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Welcome to AWC’s online library of Legislative Bulletin and CityVoice news articles and other updates.

Published on Monday, August 14, 2017

Several city priorities addressed in 2017-19 operating budget & revenue package, including internet sales tax, but disappointing outcome on property tax cap

After two special sessions and a new revenue forecast that did not bring much change, it was a relief when the Legislature enacted a new 2017-19 operating budget that provided state shared revenues historically distributed to cities such as liquor revenues, fire insurance premium tax, and funding for the Municipal Research and Services Center (MRSC). A revenue bill EHB 2163 was also enacted that will produce new revenue for the state and cities. AWC has long supported an effort to collect sales tax on internet purchases from out-of-state retailers to compliment taxes already collected on in-state retailers, and the passage of a state version of the Marketplace Fairness Act (AKA internet sales tax) will begin to close the loophole for online purchases. In addition, the budget funded new classes at the Basic Law Enforcement Academy (adding six classes per year in the operating budget and adding eight new classes in the supplemental budget for 2017) to address the backlog. Finally, additional sales taxes will be raised by eliminating the bottled water tax exemption.

There were a few areas of disappointment for cities in the 2017-19 operating budget:

  • Local government marijuana mitigation revenues are reduced from $30 million to $12 million in the 2017-19 biennium. The budget also provides that if marijuana revenues exceed certain forecasts, local governments will receive an additional $18 million in the 2017-19 biennium. However, in all biennia following 2017-19, the budget imposes a $6 million per fiscal year limit on marijuana distributions.
  • The budget includes the intent to phase out streamlined sales tax (SST) mitigation distributions in 2019 for the 48 cities receiving them. Instead, a budget proviso is included to study the actual revenue impacts from the new state implementation of collecting internet sales taxes from out-of-state retailers.
  • While the Legislature changed state property taxes as part of the funding sources for the McCleary “fix” for schools (EHB 2242), the budget proposal did not include a new local option (HB 1764) to allow cities or counties to increase property taxes greater than one percent, or any other new “cap.”

In 2016, the Legislature passed a bill which established a task force on local business tax and licensing simplification. A nine-member task force, chaired by the Department of Revenue and included business and city representatives, developed options for simplifying local business licensing. The task force chair reported to the Legislature early in the 2017 session, and many of the recommendations were implemented with the passage of EHB 2005. The bill:

  1. Requires all cities with business licenses to collaborate for administration of business licenses by 2022 with the state Business Licensing Service (BLS) or by 2020 with FileLocal, the city licensing and local tax administration portal;
  2. Requires cities to adopt a model business license threshold by January 2019; and
  3. Creates a task force chaired by the Department of Revenue to recommend changes to the two-factor formula for service income apportionment for local B&O taxes.

AWC is working with cities to aid in the implementation of the bill provisions.

Bill #

Descriptive title

Final status

EHB 1201

Extending the taxing authority of public facilities districts

Law; Effective 7/23/2017

SHB 1526

Exempting multipurpose senior citizen centers from property tax

Law; Effective 7/23/2017

EHB 2005

Simplifying the administration of municipal general business licenses

Law; Effective 7/23/2017

EHB 2163

Relating to revenue (includes Marketplace Fairness Act)

Law; Effective 7/7/2017, except for sections 101-109 effective 8/1/2017; section 213 effective 7/23/2017; sections 301-304 effective 7/1/2017; and section 502 effective 1/1/2018

SSB 5138

Modifying metropolitan park district authority

Law; Effective 7/23/2017

SSB 5883

State operating budget

Law (Partial veto); Effective 6/30/2017

SB 5977

Relating to revenue (includes Mainstreet Program tax credit)

Law (Partial veto); Effective 10/19/2017, except for sections 401-402 effective 6/30/2017; Sections 301-302, 1001-1003 effective 7/1/2017; sections 101-104, 403, 503, 506, 508, 526, 703, 705, 707, 801-803 effective 1/1/2018; sections 1301-1032 effective 1/1/2022

SHB 1113

Gradually restoring local liquor revenue

Did not pass

HB 1764

Replacing the one percent property tax revenue limit with a limit tied to cost drivers

Did not pass

HB 1904

Concerning the sale and taxation of personal information and consumer data

Did not pass

HB 2006

Providing cities and counties flexibility with existing revenues

Did not pass

HB 2041

Making local authority to seek voter approval on property tax more useful

Did not pass

HB 2115

Homestead property tax exemption

Did not pass

SHB 2186

Concerning investing in Washington families by improving the fairness of the state's excise tax system by narrowing or eliminating tax preferences, imposing a business and occupation tax surcharge while eliminating tax liability for small businesses, enacting an excise tax on capital gains, modifying the real estate excise tax, making administrative changes, and implementing marketplace fairness in Washington

Did not pass

SB 5772

Replacing the one percent property tax revenue limit with a limit tied to cost drivers

Did not pass

SB 5240

Gradually increasing local liquor revenue

Did not pass

SSB 5827

Definitions and reporting requirements for municipalities receiving lodging tax revenues

Did not pass

SB 5929

Concerning investing in Washington families by improving the fairness of the state's excise tax system by narrowing or eliminating tax preferences, imposing a business and occupation tax surcharge while eliminating tax liability for small businesses, enacting an excise tax on capital gains, modifying the real estate excise tax, making administrative changes, and implementing marketplace fairness in Washington

Did not pass

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