From the Director: 2005 Legislative Session: A Positive One for Cities
By Stan Finkelstein, AWC Executive Director
On Sunday, April 24th, the 2005 regular session of the legislature adjourned "sine die."

This longer 105-day session was intended to address major issues, such as the state’s 2005-07 biennial budget, a transportation-funding package, and election "reform." For the most part, the Legislature accomplished much of what it had set out to do, without the need for a special session.

From the onset, the session was clouded by the contested election of Governor Christine Gregoire. The narrowness of her election victory, coupled with allegations of election improprieties, raised concerns regarding the entire election process. In the end, while the Legislature enacted a series of minor election reforms, much of the electoral system remained intact. The election issue was a source of some dissension throughout the session, and possibly contributed to frictions between Democrats and Republicans.

For the first time in a number of years, the governorship and both Houses of the Legislature are in the hands of a single party: the Democrats. The Democrats gained control of the Senate with a 26-23 majority, and strengthened their control with a 55-43 majority in the House. Even with majorities in both houses, there were a number of issues for which the Democrats could not muster a majority.

Strong gubernatorial leadership characterized the 2005 session. Governor Gregoire exhibited a real presence in the legislative process and was instrumental in resolving a number of divisive issues, including the transportation package. The Governor played a pivotal role and established a strong relationship with the legislative leadership. The Association was especially appreciative of the warm reception given by the Governor to the leadership of AWC and the counties’ associations. She expressed a real concern about the well-being of local governments and pledged to work with the associations to foster a true state-local partnership.

Fiscal Woes

Money! Money! Money - or the lack thereof has characterized the state’s fiscal picture for the past five years. Once again, the Legislature faced a substantial revenue shortfall in endeavoring to sustain services for the upcoming biennium. That shortfall exceeded $2 billion when the Legislature convened in January. The shortfall reflected the impact of mounting health care costs, initiatives either reducing revenues or increasing costs, and the implementation of a collective bargaining agreement providing for state employee salary increases for the first time in four years. In a nutshell, the state was looking at either cutting services or increasing taxes, both equally distasteful alternatives.

In the end the Legislature resolved its budget dilemma with a combination of tax increases and budget reductions. The Legislature approved increases in tobacco and liquor taxes, re-imposition of an estate tax, and spending cuts. The Legislature also cut back the proposed increase in pension funding rates, a decision that benefited cities.

Unfortunately, resolution of the budget debate turned into a partisan conflict with the Republicans opposing the tax increases and the Democrats opposed to further spending cuts. The adopted budget sustained local government assistance programs, but funded very few new initiatives.

State of the Cities

One of the keys to the Association’s successes during the 2005 session was that the Legislature recognized that many of the state’s cities and towns were in a fiscal "vise." They were facing ever rising costs and shrinking revenues. That reality was highlighted in the AWC State of the Cities report, unveiled at a press conference in the Legislative Building on January 18. In attendance were representatives of the capitol press corps, many key legislators, legislative staff, and representatives of the administration. In her discussion, AWC President, Mary Place reviewed the findings and indicated that the report documented the dire financial conditions of many of the state’s 281 cities and towns.

Clearly, the State of the Cities report helped immeasurably in convincing legislators that many of our state’s communities were in trouble and desperately needed ongoing assistance. This report, coordinated by AWC staff members Meagan Eliot and Sheila Gall, will be periodically updated to monitor the fiscal health of the state’s cities. In large part it has validated the belief that the Legislature will respond to irrefutable evidence of a problem and the need for a solution.

Assistance to Struggling Cities and Counties

A centerpiece of the AWC and Washington State Association of Counties legislative agenda for the 2005 session was the need for ongoing funding for the state’s more financially strained cities and counties. Repeal of the motor vehicle excise tax, and with it, elimination of sales tax equalization has resulted in a large number of jurisdictions having great difficulty funding basic services. Whereas previously the Legislature provided "backfill" to assist the most adversely impacted cities and counties, continuing revenue shortfalls made it unlikely that "backfill" would be continued.

The AWC Board of Directors adopted the position that there needed to be an ongoing program of fiscal assistance. SB 6050, sponsored by Senators Parlette, Doumit, Morton, and Mulliken, establishes a program of ongoing financial assistance to struggling cities and counties. The measure diverts $20 million dollars in state real estate excise tax from the Public Works Assistance Account to a new city-county assistance account for distribution to those cities and counties characterized by low per capita sales tax receipts or low assessed valuations per capita. Cities with low sales taxes but with high-assessed valuations are excluded from the program.

Passage of this legislation would not have been possible without all of the calls and emails from local officials to their legislators. Those calls from home acknowledged the difficulties that many jurisdictions were experiencing and of the importance of state assistance. Legislators were sensitive to their cities’ and counties’ needs and were willing to redirect resources to respond.

A special note of appreciation is due to Bridgeport Mayor, Steve Jenkins, without whose efforts this measure probably would not have seen the light of day. Steve prevailed upon his senator, Senator Parlette, to introduce the measure and work towards its passage. AWC is especially appreciative of Senator Parlette’s efforts on behalf of SB 6050, as well as those of Senator Doumit. The Senators were especially committed to this legislation and without their persistence it is unlikely that the measure would have passed.

Transportation Funding: A Partial Victory

A second high priority for the AWC this past session was to secure additional funding for city transportation needs. The Association sought both an increase in state gas tax distributions to cities as well as local option transportation funding sources. During the previous summer, AWC published Rough Road Ahead, documenting the difficulties many cities were having in addressing their transportation needs.

From the onset it was apparent that transportation funding would be a major legislative issue. Concerns regarding the structural integrity of the Seattle viaduct and the Evergreen Point floating bridge, coupled with the need for many other roadway improvements necessitated a funding increase. The concern of local governments was that the Legislature be mindful of the needs of cities and counties and share a portion of the increase.

This was a partial victory in that cities and counties will each receive the equivalent of a half a cent of the 9 ˝ cent gas tax increase, which, when fully implemented, will be approximately $4.25 per capita for cities. In addition, the transportation package provides for increased funding for the Transportation Improvement Board, and for the reestablishment of a small cities pavement maintenance program. Unfortunately, the Legislature was unwilling to authorize any additional local option transportation funding options. The local option issue is one that many city officials support, and we anticipate that this will continue to be part of the AWC legislative agenda.

Economic Development

Economic development has been a major concern of state and local leaders for some time. While it has often been alleged that Washington is a "business unfriendly state," few tools are available at the local level to encourage and retain business interests.

This year, a third thrust of the Association’s legislative agenda was the need to enhance the economic development tools available to cities and towns. For several years, the Association has sought authorization for tax increment financing. Unfortunately, those efforts have previously failed. This year, the Speaker of the House suggested as an alternative, establishment of an infrastructure program, funded by diversion of $50 million per biennium from the Public Works Assistance Account (ESHB 1903). The funds are to be used for infrastructure projects that result in job creation. The revenue transfer is scheduled to sunset in 2011.

In addition, the Legislature enacted 2SSB 5370, establishing an economic development strategic reserve. This legislation diverts monies from unclaimed lottery prizes to establish a source of funds that the Governor may use to secure or retain businesses.

In Closing

In addition to the aforementioned measures, a number of other critical issues were before the Legislature this year, including changes to the Public Disclosure Law, funding for infrastructure, ambulance service funding, gambling/card room zoning, public employee pensions, modifications to the Growth Management Act, and funding for the courts. As indicated in subsequent sections of this Bulletin, the Association succeeded in achieving its goals in many of the above referenced areas. More importantly, we were able to derail many of the adverse issues that were before the Legislature.

For the most part, the 2005 session was a success for the state’s cities and towns. Many positive measures were enacted and most harmful measures passed by the wayside. The Legislature was especially sensitive to the problems of the state’s smaller communities. There was a concerted effort to "do no harm" and the Legislature satisfied that mantra.

As most readers are aware, legislative successes are a result of a broad based effort to tell the city "story." This session, more than most, there was a substantial effort by our city officials to contact their legislators and participate in the lobbying process. Those contacts from home have paid countless dividends and in large part helped convince many legislators of their responsibilities to their local communities. The AWC Officers, Board of Directors, and staff are sincerely appreciative of all those local officials who went the extra mile to communicate the Association’s positions on the hundreds of measures impacting cities. Those efforts were the difference between success and failure on a number of key issues.