From the Director: Adjournment Less Than 2 Weeks Away -
“Must Do” Strategy Beginning to Form

With the Legislature scheduled to adjourn on or before March 9, legislative leadership is now beginning to formulate its exit strategy. Key issues, such as the supplemental general fund and transportation budgets will soon begin to be negotiated, and other “must have” measures will start to move.

The political reality is that the majority party will endeavor to seek passage of those measures designed to protect their incumbents, while the minority party will polarize against those bills which may give them some political advantage. Needless to say, the last 10 days of any session are characterized by a certain amount of game playing mixed with the serious business of legislating on behalf of the citizenry of Washington.

Budgets (Governor), Budgets (Senate), Budgets (House)

All three budgets are now before the Legislature and, fortunately, the differences are minor and subject to resolution. The most recent revenue forecast has added $158.9 million to the state’s bottom line and provided the wherewithal for the Legislature to respond to a number of new needs without jeopardizing the Governor’s desire for a $900-950 million ending reserve.

Both the Senate-passed budget and the House budget leave slightly more than the Governor’s requested reserves on the table. While the bottom lines are similar, there are still significant differences in expenditures that will have to be resolved before the March 9 adjournment.

A key element of both the House and Senate budgets is the increase in pension funding due to commence on January 1, 2007. Both budgets will result in an additional PERS employer contribution rate of 1.77%, beginning at the start of next year (see the Personnel section for more information). The legislative intent is to begin the process of stabilizing pension funding and in so doing avoiding the need for greater than already anticipated rate increases.

The Association supports this pension funding philosophy and appreciates the House and Senate not imposing a pension funding increase on local governments in July, midway through their fiscal year.

Streamlined Sales Tax-Déjà Vu

Progress is being made in moving the streamlined sales tax (SST) legislation through the House and on to the Governor’s desk.

This past Thursday evening, the House Finance Committee, with a bipartisan vote advanced the measure to the House Rules Committee for scheduling for floor action. However, passage of the bill is far from secured, and all cities need to contact their House members to request that they pass SSB 6594 with full mitigation this year. 

Pursuant to the proposal, the switch from origin to destination apportionment of sales taxes when a delivery is made will take place on July 1, 2007. The state will mitigate the impact on the negatively impacted jurisdictions, and this will avoid major local revenue losses.

On a related note, we have been told that the issue of the locating of future warehousing will be subject to a study by the Department of Revenue and Department of Community, Trade and Economic Development, as a result of Legislative concerns in response to cities’ concerns about this issue. See the Municipal Finance section for more information.

On a Closing Note

On a personal note, I’d like to express appreciation to all of those who’ve responded to our calls for legislative contact. Those calls from home have impacted legislators’ votes, which is a testament to the effectiveness of that contact.

In the closing days we will continue seek your help as we try to derail harmful legislation and achieve passage of the remaining good measures.

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