JLARC Survey Regarding City-County Assistance Account

The Joint Legislative Audit and Review Committee (JLARC) released a survey to collect information about the City-County Assistance Account. In 2005, the Legislature passed ESSB 6050, providing financial assistance to cities, towns and counties. This bill established the City-County Assistance Account from which 173 cities currently receive distributions.

It is very important that cities complete the survey, especially those receiving distributions from this account. This will be the primary opportunity for cities to provide feedback about whether or not these distributions have targeted cities’ needs since the repeal of the MVET.

ESSB 6050 requires the JLARC to review distributions to cities and counties and determine the extent to which they target the needs of cities and counties for which the repeal of the motor vehicle excise tax had the greatest fiscal impact. The law also requires JLARC to solicit input from cities and counties in creating their report. A report is due to the Legislature by the end of this year that includes findings as well as any recommendations for changes to the distribution formula.

For more information about the City-County Assistance Account and the history of MVET backfill visit AWC’s website.

Lodging Tax Reporting Forms Now Available

The Department of Community, Trade and Economic Development (CTED) has released the economic impact reporting forms that cities imposing a lodging tax must complete. The forms can be downloaded from the AWC website.

SHB 3206, which passed during the 2008 legislative session, made several changes to previous legislation requiring cities to complete reporting forms about their lodging taxes. Annual economic impact reports must be submitted to CTED for expenditures made beginning January 1, 2008. The first reports are due spring of 2009.

Natural Gas Use Tax Court of Appeals Decision

In May of this year the Court of Appeals reversed an earlier trial court opinion requiring G-P Gypsum to pay a use tax for using natural gas within the City of Tacoma. Gypsum appealed the trial court’s decision denying it a refund of Tacoma use taxes arguing that the statutory definition of "use" limits the city’s tax to where the taxpayer first exercised dominion or control over the gas. The company had purchased natural gas outside Tacoma then transported the gas to its plant.

The Court of Appeal’s ruling asserts that a business does not "use" natural gas when it burns the natural gas in the city if it had first obtained dominion and control of the gas outside of the city.

The Department of Revenue has filed a petition for review to the Supreme Court, arguing:

The court’s opinion conflicts with Supreme Court precedents in concluding that it could not consider Legislative intent enacted as part of the statute;
The court’s refusal to consider Legislative intent results in an incorrect interpretation of the local natural gas use tax; and
The case involves issues of substantial public interest because the ruling contradicts the will of the Legislature and impacts public finances.

This case could have ramifications, calling into question local natural gas use taxes imposed by 47 cities throughout the state. Industrial natural gas users that purchase gas from out-of-state brokers could pay no local use tax and no local public utility tax. AWC has begun working with others to propose a Legislative fix.

Joint Task Force on Local Financing Options for King County Created

A new task force on local financing options for King County met Wednesday, July 16, 2008. This task force was created in Section 6015 of the 2008 Capital Budget (ESHB 2765). The seven-member committee will examine local financing options for issue areas such as affordable housing, arts, culture, Puget Sound restoration and preservation, and others. The task force is limited to reviewing existing King County-specific revenue options to fund these areas. Options must include taxes on admissions, car rental, hotel/motel, restaurant and others.

Streamlined Sales Tax Trainings

Destination-based sales tax sourcing took effect on the first of this month. The Department of Revenue (DOR) continues its outreach to cities about the changes. Three more training sessions are currently planned:

Wednesday, August 6 in Leavenworth
Wednesday, August 13 in Redmond
Wednesday, September 17 in Yakima

All cities, whether initially identified as negatively or positively impacted in the 2003 sourcing study, are encouraged to attend one of the sessions to understand how sales tax administration will be changing over the next couple of years. More information is available on DOR’s website http://mitigation.dor.wa.gov.

In addition, DOR will be will be contacting individual cities in the near future for assistance in identifying the businesses impacted by annexations that have occurred since July 1, 2007 for which it has information. If your city has not already provided information about recent annexations to DOR, the contact for annexation information is Tiffany Johnson tiffanyj@dor.wa.gov, (360) 902-7122, or Department of Revenue, Local Tax Manager, P O Box 47476, Olympia, WA 98504-7476.

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