AWC Priority
Streamlined Sales Tax (SSB 5089)

Governor Gregoire signed the Streamlined Sales Tax bill into law on March 22. This bill signing closes the chapter on a multi-year effort by cities and its coalition partners.

Thanks to the several city officials who worked with AWC and the legislature over the past several years and who attended the bill signing ceremony, including AWC President Mark Foutch.

The bill will go into effect on July 1, 2008, and the Department of Revenue will be conducting training with the business community over the next year on implementation of sourcing. For more information about the bill, including the mitigation process, see the AWC website at www.awcnet.org/streamlinedtax.

AWC Priority
Lodging Tax Revenues (SSB 5647)

SSB 5647, which would provide greater flexibility for cities using lodging tax revenues, is scheduled for a hearing by the House Committee on Community & Economic Development & Trade on Monday, March 26 at 1:30 pm. See last week’s Bulletin for more information.

We are hopeful that this bill will pass through the House intact. Cities are encouraged to contact their Representatives and encourage them to support this bill.

AWC Priority
Multi-Family Ten Year Property Tax Exemption (ESHB 1910)

ESHB 1910 was heard by the Senate Consumer Protection and Housing Committee on Tuesday, March 20. As approved by the House, this legislation would allow cities above 15,000 to provide a 10-year property tax exemption for multi-family housing in an urban area. A city must establish a local housing affordability component if they use this tool. The bill also outlines a number of reporting requirements to determine how the tax exemption is being used.

We will continue to work to reduce the reporting requirements and attempt to lower the population threshold that defines which cities can use this very valuable density tool.

ESHB 1910 has not yet been scheduled for executive action awaiting potential agreement on amendments. If approved by this Committee the bill is likely to be referred to the Ways and Means Committee. The Ways and Means Committee has not been receptive to this legislation in the past. Please contact Jim Justin, jimj@awcnet.org, if you have any comments or questions on this bill.

Department of Revenue Rulemaking on Hotel Intermediaries

The Department of Revenue will soon submit a draft rule regarding the correct lodging tax treatment of hotel rooms sold by internet based travel companies or "hotel intermediaries". Currently, it is likely that the hotel/motel tax is only being applied to the wholesale price in these types of transactions. A number of national groups including the Multi-State Tax Commission are reviewing the issue of the correct tax treatment. Legal challenges are pending in several states regarding the amount of tax due and whether the hotel or the intermediary is the responsible taxpayer.

AWC will forward the draft rule to cities as soon as it is available. Public hearings are likely to be scheduled in May.

Proposed State Budgets (SHB 1128, SB 5140)

On Tuesday, March 20 there was a public hearing on SHB 1128, Rep. Helen Sommers’s (D-Seattle and Appropriations Committee Chair) proposed operating budget. The following day the bill passed out of the Appropriations Committee. The bill has now been placed on second reading awaiting action by the full House, which we expect to be on Monday, March 26.

The operating budget is similar to the Governor’s budget released in December. Some highlights include:

$31.6 million is proposed to fully mitigate losses to negatively impacted jurisdictions as a result of Streamlined Sales Tax legislation.
Funds for a LEOFF 1 retiree medical study to perform an actuarial analysis of local government liabilities and to assist smaller cities with the identification of their specific liability.
$9 million for local government stormwater grants.
$20 million for local public health funding in addition to continued state backfill.

The budget also provides continued support for programs of importance to cities such as the City-County Assistance Account, CERB, and Job Development Fund.

The Senate is expected to release their version of the operating budget on Tuesday, March 27. SB 5140 is scheduled for public hearing later in the day by the Ways & Means Committee. Executive session is scheduled for Wednesday, March 28.

More information on the proposed budgets and how they impact cities can be found on the AWC website at www.awcnet.org.

Sales & Use Tax Exemption for Propane by Farmers (HB 1376)

This bill would provide a sales and use tax exemption to farmers or people who provide horticultural services to farmers for propane used for horticultural services. The bill would not include highway use or residential space or water heating. The local government fiscal impact is estimated to be nearly $1 million.

HB 1376 was heard by the Senate Agriculture & Rural Economic Development Committee on Monday, March 19 and executive action was taken the same day. The bill has been referred to Ways & Means.

AWC has expressed concerns that this bill would negatively impact small and rural communities. Please contact your Senator if you have concerns about this bill.

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AWC Priority Streamlined Sales Tax (SSB 5089)