The enacted operating budget bill for the 2019-21 biennium (Engrossed Substitute House Bill 1109) provides $2,038,000 to fund a Tax Structure Work Group. The work group is to have nine voting members and three nonvoting members. The nine voting work group members must include four members of the Senate (two from each caucus) and four members of the House of Representatives (again, two from each caucus). The governor appoints one voting member. The three nonvoting members represent the Department of Revenue, the Association of Washington Cities and the Washington State Association of Counties.

This new Tax Structure Work Group succeeds the House Tax Structure Work Group, created in 2017 by Substitute Senate Bill 5883, which issued its final report in December 2018.

The work group met for the first time on Tuesday, December 3. At the meeting, Representative Noel Frame and Senator Keith Wagoner were elected work group Co-Chairs.

ESHB 1109 requires the Department of Revenue to prepare a report that updates the data and research that informed the analyses and recommendations of the final report of the 2002 Washington State Tax Structure Study Committee (WSTSSC). For each alternative tax system recommended by WSTSSC, this report is to estimate the amount of revenue that system would have generated during the 2017–19 biennium and to estimate the distribution of tax burdens across households by income level and across businesses by industry.

The DOR report is also to analyze several alternatives identified by the 2018 House Tax Structure Work Group. These alternatives include replacing the business and occupation tax with either a corporate income tax or a margins tax (a type of business tax used in Texas), and replacing the current one percent limit on revenue growth from the state property tax with a limit based on population growth and inflation.

DOR is to produce a preliminary draft of this report by December 1, 2020. The work group is to present the preliminary report to legislative fiscal committees during the 2021 legislative sessions. Following the 2021 session the work group is hold a series of public meetings across the state, presenting DOR’s analyses of the various alternatives and receiving feedback.

ESHB 1109 is silent as to whether anything further will happen following this series of public meetings. However, the bill requires that all voting members sign “a statement of understanding that the commitment to serve on the tax structure work group is through December 31, 2024.”

TVW coverage of the first meeting is here.