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Published on Tuesday, March 29, 2016

AWC state budget alert

Late Monday evening, the House and Senate released their proposed operating budget compromise, and this morning the capital budget proposal was released. Although the compromise proposals fix some items of concern in earlier proposals, AWC is disappointed to see continued sweeps to city revenue and programs. Here’s an overview of several items we’ve been following in previous budget proposals.

  • Public Works Trust Fund: For all intents and purposes, this budget kills the Public Works Trust Fund. For the past two biennia, the Legislature has filled gaps in the state operating budget by sweeping funds from the Public Works Assistance Account (aka the Public Works Trust Fund) and diverting tax revenues destined for the account. This supplemental budget digs even deeper into the program. It sweeps $154 million in loan repayments expected to be paid by local governments in the 2017-19 biennium. This is in addition to the $73 million swept in this biennium for a total of $227 million. However, the budget includes $50,000 to generate a state infrastructure strategy and examine the state and local infrastructure partnership.
  • Municipal Research & Services Center funding: The Legislature seems to have heard the overwhelming support for MRSC, and the compromise budget provides full funding for their services without additional diversions from city and county liquor revenue.
  • Law enforcement training: The compromise provides much needed funding for two additional basic law enforcement training classes in FY 2016 and does not increase the direct cost to cities sending cadets to training.
  • Fire Insurance Premium Tax distributions: Currently, 44 cities share 25% of the state’s tax on fire insurance premiums. The compromise budget proposal limits the amount a city may receive to $2,000 per pre-LEOFF and LEOFF 1 retiree or the amount received in 2016, whichever is less. In addition, a city is only eligible to receive a distribution if it is levying the 22.5 cents in property tax under RCW 41.16.060 for the Firefighters’ Pension Fund and can demonstrate the levy is not sufficient to meet the estimated demands on the fund or maintain the actuarial soundness of the fund. We expect some cities will see a reduced distribution, and others no distribution, in FY 2017.
  • Merger of the LEOFF 1 retirement system with the Washington Teachers' Retirement System Plan 1 (TRS 1): The compromise does not include a previously proposed merger of the LEOFF 1 and TRS 1 retirement systems. However, it directs the Select Committee on Pension Policy to study a merger of the two systems and update their 2011 merger study of the LEOFF 1 and LEOFF 2 retirement systems.

For additional information, please see AWC’s budget summary chart. In addition, the proposed operating budget documents are available here and the capital budget documents here.

The Legislature is expected to pass the compromise budget proposal today, and budget-related policy bills are also being moved. It is anticipated that the Legislature will adjourn late tonight or tomorrow.

For questions, contact Victoria Lincoln or Serena Dolly.

Categories: Budget & finance