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Published on Monday, March 14, 2016

In legislative overtime, budget writers look again to divert important city revenues

Legislators failed to reach agreement on supplemental operating and capital budgets during their 60-day regular session. Senate budget writers unveiled a proposal that damages city interests, and while House budget writers have not proposed damaging cuts or diversions, they have not unveiled any new ideas either. They are meeting with Senate counterparts behind closed doors, and it could take days or weeks to come to an agreement. The fate of several key items for city interests is unknown, and right now, city revenues are on the table.

Below is the latest information about what’s at stake. Now is the time to let your Senators and House members know what you think.

As considered late last week before the Ways and Means Committee, the Senate budget writer’s operating budget proposal would:

  • Grab future funds slated to return to the Public Works Trust Fund (PWTF) next biennium, thus essentially killing it, because six years will have gone by without the program;
  • Divert liquor revenues now shared with all cities to pay for one more year of the Municipal Research and Services Center (MRSC) before ending their funding by July 1, 2017; and
  • Divert, as proposed previously, $4.4 million in Fire Insurance Premium Tax funds provided to 44 cities to help pay for retiree benefits required under state law.

Unlike their original operating budget proposal passed during the regular session on a party-line vote, this one doesn’t contain higher fees to train law enforcement personnel or merge the LEOFF 1 and TRS 1 retirement accounts.

Proposal proponents acknowledge that the Public Works Trust Fund sweep is designed to signal an end to the 30+ year successful program that has provided low-interest loans of more than $2.6 billion to build and fix critical local infrastructure. By diverting both loan repayments and utility, solid waste, and real estate excise taxes that have funded this, the Senate proposal will essentially put the final nail in the coffin of this previously exemplary program. In its place, they suggest creating a favorable market rate loan program for smaller jurisdictions. A constitutional amendment is needed to create this, and while AWC supports the concept, it wouldn’t help nearly as many jurisdictions and won’t be as cost-effective as the PWTF.

The MRSC funding grab is delayed by a year from their earlier proposal. It essentially asks cities and counties to pay again for another year of MRSC services – once with liquor funds sliced off the top of what is currently allocated to locals, and now again with another slice that further reduces the amount shared. The Senate proposal signals an end to more than 80 years of MRSC funding and assumes that it will be supported in the future by fees paid by interested cities and counties.

We’ll keep you posted as this process unfolds and again we urge you — don’t wait to contact your legislators if you’re concerned.

The original version of this article misprinted that the Fire Insurance Premium Tax diversion was $44.4 million, it has been corrected to the amount of $4.4 million.