Changes to Sales and Use Tax for Public Facilities in Rural Counties

Over the past couple of years there have been a few changes to the statute authorizing rural counties to impose a .09% rural sales tax, also known as the Rural Counties Public Facilities Sales Tax. While MRSC has included those changes in our Revenue Guide for Counties, we think it’s also important to highlight that information separately.

First, for those who may not know what the .09% rural sales tax is, both it and the counties that can impose it are described in our Revenue Guide for Counties as follows:

Any “rural county” — defined as a county with a population density of less than 100 people per square mile or smaller than 225 square miles in land area — may impose a sales tax of up to 0.09% for economic development purposes, commonly referred to as “.09 money” (RCW 82.14.370). This tax is a credit against the 6.5% state sales tax and therefore does not result in a tax increase to the consumer.

The tax was part of the broader 1997 bill, SB 5740, and was intended to assist rural counties in their efforts to promote economic development and employment opportunities. According to the Washington State Office of Financial Management, 30 counties currently qualify for this tax.

Since its 1997 inception, there have been a couple of major and several minor legislative changes to the statute. While we won’t cover definitions or formatting changes, we believe the changes below are most important for entities utilizing these funds to be aware of.

Changes

In 2024, HB 1987 passed (effective June 6, 2024) with the following major change:

• Adding the purchase of land for affordable workforce housing infrastructure and facilities as an authorized use of .09% monies.

In 2023, HB 1267 passed (effective July 23, 2023), making the following changes:

• Changing the expiration of the sales tax for counties imposing the tax before August 1, 2009, and meeting the definition of a rural county as of August 1, 2009, to December 31, 2054;
• Expanding counties’ reporting on the use of funds to require more detailed information on both new and continuing projects; and
• Requiring the state auditor’s office to provide a publicly accessible report on the funds’ usage by December 31, 2024.

And, as a reminder, in 2022, SB 5868 passed with an effective date of June 9, 2022, effecting the following change:

• Expanding the use of .09% funds to include affordable workforce housing infrastructure or facilities.

The Office of the Washington State Auditor annually tracks how rural counties are spending proceeds from .09% sales tax, with the most recent reporting year being 2023.

Finally, you can access our Revenue Guide for Counties for more information on this and other sales taxes available to county governments, or for sales tax available for cities and towns, check out the Revenue Guide for Washington Cities and Towns.

As always, if you have a question regarding the use of .09% rural sales tax or other funds, you can Ask MRSC.