TACOMA, Wash. — People in Tacoma will start paying more in sales tax.
Tacoma City Council on Tuesday voted unanimously to approve a one tenth of 1 percent sales tax increase to fund affordable housing projects.
The action increases sales tax from 10.2 percent to 10.3 percent, adding a dime to every $100 purchase, not including groceries. The increase is estimated to net the city an annual revenue of $5 million.
The tax begins July 1. The city will start to receive the revenue sometime in early fall.
“We’ve got to do something if we’re going to even get to close to achieving our goal of getting more affordable housing in Tacoma,” Mayor Victoria Woodards said Tuesday.
Washington state House Bill 1590, passed in 2020, gives city and county councils authority to vote to raise local sales taxes for housing and does not require them to ask voters for approval.
Under the law, 60 percent of the proceeds are to be used for constructing affordable housing, mental and behavioral health-related facilities and funding operations and maintenance of new affordable housing and facilities where housing-related programs are provided. The remaining 40 percent can be used for “operation, delivery or evaluation” of mental and behavioral health treatment programs or housing-related services.
The law also allows the city to bond against the funding to leverage millions of dollars more in additional investments for housing projects.
The funds would target populations making at or below 60 percent of Pierce County’s Area Median Income (AMI), or roughly $51,900 a year for a family of four. The city also can set parameters to target populations below 60 percent AMI. Populations that can be served under the statute include veterans, senior citizens, people without homes, unaccompanied homeless youth and young adults, people with disabilities or domestic violence survivors.
City staff is required to meet with stakeholders to determine which projects should be funded and how to best use the money.
On Tuesday, the council added an amendment that requires city staff to work with a committee of the City Council to develop a spending plan and to provide a written report every two years on how the money is spent.
The amendment was added after some Council members expressed concern that there wasn’t a more detailed plan for the funds prior to approval of the tax.
“It was vital to all the members of this council that we add an accountability piece in there,” Council member Lillian Hunter said.
At least 33,000 households, or 40 percent of renter households in Tacoma, are considered “cost-burdened,” or pay at least 30 percent of their income on housing costs each month, and 16 percent of those households pay more than 50 percent of their income on housing costs, according to city data.
“I’m really pumped that we’re doing this,” Council member Chris Beale said. “This is kind of a landmark moment here that really can’t be underscored — that we have not had a sustainable source of funding like this for our Housing Trust Fund or Economic Development Department or anything like that, at all.”
Michael Mirra, executive director of the Tacoma Housing Authority, spoke in support of the tax at Tuesday’s City Council meeting.
“What the council does need is assurance that the city is poised to use the money well,” Mirra said. “And I can offer THA’s portion of that assurance by telling you that the Tacoma Housing Authority pipeline by itself can put this money to good use.”
“There are plenty of projects in our pipeline to fill the need for this fund,” said Amanda DeShazo, executive director with the Pierce County Affordable Housing Consortium.