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

Published on Monday, March 30, 2015

State budget update

As expected, the House Democrats released their 2015-17 state operating budget on Friday, March 27. The $39 billion biennial budget proposal relies on nearly $1.5 billion in new revenue to help address the McCleary funding decision.

City impacts

For cities, the proposal:

  • Fully funds all state revenues shared with cities, including liquor revenue, SST mitigation, city-county assistance, and municipal criminal justice.
  • Does not divert substantial revenues from the Public Works Trust Fund and funds a modest loan list. The latest on the trust fund is available here.
  • Provides cities and counties with $6 million annually in marijuana excise tax revenues. Information about why AWC is advocating for a larger share and other marijuana legislation is here.
  • Does not lift the cap on the city share of liquor profits.

More details about the House budget proposal’s impacts on cities can be found in AWC’s budget matrix and on the state’s budget website.

New revenue

To fund their budget proposal, the House also released its revenue proposal, HB 2224. The bill contains the following revenue items:

1. State B&O tax changes

  • Permanent reinstatement of a B&O surtax on service businesses in effect from 2010 – 2013.
  • Elimination of the preferential B&O tax rate for travel agents, tour operators, prescription drug resellers, and royalty income.

2. Sales & use tax changes

  • Elimination of the sales tax exemption on bottled water.
  • New limits on the nonresident sales tax exemption. Out of state residents would be allowed to apply for a refund if they paid $25 or more in sales tax in one calendar year.
  • Narrowing the use tax exemption for extracted fuel.

3. Capital gains tax

  • Imposition of a 5% capital gains tax beginning January 1, 2016. Exempts the first $25,000 (individuals)/$50,000 (joint filers), the sale of most primary residences, and retirement accounts.

4. Marketplace Fairness

  • Establish new nexus standards for collecting sales tax from out-of-state retailers. (This has been a long-standing AWC federal priority.)

More details and revenue estimates will be available as the House considers the revenue proposal.

What’s next

The House Appropriations Committee is scheduled to hear the budget proposal on Monday, March 30 at 1:30pm, and we expect the full House to consider it later in the week. The revenue proposal is scheduled to be heard in the House Finance Committee on Tuesday, March 31 at 8am.

The Senate is expected to release its own operating budget proposal before Friday, April 3. We’ll continue to keep you posted in the Legislative Bulletin and through Action Alerts, if needed.

Categories: Budget & finance