​Join the Tri-City Regional Chamber of Commerce for an important Regional Advocacy Roundtable on Tuesday, July 1, 2025, at 8:00 a.m. at the Tri-City Business and Visitor Center.

This timely discussion, titled "Behind the Bill – How Policy Shapes Our Energy Costs," will explore how recent legislation and public policy decisions influence the prices of electricity and fuel in Washington State. Business leaders, policymakers, and energy experts will break down what’s driving costs and what it means for local employers and residents.

Here is a sneak peek on the discussion.

When people hear the “18th Amendment,” they often think of the Prohibition era in U.S. history. However, in Washington State, the 18th Amendment has an entirely different meaning—one that directly affects how we build and maintain roads and highways.
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Adopted by voters in November 1944, Washington’s 18th Amendment, found in Article 2, Section 40 of the State Constitution, shaped the state’s transportation system for more than 80 years. At its core, the amendment ensures that the money collected from motor fuel taxes and vehicle license fees is used exclusively for highway purposes. This provision has become the cornerstone of Washington’s approach to transportation planning and infrastructure investment.

A Constitutional Guarantee for Road Funding
The 18th amendment mandates that revenues from gas taxes and car and truck license fees go into a dedicated fund. This money can only be used for highway-related expenses, such as building and repairing roads, bridges, and highways; paying for engineering and legal work tied to these projects; installing and maintaining traffic signals and signage; and operating elements of the highway system such as bridges and ferries. Importantly, it cannot be spent on public transit systems, bicycle infrastructure, or pedestrian walkways.
This strict allocation of funds was intended to protect the interests of drivers, ensuring that the money they contribute through taxes and fees is reinvested in the roadways they use. Before 1944, those funds could be diverted for other uses, sparking concern among voters who wanted greater transparency and accountability in how transportation dollars were spent.

Why It Matters Today
The 18th amendment plays a vital role in Washington’s ability to fund long-term transportation projects. Providing a consistent and protected revenue stream allows the state to plan and execute major initiatives, such as freeway expansions and bridge replacements, with greater confidence. The amendment also reinforces fiscal transparency by preventing lawmakers from reallocating highway funds to unrelated programs, a safeguard that helps maintain public trust in government budgeting.
Beyond financial management, the amendment supports the state’s economy by sustaining a reliable network of roads and highways. An efficient transportation infrastructure is critical for moving goods, services, and people throughout Washington. By securing funding for these purposes, the amendment underpins broader economic activities and regional trade.

Impacts on Budgeting and Policy Decisions
The influence of the 18th amendment extends well beyond road construction. Over the past two decades, increases in gas taxes have helped finance landmark transportation projects, such as the I-405 corridor improvements, the new SR 520 floating bridge, and critical repairs to I-5. However, the amendment also creates budgetary challenges. Because its rules only allow spending on highway-related purposes, funding for public transit, ferries, and non-motorized transportation must come from other, more flexible sources such as general sales tax revenue or carbon pricing programs.
This division of transportation funding into “protected” and “unprotected” categories adds complexity to the state’s budget planning. Lawmakers must carefully assess each proposed project to ensure it aligns with the amendment’s legal definition of “highway purposes.” Courts have weighed in on several gray areas, sometimes ruling that park-and-ride facilities or utility relocations related to road projects qualify—and sometimes not—depending on the circumstances.

A Key Piece of Transportation Policy
For legislators, the 18th amendment set clear boundaries on how gas tax revenue can be used. Careful planning and legal review are required to ensure compliance and to avoid misallocations that could trigger legal challenges. More broadly, it shapes the way Washington prioritizes transportation spending and infrastructure development.
While the amendment has provided funding stability and helped build a robust highway system, it also limited the state’s ability to shift focus toward modern transportation needs, such as expanding public transit or preparing for a low-emission future. As Washington faces growing challenges—traffic congestion, climate change, and the shift to electric vehicles—some policymakers and advocates are beginning to question whether the 18th amendment still reflects the state’s transportation priorities.

Washington’s 18th Amendment is more than just a financial rule; it is a foundational element of the state’s transportation strategy. This ensures that funds collected from drivers are reinvested in the roads and highways on which they rely, providing transparency and economic support. However, as transportation needs evolve, the amendment also imposes constraints on innovation and flexibility. The debate over its future is likely to continue, but for now, it remains a guiding force in how Washington builds and maintains its transportation infrastructure.

​Opportunity Zones (OZs) are designated areas that aim to stimulate economic development in distressed communities by offering tax incentives to investors. Established under the 2017 Tax Cuts and Jobs Act, OZs encourage investment in low-income areas by providing tax benefits to those who reinvest capital gains in these zones.

Purpose and Function of Opportunity Zones
The primary goal of OZs is to spur economic growth and job creation in the underdeveloped regions. Investors can defer capital gains taxes by reinvesting those gains in ((QOFs) that finance projects within OZs. If an investment is held for a certain period, investors may benefit from reduced or eliminated capital gains taxes on the new investment.

Opportunity Zones in Benton and Franklin Counties
In Washington State, 139 census tracts have been designated as Opportunity Zones, including areas within Benton and Franklin Counties. In Benton County, the city of Kennewick features two OZs: the Vista Opportunity Zone and the Downtown/Waterfront Opportunity Zone. Franklin County's city of Pasco also contains designated OZs aimed at attracting investments to stimulate local economic development.

Current Status and Future of the Program
As of 2025, the Opportunity Zone program will remain active, with key tax benefits available to investors. However, the program is set to expire on December 31, 2026, unless extended by new legislation. Recent legislative proposals aim to renew and enhance the program, potentially extending its benefits beyond the current expiration date.

Tax Advantages and Limitations
Investing in OZs offers several tax benefits:

• Deferral of Capital Gains: Taxes on prior gains can be deferred until the earlier of the sale of the new investment, or December 31, 2026.
• Reduction of Deferred Gain: If the investment is held for at least five years, there is a 10% exclusion of the deferred gain.
• Exclusion of Gains from OZ Investment: Gains from the OZ investment itself can be excluded from taxes if held for at least ten years.

However, limitations exist. The initial benefits related to step-ups in basis for investments held for five or seven years are no longer available for new investments, as the program's timeline does not allow for these holding periods before the 2026 deadline.

Resources for Further Information
For those interested in exploring OZ opportunities in Benton and Franklin Counties, local economic development offices and the IRS provide resources and guidance. The Port of Pasco offers information on OZs within Franklin County, while the City of Kennewick provides details on its designated zones. In addition, the IRS website contains comprehensive information on OZ regulations and benefits. Additional information on OZ can also be found by visiting Opportunity Zones | HUD.gov / U.S. Department of Housing and Urban Development (HUD)
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Conclusion
Opportunity Zones present a strategic avenue for investors to contribute to the revitalization of economically distressed areas while receiving tax incentives. In Benton and Franklin Counties, these zones offer the potential for community development and economic growth. As the program's future beyond 2026 remains uncertain, stakeholders should remain informed of legislative developments to maximize the benefits of OZ investments.

In Washington State, experience-related tax and social cost tax are the two primary components of the Unemployment Insurance (UI) tax system. Both are paid by employers; however, they serve different purposes and are calculated differently.
 
1. Experience-Rated Tax

The Experience-Rated Tax is based on an individual employer's history of layoffs and unemployment claims. Employers with more layoffs in the past are assigned a higher tax rate, whereas those with fewer layoffs pay a lower rate. This system incentivizes employers to minimize layoffs and maintain workforce stability.

How It Works:

• Experience Rating:
  • Washington State uses a "benefit ratio" method to calculate an employer's experience rate.
  • The benefit ratio is determined by dividing the total amount of UI benefits paid to the employer's former employees over a three-year period by the employer's taxable payroll during the same period.
• Assigned Rate:
  • The employer's benefit ratio is compared to other employers in the state and assigned to a "tax class."
  • Washington has multiple tax classes ranging from lower rates for employers with fewer layoffs to higher rates for those with more layoffs.
• Who Pays?
  • Employers only pay this tax. This amount varies according to the employer’s individual experience.
• Collection:
  • This tax is collected quarterly, along with the Social Cost Tax, as part of the total UI tax rate.

 
2. Social Cost Tax

The Social Cost Tax covers the costs of unemployment benefits that cannot be directly attributed to specific employers. These include:

• Benefits paid to workers whose employers went out of business.
• Costs of unemployment claims that exceed an individual employer's contribution.
• Other non-chargeable benefits include those related to state-mandated programs.

How It Works:

• Pooled Cost:
  • The total amount of non-chargeable benefits is calculated statewide each year.
  • The cost is shared among all employers in the state regardless of their individual experience ratings.
• Rate Assignment:
  • All employers pay the same Social Cost Tax rate, although the actual dollar amount paid depends on the taxable payroll of the employer.
  • This rate is determined annually by the Employment Security Department (ESD) and is based on the total social costs of the previous year.
• Who Pays?
  • Employers only pay this tax, as employees do not contribute to UI funding in Washington.
• Collection:
  • The Social Cost Tax is collected along with the Experience-Rated Tax, as part of the total UI tax rate. Both are reported and paid quarterly.

How Rates Are Collected
    1. Total UI Tax Rate:

• The total UI tax rate for an employer is the sum of
  • Their experience-related tax rates.
  • Social Cost Tax rate.
    
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    2.  Collection Process:

• Employers report their taxable payroll to the Washington Employment Security Department (ESD) each quarter.
• Taxes are calculated based on the taxable wages of each employee up to the taxable wage base for the year (e.g., $76,500 in 2024).
• Employers pay the combined total (experience-related tax + social cost tax) as part of their quarterly UI tax payments.

 
Summary

• Experience-Rated Tax: Customized for each employer based on their layoff history; incentivizes workforce stability.
• Social Cost Tax: A shared cost among all employers to cover UI benefits that are not directly attributed to specific businesses.
• Both taxes are essential for funding the UI program, ensuring that benefits are available for workers, while balancing fairness for employers.

In this two-part series, we cover what Washington State Unemployment Insurance works and how it is collected. In the second part of the series, we discuss how UI rates are calculated.
 
Unemployment Insurance (UI) in Washington State is a program that provides temporary financial assistance to workers who lose their jobs through no fault of their own. The program is funded by taxes paid by employers, and the system is designed to ensure the stability of both workers and businesses.
 
How UI is Collected
UI in Washington is funded by employer-paid taxes. Employers contribute based on their payroll and their "experience rating," which reflects their history of laying off workers.
 
1.  Experience Rating:

• Employers with higher layoffs pay higher UI tax rates. This incentivizes businesses to maintain their workforce stability.
• The rating is calculated based on the benefits paid to former employees relative to the taxable payroll over a certain period (typically three years).

 2.  Taxable Wage Base:

• Only wages up to a certain limit ( taxable wage base) are subject to UI taxes. For 2024, the taxable wage base in Washington State is $76,500.

 3.  Tax Rates:

• UI tax rates vary by employer and include two primary components.
  • Experience-Rated Tax: Determined by the employer's layoff history.
  • Social Cost Tax: Covers the costs of benefits not attributed to specific employers (e.g., bankrupt businesses, non-chargeable benefits).

 
The Two Parts of the Fund
The Washington State UI system involves two key funds.
 
1.  Unemployment Insurance Trust Fund:

• Pays out regular UI benefits for eligible unemployed workers.
• Funded entirely by employer taxes under the Federal Unemployment Tax Act (FUTA) and state-specific taxes.
• Employers pay the state UI taxes, and the state administers the fund to provide benefits.

 
2.  Solvency or Supplemental Fund:

• Acts as a buffer to ensure that the program remains solvent during periods of high unemployment.
• Typically, it is funded through additional employer contributions.
• Ensures that benefits can be paid even during economic downturns or times of increased claims.

 
Who Pays Each Portion?
1.  Employers:

• Employers pay all state UI taxes, including experience-rated and social cost components.
• Employers also pay a federal UI tax (FUTA) of 6% on the first $7,000 of each employee's wages, although they often receive a credit that reduces this rate to 0.6% if state obligations are met.

 
2.  Employees:

• In most states, the UI is entirely funded by employers. However, a few states allow employee contributions, and Washington State is not one of them. Workers in Washington do not directly pay into the UI fund.

Summary

Employers are solely responsible for funding Washington State's UI program, which consists of the Unemployment Insurance Trust Fund for benefits, and a Supplemental Fund for solvency. The system's design balances individual employer contributions with shared costs to cover broader economic risks, ensuring the program supports workers while maintaining fairness for businesses.

Stay tuned for part two. "​Breaking Down Washington’s Unemployment Insurance Taxes: Experience-Rated vs. Social Cost"

​Property taxes are one of the main ways communities in Washington State pay for public services. These taxes help fund schools, police, fire departments, roads, libraries, etc. Understanding how property taxes are calculated and where money goes can help one see how tax dollars are used.
 
In Washington, property taxes are based on the value of one’s home or land. Each year, the county assessor estimates how much your property is worth. This is called an assessed value. Once this value is set, it is multiplied by the tax rate to determine how much you owe.
 
The tax rate comprises several smaller parts. These come from different local governments and services, such as cities, counties, school districts, and fire districts. Each of these groups, called taxing districts, determines how much money it needs to operate. The total amount of money that all these districts want to collect is divided by the value of all properties in the area. This is how the total tax rate is determined.
 
Most of your property tax—about 80 to 85 percent—goes to local taxing districts. This money pays for public schools (local levies), fire protection, parks, and city and county services. The remaining 15 to 20 percent of your tax goes to the state government, mainly to fund K-12 public education.
 
The state collects a uniform tax across all counties, which is called the state school levy. Currently, it is approximately $2.70 per $1,000 of the assessed value, although it can change. This means that if your home is worth $300,000, about $810 of your property taxes goes to the state for public schools.
 
In summary, property taxes in Washington are based on the value of property and the needs of local and state services. Most of what you pay remains in your community, helping to keep schools running, roads repaired, and emergency services available. A smaller portion goes to the state to help fund education across Washington.

Here is a short video provided by Washington State that addresses property taxes

On May 15, Governor Bob Ferguson visited the Tri-Cities for a special bill signing ceremony, recognizing the work of local legislators during the 2025 Washington State legislative session. Held in the heart of the Tri-Cities region, the event celebrated the successful passage of bills championed by Eastern Washington lawmakers. At the ceremony, Governor Ferguson signed 11 bills into law, highlighting the impact of regional leadership on statewide policies.

The bills signed in the Tri-Cities covered a range of topics, from agriculture and infrastructure to workforce development and education. While most legislation is typically signed in Olympia, this visit underscores the importance of bringing government closer to the communities it serves. It also offered local residents a chance to witness firsthand how their elected officials are shaping laws that directly affect their region.

In total, Tri-City legislators successfully passed 18 bills into law during the 2025 session. This legislative achievement reflects the growing influence of Eastern Washington voices in Olympia and the commitment of local lawmakers to address regional needs. The remaining bills were signed earlier this year at ceremonies held at the state capitol, continuing the longstanding tradition of recognizing the legislative process at the seat of government.

This event not only highlighted the accomplishments of local lawmakers, but also emphasized the importance of bipartisan collaboration in achieving meaningful results. The governor’s decision to hold a bill signing ceremony in the Tri-Cities sends a clear message: the voices of Eastern Washington are being heard, and their ideas are making a difference across the state.
Tri-Cities can take pride in the active role their delegation plays in shaping state policy. These successes established a strong foundation for future advocacy efforts and legislative progress in the region.

The Tri-City Regional Chamber of Commerce has joined a broad coalition of business organizations urging Congress to preserve the federal deduction for state and local business taxes, commonly referred to as the B-SALT deduction. The Chamber is advocating for local businesses, emphasizing that changes to this long-standing tax provision could lead to substantial financial burdens for employers throughout the Tri-Cities and beyond.

The B-SALT deduction allows companies to deduct mandatory state and local taxes as part of their ordinary business expenses. However, recent proposals in Congress suggest placing caps on or eliminating this deduction entirely. If enacted, these changes could generate more than $600 billion in additional taxes over the next decade, affecting a wide range of business entities, including sole proprietors, partnerships, corporations, and commercial property owners.

In partnership with other regional and national business groups, the chamber highlighted that deduction has been a critical component of the federal tax code for decades. This helps ensure that businesses are not taxed twice on the same income and supports broader goals of economic stability and growth.

The coalition's message to lawmakers is clear: eliminating the B-SALT deduction would roll back important progress made through the 2017 Tax Cuts and Jobs Act, which contributed to wage increases, job creation, and expanded investment in local communities. Maintaining deductions is vital for preserving a fair and competitive tax environment that supports economic development and small business sustainability.
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The Tri-City Regional Chamber will continue advocating on behalf of its members to protect policies that promote business growth and reduce unnecessary tax burdens.

You can review the letter the Chamber sent here. 

Washington State’s 2025 legislative session brought major changes to the budget and tax landscape. The Washington Research Council (WRC) has published several insightful articles that break down the implications of these changes for businesses, consumers, and the state’s fiscal future. Below is a summary of each article, with a link for further reading.

1. Budget Cuts Offset by New Spending
While the Washington Legislature made $7.020 billion in cuts to the operating budget over five years, these reductions were largely offset by significant new spending on other programs. The analysis highlights that budget shifts do not necessarily reduce overall government spending but rather reallocate resources to new or expanded initiatives. This reflects a prioritization of funding rather than an actual contraction of government operations, raising questions about the long-term sustainability of the state’s fiscal policies.
Read the full article →

2. Historic Tax Increase and B&O Rate Changes
This Washington Research Council article outlines the scope and impact of the largest tax increase in Washington State’s history, adopted during the 2025 legislative session. The tax package includes substantial increases in Business and Occupation (B&O) tax rates, particularly targeting service industries and high-revenue firms. The Council details how different business sectors will be affected, emphasizing that changes could increase the cost of doing business across the state. This article also raises concerns about the economic impact of these tax hikes on competitiveness and investment in Washington.
Read the full article →

3. Revenue Impacts of B&O Tax Bill
A closer look at the revenue implications of the new B&O tax provisions reveals detailed estimates of the additional revenue the state expects to collect. It breaks down how each provision, including rate increases, surcharges, and new classifications, contributes to the overall projected revenue gain of over $2.7 billion in the first four years. The report emphasizes that a large share of revenue comes from service-related businesses and high-grossing firms, and it raises concerns about potential volatility and economic burden, especially for sectors sensitive to narrow margins.
Read the full article →

​4. Conference Budget Boosts Appropriations and Revenues
The final conference budget report proposes an 8.2% increase in Near General Fund–State (NGFO) appropriations and includes a tax package expected to raise $9.4 billion over four years. The analysis highlights how the budget significantly expands state spending, driven by both increased tax collection and program growth. The Council notes that the budget relies heavily on new taxes and fees, raising concerns about the long-term fiscal outlook and sustainability of this elevated spending trajectory.
Read the full article →

5. Impact of Higher B&O Taxes on Consumers
This article from the Washington Research Council explains that while a Business and Occupation (B&O) tax is levied on businesses, the economic burden often shifts to consumers through higher prices. The analysis emphasizes that businesses typically pass tax increases along the supply chain, especially in competitive markets where margins are tight. The Council warns that the recent B&O tax hikes adopted by the legislature are likely to raise the cost of goods and services for Washington residents, disproportionately affecting low- and middle-income households.
Read the full article →

Each article provides a valuable context for understanding how these fiscal decisions may ripple through Washington’s economy. Whether you’re a policymaker, business owner, or just a curious resident, staying informed on these developments is crucial.