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Over the next few weeks, lawmakers in Washington’s state House and Senate need to resolve significant differences on new taxes, education funding, furloughs for state employees and much, much more.
But on money for the state’s Housing Trust Fund, the gap is small.
In their bipartisan capital budget plans released last week, the Senate budgets $600 million for Washington’s primary source of affordable housing funding. The House earmarked $598 million.
Both plans are substantial hikes over the current biennium, for which lawmakers sent over $527 million to the fund. That hefty sum helped earn 2023 the title “The Year of Housing” in the Washington Legislature.
The bipartisan proposals are also more than the $536 million that former Gov. Jay Inslee proposed in December. The only input Gov. Bob Ferguson’s office gave on the Senate’s capital budget was to stay close to Inslee’s funding on the trust fund.
Still, the Senate’s lead capital budget writer went beyond that baseline.
“It’s been no surprise that I wanted housing,” said Yasmin Trudeau, D-Tacoma. “I’ve supported housing policy, I’ve supported supply, stabilization, I’ve supported anything related to housing. A lot of that is based on my own lived experience. So I know the need is acute.”
The Housing Trust Fund isn’t the only pot of money for homes in the capital budgets. The House version has nearly $724 million for housing, including the Housing Trust Fund dollars. The Senate figure is $770 million.
Much of that extra money pays for connecting utilities to affordable housing. The Senate budgets $65 million for this. The House has $100 million, including $10 million for the long-planned redevelopment of Fort Lawton in Seattle.
The Senate plan also looks to put nearly $36 million toward developing more housing near transit. The House has $10 million dedicated to shelter and housing for youth.
Lawmakers are trying to tackle an estimated million-home shortfall over the next two decades as the state grows. And half of those added homes would need to be affordable to those making less than half of the median income, according to a state Department of Commerce report last year.
Washington is 230,000 affordable units shy of what it needs for those households. The state needs nearly 22,000 new units per year through 2044, but averaged just 7,000 from 2016 to 2023.
Meanwhile, the number of housing permits has declined the past two years, likely due to rising construction costs and higher interest rates. Affordability continues to be a major issue, as rents climb faster than incomes.
Advocates applauded the new proposed investment.
“Your investments to increase the supply of affordable homes across the state will significantly transform lives,” Michele Thomas, the director of policy and advocacy for the Washington Low Income Housing Alliance, told a Senate committee last week.
Jesse Simpson, of the Housing Development Consortium, called the House’s proposal “bold and necessary steps to address our state’s deep shortage of affordable housing.”
Getting specific
Founded in 1986 to finance housing for low-income Washingtonians, the Housing Trust Fund has since invested $2 billion to help build over 58,000 units.
The funding mostly goes to the state Department of Commerce to dole out via competitive grants, like the roughly $100 million both chambers earmarked for permanent supportive housing, the more than $200 million for multifamily rental units and the $50 million to $55 million for housing for people with intellectual and developmental disabilities. Each proposal also has $50 million in the trust fund to preserve existing housing.
Most of the money goes toward grants for construction, but can also be used for rental subsidies and assistance on down payments for first-time homebuyers.
The House blueprint budgets $80 million for homeownership help, while the Senate sets aside $75 million.
Lawmakers continue to show their “commitment to affordable housing and affordable homeownership, and move us closer to our goal of 20% of the Housing Trust Fund being dedicated to affordable homeownership,” said Ryan Donohue, the chief advocacy officer for Habitat for Humanity Seattle-King & Kittitas Counties.
The budgets also include money tied to specific projects. In the House, those include $4.5 million for a shelter organization in King County, $5 million for the YWCA based in Wenatchee and $2 million for an 80-unit transit-oriented development project in Tacoma.
And in the Senate, there is $8 million for a 17-story affordable housing project near the University of Washington, $2 million for older adult housing in Yakima and another $2 million for refugee and immigrant housing in Tacoma.
The Senate unanimously approved its capital budget plan Saturday, kicking off a few weeks of negotiations between the two chambers before arriving at a consensus. The legislative session is slated to end April 27.
Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: info@washingtonstatestandard.com.
How can Washington State talk about affordable housing? When they are talking about raising the property tax cap to 3% of your homes assessed value. So many will loose there homes. That increase will then be passed along to any renters of homes. Which rent is high enough as is. They will be making it virtually unaffordable to live in Washington State. And before you say 3% is not much. Think of it this way. At 1% my property taxes can be 10k a year. At 3% it can go up to 30k a year. Can people afford triple the amount in property taxes or rent? Although affordable housing is very important. You can’t bankrupt others to make it happen. If you don’t believe me. Take a look at the Washington State Department of Revenue Homeowners Guide to Property Tax.
Christine, that’s not how the property tax cap works. If a city raises $1 million dollars from property tax, the 1% cap means that the total they raise next year can only increase by 1% which is $10,000. If your share of the $1 million is $10,000, then assuming all properties assessed valuations increase or decreases at the same rate, your share of the increase would also be 1% which is $100. Increasing the cap to 3% means that this hypothetical city could instead increase their total tax revenue by $30,000 and your share of the increase would be $300.
The 1% property tax cap is one of the primary reasons why so many cities around Washington state, including Edmonds, are going broke. This is especially true for cities like Edmonds which are overly dependent on property tax revenue. Capping revenue growth at 1% annually effectively means reducing a city’s capacity to pay its bills over time as inflation erodes the value of its revenue stream. The 1% cap may have made sense at one time to force cities to cut wasteful spending but you can’t keep cutting indefinitely for year after year and maintain a healthy city. It’s time for the 1% cap to be eliminated and cities to be allowed to fund themselves adequately again.
As a taxpayer, I did not agree to pay for other peoples housing. The Democrat super majority in this state is spending at a rate that exceeds any fiscal logic. The government is continuing to spend our money when we are billions in debt. The increase in taxes that is necessary to pay for this and other pet projects will make the cost of living in this state too expensive for a lot of citizens (property tax increases, gas tax increases, taxes on every service they can think). We need a DOGE in this State!
They say, they, need because we don’t have enough but yet the problem continues to grow so apparently the way they spend money continues to not work. Why would we want to increase funding on things that don’t, that haven’t worked as a bandaid to the bigger reasons for peoples inability to provide for themselves?
Raising property tax from 1% to 3% can negatively impact both homeowners and renters for several reasons For Homeowners:
1. Increased Financial Burden: A tripling of the property tax rate significantly increases the annual cost of owning a home. For example, on a 1,000,000 home: • At 1%: $10k/year • At 3%: $30k/year That $20k jump can strain budgets, especially for retirees or those on fixed incomes.
2. Lower Property Values: Higher taxes can make homes less attractive to buyers, which may reduce demand and depress home values over time.
3. Risk of Foreclosure: For homeowners already near the edge financially, a sudden tax increase could lead to unpaid taxes and even foreclosure in extreme cases.
4. Discouragement of Investment: Property owners may be less inclined to upgrade or maintain homes if rising taxes eat into their return on investment. ⸻ For Renters:
1. Rent Increases: Landlords typically pass on tax increases to tenants. A significant jump in property tax can lead to higher monthly rent, especially in tight housing markets.
2. Less Affordable Housing: Increased operational costs may push landlords to convert affordable housing into luxury units or sell altogether, reducing affordable rental supply.
3. Reduced Maintenance and Upkeep: Landlords facing higher taxes may cut back on property maintenance and repairs, leading to poorer living conditions for tenants. ⸻