AWC Legislative Bulletin - Volume 31, No. 5
February 8, 2008  (Plain Text Version)

Return to Graphical Version | Search back issues

In this issue:
What You Need to Know Now!
From the Director: Legislature Approaches First "Cutoff" Tapings Legislation "Resurrected"
Energy & Telecommunications
Environment & Water
General Local Government
Infrastructure, Transportation & Economic Development
Land Use & Housing
Law & Justice
Municipal Finance
Personnel & Labor Relations
Engaging Citizens in Government Performance
Online Legislative Advocacy Tools
AWC Legislative Contacts & Officers

Municipal Finance

City Business Licenses & SST (HB 3126)

HB 3126 was heard by the House Finance Committee on Tuesday, February 5, and AWC testified in support along with members of the business community.

AWC has been working with the business community to allay concerns that the reporting requirements of the streamlined sales tax (SST) will result in additional licensing or tax obligations for businesses whose sales involve deliveries. This legislation clarifies that mere registration or compliance with SST does not result in nexus for license or tax purposes.

AWC will oppose limits on local authority to license and regulate businesses that seek to expand this clarification beyond this limited application.

City B&O Taxes – Definition of Customer Location for Service Apportionment (HB 3244/SB 6894)

AWC testified in opposition to HB 3244 in the House Finance Committee on Tuesday, February 5. This legislation would make a change to one of the three options available to business for calculating the service-income factor in the two-factor formula required by the service apportionment provisions the 38 B&O tax cities were required to adopt by January 1, 2008 under RCW 35.102.130.

It would provide a three-part test for determining the customer location for the service income factor, the billing address of the customer, the office location of the taxpayer, or another location where there is "clear and convincing evidence" that the taxpayer submitted an address to avoid taxation.

Given the frequency in which third parties are used to process billing for entities, AWC does not believe this interpretation of customer location is workable as an accurate representation of where service-income activity occurs. In addition, it is unclear how these defaults would operate in conjunction with the other two options for the service income factor.

Thank you to Dwight Dively, Finance Director, Seattle, for testifying on the bill and expressing why this definition would be a significant and unworkable change in tax policy.

Providing Additional Revenues for Public Safety (HB 2962/SB 6573)

In the Personnel and Labor Relations section of last week’s Bulletin companion bills HB 2962 and SB 6573 were discussed. These bills would create a public safety enhancement account. Half of the funds would go to the LEOFF Plan 2 system benefit improvement account to pay for a new LEOFF 2 benefit. The benefit would be determined at a later date by the LEOFF 2 Board. The other half would be distributed to cities and other local jurisdictions for public safety enhancements. These distributions would be based upon the size of the jurisdictions LEOFF 2 workforce.

The Legislature is reviewing different scenarios regarding how much money to allocate for this purpose. It is likely they will start slowly and allocate more in the future. The vision is to appropriate $50 million a year by 2015. Hence, $25 million would be allocated for local public safety purposes.

A public hearing on SB 6573 was held in the Senate Ways & Means Committee on Tuesday, February 5. AWC testified in support of the bill given additional money for public safety purposes and the payment of a LEOFF 2 benefit that would not impact local resources. We are working on amendments to ensure cities and towns that contract for police and fire services will receive some aid.

Voter-Approved Increases in Property Tax Levy Limitations (HB 2554, SB 6641)

Several bills have been introduced this session that provide a legislative fix to ESB 5498 (passed in 2007) which inadvertently changed how levy rates are calculated after a temporary multi-year levy lid lift.

HB 2554 and SB 6641 use different language to clarify that at the conclusion of a multi-year levy lid lift, the final levy can be used for computing subsequent levies if this is "expressly stated" in the ballot proposition. The default will be to rebase as if the lid lift had not occurred.

HB 2554 passed out of the House Finance Committee on Wednesday, February 6 and SB 6641 passed out of the Senate Ways & Means Committee on Friday, February 1. AWC supports the fix these bills provide to the current statute.

Sales and Use Tax Exemptions for Machinery and Equipment to Generate Electricity (HB 3116/SB 6733)

These companion bills would provide a sales and use tax exemption for machinery and equipment used to generate electricity using biomass. Currently, a sales and use tax exemption applies to machinery and equipment used to generate electricity from renewable sources (not including biomass). Biomass would include animal waste, food waste, solid organic fuels from wood, and byproducts of pulping or wood manufacturing processes. These bills would also change the existing exemption’s expiration date from 2009 to 2014.

The local government fiscal impact for 2009 would be $863,000 and increase to $6 million annually from 2010 on.

The House bill was heard in the Finance Committee on Tuesday, February 5. The Senate version of the bill is scheduled for public hearing in Ways & Means at 1:30 pm on Tuesday, February 12.