Once-failed efforts to expand special education funding and cap rent increases found success in the recently concluded state legislative session and support from the 24th District’s three lawmakers.
The measures stand among of slew of bills and a $78 billion biennial budget fueled by tax increases and budget cuts that, as of Friday, still awaited Gov. Bob Ferguson’s signature, due by May 20.
The spending plan includes funding for a $250,000 Department of Natural Resources study on the impact of future logging on the Elwha River watershed and if DNR timber should be placed in a natural conservation area, said Sen. Mike Chapman, D-Port Angeles, the Agriculture and Resources committee chair who proposed the capital expenditure.
But budget restraints have doomed — for the time being — further development of roundabouts on U.S. Highway 101 and planned improvements for the stretch from Sequim to Blyn.
Housing is a major focus of the spending plan, said Rep. Steve Tharinger, D-Port Townsend, citing $600 million in capital expenditures for the state Housing Trust Fund for multifamily rental housing. Affordable housing projects include permanent supportive housing, which offer support services for the chronically homeless.
The rental cap stalled in the Senate in 2024, but a version with a higher increase threshold survived this year’s cut.
With some exceptions, such as a 12-year exemption for newly constructed dwelling units, House Bill 1217 would limit rents to a base increase of 7 percent plus the inflation rate, or 10 percent, whichever is less. The 2024 version capped rents at 7 percent.
Clallam County’s 11.8 percent annual apartment rent growth rate in 2024 was the highest among Washington’s 39 counties, according to a University of Washington study.
Average monthly rent was $917, with 511 apartments countywide.
By comparison, Jefferson County annual apartment rent growth rate was 1.1 percent, eighth lowest in Washington. Average rent was $749 for the county’s 139 units.
One-bedroom apartments were $783 in Clallam and $650 in Jefferson.
Under HB 1217, rent increases for mobile home park residents, where homeowners pay monthly for the land they occupy, would be limited to a flat 5 percent.
As a state House member in 2024, Chapman opposed the cap, fearing it would deter rental housing development.
He said last week construction costs also go into development decisions and suggested the 10 percent threshold is more favorable to investors.
“I tried to navigate the middle ground,” Chapman said. “It’s going to take awhile to see if we got it right.”
Jesse Schubert, owner of Action Property Management in Sequim, manages about 150 single-family, duplex and fourplex homes, mostly in Sequim and Port Angeles — commonly two-bedroom, two-bath, one-car garage — that rent for an average of $1,850 a month.
Tenant income must equal three times the rent.
“None of our clients want tenants to be homeless or have to choose between paying the rent or buy food or medicines,” Schubert said.
Costs can be high for home rental maintenance or for build-to-rent projects, and landlords don’t control market rates, he said.
Schubert has not seen the rent growth reflected in the UW study in rental homes. And the crux of the problem does not lie with landlords, but wages, he said.
“That’s a bigger challenge that I don’t think is solved by capping rents,” he said.
“It’s an artificial market distortion that depresses what you can charge for rent and is ultimately a disincentive to builders. That’s opposite what’s needed.”
Tharinger was confident demand for rentals will overshadow the cap and spark development.
“The demand is so high, I think there will be people who will still invest and build units,” he said. “We are incentivizing multi-unit fourplexes and duplexes to make it easier to build. Maybe they won’t make a 25 percent return, but quite frankly, they don’t need to.”
Rep. Adam Bernbaum, D-Port Angeles, is a former legislative assistant in his first term and the Transportation Committee vice chair. He voted for HB 1217 “with quite a bit of hesitation,” he said.
His one campaign promise was to pass rent cap for manufactured home parks.
“I personally think the better version of this policy would’ve had more tools in place to provide assurance to developers that if they want to build apartment complexes in Washington state, this is going to be a place that’s friendly for them to do so,” Bernbaum said.
The spending plan on Ferguson’s desk covers a $16 billion projected shortfall over the next four years.
The business and occupation tax, levied on gross receipts, would increase from 0.471 percent to 0.5 percent for retailers and from 0.484 percent to 0.5 percent for wholesalers and manufacturers starting Jan. 1, 2027.
The increase would equal 29 cents on every $1,000 of B&O tax for retailers, and 16 cents on every $1,000 of B&O tax for wholesalers and manufacturers. The rate also would increase for businesses with gross receipts over $1 million, and a temporary 0.5 percent surcharge would be levied on businesses with a taxable income over $250 million.
The gas tax also would increase July 1 by 6 cents a gallon and indexed to inflation for future years.
And the retail sales tax would be expanded (ESSB 5814) to areas including software development, web design, IT training and services, and advertising services not including print and broadcast media, raising $4.7 billion over four years. It would require businesses with at least $3 million in taxable retail sales to prepay their state sales tax.
“A lot of those taxes will be passed along to the consumer, which will cause prices to rise,” predicted Colleen McAleer, executive director of the Clallam County Economic Development Council and a Port of Port Angeles commissioner.
She said EDC funding, including small business assistance, would drop substantially, and that could lead to staff cuts at the nonprofit.
Meanwhile, Senate Bill 5263 increases education funding for students with disabilities at a cost of $2 billion through 2029 and removes an enrollment cap that limited special education funding to 16 percent of a district’s special education students.
Twenty percent of the Port Angeles School District’s enrollment is comprised of special education students.
The bill also increased a per-student cost multiplier under which districts receive the funding.
“Last year, we reported about $1.6 million of local funds to cover the difference between the students that qualified and what the state and federal government fund,” Port Angeles schools Superintendent Marty Brewer said.
Property tax levy funds help cover that spending.
Brewer said he is unsure if Ferguson’s approval of SB 5263 would fully cover the 4 percent of students who exceed the 16 percent threshold.
“I need to do more research in the coming days and weeks to really understand this whole conversation because I’m getting conflicting information,” he said.
Capital projects include funding for a seismic safety grant program at Cape Flattery school at Neah Bay, the Shore Aquatic Center childcare expansion project, the Port Angeles Marine Discovery Center, the Jefferson County Early Learning Center, and for Fort Worden in Port Townsend as it transitions from being a public development authority.
Capital funding for the Port of Port Townsend includes $1.3 million to help buy a 75-ton electric travel lift to replace a 39-year-old 70-ton lift.
“It’s our classic,” Port Executive Director Eron Berg said.
Other port projects in the spending plan include $500,000 for boatyard expansion.
Clallam County Commissioner Mark Ozias, the board’s senior member and its legislative liaison, said a bill to fund public defense expenditures did not advance, but he was hopeful a $100 million hiring and training program for law enforcement agencies proposed by Ferguson and included in the spending plan would help the county.
It requires a local match of a 0.1 percent sales tax without voter approval.
“Clallam County should be competitive,” Ozias said. “It’s a step in the right direction.”
Chapman noted the barebones transportation budget delays the Sequim-Blyn U.S. Highway 101 improvement project.
“That’s not a high-priority project for the overall state transportation system,” he said.
“I’m skeptical it will ever be funded. Everything’s getting delayed.”
Chapman said not to expect any new Highway 101 roundabout construction, either, something he and Ozias allowed might be OK with North Olympic Peninsula residents.
Partial list of bills
The following is a partial list of bills that passed. For a full list, go to www.fiscal.wa.gov.
SB 5390: Increases cost of Discover Pass from $30 to $45 for access to state parks, Department of Fish and Wildlife areas and trails, and state Department of Natural Resources trails, campgrounds and recreation sites. Delivered to governor.
HB 1353: Allows cities to operated self-certification program under which architects can certify building-code compliance for detached accessory dwelling units. Governor signed.
HB 1096: Requires cities to establish a process for simultaneous review and approval of an administrative residential lot-split. Delivered to governor.
SB 5298: Removes the requirement for the owner of a manufactured or mobile home park to provide to residents a separate notice of sale for the park. A notice of opportunity to purchase must be delivered to each tenant, any qualified tenant organization, the local government and the state Department of Commerce. Delivered to governor.
SB 5509: Requires cities to allow child care centers as outright permitted uses in all but industrial, light industrial and open space zones. Delivered to governor.
SB 5471: Allows counties to authorize middle housing — such as duplexes, fourplexes, townhouses, courtyard apartments — compatible with single-family houses on parcels that permit single-family residences in urban growth areas and limited areas of more intensive rural development (LAMRID). Middle housing in a UGA or LAMRID would be limited to four residential units per lot. Delivered to governor.
SB 5337: Requires Department of Social and Health Services certification for memory care services as assisted living facilities that meet standards specific to the needs of dementia patients. Signed by governor.
SB 5486: Requires movie theaters to provide captioning for certain screenings and access to closed captioning technology. Delivered to governor.
SB 5104: Protects employees from employers who engage in coercion and threats in the workplace based on immigration status. Delivered to governor.
SB 5110: Authorizes community and technical colleges to waive tuition and fees for tribal elders older than 55, a waiver that also applies to children and surviving spouses of law enforcement officers, firefighters fully disabled in the line of duty and highway workers. Signed by governor.
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Paul Gottlieb is a freelance writer and photographer who is a former senior reporter and commentary page editor at Peninsula Daily News. He lives in Port Angeles.
Mike Chapman.
Steve Tharinger.
