Washington projects $250M funding shortfall for homeless services

In Washington, the slow housing market is having a consequence that few have heard about: less money to help people who are homeless. 

Nearly all of the state’s funding for homeless services comes from document recording fees that people pay when they buy or refinance homes. 

As real estate transactions have dropped, so have the fees being collected. This fiscal year, there’s a projected shortfall of around $250 million. 

“When people hear this, they should be really, really alarmed,” said Michele Thomas, director of policy and advocacy for the nonprofit Washington Low Income Housing Alliance. “Nobody wants cuts to homeless services. Nobody wants homeless shelters to close. Nobody wants to see an increase in unsheltered homelessness on our streets.” 

For the past two years, the Washington Legislature has backfilled the hole. But because the hole is about four times as big as last year’s, and because analysts are predicting a budget deficit in the coming session, Thomas is worried there won’t be enough to cover the gap.

She said she will be especially concerned if the capital gains tax is repealed in the upcoming election, thereby reducing the amount of revenue the state collects. 

“The Legislature has never put enough money in the budget to actually meet the need of people who are experiencing instability in their housing or who are experiencing homelessness,” Thomas said. “So if we’re talking about cuts right now, we are talking about cuts to a system that’s already broken.” 

Document recording fees fund the Consolidated Homeless Grant, which in turn funds homeless services across the state. Every county, from urban to rural, could be affected. 

In Walla Walla County, for example, the revenue earned from document recording fees dropped by more than half between 2021 and 2023, resulting in the lowest revenue generated in six years.

“This work is already really stressful,” said Sam Jackle, senior homeless housing coordinator for the county’s Department of Community Health. “When there’s uncertainty around whether or not there’s enough funds or where the funds will come from, that just kind of amplifies that.” 

Jackle hopes the Legislature will make up for the shortfall, as it’s done in past years. If it doesn’t, that could lead to cuts. 

“We would have to look at reducing the amount of funding that we can put out for homeless services and housing assistance programs,” Jackle said, referring to things like transitional housing, permanent supportive housing, emergency shelters, case management and street outreach. “It could lead to less services, or programs having to get more creative about how they fund those services.” 

While other states use document recording fees to fund housing-related programs, Thomas doesn’t think others rely on them as heavily as Washington does. Ultimately, she believes the Legislature must supplement document recording fees with another stream of funding. 

“The state really is going to have to grapple with this,” Thomas said. “Because it’s the third year in a row that the Legislature has had to figure out how to fully fund the existing level of homeless services.” 

Thomas noted that a budget deficit year, however, is probably not the time to have that conversation. 

“We need the Legislature to prevent cuts,” she said. “And after that, we need to engage everyone in a conversation about how to have a more sustainable fund source.”