Most priority city fiscal flexibility bills don’t make it past cutoff

Thursday, March 12 at 5 pm was the last day for the House and Senate to consider bills originating in their own chamber. Any bills that didn’t pass a vote by the full House or Senate before this time are considered "dead" for the session, unless they can be tied to the budget.

A number of AWC priority fiscal bills on the House calendar failed to be acted upon prior to the cutoff and are considered dead for the year. These bills include:

• HB 1422, concerning the taxation of brokered natural gas and manufactured gas, would have clarified the definition of "use" for taxation of natural/manufactured gas in response to a May 2008 Court of Appeals decision. Concerns about moving this bill forward centered on the retroactivity clause.
• SHB 1147, modifying provision of local options taxes, would have removed non-supplant language from the 0.3% sales tax and multi-year levy lid lift. This bill was also being considered as the vehicle for a county unincorporated utility tax and city water/sewer district utility tax.
• SHB 2075, concerning the excise taxation of certain products and services provided or furnished electronically, would have implemented many of the recommendations of the workgroup on the Taxation of Electronically Delivered Products. Many believe this bill may still be considered necessary to implement the budget and therefore, eligible for action later in the year.
• SHB 2249, modifying local government revenue options in counties with a population of one million five hundred thousand or more, would have provided incentives and additional revenue options for King County and the cities within that annex proposed annexation areas by 2012.

In addition to these bills, other priority bills that would have granted cities new revenue options or greater flexibility with existing revenues died in committee a few weeks ago.

• HB 1318/SB 5143, providing for an increase in the property tax limit for emergency medical care and services, would have allowed permanent EMS levies to increase to 6% or less.
• SB 5432, adjusting the property tax levy lid limits for certain local services, would have authorized a new limit factor of the greater of 1% or inflation on certain property tax levies including permanent EMS levies.

Select bills that would have provided additional revenues for city infrastructure projects or greater flexibility with existing capital revenues that did not make it past cutoff include:

• HB 1947, concerning the regulation and preservation of urban streets through a local option street utility.
• SHB 1744/SSB 5630, concerning real estate excise tax expenditures for parks and capital projects.
• SHB 1614/SB 5518, reducing the amount of petroleum pollution in storm water.

While these bills are technically dead there are ways to advance the policy issues on other pieces of legislation. AWC staff will continue to seek means of securing fiscal resources and flexibility for cities.

We are pleased that on Wednesday, March 11, the Senate did pass 2SSB 5433, modifying provisions of local option taxes. If approved by the House, this companion bill to SHB 1147 would remove non-supplant language from the 0.3% sales tax and levy lid lift statutes. It would also expand the allowable uses of the 0.3% sales tax to include fire protection purposes and a broader definition of public safety.

Legislative votes on new revenue proposals are always difficult. However, we were hopeful that given the current economic climate and dwindling city fiscal conditions that the Legislature would provide cities new options. A number of legislators continue to stress a desire to assist local governments. We will continue to "work" the city fiscal flexibility agenda.

Thank you for your responsiveness over the past few weeks and the calls you have made to legislators. As the session progresses, your continued communication with legislators about the importance of additional fiscal flexibility will be critical.

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