2025 tax preference performance reviews

Description

This report will include three preferences that aim to support the manufacture, sale, and use of liquefied natural gas (LNG) and compressed natural gas (CNG) for transportation.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Natural Gas Used for Transportation (Public Utility Tax)	82.16.310	2014	Not in exemption study	None
Natural Gas Used for Transportation (Use Tax)	82.12.022(6)	2014	$68,636,000	None
Sales of LNG for use by private or common carriers in interstate or foreign commerce (Sales Tax)	82.08.0261(2,3)	2014	Not disclosable	7/1/2028

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objectives are to:

• Promote job creation and positive economic development.
• Lower carbon dioxide (CO₂), sulfur dioxide (SO₂), nitrogen dioxide (NO₂), and particulate emissions.
• Secure optimal LNG pricing for the state of Washington and other public entities.

Performance metric

The Legislature directed JLARC to evaluate the following:

1. The employment positions and wages at a Washington natural gas liquefaction facility operated by a gas distribution business which sells LNG for use as a transportation fuel.
2. The estimated total cost of construction of the plant, including machinery and equipment costs.
3. The estimated fuel savings by the Washington state ferry system and other public entities through the use of LNG purchased from a gas distribution business.
4. The estimated reduction in CO₂, SO₂, NO₂, and particulate emissions resulting from the use of LNG and CNG as a transportation fuel sold by a gas distribution business. LNG and CNG emissions must be compared to an equivalent amount of diesel fuel.

Description

This report will review a property tax exemption for land and structures owned by a nonprofit entity or qualified cooperative association. The owner must plan to develop or redevelop residences that will be sold to low-income households.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Nonprofit Low-Income Housing Development (Property Tax)	84.36.049	2016	$927,000	12/31/2027

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objective is to encourage and expand nonprofit low-income housing developers' ability to provide homeownership opportunities for low-income households.

Performance metric

The Legislature directed JLARC to evaluate the following two years before the preference expires in 2027:

1. Annual growth in the percent of revenues dedicated to developing affordable housing for each nonprofit and qualified cooperative association that claims the preference.
2. Annual change in the number of parcels qualifying for the exemption.
3. Annual change in the number of parcels for which owner occupancy notifications have been submitted to DOR.

The Legislature intends to extend the preference if the review finds that most of the taxpayers claiming the preference increased the percent of revenues dedicated to developing low-income housing. Measures include program expenses, program spending, or another metric.

Description

This report will review preferential business and occupation (B&O) tax rates on income from travel agent or tour operator businesses.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Travel Agents and Tour Operators (B&O tax)	82.04.260(5)	2014	$14,220,000	None

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature did not state an objective. JLARC staff reviewed the preference in 2012 and inferred three objectives:

1. Reduce the financial impact of DOR's 1975 rule change on travel agents by reducing their tax rate in proportion to the commissions earned from arranging interstate air travel.
2. Provide equitable tax treatment between travel agents and air carriers.
3. Achieve administrative simplicity by taxing tour operators at the same rate as travel agents.

Performance metric

The Legislature did not state a performance metric.

Description

This report will review an exemption from multiple taxes for businesses that participate in one trade convention each year without making retail sales.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Trade convention attendance (Multiple taxes)	82.32.531	2016	Indeterminate	1/1/2027

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objective is to encourage participation in Washington trade conventions.

Performance metric

The Legislature directed JLARC to evaluate the change in the number of businesses participating in trade conventions since 2015.

Description

This report will review a property tax exemption for real and personal property owned by a senior citizen organization. The organization must use the property as a multipurpose senior citizen center.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Multipurpose Senior Citizen Centers (Property Tax)	84.36.670	2017	$122,000	1/1/2028

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objective is to provide tax relief to senior citizen centers that do not otherwise qualify for a property tax exemption.

Performance metric

The Legislature directed JLARC to evaluate the number of senior citizen centers that received the property tax exemption and that would not otherwise have qualified for a property tax exemption.

Description

This report will review a sales and use tax exemption for materials and labor used to construct adapted housing for disabled veterans.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Disabled Veteran Adapted Housing (Sales and Use Tax)	82.08.0207; 82.12.0207	2017	$0	None

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objective is to provide financial relief for disabled veterans.

Performance metric

The Legislature directed JLARC to evaluate:

1. The number of tax refund requests for qualifying adapted housing projects each year.
2. The total amount of adapted housing grants awarded to veterans in Washington.

Description

This report will review a B&O tax exemption for fertilizer and seed distributors. They must sell commercial fertilizer, agricultural crop protection products, or seed at wholesale to an eligible retailer.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Agricultural Fertilizer and Seed Wholesaling (B&O Tax)	82.04.628	2017	Not disclosable	None

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objective is to provide tax relief to wholesale distributors of commercial fertilizer, agricultural crop protection products, and seeds.

Performance metric

The Legislature directed JLARC to evaluate the number of distributors that qualify for the exemption.

Description

This report will update a 2023 review of a hazardous substance tax exemption for certain agricultural crop protection products (e.g. pesticides). Eligible products must be stored in or transported through Washington, then sold out of state.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Warehoused Agricultural Crop Protection Products (Hazardous Substance Tax)	82.21.040(5)(a)	2015	$278,000	1/1/2028

Note: Estimated 2023-25 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objectives are to:

• Clarify an existing exemption from the hazardous substance tax for agricultural crop protection products.
• Incentivize businesses to store products in Washington while engaging in interstate commerce.

Performance metric

The Legislature directed JLARC to evaluate change in hazardous substance tax revenue.

Description

This report will review three preferences for sales of power or fuel to silicon smelters.

Preference	RCW	Enacted	Estimated biennial savings	Expiration date
Electric Power Sales to Silicon Smelters (Public Utility Tax)	82.16.315	2017	$0	7/1/2027
Electric Power Sales to Silicon Smelters (B&O Tax)	82.04.545	2017	$0	7/1/2027
Natural and Manufactured Gas Sales to Silicon Smelters (Use Tax)	82.12.022(7)	2017	$0	7/1/2027

Note: Estimated 2025-27 biennial savings are based on the 2024 Department of Revenue (DOR) tax exemption study. JLARC staff will assess the estimate as part of the tax preference review process.

Public policy objective

The Legislature stated that its objective is to promote the manufacturing of silicon that is used to make photovoltaic solar energy systems.

Performance metric

The Legislature directed JLARC to evaluate:

1. The number beneficiary businesses and their total taxpayer savings each year.
2. The volume of solar grade silicon made in Washington compared to years before October 2017.
3. The number of employment positions for each silicon smelter benefiting from the preferences.
4. The cost per job based on the taxpayer savings of each silicon smelter.
5. The number and output of solar energy systems produced from silicon smelted by beneficiaries.
6. The number of jobs at each eligible smelter paying above the county average annual wages.
7. The proportion of the county's above-average-wage jobs that are located at each beneficiary's silicon smelter.