Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS
Finance Committee
HB 1702
Brief Description: Authorizing counties to impose a public utility tax.
Sponsors: Representatives Wylie, Fitzgibbon and Pollet.
Brief Summary of Bill
  • Authorizes counties to impose a county public utility tax.
Hearing Date: 2/21/25
Staff: Tracey Taylor (786-7152).
Background:

State Public Utility Tax.

The gross income derived from the operation of publicly and privately owned utilities is subject to the public utility tax (PUT), unless otherwise exempt.  The tax is imposed in lieu of business and occupation (B&O) tax and is applied only on sales to consumers.  Other income of the utility, such as retail sale of tangible personal property, is subject to the B&O tax.  There are six different PUT rates, depending on the specific utility activity.  The rates are:

  • 3.852 percent on telegraph companies, distribution of natural gas, and the collection of sewage;
  • 3.8734 percent on the generation or distribution of electrical power;
  • 0.642 percent on urban transportation and watercraft vessels under 65 feet in length;
  • 1.926 percent on motor transportation, railroads, railroad car companies, and all other public service businesses;
  • 5.029 percent on the distribution of water; and
  • 1.3696 percent on log transportation.

 

Municipal Taxes.

Any city or town may impose a B&O tax upon the income of public and private utilities providing services within the boundaries of a city as well as upon the city's own municipal utilities. 

 

Cities and towns are also authorized to impose taxes upon public utility districts that operate works, plants, or facilities within the city or town for the sale of electricity. 

 

There are no statutory restrictions on the tax rates for water, sewer, solid waste, and stormwater utilities.  The tax rate for electric, gas, steam, and telephone utilities may not exceed 6 percent without voter approval. 
Summary of Bill:

The legislative authority of a county may impose a tax on a utility providing service to customers within the county.  The county PUT may be up to 3 percent of the gross income of the utility derived from providing services to customers within the county.  A utility means an electrical power utility, gas utility, telephone utility, water utility, sewer utility, solid waste utility, or cable service utility.

 

The utility’s billing must include the county PUT with the rates and charges for utility services as well as separately stating the county PUT being charged.

 

The imposition of this county PUT may only begin on the first day of a quarter that is at least 75 days from the date the county adopts the ordinance or resolution imposing the county PUT.

 

A county may authorize county PUT exemptions for business customers; however, a county may not authorize a general county PUT exemption for residential customers only.  A county may authorize a credit against the county PUT for the amount of any similar utility tax imposed by a city or town on the same taxable event.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.