Legislative updates preserving timber tax distribution for school districts with recent school district levy failures

Intended audience: County assessors, county treasurers, and taxing districts.

The 2026 Legislature passed Senate Bill 5994 (SB 5994), which changes how county treasurers distribute timber excise tax revenues under RCW 84.33.081. The bill took effect March 16, 2026.

Background

Timber Excise Tax (timber tax), also known as forest tax, is collected from timber owners, also known as timber harvesters.

The timber tax includes:

• A 1% state tax.
• A 4% county tax.

Both taxes are based on the stumpage value of timber harvested in Washington state. The state administers the tax program.

Before the tax revenue is distributed, the state and counties deduct their share of administration costs. On the last working day of February, May, August, and November, the Washington State Treasurer distributes the remaining timber tax collected within each county to that county’s treasurer.

County treasurers then distribute those funds to taxing districts within the county in accordance with RCW 84.33.081 and the Timber Tax Distribution worksheets completed by the county assessors.

County treasurers distribute timber tax revenues using three priority levels:

1. The first priority level of distribution is for voter-approved bonds and school district capital projects funds. Timber assessed value (TAV) is used to calculate both the district’s levy rate and the timber tax distribution.
2. The second priority level of distribution is for school district enrichment and transportation vehicle levies. Half of TAV, or 80% of the 1983 timber roll, is used to calculate the district’s levy rate and timber tax distribution.
3. The third priority level of distribution is for regular levies or excess levies not included in priority one and two. TAV is used to calculate the timber tax distribution but not to calculate the levy rate for regular levies.   

What the bill does

This bill amends RCW 84.33.081 to allow school districts to continue receiving timber tax distributions for capital project levies and enrichment levies, even if the district does not impose those excess levies in the current tax year, as long as the district imposed the levy within the previous two years.

The timber tax distribution is based on the highest levy rate the district imposed during the prior two years of the levy.

This enacted legislation has an emergency clause. The change in the distribution of timber tax begins with the 2026 calendar year.

What the bill doesn’t do

This bill does not change:

• The calculation of TAV.
• The calculation of the composite tax rate.
• The calculation of levy rates for taxing districts.
• The amount of timber tax distributed to the county.

What does this mean for 2026 distributions?

For calendar year 2026, county assessors must update the Timber Tax Distribution worksheets to include school district capital project levies and enrichment levies that are not being levied in the current year but were levied within the previous two years.

County assessors must provide the updated worksheets to the county treasurer. County treasurers will then use the updated information to complete the remaining timber tax distributions in 2026.

This means satisfying the required first-half distribution to all priority one and priority two districts from the second quarter distribution before any distributions are made to priority three.

What does this mean for distributions in 2027 and beyond?

The county assessor will need to track school district capital project and enrichment levies that have expired, when new replacement levies are not levied by the district. The highest levy rate from the prior two years will be used to calculate the timber tax distribution for the school district, even though there is not a property tax levy for that tax year. An expired levy that is not replaced can receive timber tax distributions based on past rates for up to two years.

Questions and answers

Q: Does SB 5994 also apply to school district bond, construction, or transportation vehicle levies?

A: No. SB 5994 applies only to capital project levies and enrichment levies under RCW 84.52.053.

Q: Does SB 5994 allow an expired levy rate to be used indefinitely for timber tax distributions?

A: No. The provision applies only for up to two years after a school district imposed the levy. Receiving a timber tax distribution based on a prior levy rate does not count as imposing a levy.

For example, if School District A imposed an enrichment levy for tax years 2023 through 2026, but does not impose an enrichment levy in the 2027, 2028, or 2029 tax years:

• The highest levy rate levied in 2025 or 2026 will be used for the 2027 timber tax distribution.
• The levy rate from 2026 will be used for the 2028 timber tax distribution.
• The district would not be eligible for timber tax distribution in 2029 unless it imposes a new enrichment levy.