Modifying local option taxes (2SSB 5433)

Please see the lead article for an explanation of the proposed striking amendment for this bill.

Digital goods (HB 2320, SHB 2075)

A new digital goods bill was introduced earlier this week and heard in the House Finance Committee on Friday, March 27. It is a much more streamlined version of the bill that essentially codifies the Department of Revenue’s current tax treatment of digital books, music, and videos in compliance with the requirements of the streamlined sales tax agreement (SSUTA). Beginning January 1, 2010, the SSUTA requires states to specifically impose sales taxes on digital goods that are separate from their tangible equivalents or they are not allowed to continue taxing them.

If a digital goods bill does not pass this session to bring Washington in compliance, the Department of Revenue estimates that the resulting non-compliance with the SSUTA could result in $6 million in lost voluntary compliance sales tax revenue in 2010. Furthermore, failure to specifically impose sales tax on digital goods would result in an additional $28 million in sales tax revenue losses in 2010.

Unlike SHB 2075, HB 2320 does not address a number of the issues explored by the digital goods study committee that met over the interim, including exemptions for standard digital business information or providing amnesty for potential past tax liability.

It remains to be seen if portions of the original bill SHB 2075 will end up in this bill before it passes out of committee or if SHB 2075 will be the bill advanced.

Concerning the annexation sales and use tax (ESSB 5321)

This bill would make changes to the sales and use tax credit that most cities in King, Pierce and Snohomish Counties are currently eligible to receive when they have a large annexation. See last week’s Bulletin for more information on this bill.

ESSB 5321 is scheduled for executive session by the House Finance Committee on Friday, March 27 in the afternoon.

Provisions for all counties to value property annually (SSB 5368)

This bill passed out of the House Finance Committee on Thursday, March 26. It would require that all counties revalue property annually for property tax purposes by January 1, 2014. It would also require that the Department of Revenue provide guidance and financial assistance to counties converting to annual revaluations.

Changes to the city-county assistance account (SB 5511)

SB 5511 passed out of the House Finance Committee on Thursday, March 26. This bill would make several changes to the City-County Assistance Account based on the recommendations of the Joint Legislative Audit and Review Committee.

These changes include:

Changing the formula so the sum of sales tax revenues and any funds received from streamlined sales tax mitigation would be used to determine eligibility; and
Changing the certification date from March to October, with the first distribution taking place in January rather than April.

Sales and use tax exemptions (SHB 2275, ESHB 2278)

These two bills passed out of the Senate Committee on Agriculture & Rural Economic Development on Tuesday, March 24 and were referred to the Senate Ways & Means Committee.

SHB 2275 provides a sales and use tax exemption for the non-highway use of propane by farmers. The fiscal note states that the impact on local governments would be a negative $643,000 annually.

ESHB 2278 concerns the sales and use tax exemption for livestock nutrient management equipment and facilities. The fiscal note indicates the impact on local governments would be a negative $390,000 annually.

Requiring extraordinary revenue growth to be transferred to the budget stabilization account (SJR 8209)

On Tuesday, March 24 the House Ways & Means Committee held a public hearing on SJR 8209. This resolution would require extraordinary revenue growth to be transferred in the Budget Stabilization Account. Extraordinary revenue growth is defined as the amount of general state revenue growth above one-third the average growth rate of the previous five biennia.

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