Bellingham council OKs sales tax for low-income housing. Here’s what it means
A new sales tax to fund housing for low-income people and provide mental health and related services was unanimously approved by the Bellingham City Council this week.
It adds one-tenth of 1% to sales taxes in the city of Bellingham, and will take effect before July 1.
“It is a structural and systemic measure that speaks to the root causes of why people experience homelessness, and that is housing and providing services for those that need it,” said Councilman Dan Hammill, who proposed the tax.
Such a tax could bring in $3 million a year for low-income housing and mental health services, Deputy Finance Director Forrest Longman told The Bellingham Herald in an email.
It amounts to an extra penny in tax on a $10 purchase.
“We are estimating that the tax will cost $15-25 per year for a household earning the median household income, $56,000 per year, “ Forrest Longman, deputy finance director, told The Bellingham Herald in an email.
“There is obviously a large variation in the amount of each household’s taxable spending, so this represents a fairly broad range,” Longman said.
Whatcom County Council members will consider a similar tax at their March 23 meeting, a step that could add another $2 million for low-income housing countywide.
Several Bellingham council members said Monday, March 15, that they would have preferred to have put the tax on a ballot measure before voters, but waiting until November would risk rejection at the polls — and the city would lose about $1.5 million in the period from July to November.
“I struggled with this, not because it’s not the right thing to do but I’m not a huge fan of additional taxes,” said Councilwoman Lisa Anderson.
Bellingham residents have voted to tax themselves several times — for street projects, low-income housing and for the Greenways trail system, Anderson said.
“Given that time matters and the thought of losing $1.5 million having to wait for a vote and then implementation until next year, which possibly could be $3 million (lost) is a bit difficult,” she said.
“I wish there was a different way of taxation because even though it’s a small amount for some families, $25 or even $20 could make a difference here or there. We realize that,” she said.
Current sales tax rate in Bellingham is 8.7%, the same as in Ferndale, Lynden and Mount Vernon, according to the state Department of Revenue.
Seattle’s sales tax rate is 10.1%.
Cities can enact a sales tax for low-income housing under a law that passed the Democratic-controlled Legislature along partisan lines and was signed by Gov. Jay Inslee in 2020.
That law allows cities and counties to enact a one-tenth of 1% sales tax to build and operate low-income housing and to pay for mental- and behavioral-health facilities and services. At least 60 percent of the funds must be spent on “vulnerable populations including senior citizens,” according to the law, which encourages programs for veterans and homeless families with children.
Hammill proposed the measure at the council’s Feb. 22 meeting and it received unanimous support to bring it forward as a proposed ordinance for discussion.
“(It) would aim squarely at the root causes of homelessness,” Hammill said at the February meeting.
Hammill’s proposed tax would supplement the Bellingham Home Fund, which is a property tax that collects 36 cents for every $1,000 of assessed value and directs it toward low-income housing and supportive services.
It raises about $4 million annually, the city said in 2018 when the measure passed with 67% of the vote.
It costs the owner of a $500,000 home $180 a year.
“What we’re doing is working,” said Council President Hannah Stone. But it’s not enough.”
