Initiative 960 passes November 6 General Election

I-960 (concerning tax and fee increases imposed by state government) passed this week with 52% of the vote. The initiative requires voter approval or two-thirds of both the Senate and House to increase taxes. The initiative also expands the current legislative fiscal note process to include additional public notification when the Legislature considers tax bills, including voting records on proposals, and a 10-year estimate of the costs of legislation for all versions of the proposed bills at each state of the legislative process.

The initiative also:

requires legislative approval of state fee increases; and
requires an advisory vote during the next general election for all revenue increases approved by the Legislature that are not otherwise approved by the voters.

While the initiative does not directly impact cities, we anticipate significant secondary impacts given the constraints this initiative will place on the State. Some have already questioned the constitutionality of this initiative and we do expect legal challenges.

Department of Revenue – SST Mitigation

AWC continues to work with the Department of Revenue (DOR) to help ensure that mitigation loss and voluntary compliance calculations are as accurate as possible in preparation for the state’s implementation of destination based sales tax as part of the streamlined sales tax implementation in July 2008.

The DOR mitigation website includes meeting materials and a link to their listserv. For more information, go to the destination based sales tax website at http://destinationtax.dor.wa.gov and click on "mitigation for local governments" on the right-hand menu.

In addition, AWC has scheduled additional conference calls with its work group to assist the city representatives in identifying city issues related to mitigation prior to each of the remaining DOR mitigation meetings. If your city is interested in participating in future calls, which are currently scheduled for November 26 and December 10, please contact Sheila Gall at sheilag@awcnet.org.

Reminder: 39 B&O Tax Cities Must Adopt the Revised Model Ordinance by January 1, 2008

The 39 B&O tax cities are required to update their city B&O tax ordinance by January 1, 2008, to comply with the allocation and apportionment provisions in RCW 35.102.130.

The updated model ordinance documents are posted on the AWC website at www.awcnet.org/b&o along with background materials for cities to use in discussing the issue with councils and the business community. AWC will also be working with a group of cities later this year to develop a template worksheet for cities to include with tax forms for service businesses to use to determine taxes under apportionment.

Please let contact Sheila Gall or Jim Justin with any questions on this issue at sheilag@awcnet.org, jimj@awcnet.org, or 360-753-4137.

Lodging Tax Reporting Forms

Many cities have inquired about the status of the new lodging tax reporting forms mandated by SSB 5647. As a result of this bill, cities now have expanded authority to use the lodging tax, but must prepare an economic impact report for the Department of Community Trade and Economic Development (CTED).

AWC will meet with representatives from CTED as well as the State Auditors Office the week of Monday, November 19 to review the forms. This meeting wasn’t scheduled as quickly as we had hoped, however, we expect finalized forms to be available early December.

If you have any questions please contact Alicia Seegers Martinelli at (360) 753-4137 or aliciam@awcnet.org.

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