HB 2878)

The proposed substitute to the State’s general operating budget, HB 2687, is expected to be released by Rep. Helen Sommers (D-Seattle) early next week. The bill is scheduled for public hearing on Wednesday, February 20 in the House Committee on Appropriations at 3:30 pm. It is scheduled for executive session in the same committee the following day, Thursday, February 21, at 3:30 pm. Once we review the proposed budget we will outline the impacts on cities and place this information on our website.

The capital budget, HB 2765, will be heard in the House Committee on Capital Budget at 8:00 am on Thursday, February 21 with executive session scheduled for the following day at 1:30 pm. The transportation budget, HB 2878, is scheduled for public hearing in the House Transportation Committee on Wednesday, February 20 at 3:30 pm, and executive session the following day at 3:30 pm. Again, we will review these budgets and keep you informed of impacts on cities.

Streamlined Sales Tax & Business Licenses (SHB 3126)

This bill clarifies that registration or compliance with the streamlined sales tax agreement does not by itself subject a business to business license or tax requirements. AWC has worked with the business community to support this clarification, and SHB 3126 passed the House unanimously on February 14.

City B&O Tax Legislation Still in Committee (HB 3244, HB 2965)

HB 3244, which would have imposed a three part definition for customer location, failed to pass out of the Finance Committee before the legislative cut-off. AWC opposed this significant change in tax policy for determining where to apportion service income under RCW 35.102.130, which went into effect in January 2008. Customer location is one of three options to determine the service-income factor required for the two-factor formula for apportionment of service income under RCW 35.102.130.

HB 2965, which would have required the Department of Revenue to complete a study on state administration and collection of city B&O taxes by December 2008, also failed to pass out of the Finance Committee before the legislative cut-off. AWC also opposed this bill.

These bills appear to be dead for the session.We will continue to monitor these and other finance issues for they may be deemed related to the budget, which exempts bills from any legislative cut-offs.

Providing Additional Revenues for Public Safety (SB 6573)

As noted in last week’s Legislative Bulletin, SB 6573 would provide additional revenues to cities for enhanced public safety. Executive action was taken in the Senate Committee on Ways & Means on February 12. The bill was pulled from Rules and now awaits action by the full Senate. AWC supports this bill and is asking Senators to pass the bill.

Requiring Annual Property Revaluations (SHB 2611)

This bill would require that by 2012 all counties revalue taxable property annually and physically inspect property every six years. The mandate is conditional upon the Department of Revenue (DOR) providing guidance and financial assistance to counties not yet on an annual revaluation cycle.

On February 12, a substitute version of the house bill, SHB 2611, passed out of the Finance Committee. The substitute bill provides that DOR administer a grant program to assist counties, and notes that if specific funding is not provided by June 30, 2008, the act is null and void.

Increasing Income Thresholds for Property Tax Relief (HB 1364)

This bill would increase the income threshold of senior citizens and people retired due to a physical disability qualifying for property tax relief. Income thresholds are increased by $5,000. For example, under this bill a qualifying person with a combined disposable income of $40,000 or less is exempt from all excess property taxes, whereas the current threshold is $35,000.

The local government fiscal impact is $3 million for calendar year 2009, with a shift of tax burden of $23 million. This bill is currently in House Rules.

Reallocating Existing Lodging Taxes for Heritage and Arts Programs (HB 3054/SB 6638)

Currently cities in King County (except for Bellevue) cannot impose hotel-motel taxes that are a credit against the state sales tax until 2021. This bill would prohibit cities in King County from imposing this tax after 2021 and direct all revenues to arts and heritage programs.

HB 3054 passed out of the House Finance Committee on February 12 and is in Rules. SB 6638 passed out of the Senate Ways & Means Committee on February 12 and is eligible for second reading.

Excluding Car-Sharing Activities from the Rental Car Tax (SHB 2880)

SHB 2880 passed out of the House Committee on Finance on February 12 and would exclude car-sharing activities from the rental car tax. The bill defines "car sharing" as:

Passenger vehicles that are provided to members of an organization;
An organization that charges a membership fee;
Average use that is less than eight hours;
Vehicles that are available to members in dispersed locations; and
A separate written agreement is not required each time a member uses a vehicle.

The fiscal note states there are currently three car sharing organizations in the state. These organizations have vehicles in Seattle, Vancouver, Bellingham and Kitsap County. This bill’s local government fiscal impact is estimated to be $121,000 for fiscal year 2009.

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