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Municipal Finance
AWC Priority
Streamlined Sales Tax (SSB 5089)
SSB 5089 is currently in the House Rules Committee, and no further action took place on the streamlined sales tax bill last week.
All cities are encouraged to contact their House members to ask them to bring SSB 5089 to the House floor for a vote soon. Remind them that 19 city, county, and business organizations have joined in support of streamlined sales tax legislation this year.
AWC Priority
Municipal Business & Occupation (B&O) Taxes (SHB 2368)
HB 2368 was heard by the House Finance Committee on March 5. Thanks to Mayor Bill Baarsma, Tacoma; Gayla Gjertsen, Tumwater Finance Director; and Lucy Liu, Bellevue Tax Manager for testifying on behalf of cities in support of this bill.
SHB 2368 passed out of the Finance Committee later that day, and the bill is in the House Rules Committee awaiting further action. However, it appears that, unless cities and the business community can reach agreement on the provisions of the bill, it is unlikely to progress further. The Association of Washington Business (AWB) questions the need for this bill at this time and continues to seek state collection and administration of the local B&O tax.
The amended version of SHB 2368 eliminates the language that would have provided a one-year delay in the apportionment provisions scheduled to go into effect in January 2008 for the 39 cities that impose a local B&O tax. The substitute version of the bill did retain the provisions that would
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Include a property factor in the apportionment formula and align the formula with the Multi-State Tax Commission (a national organization of state tax administrators used by many other states);
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Make needed technical corrections to the model ordinance requirements; and
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Provide for a small business exception to apportionment requirements.
AWC has always been concerned that the apportionment formula required by the legislation passed in 2003 and scheduled to take effect in 2008 is unworkable. Other groups have also questioned the current formula. Last session, the newspaper and publishing industry secured passage of legislation to exempt them from apportionment requirements. In response to questions from small businesses, Department of Revenue (DOR) attorneys have indicated that implementation of the apportionment provisions is mandatory for all businesses, even if it may require costly new accounting.
Several bills providing greater fiscal flexibility have moved since last week.
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HB 1369, which would remove non-supplanting language on the voter-approved property tax lid lift, is in the House Rules Committee. Please contact your representatives and encourage them to move this bill to the floor calendar and vote yes.
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SB 5498, which would eliminate non-supplanting requirements in the voter-approved property tax lid lift and the three-tenths voter-approved sales tax, has been placed on the Senate floor calendar. Please call your senator and ask him/her to vote yes on this bill.
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SSB 5647, which would expand the definitions of "tourism-related facility" and "tourism promotion," passed the Senate on a vote of 35-12 on Thursday, March 8.
Providing Consistency Between Code and Non-code Cities (HB 2161)
This bill would give code cities the same authority currently granted to non-code cities regarding the allocation of interest income from commingled investments. The bill passed the House on a 96-0 vote on Thursday, March 8. Thank you to cities that contacted their representatives and encouraged them to vote for the bill.
Sales and Use Tax Exemption for Repairs to Farm Machinery and Equipment (SHB 1901, HB 1902)
These bills are similar in that they provide a sales and use tax exemption for parts and services related to farm vehicles and qualifying farm machinery and equipment. Both bills are currently on the House floor calendar and could be acted upon at any time.
AWC opposed these bills when they were heard by the Finance Committee, noting that they would negatively impact rural and small cities and towns. Cities that believe these bills could negatively affect their tax base are encouraged to contact their legislators and Alicia Seegers Martinelli at aliciam@awcnet.org or (360) 753-4137.
We outlined a few of these property tax bills in last week's Bulletin. HB 2334 would allow cities to increase property taxes to 100% plus inflation in lieu of imposing impact fees and HB 2117 would reenact the limitations on regular property tax growth adopted under I-747.
A couple of bills that have moved in the Senate would provide homestead exemptions. SSB 5187 and SSJR 8210 would provide a homestead exemption from state property taxes for the first $75,000 of a residential property’s assessed value. SSJR 8210 would additionally amend Article 7 of the State Constitution to allow for the changes in SSB 5187. This bill and the resolution are in the Senate Rules Committee.
While some of these bills have not met the internal deadlines of the Legislature, we believe the property tax debate in Olympia is very much "alive." If agreement is reached by the House, Senate and Governor on a specific proposal, that proposal would be advanced.
AWC Priority
Providing Dedicated Public Health Funding (2SHB 1825)
2SHB 1825, which provides dedicated funding for local public health jurisdictions, passed out of the House Appropriations Committee on Saturday, March 3 and is scheduled on the House floor calendar.
The bill would transfer $48 million a year from the general fund to the newly-created Local Public Health Financing Account. The bill directs $5.425 million of the funds in the account to be annually divided equally among all public health jurisdictions, while the remainder would be distributed by population.
Budget Overview
Annually the House and Senate alternate which house proposes the state budget. This year the budget is scheduled to come from the House.
The House budget is being developed slightly differently this year than before. The Appropriations Subcommittees on Education and General Government & Audit Review each proposed operating budget recommendations related to their specific topic areas. Links to the subcommittees’ budget recommendations can be found on AWC’s website or the website of the Legislative Evaluation & Accountability Program Committee, http://leap.leg.wa.gov/leap/default.asp.
Many of the operating budget recommendations that were proposed by the General Government & Audit Review Subcommittee were similar to those proposed by the Governor. We expect a budget to be presented by the full House Appropriations Committee on March 19.
Fiscal Committee Cutoff and Dead Bills
Monday, March 5 was the cutoff for bills in the house of origin to move out of the House fiscal committees and Senate Ways & Means and Transportation committees. However, the cutoff date does not apply for any fiscal bill necessary to implement the budget.
Below is a list of bills that appear to be dead for the session that are not expected to be implemented with the budget.
Bills supported by AWC:
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HB 1851, authorizing a local sales and use tax for criminal justice purposes.
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SB 5846, authorizing the use of hotel and motel tax revenues for public safety activities directed towards certain tourism areas.
Bills opposed by or of concern to AWC:
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HB 2175, providing a sales and use tax exemption for low carbon generation facilities.
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SB 5471, limiting the power of cities and towns to license businesses not located within the city or town.
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