Committee hears HB 2711 substitute to clarify fuel‑tax indexing, luxury‑tax rules and create ‘Preserve Washington’ account

Committee staff presented the proposed substitute to House Bill 2711 on Feb. 23, positioning it as a follow‑up to last year’s transportation resources package (engrossed substitute Senate Bill 5801). The substitute responds to administrative concerns flagged by the Departments of Revenue and Licensing and the State Treasurer’s Office.

Staff summarized the substitute’s central elements: it clarifies that the inflationary component of fuel tax rate changes should be distributed following the same formula as the 6¢ and 9¢ motor and special fuel increases enacted previously; it aligns the use‑tax base with the sales‑tax base for new luxury taxes (vehicles, recreational vessels) so trade‑in value is treated consistently; and it delays the RTTO (registered tow truck operator) reimbursement program until July 1, 2027, because there is no current‑biennium funding to support reimbursements.

The proposed substitute also makes several policy and administrative changes: it repeals the luxury aircraft tax included last year; it clarifies rental‑car tax administration for peer‑to‑peer platforms by requiring vehicle owners to certify reseller status so platforms can identify taxable rentals; it waives penalties and interest for dealers who attempted compliance before Department of Revenue guidance; it allows luxury‑tax on leased vehicles to be paid incrementally with lease payments; and it creates a Preserve Washington account in the Motor Vehicle Fund restricted to highway preservation and maintenance purposes.

Public testimony: RV industry witnesses asked for a delay to the luxury vehicle tax implementation, citing sales declines and competitive tax environments in neighboring states. Kevin Carl, an RV dealer, told the committee that "RV registrations are down 52%" and asked for a one‑year delay to allow market recovery. Charlie Power said the luxury tax had made Washington among the highest‑taxed states for motorhomes and asked for an amendment to delay implementation; he cited a nonpartisan Senate staff estimate that the fiscal impact of a delay would be less than $5 million.

Labor and local government testimony: Dennis Eagle of the Washington Federation of State Employees supported the creation of a Preserve Washington account and urged consideration of increasing bid limits for maintenance projects to permit timely in‑state maintenance work.

Process notes: staff described the substitute's fiscal impacts in the fiscal note (modest revenue increases from aligning use and sales tax bases for luxury taxes, administrative costs to agencies, and timing shifts for RTTO reimbursements). Members asked about public posting of the proposed substitute and staff agreed to ensure it is available in committee materials on the public site. The committee closed the public hearing and scheduled an executive session with amendment deadlines (contact staff by 10 a.m. tomorrow and finalize by 6 p.m.).