Municipal Finance

AWC Priority Issue:
Streamlined Sales Tax (SB 5089/ HB 1072)

SB 5089 passed out of the Senate Ways & Means Committee on January 18 with two "no" votes. These two votes in committee against the bill, which was approved unanimously by the Senate last year, serve as a reminder to all cities of the need to continue to remind legislators that adoption of the SST agreement with full mitigation is one of the top priorities for cities this session.

Thank you to AWC President Mark Foutch, Mayor of Olympia, and Eric Faison, Federal Way Councilmember, for testifying on behalf of cities in front of the Ways and Means Committee last week.

HB 1072 will be heard by the House Finance Committee on Tuesday, January 23 at 10 am. AWC President Foutch is again scheduled to testify in support of the bill. We expect he will be joined by representatives from the Department of Revenue, counties, and business in support of the bill.

AWC will again be using an SST contact list to send out periodic e-mail updates to city officials in addition to the legislative bulletin and action alerts. If you are not a member of the SST contact list and would like to be added, e-mail Sheila Gall at sheilag@awcnet.org.

For updated SST impact estimates and the most recent fact sheet, see the AWC website at www.awcnet.org/streamlinedtax.

AWC Priority Issue:
City Fiscal Flexibility (HB 1342, HB 1254, HB 1369)

Promoting city fiscal flexibility for existing revenue sources is one of AWC’s legislative priorities. A few recently-introduced bills would provide greater flexibility for cities. We will continue to work on getting hearings scheduled for these bills.

HB 1342, sponsored by Rep. Dean Takko (D-Longview), clarifies the use of existing lodging tax revenues for tourism promotion. The bill would define "tourism promotion" to include operations of special events and festivals, not just marketing of those events. It would also allow cities to support tourism-related facilities owned by a nonprofit organization.

HB 1254, sponsored by Rep. Barbara Bailey (R-Oak Harbor), also relates to hotel/motel tax revenues. The bill would expand the definition of tourism-related facilities to include those owned by a nonprofit organization and it would allow municipalities to contract with nonprofit organizations for tourism promotion activities.

HB 1369, sponsored by Rep. Kelli Linville (D-Bellingham), expands voter-approved multi-year property tax lid lifts to all local jurisdictions (such as library and fire districts). The bill also removes non-supplanting language on the lid lifts for cities and counties.

Local Sales and Use Tax (HB 1139)

At 8 am on January 26 the House Finance Committee will hear HB 1139, modifying the local sales and use tax that is credited against the state sales and use tax when a large annexation occurs. This bill would add Seattle to the list of cities that can use the sales tax credit. Currently, cities in King, Pierce and Snohomish counties, except Seattle, can utilize this sales tax credit. The current credit is 0.1% for annexed areas between 10,000 and 19,999 in population and 0.2% for areas greater than 20,000 in population. The maximum tax credit for Seattle would be 0.05% for areas with a population greater than 10,000.

Modifying Property Tax Exemption Provision to Provide Affordable Housing Requirements (SB 5404)

The Senate Committee on Consumer Protection & Housing will hear SB 5404 on Friday, January 26 at 8:30 am. The bill would modify the existing multi-family property tax exemption by adding new affordable housing requirements. It requires that 20% or a minimum of one unit (whichever is greater) of any rental or owner occupancy multi-family housing be designated affordable housing. The bill also expands the authority of cities using the tax exemption from cities with a population of 30,000 or more to those with a population of 15,000 or more. The Department of Community, Trade and Economic Development will set the threshold for rental and sales prices that would qualify for the exemption and annually notify qualifying cities.

Tax Preference Work Session

On Wednesday, January 24, the House Finance Committee is having a work session on the citizen commission for performance measurement of tax preferences. They will discuss the ten-year review schedule for tax exemptions and the scope and objectives for full and expedited reviews.

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