State Sen. Ron Muzzall is sponsoring a bill that would require private companies that own military housing to pay property taxes.

If passed, SB 5845 would increase tax revenues for some districts — such as Oak Harbor Public Schools and the Whidbey hospital district — and share tax responsibility with all property owners.

Muzzall, a Republican from Oak Harbor, explained that giant corporations own housing on military bases in the state but don’t pay property taxes because of a 2008 law passed in an effort to protect Fairchild Air Force Base from a round of the Base Realignment and Closure process.

Muzzall’s bill would reverse the law. He said officials from the Oak Harbor school district, hospital district and Island County advocated for the change. He spoke with Navy officials who said they have no problem with it since it won’t affect the military or personnel.

“It’s a tax equity issue that most people can agree with,” he said.

At Naval Air Station Whidbey Island, for example the out-of-state company Hunt Military Communities owns base housing, while the land it sits on is owned by the federal government.

The federal land will remain exempt from property taxes, but Muzzall’s bill would require the company to pay its share of property taxes on the housing itself.

Muzzall said he started looking into the issue after hearing from the WhidbeyHealth board. The Whidbey hospital and clinics serve active duty personnel and their families, especially since the base hospital became a clinic with limited services. But at the same time, Navy personnel living in base housing don’t pay the property taxes that are essential to the operation of the hospital.

“The taxpayers end up picking up the slack,” Muzzall said.

The Oak Harbor school district is in a similar position. Many of the students come from military families, but the large portion of the property in the district is federal and exempt from property taxes. The district receives Impact Aid from the federal government to help make up for it, but it doesn’t come close to filling in the gaps, according to Muzzall.

Requiring private owners of military housing to pay property taxes won’t solve the problem, Muzzall said, but it will help. It is estimated that the increased property tax collection from privately owned Navy housing on Whidbey Island will be “upwards of $250,000” a year.

The bill wouldn’t have an effect on property tax collections for the city of Oak Harbor or Island County, which are limited by a 1% increase each year. But it would mean taxpayers no longer are picking up the property tax bill for a corporation.

While it doesn’t mean more money for them, Island County commissioners identified the bill as one of their top policy issues for state lawmakers. They discussed the bill this week with a lobbying firm the county hired to advocate in Olympia.

Commissioner Jill Johnson said it was important to make it clear that the bill isn’t anti-military.

“It’s not about the military itself,” she said. “It’s not about the land and it’s not about the personnel. It’s about a corporation paying its taxes.”

In a statement, a Hunt Military Communities spokesperson said the company is aware of the legislation and is “working to understand how it will affect the Whidbey Island military housing tax requirements.”

“We look forward to engaging with government officials to discuss the impacts this legislation, if passed, would have on the sustainment dollars available to modernize the community and improve the quality of life for our military residents,” the statement said.