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Published on Friday, April 17, 2015

House Finance Committee hears city and county fiscal sustainability bill

On Friday, April 17, the House Finance Committee heard a proposed substitute version of HB 2156, promoting the fiscal sustainability of cities and counties. We are very appreciative of the efforts by the bill’s sponsors: Representatives Chris Reykdal (D-Tumwater), Reuven Carlyle (D-Seattle), and Steve Tharinger (D-Dungeness). The nine part bill:

  1. Gradually increases city and county liquor profit sharing. For state fiscal years 2018 through 2023, local liquor profit distributions increase by $2.5 million annually until the historic distribution formula of 50% state, 40% cities, and 10% counties is reinstated in FY 2024. Reinstating the historic liquor profit sharing formula has been a top priority for AWC since the Legislature enacted the $49.4 million annual cap in 2012.
  2. Authorizes a county public utility tax. The current language is the result of a drafting error and is the original language from HB 1133. As currently written, counties are authorized to impose a 6% maximum utility tax throughout the county with voter approval and are required to provide a credit against any city utility taxes levied. AWC and the Washington State Association of Counties testified in support of allowing counties to impose a utility tax in unincorporated areas but not on a city utility. We will continue to work with legislators and the counties to ensure any county utility tax does not impact city utility taxes.
  3. Allows assessments for nuisance abatement. In addition to existing authorities, this part authorizes a city or town to levy a special assessment, not to exceed $2,000, to reimburse a city or town for the expense of abatement. The city must notify the property owner and any mortgage holder before levying an assessment. This bill is a continuation of the work done on SB 5694, and cities need amendments to the current language, including one to clarify the $2,000 cap does not affect underlying authority and only applies to the new priority lien.
  4. Establishes cost recovery for commercial public records requests. This part allows the state and local governments to charge a fee, not to exceed the actual costs of providing the records, for certain commercial public records requests. The bill provides exemptions for specific types of businesses, such as newspapers. The language comes from another AWC supported bill, HB 1086.
  5. Accepts small political subdivisions in PEBB health coverage. This is a county priority that would require the state’s Public Employees Benefit Board to accept political subdivisions with fewer than 5,000 employees. The language mirrors that of ESHB 1740.
  6. Authorizes new funding for cultural and heritage access programs. Like SB 5463, this part allows counties to create a cultural access program by ordinance. A city may create a program if the county does not do so by June 30, 2017. Programs would be funded through a new .1% sales tax or a property tax equal to a .1% sales tax.
  7. Increases the county mental health sales tax. This authorizes an increase in the mental health sales tax authority from .1% to .2%. This is primarily a county imposed tax and only available to cities over 30,000 in Pierce County.
  8. Modifies the annexation sales tax credit. Like HB 1576, this change is for Seattle’s annexation of White Center. It increases the $5 million per year cap for the credit to $8 million but decreases the time period of the credit from ten years to six years.
  9. Changes county authorization of the public safety sales tax. Currently, counties may impose a .3% public safety sales tax with voter approval. The county retains 60% of the revenue, and cities receive the other 40% on a per capita basis. One-third of the revenue must be used for public safety. If the county has not enacted this optional sales tax, a city is allowed to impose a .1% sales tax with voter approval. This part of the bill allows the county legislative authority to impose the first .1% sales without voter approval. The county’s remaining .2% and the city .1% still require voter approval. Ten counties and 14 cities impose the tax.

The bill, and its Friday morning hearing, generated a lot of interest from local governments, utilities, the business community, open government advocates, and others. Overall, cities and counties testified in strong support for the bill while most opposition was directed at Part 2, the county public utility tax, and Part 4, cost recovery for commercial public records requests.

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