Municipal Finance

Revenues for Public Safety (ESSB 6573)

AWC supports the striking amendment by Rep. Mark Ericks (D-Bothell) to ESSB 6573. This bill would provide additional revenues to local jurisdictions for public safety purposes, an AWC legislative priority. This bill currently sits on the House calendar awaiting action.

This bill’s striker would:

• Dedicate funds in equal portions for:
  • Local jurisdictions to support criminal justice services, information and assistance to parents and families dealing with at-risk or runaway youth, or other public safety purposes.
  • Future LEOFF Plan 2 benefits (adopted by the Legislature and actuarially fully funded by the new LEOFF Plan 2 account).
• Transfer up to $50 million per biennium for the purposes listed above (the appropriation of funds is contingent upon general state revenues increasing more than 5%).
  • Distributions to local governments would begin January 2012 and each January thereafter.
  • Appropriations would be phased:
    • $5 million in 2011
    • $10 million in 2013
    • $20 million in 2015
    • The lesser of 1/3 the state’s general fund increase or $50 million in 2017 and for future biennia
• Distribute funds to local jurisdictions based on their number of LEOFF Plan 2 members compared to total LEOFF Plan 2 membership (cities contracting for law enforcement or fire protection services with other entities must agree on the distribution of funds).

Please contact your Representatives and encourage their support of the striking amendment to ESSB 6573. The status of the bill remains in doubt and must be approved by 5 pm on Friday, March 7.

Supplemental State Budgets (HB 2687, HB 2765, HB 2878)

The Governor, House of Representatives and Senate have now all released their budgets. The Senate passed their version of the operating budget (ESHB 2687) Thursday, February 28. The three parties are now in negotiations, which will continue through much of next week. For more information about how each budget impacts cities visit our website at www.awcnet.org.

Lodging Tax Economic Impact Report (SHB 3206)

This bill passed the Senate (46-0) on March 4, and will now go to the Governor for review and signature. This bill will modify the reporting requirements included in last year’s legislation, which provided cities additional flexibly regarding the use of hotel/motel tax proceeds.

The reports will be for hotel/motel tax expenditures that begin in 2008 and will include:

• Lodging tax revenues received;
• A list of festivals, special events, or nonprofit organizations receiving funds;
• A list of festivals, special events or tourism facilities sponsored or owned by local jurisdictions;
• Revenue expended on each festival, special event or tourism-related facility owned or sponsored by a nonprofit organization or local jurisdiction; and
• The estimated number of tourists, person traveling over 50 miles, person staying overnight, and lodging stays generated by each event or facility.

The requirement to report the estimated increase in sales and use tax revenues attributable to each event or facility (which was included in last year’s bill) was removed.

It is AWC’s hope that these reports will demonstrate the value in having additional flexibility to use these revenues for events and tourism-related facilities.

Property Tax Exemptions (SSB 5256, SSB 6389)

Two property tax exemptions noted in last week’s Legislative Bulletin and included in the Senate budget have passed the House.

• SSB 5256 passed the House on March 5 (96-0). This bill will provide for the exclusion of veterans benefits from the income calculation for the retired person property tax relief program. The state-wide local government impact on revenues is $106,000 (CY 2009), growing to $194,000 (CY 2013). The shift of local government tax burden is expected to be between $2.2 and $3.9 million.
• SSB 6389 also passed the House on March 5 (95-1). This bill will exempt certain military housing from property and leasehold excise taxes. The fiscal impact to local governments state-wide is $111,000 (CY 2009), growing to $150,000 (CY 2013).

Voter-Approved Increases in Property Tax Levy Limitations (ESB 6641)

This bill addresses ESSB 5498 from the 2007 legislative session, which unintentionally changed how levy rates are calculated at the end of a lid lift. The House approved ESB 6641 on Thursday, March 6. The bill is headed to the Governor.

If approved by the Governor, this bill will require that the title of a lid lift proposition (whether temporary or permanent) "expressly state" if the final levy will serve as the basis from which subsequent levies are to be calculated or if the base will be recalculated as if the lid lift had not occurred. If the title is silent, then the levy rate will rebased as if the lid lift had never happened.

Streamlined Sales Tax & Business Licenses (SHB 3126)

AWC has worked with the business community to support this bill to clarify that registration or compliance with the streamlined sales tax agreement does not by itself subject a business to business license or tax requirements. It was placed on second reading in the Senate on March 6.

SST Florist Exemption (SB 6799)

SB 6799, a Department of Revenue request bill, passed the House unanimously on March 5. It implements an exemption in the national agreement for florist wire-transfer flower deliveries, continuing current practice in the industry that already uses a national method for consistent tax treatment.

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