City flexibility and revenue priority issues heard by House Finance Committee

On March 24, AWC and other local government representatives testified in support of a proposed striking amendment to 2SSB 5433, modifying provisions of local option taxes, in front of the House Finance Committee. This striking amendment was brought by Committee Chair Rep. Ross Hunter (D-Bellevue), incorporating a number of city fiscal flexibility and revenue options that died in the House several weeks ago.

2SSB 5433, originally sponsored by Sen. Debbie Regala (D-Tacoma), has become our best vehicle to try to move these important issues forward. Highlighted issues that were included in the striking amendment include clarifying the intent of the brokered natural gas use tax, allowing cities to impose a utility tax on water-sewer districts, and removal of anti-supplanting language in the public safety sales tax and multi-year levy lid lifts.

Specifically, the proposed striking amendment would:

• Eliminate anti-supplanting language for the county 0.3% public safety sales and use tax until January 1, 2015 and expand the allowable uses to include fire protection. In counties where this tax is levied, 60% goes to the county and 40% to cities on a per capita basis;
• Allow counties to partially supplant existing funds raised by the mental health/chemical dependency sales and use tax until January 1, 2015;
• Allow multi-year lid lifts passed after the effective date of the bill to supplant existing funds (this would apply to King Co taxing districts including cities only for lid lifts approved in 2009, 2010, and 2011);
• Allow for the creation of a rural infrastructure improvement and public safety (RIPS) district in the unincorporated area of a county and allow this district to impose a utility tax until January 1, 2015;
• Limit the ferry district property tax rate in King County to 7.5 cents per $1000 of assessed value and authorize an additional property tax in King County at the same rate to fund transit projects;
• Require cities and towns within King County to annex large potential annexation areas by January 1, 2012, in order to receive transportation improvement account and public works account grants and loans;
• Allow cities and towns to impose a utility tax on water/sewer districts at a rate up to 6% until January 1, 2015;
• Require the state auditor to conduct a performance audit of King County; and
• Clarify the definition of "use" for the brokered natural gas use tax allowing the nearly 50 cities that currently levy the tax to continue to do so.

In testimony, AWC shared with the committee that cities across the state are experiencing budget pressures. This bill could provide some additional tools for local governments and allow us to work with our citizens to determine the best options.

The House Finance Committee is scheduled to take action on 2SSB 5433 Friday, March 27 at 1:30 pm. We expect a number of amendments and the bill the Committee approves will most likely not include everything in the original striker – it will be "skinned" down. We appreciate the support of both Rep. Hunter and Sen. Regala in advancing these issues to assist local governments in dealing with this unprecedented economic downturn.

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