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Published on Friday, May 19, 2017

What does it mean for cities if the Legislature fails to adopt a budget before June 30?

In 2015, the state faced similar budget gridlock and made a contingency plan for what would happen if a budget was not in place by the start of the fiscal year July 1. Since a shutdown has never occurred in Washington State, nobody knows precisely what the impacts will be, and much depends on how long a state government shutdown lasts and what available options the Legislature may have to respond. The state’s guidance to state agencies on contingency planning is available here.

Most revenue distributions to cities from the state, such as sales tax and liquor revenue, are scheduled for the end of July. Based on the 2015 state contingency plan, the Department of Revenue will have a skeleton crew working to receive tax returns, make deposits, and ensure revenues are distributed to local governments. The State Treasurer will continue to operate the Local Government Investment Pool. The State Auditor will continue conducting local government and performance audits.

Some state services that are intertwined with cities, such as state business licensing and permits, will not operate in the event of a partial shutdown.

Other impacts are less clear. What happens with state grants and contracts will depend on the type of funding and which state agency administers it. Preparations similar to those that occurred in 2015 are underway in state agencies, and grant recipients and other funding recipients will soon start to receive official notifications as required by contracts that funding will be suspended on July 1 if there is no state budget. Cities that receive a letter or are concerned about specific grants should contact the agency administering it.

Categories: Budget & finance