;
(D) Separately stated charges for physical therapy provided by a physical therapist, as those terms are defined in RCW 18.74.010, or occupational therapy provided by an occupational therapy practitioner, as those terms are defined in RCW 18.59.020, when performed pursuant to a referral from an authorized health care practitioner or in consultation with an authorized health care practitioner. For the purposes of this subsection (3)(m)(ii)(D), an authorized health care practitioner means a health care practitioner licensed under chapter 18.83, 18.25, 18.36A, 18.57, 18.71, or 18.71A RCW, or, until July 1, 2022, chapter 18.57A RCW;
(E) Rent or association fees charged by a landlord or residential association to a tenant or residential owner with access to an athletic or fitness facility maintained by the landlord or residential association, unless the rent or fee varies depending on whether the tenant or owner has access to the facility;
(F) Services provided in the regular course of employment by an employee with access to an athletic or fitness facility maintained by the employer for use without charge by its employees or their family members;
(G) The provision of access to an athletic or fitness facility by an educational institution to its students and staff. However, charges made by an educational institution to its alumni or other members of the public for the use of any of the educational institution's athletic or fitness facilities are a retail sale under this subsection (3)(m). For purposes of this subsection (3)(m)(ii)(G), "educational institution" has the same meaning as in RCW 82.04.170;
(H) Yoga, chi gong, or martial arts classes, training, or events held at a community center, park, school gymnasium, college or university, hospital or other medical facility, private residence, or any other facility that is not operated within and as part of an athletic or fitness facility.
iii. Nothing in (m)(ii) of this subsection (3) may be construed to affect the taxation of sales made by the operator of an athletic or fitness facility, where such sales are defined as a retail sale under any provision of this section other than this subsection (3).
iv. For the purposes of this subsection (3)(m), the following definitions apply:
(A) "Athletic or fitness facility" means an indoor or outdoor facility or portion of a facility that is primarily used for: Exercise classes; strength and conditioning programs; personal training services; tennis, racquetball, handball, squash, or pickleball; or other activities requiring the use of exercise or strength training equipment, such as treadmills, elliptical machines, stair climbers, stationary cycles, rowing machines, pilates equipment, balls, climbing ropes, jump ropes, and weightlifting equipment.
(B) "Martial arts" means any of the various systems of training for physical combat or self-defense. "Martial arts" includes, but is not limited to, karate, kung fu, tae kwon do, Krav Maga, boxing, kickboxing, jujitsu, shootfighting, wrestling, aikido, judo, hapkido, Kendo, tai chi, and mixed martial arts.
(C) "Physical fitness activities" means activities that involve physical exertion for the purpose of improving or maintaining the general fitness, strength, flexibility, conditioning, or health of the participant. "Physical fitness activities" includes participating in yoga, chi gong, or martial arts.
For the purposes of (g) through (i) and (k) of this subsection (3), the terms "sale at retail" and "retail sale" do not include a sale between members of an affiliated group as defined in RCW 82.04.299(1)(f).
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The term also includes the renting or leasing of tangible personal property to consumers.
The term does not include the renting or leasing of tangible personal property where the lease or rental is for the purpose of sublease or subrent.
The term also includes the providing of "competitive telephone service," "telecommunications service," or "ancillary services," as those terms are defined in RCW 82.04.065, to consumers.
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The term also includes the sale of prewritten computer software, custom software, and customization of prewritten computer software to a consumer, regardless of the method of delivery to the end user. For purposes of this subsection (6)(a), the sale of prewritten computer software includes the sale of or charge made for a key or an enabling or activation code, where the key or code is required to activate prewritten computer software and put the software into use. There is no separate sale of the key or code from the prewritten computer software, regardless of how the sale may be characterized by the vendor or by the purchaser.
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ii.(A) The service described in (b)(i) of this subsection (6) includes the right to access and use prewritten computer software, custom software, and customization of prewritten computer software to perform data processing.
(B) For purposes of this subsection (6)(b)(ii), "data processing" means the systematic performance of operations on data to extract the required information in an appropriate form or to convert the data to usable information. Data processing includes check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities.
The term also includes the sale of or charge made for an extended warranty to a consumer. For purposes of this subsection, "extended warranty" means an agreement for a specified duration to perform the replacement or repair of tangible personal property at no additional charge or a reduced charge for tangible personal property, labor, or both, or to provide indemnification for the replacement or repair of tangible personal property, based on the occurrence of specified events. The term "extended warranty" does not include an agreement, otherwise meeting the definition of extended warranty in this subsection, if no separate charge is made for the agreement and the value of the agreement is included in the sales price of the tangible personal property covered by the agreement. For purposes of this subsection, "sales price" has the same meaning as in RCW 82.08.010.
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The term also includes the following sales to consumers of digital goods, digital codes, and digital automated services:
Sales in which the seller has granted the purchaser the right of permanent use;
Sales in which the seller has granted the purchaser a right of use that is less than permanent;
Sales in which the purchaser is not obligated to make continued payment as a condition of the sale; and
Sales in which the purchaser is obligated to make continued payment as a condition of the sale.
A retail sale of digital goods, digital codes, or digital automated services under this subsection (8) includes any services provided by the seller exclusively in connection with the digital goods, digital codes, or digital automated services, whether or not a separate charge is made for such services.
A retail sale of digital goods, digital codes, or digital automated services does not include the following services if the sale occurs between members of an affiliated group as defined in RCW 82.04.299(1)(f):
Any service that primarily involves the application of human effort by the seller, and the human effort originated after the customer requested the service;
Live presentations, such as lectures, seminars, workshops, or courses, where participants are connected to other participants via the internet or telecommunications equipment, which allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time;
Advertising services. For purposes of this subsection (8)(c), "advertising services" means all services directly related to the creation, preparation, production, or dissemination of advertisements. Advertising services include layout, art direction, graphic design, mechanical preparation, production supervision, placement, and rendering advice to a client concerning the best methods of advertising that client's products or services. Advertising services also include online referrals, search engine marketing and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign. Advertising services do not include web hosting services and domain name registration; and
Data processing services. For purposes of this subsection (8)(c), "data processing service" means a primarily automated service provided to a business or other organization where the primary object of the service is the systematic performance of operations by the service provider on data supplied in whole or in part by the customer to extract the required information in an appropriate form or to convert the data to usable information. Data processing services include check processing, image processing, form processing, survey processing, payroll processing, claim processing, and similar activities. Data processing does not include the service described in subsection (6)(b) of this section.
For purposes of this subsection, "permanent" means perpetual or for an indefinite or unspecified length of time. A right of permanent use is presumed to have been granted unless the agreement between the seller and the purchaser specifies or the circumstances surrounding the transaction suggest or indicate that the right to use terminates on the occurrence of a condition subsequent.
The term also includes the charge made for providing tangible personal property along with an operator for a fixed or indeterminate period of time. A consideration of this is that the operator is necessary for the tangible personal property to perform as designed. For the purpose of this subsection (9), an operator must do more than maintain, inspect, or set up the tangible personal property.
The term does not include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind.
The term also does not include sales of chemical sprays or washes to persons for the purpose of postharvest treatment of fruit for the prevention of scald, fungus, mold, or decay, nor does it include sales of feed, seed, seedlings, fertilizer, agents for enhanced pollination including insects such as bees, and spray materials to: (a) Persons who participate in the federal conservation reserve program, the environmental quality incentives program, the wetlands reserve program, and the wildlife habitat incentives program, or their successors administered by the United States department of agriculture; (b) farmers for the purpose of producing for sale any agricultural product; (c) farmers for the purpose of providing bee pollination services; and (d) farmers acting under cooperative habitat development or access contracts with an organization exempt from federal income tax under 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code or the Washington state department of fish and wildlife to produce or improve wildlife habitat on land that the farmer owns or leases.
The term does not include the sale of or charge made for labor and services rendered in respect to the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation. Nor does the term include the sale of services or charges made for the clearing of land and the moving of earth of or for the United States, any instrumentality thereof, or a county or city housing authority. Nor does the term include the sale of services or charges made for cleaning up for the United States, or its instrumentalities, radioactive waste and other by-products of weapons production and nuclear research and development.
The term does not include the sale of or charge made for labor, services, or tangible personal property pursuant to agreements providing maintenance services for bus, rail, or rail fixed guideway equipment when a regional transit authority is the recipient of the labor, services, or tangible personal property, and a transit agency, as defined in RCW 81.104.015, performs the labor or services.
The term does not include the sale for resale of any service described in this section if the sale would otherwise constitute a "sale at retail" and "retail sale" under this section.
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The term "sale at retail" or "retail sale" includes amounts charged, however labeled, to consumers to engage in any of the activities listed in this subsection (15)(a), including the furnishing of any associated equipment or, except as otherwise provided in this subsection, providing instruction in such activities, where such charges are not otherwise defined as a "sale at retail" or "retail sale" in this section:
i.(A) Golf, including any variant in which either golf balls or golf clubs are used, such as miniature golf, hitting golf balls at a driving range, and golf simulators, and including fees charged by a golf course to a player for using his or her own cart. However, charges for golf instruction are not a retail sale, provided that if the instruction involves the use of a golfing facility that would otherwise require the payment of a fee, such as green fees or driving range fees, such fees, including the applicable retail sales tax, must be separately identified and charged by the golfing facility operator to the instructor or the person receiving the instruction.
(B) Notwithstanding (a)(i)(A) of this subsection (15) and except as otherwise provided in this subsection (15)(a)(i)(B), the term "sale at retail" or "retail sale" does not include amounts charged to participate in, or conduct, a golf tournament or other competitive event. However, amounts paid by event participants to the golf facility operator are retail sales under this subsection (15)(a)(i). Likewise, amounts paid by the event organizer to the golf facility are retail sales under this subsection (15)(a)(i), if such amounts vary based on the number of event participants;
ii. Ballooning, hang gliding, indoor or outdoor sky diving, paragliding, parasailing, and similar activities;
iii. Air hockey, billiards, pool, foosball, darts, shuffleboard, ping pong, and similar games;
iv. Access to amusement park, theme park, and water park facilities, including but not limited to charges for admission and locker or cabana rentals. Discrete charges for rides or other attractions or entertainment that are in addition to the charge for admission are not a retail sale under this subsection (15)(a)(iv). For the purposes of this subsection, an amusement park or theme park is a location that provides permanently affixed amusement rides, games, and other entertainment, but does not include parks or zoos for which the primary purpose is the exhibition of wildlife, or fairs, carnivals, and festivals as defined in (b)(i) of this subsection;
v. Batting cage activities;
vi. Bowling, but not including competitive events, except that amounts paid by the event participants to the bowling alley operator are retail sales under this subsection (15)(a)(vi). Likewise, amounts paid by the event organizer to the operator of the bowling alley are retail sales under this subsection (15)(a)(vi), if such amounts vary based on the number of event participants;
vii. Climbing on artificial climbing structures, whether indoors or outdoors;
viii. Day trips for sightseeing purposes;
ix. Bungee jumping, zip lining, and riding inside a ball, whether inflatable or otherwise;
x. Horseback riding offered to the public, where the seller furnishes the horse to the buyer and providing instruction is not the primary focus of the activity, including guided rides, but not including therapeutic horseback riding provided by an instructor certified by a nonprofit organization that offers national or international certification for therapeutic riding instructors;
xi. Fishing, including providing access to private fishing areas and charter or guided fishing, except that fishing contests and license fees imposed by a government entity are not a retail sale under this subsection;
xii. Guided hunting and hunting at game farms and shooting preserves, except that hunting contests and license fees imposed by a government entity are not a retail sale under this subsection;
xiii. Swimming, but only in respect to (A) recreational or fitness swimming that is open to the public, such as open swim, lap swimming, and special events like kids night out and pool parties during open swim time, and (B) pool parties for private events, such as birthdays, family gatherings, and employee outings. Fees for swimming lessons, to participate in swim meets and other competitions, or to join a swim team, club, or aquatic facility are not retail sales under this subsection (15)(a)(xiii);
xiv. Go-karting, bumper cars, and other motorized activities where the seller provides the vehicle and the premises where the buyer will operate the vehicle;
xv. Indoor or outdoor playground activities, such as inflatable bounce structures and other inflatables; mazes; trampolines; slides; ball pits; games of tag, including laser tag and soft-dart tag; and human gyroscope rides, regardless of whether such activities occur at the seller's place of business, but not including playground activities provided for children by a licensed child day care center or licensed family day care provider as those terms are defined in RCW 43.216.010;
xvi. Shooting sports and activities, such as target shooting, skeet, trap, sporting clays, "5" stand, and archery, but only in respect to discrete charges to members of the public to engage in these activities, but not including fees to enter a competitive event, instruction that is entirely or predominately classroom based, or to join or renew a membership at a club, range, or other facility;
xvii. Paintball and airsoft activities;
xviii. Skating, including ice skating, roller skating, and inline skating, but only in respect to discrete charges to members of the public to engage in skating activities, but not including skating lessons, competitive events, team activities, or fees to join or renew a membership at a skating facility, club, or other organization;
xix. Nonmotorized snow sports and activities, such as downhill and cross-country skiing, snowboarding, ski jumping, sledding, snow tubing, snowshoeing, and similar snow sports and activities, whether engaged in outdoors or in an indoor facility with or without snow, but only in respect to discrete charges to the public for the use of land or facilities to engage in nonmotorized snow sports and activities, such as fees, however labeled, for the use of ski lifts and tows and daily or season passes for access to trails or other areas where nonmotorized snow sports and activities are conducted. However, fees for the following are not retail sales under this subsection (15)(a)(xix): (A) Instructional lessons; (B) permits issued by a governmental entity to park a vehicle on or access public lands; and (C) permits or leases granted by an owner of private timberland for recreational access to areas used primarily for growing and harvesting timber; and
xx. Scuba diving; snorkeling; river rafting; surfing; kiteboarding; flyboarding; water slides; inflatables, such as water pillows, water trampolines, and water rollers; and similar water sports and activities.
b. Notwithstanding anything to the contrary in this subsection (15), the term "sale at retail" or "retail sale" does not include charges:
i. Made for admission to, and rides or attractions at, fairs, carnivals, and festivals. For the purposes of this subsection, fairs, carnivals, and festivals are events that do not exceed 21 days and a majority of the amusement rides, if any, are not affixed to real property;
ii. Made by an educational institution to its students and staff for activities defined as retail sales by (a)(i) through (xx) of this subsection. However, charges made by an educational institution to its alumni or other members of the general public for these activities are a retail sale under this subsection (15). For purposes of this subsection (15)(b)(ii), "educational institution" has the same meaning as in RCW 82.04.170;
iii. Made by a vocational school for commercial diver training that is licensed by the workforce training and education coordinating board under chapter 28C.10 RCW; or
iv. Made for day camps offered by a nonprofit organization or state or local governmental entity that provide youth not older than age 18, or that are focused on providing individuals with disabilities or mental illness, the opportunity to participate in a variety of supervised activities.
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The term "sale at retail" or "retail sale" includes the purchase or acquisition of tangible personal property and specified services by a person who receives either a qualifying grant exempt from tax under RCW 82.04.767 or 82.16.320 or a grant deductible under RCW 82.04.4339, except for transactions excluded from the definition of "sale at retail" or "retail sale" by any other provision of this section. Nothing in this subsection (16) may be construed to limit the application of any other provision of this section to purchases by a recipient of either a qualifying grant exempt from tax under RCW 82.04.767 or a grant deductible under RCW 82.04.4339, or by any other person.
For purposes of this subsection (16), "specified services" means:
The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation;
The clearing of land or the moving of earth, whether or not associated with activities described in (b)(i) of this subsection (16);
The razing or moving of existing buildings or structures; and
Landscape maintenance and horticultural services.
The purpose of this chapter is to provide local communities options to preserve and increase access to healthy and affordable food for Washingtonians living in underserved communities. It is also the purpose of this chapter to encourage grocery retailers to maintain their presence in underserved communities and to incentivize the construction of new stores in underserved areas based on community needs.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"City" means any city or town.
"Frontier county" means a county with a population density of fewer than 50 persons per square mile.
"Governing authority" means the local legislative authority of a city or county having jurisdiction over the property for which an exemption may be applied under this chapter.
"Grocery store" means a small food retailer, a mid-sized food retailer, or a supermarket.
"Mid-sized food retailer" means a medium-sized retail outlet with at least 2,500 but less than 16,000 square feet, of which at least 75 percent is occupied by food and related products.
"Owner" means the property owner of record.
"Rural county" means a county with a population density of fewer than 100 persons per square mile or a county smaller than 225 square miles, as determined by the office of financial management and published each year by the department for the period July 1st to June 30th.
"Small food retailer" means a retail outlet with less than 2,500 square feet that sells a limited selection of foods and other products, such as a bodega, convenience store, corner store, neighborhood store, small grocery, or small-scale store.
"Supermarket" means a retail outlet with at least 16,000 square feet, of which at least 90 percent is occupied by food and related products.
"Underserved community zone" means an area of land designated by a governing authority in this chapter.
"Urban area" means a zip code with a population of more than 3,000 residents per square mile.
"Urban county" means a county located in a metropolitan statistical area as determined and defined by the United States office of management and budget or other appropriate agency or office of the federal government.
A city governing authority may by ordinance or resolution establish an underserved community grocery store property tax exemption program to provide property tax exemptions to preserve existing grocery stores, to incentivize the rehabilitation of existing or vacant grocery store buildings, and to incentivize the construction of new grocery store buildings in underserved communities.
A county governing authority may by ordinance or resolution establish an underserved community grocery store property tax exemption program for unincorporated areas to provide property tax exemptions to preserve existing grocery stores, to incentivize the rehabilitation of existing or vacant grocery store buildings, and to incentivize the construction of new grocery store buildings in underserved communities.
An underserved community grocery store property tax exemption program established by a governing authority may offer one or more property tax exemptions for the following categories of grocery stores located within an underserved community zone designated by the governing authority pursuant to section 305 of this act:
Existing grocery stores;
Rehabilitated grocery stores; or
Newly constructed grocery stores.
For the purpose of creating an underserved community grocery store property tax exemption program, the governing authority of a city or county must adopt a resolution of intent to create an underserved community grocery store property tax exemption program and designate one or more areas as underserved community zones as generally described in the resolution. The resolution must state the time and place of a hearing to be held by the governing authority to consider the creation of the program and the designation of the zones and may include such other information pertaining to the creation of the program and the designation of the zones as the governing authority determines to be appropriate to apprise the public of the action intended. However, the resolution must provide information pertaining to:
The application process;
The approval process;
The appeals process for applications denied approval; and
Requirements, conditions, and obligations that must be followed postapproval of an application.
The governing authority must give notice of a hearing held under this chapter by publication of the notice once each week for two consecutive weeks, not less than seven days, nor more than 30 days before the date of the hearing in a paper having a general circulation in the city or county. The notice must state the time, date, place, and purpose of the hearing and generally identify the area or areas proposed to be designated as an underserved community zone.
Following the hearing or a continuance of the hearing, and subject to the limit on underserved community zones in section 305 of this act, the governing authority may create the program and designate all or a portion of the area or areas described in the resolution of intent as an underserved community zone or zones if it finds, in its sole discretion, that the criteria in section 305 of this act have been met.
Except as otherwise provided in this section, the governing authority of a city or county may designate an underserved community zone if it determines that a contiguous group of census tracts within the city's or county's jurisdiction meets the following requirements:
The area must meet one or more low-income criteria and the low-access criterion; or
The area must meet the criterion for health disadvantaged areas and the low-access criterion; or
The area must meet the criterion for a low-transportation-access area.
For a property tax exemption for an existing grocery store, as an alternative to meeting the requirements in subsection (1) of this section, a governing authority must establish that without the creation of an underserved community tax incentive program and the designation of an underserved community zone, the area will meet the requirements of subsection (1) of this section due to the closure of an existing grocery store.
A governing authority may use an alternative methodology for the creation of an underserved community zone that fits its community's needs if the methodology and accompanying data is submitted to and it is approved by the department of commerce.
The total underserved community zone designations allowed per county are as follows:
For urban counties, a maximum of 10 underserved community zones;
For rural counties, a maximum of five underserved community zones; and
For frontier counties, a maximum of three underserved community zones.
Five years after the establishment of an underserved community zone and every five years thereafter, a governing authority may add, remove, or alter the boundaries of an underserved community zone. The governing authority must provide the department of commerce with the methodology and reasoning for the change in the zone location.
The removal or altering of an underserved community zone does not disqualify any existing property tax exemptions granted under this chapter.
The governing authority must provide information regarding the location of the designated zones to the department of commerce.
Low-income criteria are as follows:
Census tracts meeting one or more income criteria used in the food access research atlas published by the United States department of agriculture; or
Census tracts in which 25 percent or more of the population have incomes at or below 200 percent of poverty thresholds reflected in the most recently available five-year American community survey estimates.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Health disadvantaged areas" include census tracts with an index score of eight or above on the most recently published department of health environmental health disparities map index, indicating the highest composite levels of health disadvantage based on a combination of environmental, health, socioeconomic, and demographic factors.
"Low-access area" means a grouping of contiguous census tracts in which at least 500 people or 33 percent of the population is greater than 0.5 miles from the nearest supermarket or an urban area or greater than 10 miles for a rural area.
"Low-transportation-access area" means a grouping of census tracts in which:
More than 100 households have no access to a vehicle, according to the most recently published five-year American community survey estimate and the grouping of census tracts is located more than 0.5 miles from the nearest supermarket; or
At least 500 people or 33 percent of the population live more than 20 miles from the nearest supermarket.
The value of real property qualifying under this chapter is exempt from local and state property taxation under this title as provided in this chapter.
For existing grocery stores, the value of the real property consisting of a grocery store building or a portion of a building used as a grocery store within an underserved community zone as identified by a governing authority is exempt from taxation for properties for which an application for a certificate of tax exemption is submitted and approved under this chapter. The value is exempt under this section for 30 successive years beginning on the day the certificate is approved by the governing authority.
For rehabilitated grocery stores, the value of the new construction and the value of the real property consisting of a grocery store or a portion of a building used as a grocery store within an underserved community zone as identified by a governing authority is exempt from taxation for properties for which an application for a certificate of tax exemption is submitted under this chapter. The value is exempt under this section for 30 successive years beginning on the day the certificate is granted by the governing authority.
For newly constructed grocery stores, the value of the new construction consisting of a grocery store or a portion of a building used as a grocery store within an underserved community zone as identified by a governing authority is exempt from taxation for properties for which an application for a certificate of tax exemption is submitted and approved under this chapter. The value is exempt under this section for 30 successive years beginning on the day the certificate is approved by the governing authority.
The exemptions provided in this section do not include the value of real property not qualifying under this chapter and do not apply to the value of the land.
The exemptions provided in this section do not apply to increases in assessed valuation made by the assessor on nonqualifying portions of building and value of land nor to increases made by lawful order of a county board of equalization, the department, or a county to a class of property throughout the county or specific area of the county to achieve the uniformity of assessment or appraisal required by law.
The real property consisting of an existing grocery store, a rehabilitated grocery store, or newly constructed grocery store must be located in an underserved community zone as identified by the governing authority under section 305 of this act on the date the tax exemption certificate is granted to the owner by the governing authority.
Rehabilitated and new construction grocery stores must:
Meet all construction and development regulations of the city or county;
Be zoned as a commercial or mixed-use development; and
Be party to a contract with the city or county approved by the governing authority under which the applicant has agreed to the implementation of the development on terms and conditions satisfactory to the governing authority.
The exemptions provided in this section do not apply to property taxes levied by school districts.
The exemption provided in this section is in addition to any other exemptions, deferrals, credits, grants, or other tax incentives provided by law.
At the conclusion of the exemption period, the cost of new construction and rehabilitative improvements to the property must be considered as new construction for the purposes of chapters 84.55 and 36.21 RCW.
An owner of a property seeking an exemption under this chapter must complete the following procedures:
The owner must apply to the city or county on forms adopted by the governing authority. The application must contain the following:
Information setting forth the grounds supporting the requested exemption including information indicated on the application form or required by this chapter;
For rehabilitation projects and new construction, a description of the site plan, a statement that the applicant would not have built in this location but for the availability of the tax exemption under this chapter, and other information requested; and
A statement that the applicant is aware of the potential tax liability involved when the property ceases to be eligible for the incentive provided under this chapter;
The applicant must verify the application by oath or affirmation; and
The application must be accompanied by the application fee, if any, required under this chapter. The governing authority may permit the applicant to revise an application before final action by the governing authority.
The city or county may approve the application if it finds that:
The existing grocery store, the rehabilitated grocery store, or the newly constructed grocery store will provide fresh and affordable groceries to an underserved community located in an underserved community zone;
For rehabilitated or newly constructed grocery stores, the proposed project is, or will be, at the time of completion, in conformance with all local plans and regulations that apply at the time the application is approved; and
The criteria of this chapter have been satisfied.
The city or county must approve or deny an application filed under this chapter within 90 days after receipt of the application.
If the application is denied by the city or county, the city or county must state in writing the reasons for denial and send the notice to the applicant at the applicant's last known address within 10 days of the denial.
Upon denial by the city or county, an applicant may appeal the denial to the city's or county's governing authority within 30 days after receipt of the denial. The appeal before the city's or county's governing authority must be based upon the record made before the governing authority with the burden of proof on the applicant to show that there was no substantial evidence to support the decision. The decision of the city's or county's governing authority in denying or approving the application is final.
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If the application for a rehabilitated grocery store or a newly constructed grocery store is approved, the city or county must issue the owner of the property a conditional certificate of tax exemption. The certificate must contain a statement by a duly authorized administrative official of the governing authority that the property has complied with the required criteria of this chapter.
The city or county must file the conditional certificate of tax exemption with the county assessor within 10 days of approval.
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If the application for an existing grocery store is approved, the city or county must issue the owner of the property a certificate of tax exemption. The certificate must contain a statement by a duly authorized administrative official of the governing authority that the property has complied with the required criteria of this chapter.
The city or county must file the certificate of tax exemption with the county assessor within 10 days of approval.
Upon completion of a rehabilitation project or new construction of a grocery store building for which an application for an exemption under this chapter has been approved and issued a certificate of occupancy, the owner must file with the city or county the following:
A description of the work that has been completed and a statement that the new construction on the owner's property qualifies the property for a partial or total exemption under this chapter; and
A statement regarding the fresh food and new jobs offered as a result of the new construction of the grocery store.
Within 30 days after receipt of the statements required under subsection (1) of this section, the city or county must determine whether the work completed is consistent with the application approved by the city or county and whether the property qualifies for a tax exemption under this chapter.
If the criteria of this chapter have been satisfied and the owner's property is qualified for a tax exemption under this chapter, the city or county must file the certificate of tax exemption with the county assessor within 40 days after receipt of the statements required under subsection (1) of this section.
The city or county must notify the applicant that a certificate of tax exemption is denied if the city or county determines that:
The work was not constructed consistent with the application or other applicable requirements; or
The owner's property is otherwise not qualified for an exemption under this chapter.
The city's or county's governing authority may enact an ordinance to provide a process for an owner to appeal a decision by the city or county that the owner is not entitled to a certificate of tax exemption to the city or county. The owner may appeal a decision by the city or county to deny a certificate of tax exemption in superior court under RCW 34.05.510 through 34.05.598 if the appeal is filed within 30 days of notification by the city or county to the owner of the exemption denial.
The governing authority may establish an application fee for the tax exemption under this chapter. This fee may not exceed an amount determined to be required to cover the cost to be incurred by the governing authority and the assessor in administering this chapter. The application fee must be paid at the time the application is filed. If the application is approved, the governing authority of the city or county must pay the application fee to the county assessor for deposit in the county current expense fund, after first deducting that portion of the fee attributable to its own administrative costs in processing the application. If the application is denied, the city's or county's governing authority may retain that portion of the application fee attributable to its own administrative costs and refund the balance to the applicant.
Thirty days after the anniversary of the date of the certificate of tax exemption and each year for the tax exemption period, the owner of the exempted property must file with a designated authorized representative of the city or county an annual report indicating the following:
A certification by the owner that the property has not changed use that is, if the owner of the property and the retailer are not the same individual, verified by the grocery store retailer;
A description of changes or improvements constructed after issuance of the certificate of tax exemption; and
Any additional information requested by the city or county.
A city or county that issues a certificate of tax exemption under this chapter must report annually by December 31st of each year, beginning in 2026, to the department of commerce. The report must include the following information:
The number of tax exemption certificates granted;
The total number and type of existing buildings exempted, and the total number and type of rehabilitated and new grocery stores constructed;
The value of the tax exemption for each project receiving a tax exemption and the total value of tax exemptions granted;
The methodology and data used by the governing authority when designating underserved community zones; and
An explanation of how the program is working to supply fresh and healthy food and new job opportunities to underserved communities.
A city or county that issues a certificate of tax exemption under this chapter must annually provide a report to the department of revenue that provides the information required in subsection (2) of this section and any other information that the department of revenue requires to verify eligibility for the business and occupation tax incentives created in sections 401 and 501 of this act.
If the value of the real property or real property improvements have been exempted under this chapter, the real property and real property improvements continue to be exempted for the applicable period under this chapter so long as they are not converted to another use and continue to satisfy all applicable conditions including, but not limited to, zoning, land use, and building requirements.
Transfer of property ownership does not terminate the exemption. The exemption is subject to the successor meeting the eligibility requirements under this chapter. The transferor of an exempted property must notify the governing authority of the transfer. The governing authority must certify that the successor meets the requirements of the exemption. The transferor must provide the information necessary for the county assessor to transfer the exemption. If the transferor fails to notify the city or county within 60 days, the tax exemption is terminated and all exempted property taxes from the date of the transfer are immediately due and payable by the transferor as required in subsection (4) of this section.
If an owner voluntarily opts to discontinue compliance with the requirements of this chapter, the owner must notify the county assessor within 60 days of the change in use or intended discontinuance and all exempted property taxes from the date of the transfer are immediately due and payable by the transferor as required in subsection (4) of this section.
If, after a certificate of tax exemption has been filed with the county assessor, the city or county discovers that a portion of the property has changed or will be changed to disqualify the property for exemption eligibility under this chapter, the tax exemption must be canceled, and the following occurs:
Additional real property tax must be imposed on the value of the nonqualifying improvements in the amount that would be imposed if an exemption had not been available under this chapter, plus a penalty equal to 20 percent of the additional value. This additional tax is calculated based upon the difference between the property tax paid and the property tax that would have been paid if it had included the value of the nonqualifying improvements dated back to the date that the improvements were converted to a nonqualifying use;
Interest upon the amounts of the additional tax at the same statutory rate charged on delinquent property taxes must be included from the dates on which the additional tax could have been paid without penalty if the improvements had been assessed at a value without regard to this chapter; and
The additional tax owed together with interest and penalty becomes a lien on the property and attaches at the time the property or portion of the property is removed from the qualifying use under this chapter, or the amenities no longer meet the applicable requirements for exemption under this chapter. A lien under this section has priority to, and must be fully paid and satisfied before, a recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which the property may become charged or liable. The lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes. An additional tax unpaid on its due date is delinquent. From the date of delinquency until paid, interest must be charged at the same rate applied by law to delinquent property taxes.
Upon a determination that a tax exemption is to be terminated for a reason stated in this section, the city's or county's governing authority must notify the record owner of the property as shown by the tax rolls by mail, return receipt requested, of the determination to terminate the exemption. The owner may appeal the determination to the city or county, within 30 days by filing a notice of appeal with the city or county, which notice must specify the factual and legal basis on which the determination of termination is alleged to be erroneous. At an appeal hearing, all affected parties may be heard and all competent evidence received. After the hearing, the deciding body or officer must either affirm, modify, or repeal the decision of termination of exemption based on the evidence received. An aggrieved party may appeal the decision of the deciding body or officer to the superior court as provided in RCW 34.05.510 through 34.05.598.
Upon determination by the city or county to terminate an exemption, the county officials having possession of the assessment and tax rolls must correct the rolls in the manner provided for omitted property under RCW 84.40.080. The county assessor must make such a valuation of the property and improvements as is necessary to permit the correction of the rolls. The value of the new construction from the rehabilitated grocery store or the newly constructed grocery store added to the rolls is considered new construction for the purposes of chapter 84.40 RCW. The owner may appeal the valuation to the county board of equalization as provided in chapter 84.40 RCW. If there has been a failure to comply with this chapter, the property must be listed as an omitted assessment for assessment years beginning January 1st of the calendar year in which the noncompliance first occurred, but the listing as an omitted assessment may not be for a period more than three calendar years preceding the year in which the failure to comply was discovered.
This chapter expires January 1, 2037.
Beginning January 1, 2027, a person is allowed a credit against the tax imposed in this chapter equal to 0.029 percent multiplied by the gross income of the grocery store operating in an underserved community zone.
To qualify for this credit, a person must be located in an underserved community zone established in section 305 of this act.
Cities and counties with established underserved community grocery store property tax exemption programs must annually provide a report to the department that includes the established underserved community zone boundaries within their jurisdiction and any other information required by the department to verify taxpayer eligibility under this section.
The credit claimed may not exceed the tax that would otherwise be due under this chapter. Refunds may not be granted in the place of credits. Any amount of credit earned under this section not claimed by the person in one calendar year may be carried forward for no more than one calendar year immediately following the year that the credit was earned.
The total amount of credit authorized under this section may not exceed an annual statewide limit of $5,000,000 per calendar year.
No application is necessary for the tax credit. The person must keep records necessary for the department to verify eligibility under this section. To claim a credit a person must electronically file with the department all returns, forms, and other information the department requires in an electronic format as provided and approved by the department. Any return, form, or information required to be filed in electronic format under this section is not filed until received by the department in an electronic format. For purposes of this subsection, "returns" has the same meaning as "return" in RCW 82.32.050.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Grocery store" has the same meaning as in section 302 of this act.
"Underserved community zone" means an underserved community zone established in section 305 of this act.
This section expires January 1, 2037.
This chapter does not apply to any person engaging within this state in the business as a locally owned, employee-owned, union run, or cultural grocery store that operates in an underserved community zone established in section 305 of this act.
Cities and counties with established underserved community grocery store property tax exemption programs must annually provide a report to the department of revenue that includes the established underserved community zone boundaries and any other information required by the department of revenue to verify taxpayer eligibility under this section.
For purposes of this section, the following definitions apply:
"Cultural grocery store" means a grocery store whose sales of culturally relevant food or items make up a minimum of 40 percent of the store's total annual sales.
"Employee-owned grocery store" means a grocery store in which a significant portion of the ownership is held by employees.
"Grocery store" has the same meaning as in section 302 of this act.
"Underserved community zone" means an underserved community zone established in section 305 of this act.
"Union run grocery store" means a grocery store in which a labor union serves as the primary operator or controlling entity and exercises direct authority over management, governance, and business operations.
This section expires January 1, 2037.
This section is the tax preference performance statement for the tax preferences contained in sections 301 through 312, 401, and 501, chapter . . ., Laws of 2026 (sections 301 through 312, 401, and 501 of this act). This performance statement is only intended to be used for subsequent evaluation of the tax preferences. It is not intended to create a private right of action by any party or to be used to determine eligibility for preferential tax treatment.
The legislature categorizes these tax preferences as ones intended to provide tax relief for certain businesses or individuals, as indicated in RCW 82.32.808(2)(e).
It is the legislature's specific public policy objective to provide reduced tax liability for businesses that operate grocery stores in underserved communities.
If a review finds that after the effective date of these tax preferences the following parameters are met, then the legislature intends to extend the expiration date of these tax preferences:
The number of grocery stores operating in underserved community zones has increased;
The number of jobs created in grocery stores located in or constructed in underserved community zones has increased;
The amount of fresh food offered in grocery stores located in underserved community zones has increased; and
Any number of grocery stores operating in underserved community zones have avoided closure since the effective date of this section.
In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state.
RCW 82.32.805 and 82.32.808 do not apply to section 201 of this act.
Sections 301 through 312 of this act apply to taxes levied for collection in 2027 and thereafter.
This act takes effect July 1, 2026.