Changes to the city-county assistance account (SB 5511, ESHB 1244)

During the 2009 legislative session, two bills passed that will impact distributions through the city-county assistance account. This account provides some financial assistance to low tax-base cities and counties.

SB 5511 was introduced in response to recommendations made by the joint legislative audit and review committee after a study of the assistance account was completed in fall of 2008. This bill was also supported by AWC and the Washington State Association of Counties. The changes made in this bill include:

Change in certification date. In order to provide local jurisdictions with the amount they are eligible to receive for budgeting purposes and to incorporate the most recent assessed valuation data, the certification date for the subsequent four distributions will change from March to October. This September, preliminary eligibility amounts will be made available to local jurisdictions—eligible entities can expect to see an email from AWC. Eligibility amounts will be made final the following month, with distributions in January, April, July and October of the following year. This bill made no changes to the distribution dates, which are typically transferred to cities a few days before the beginning of the month. Cities should remember that this account is funded by the real estate excise tax, and the amounts cities receive are based on both an entity’s eligibility and the amount of funds in the account. Please read further in this article for additional information about funding for this account.
Incorporation of SST mitigation payments. The account’s formula was changed so any mitigation payments received due to losses from streamlined sales tax will be included in a jurisdictions total sales tax amount. This is one of the factors in the city formula used to determine eligibility.

Due to the changes established in SB 5511, cities will receive three distributions based on their March 2009 certified eligibility amounts (April, July, October). Beginning with the January 2010 distribution, distribution amounts will be based on the October certification from the previous year.

The state’s 2009-2011 budget appropriation, ESHB 1244, also will impact the amount of funds cities receive from the city-county assistance account. Because the account is funded by a portion of the state’s real estate excise tax and revenues from this tax have fallen significantly, AWC worked hard to secure additional resources for these low tax-base cities. The state’s 2009-11 budget appropriates an additional $10 million for the account; $5 million was transferred to the account on July 1, 2009 and $5 million is scheduled to be transferred on July 1, 2010. These additional funds will be split equally between counties and cities. Therefore, cities should expect to see a larger distribution in October than this year’s previous distributions.

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