OLYMPIA, WA – At the close of last year’s Washington state legislative session, a key bucket of wildfire prevention funding was slashed nearly in half by lawmakers attempting to offset a budget deficit. If it wasn’t restored this year, the Department of Natural Resources was prepared to cut staff and eliminate grants for communities facing wildfires.
Rep. Shaun Scott, a socialist Democrat from Seattle, found a way to get some of that funding back by eliminating what he described as a “tax loophole” for large mortgage lenders.
Commissioner of Lands Dave Upthegrove urged the Legislature to use $60 million from the state’s cap-and-trade auctions on wildfire mitigation projects. And, in this year’s budget, they did. Scott’s bill will be an additional source of funding.
House Bill 2089, signed Monday, will generate revenue by narrowing a tax break for interest accrued by mortgage lenders.
The measure stems from a 2021 tax deduction intended to help community banks. But the institutions benefiting from the tax break were mostly “placeless institutions,” reads the bill, citing findings from the Department of Revenue.
Starting July 1, lenders that issue $10 billion or more a year in mortgages will not qualify for the tax break, and the resulting revenue will be dedicated to forest health, community preparation for fires and firefighting workforce development.
During the session, Scott said that financial titans like Rocket Mortgage had been taking advantage of the tax break, even though it wasn’t intended to help them.
Scott argued that there is a link between large online mortgage lenders and wildfires. He said the companies rely heavily on data centers, which use large amounts of water and power and are therefore contributing to climate change and, in turn, worsening fires.
The bill is estimated to generate about $30 million for each two-year budget cycle and will supplement the roughly $120 million for the wildfire programs in each biennium.
“The Department of Natural Resources is appreciative of any dedicated funding,” said spokesperson Thomas Kyle-Milward.
In 2021, the Legislature committed $500 million to a new wildfire account over eight years. The department received $115 million in the last two-year budget and $130 million in the one before that.
But in last year’s budget, the funding was only about half that amount. The steps lawmakers took this year will get funding for the account back on track with the original target.
“It’s a huge issue, obviously, in the state of Washington,” said Gov. Bob Ferguson during Monday’s bill signing. “It’s critical that we dedicate sufficient resources to mitigating wildfires and preparing for them before they start.”
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