Initiative 1033 fails

Election results as of November 6, show Initiative 1033 failing with a vote of 57% no and 43% yes. AWC planned to hold two I-1033 webinars on November 6 and 9 if the initiative passed. Those webinars were cancelled.

Many who are analyzing the election have noted the strong role cities and counties played in the initiative’s defeat and many voted "no" because of the impacts on their city or county. A breakdown of the vote by county can be found here.

Election results are not final or official until certified. By law, December 3, 2009, is the last day for the Office of the Secretary of State to certify general election returns.

Thanks to all those cities that took time to provide AWC with input about I-1033 impacts and to educate your communities about the initiative’s impacts.

Streamline sales tax mitigation

The SST mitigation advisory committee met on October 1. Continuing implementation issues include consideration of how to treat mistakes in mitigation data calculations and finalizing calculations for the base year. For more information, click here.

The fourth Streamlined Sales Tax Mitigation payment was transmitted on September 30, 2009. It covers taxable retail sales made during the second quarter of 2009 and corresponds to local tax distributions made in June through August 2009. Cities are encouraged to review sourcing impact data as DOR works to finalize base year calculations.

Seventy-nine jurisdictions received payments totaling $6.97 million, which is up from $6.51 million last quarter. For more information see the mitigation history information http://dor.wa.gov/Content/AboutUs/StatisticsAndReports/Mitigation/Default.aspx.

This also means that the Department of Revenue (DOR) has made preliminary calculations for an annual estimate of the base year for future mitigation calculations. Cities are strongly encouraged to review the detail information provided in the confidential data on local sourcing impacts by business and report to DOR businesses that were incorrectly included if they would have impacted mitigation calculations.

DOR uses a secure e-mail system to the one contact person per city to send and communicate about confidential detailed-taxpayer information files that were used to determine quarterly mitigation payments. DOR's guidance regarding reviewing and communicating about that information is available in How to Read the Mitigation Detail Files.

Inflation rate for property tax purposes released

On September 22, 2009, the Department of Revenue released the rate of inflation for property taxes due in 2010. The implicit price deflator used to determine the property tax limit factor is negative 0.848 percent (-0.848%).

Anticipating a negative IPD, the Department of Revenue released a special notice in April of this year answering questions about the impact of deflation (or negative "inflation") on local property taxes. For taxing districts with a population of 10,000 or less, the limit factor is 101% regardless of the IPD. For taxing districts with a population of 10,000 or more, the limit factor is the lesser of 101% or 100% plus inflation. However, with a finding of substantial need and supermajority council approval, larger taxing districts can adopt a limit factor up to a maximum of 101%.

For DOR’s memo to county assessors regarding the negative IPD (9/22/09) click here.
For DOR’s Q&A on property tax levy increases (October 2009) click here.
For an outline of steps a city of 10,000 population must take to collect 101% click here. (It should be noted that if these cities wish to collect less than 101%, there are other steps to take. MRSC is preparing guidelines that address this issue, and AWC will email them out to these cities and post on our website when they are available.)

Resellers permit goes into effect January 1, 2010

Beginning January 1, 2010 the use of resale certificates to document wholesale purchases is eliminated. Instead, a seller’s permit will be issued (free of charge) by the Department of Revenue (DOR) only to those businesses that make wholesale purchases.

Businesses registered with DOR:

Before January 1, 2009, will get a permit valid for four years.
On or after January 1, 2009, will get a permit valid for two years that can be renewed for four years.

Permits for the construction industry are valid for 12 months. Qualifying contractors must reapply each year and provide information about materials and contract labor purchases.

The intent of this change is to improve sales tax compliance by making changes in procedures for wholesale exemption qualifications, particularly in the construction industry. Misuse of self-issued resale certificates is estimated to cost the state over $100 million dollars in lost revenue each year. Obviously, there is also a local impact.

To assist with their education and outreach efforts, DOR has asked cities in towns to make informational materials available at their permit counters. If you haven’t received these materials, please contact Rob Rice at robertr@dor.wa.gov.

More information can be found at www.dor.wa.gov/resellerspermit.

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