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Published on Friday, April 19, 2013

Final policy bill cutoff passes – Where do cities stand?

Following an important cut-off date on Wednesday for policy bills to clear the opposite chamber, legislators are now more focused on resolving budget issues and coming to agreement on differences in the bills each chamber has passed.

There are only nine days left in the regular session – most seasoned observers expect a special session, but it's still technically possible for them to finish on time.

Below is a summary of how things stand at this point with regard to AWC priorities.

State budget

Let’s start with the budgets – remember they’re designed to fund things between July 1, 2013 and June 30, 2015.

Operating budget

Both chambers have passed their versions of an operating budget – the Senate at $33.2 billion and the House at $34.5 billion. The Governor has outlined his budget priorities totaling $34.4 billion. They all now need to reconcile differences in spending priorities and revenue assumptions. That may take a while and could end up impacting programs important to, and revenues shared with, cities.

  • So far for cities, neither the Senate, House, nor Governor has proposed reductions in direct shared revenues with cities beyond the Senate’s halving of liquor tax distributions. Their approaches to expenditures for most other programs of importance to cities are similar, as outlined in our comparison of budget proposals.

Capital budget

Until decisions are made on how revenues are allocated in the operating budget, we don’t know the size and scope of the capital budget, or the future of various grant and loan funding streams important to many communities.

  • Both the House and Senate sweep funds from the Public Works Assistance Account into the general fund. The House appropriates $350 million for the 2014 construction loan list, and the Senate appropriates $268 million.
  • SB 5895, which is still alive in the Senate, permanently redirects 67% of the Real Estate Excise Tax (REET), 100% of the Public Utility Tax, and 100% of the Solid Waste Tax revenues from the Public Works Assistance Account to the Education Legacy Account. Over six years, this means $368 million in direct revenue is diverted from the account.
  • Both the Senate and House budgets contain significant new investments in stormwater support for local governments – $75 million and $100 million, respectively. Both budgets also contain direction to the Department of Ecology to develop a permanent stormwater funding program that can accommodate requests on a wide variety of stormwater investments rather than the ad hoc and narrow approaches taken to date.

Transportation budget

The House has passed their transportation budget; the Senate has not yet passed theirs. Neither of the proposals assumes new revenue, so the budgets largely maintain the status quo.

  • Agencies and programs important to cities like the Transportation Improvement Board, Safe Routes to Schools, Pedestrian and Bicycle Safety Programs, and the Freight Mobility Strategic Investment Board continue to be funded, with no increases.

Transportation revenue package

House Transportation Chair Judy Clibborn has refined her transportation revenue package, which is scheduled for a hearing on April 18. Whether or not it has “legs” is still too early to tell.

  • Along with projects important to many cities, there are several parts of the proposal for cities to like. First of all, it contains several local options, including authority to increase the transportation benefit district motor vehicle fee up to $40 councilmanically and new funding for a "Complete Streets" grant program. It also increases investments in ferries and transits. The package does include continued funding, but no new additional revenues, for the Transportation Improvement Board and the Freight Mobility Strategic Investment Board.
  • Less encouraging is that the proposal increases the gas tax by 10 cents but only distributes one cent of that to cities and counties (1/2 cent each).

Policy bills

On the policy front, we are experiencing some successes as well as some disappointments.

  • Lodging taxes: Continuing to allow cities flexibility in use of locally collected lodging taxes (ESHB 1253) has been a seesaw battle and after passage earlier this week in the Senate of a version acceptable to cities, we are awaiting and expect agreement from the House.
  • Business Licensing and Taxes: So far the Legislature hasn’t made changes to city authorities concerning how business licenses (ESSB 5656) and taxes (ESSB 5688) are managed. We remain vigilant in protecting local decision-making authorities.
  • Unfunded mandates: We’re keeping an eye out for potential new unfunded mandates, and until introduction this week of some bills aimed at reducing drunk driving, we haven’t found any.
    • At least one cost-savings bill (SSB 5099), clarifying how cities respond to a mandate to use alternative fuel sources in your fleets, received overwhelming support in both the Senate and House. We’re awaiting Senate agreement to a small change we supported in the House.
    • New policy bills have been introduced in the last days of session to try to create new penalties and establish a new treatment program for impaired drivers, in response to recent tragic cases in our state. The bills were heard today in two committees where cities, along with many others, expressed concerns about the potential costs to local government. AWC posted an article outlining the bills’ impacts here.
  • Annexations: The Senate wisely chose not to advance a bill that would have significantly changed how cities annex lands (SSB 5013), and the House never considered such a proposal.
  • Fire hydrants: The AWC priority of re-establishing the ability to recover the costs of providing fire hydrant services through utility rates rather than general fund (SHB 1512) passed both House and Senate and is awaiting signature by the Governor.
  • Impact fee deferral: In the category of disappointments, it appears that the Legislature will pass HB 1652. This bill mandates that cities offer programs to allow the building industry to defer payment of impact fees until the time of occupancy or 18 months, whichever is sooner. This mandate not only causes administrative difficulties and makes it more difficult for cities to address the impacts of growth, it also rolls back the local decisions that many communities have made to defer certain impact fees but collect those for schools at the regular time.
  • Latecomer fees: HB 1717 passed the House and Senate and is on the way to the Governor’s desk. This bill provides new economic development tools for cities to recover costs associated with attracting development through up-front environmental review. This legislation also creates new responsibilities for cities to work with the development community to provide for cost recovery for developers who install expensive sewer infrastructure through latecomer fees on future development. Cities retain flexibility in administering and recovering our costs associated with that portion of the bill.
  • Alternative public works contracting: HB 1466, which extends the authority for the use of alternative public works contracting procedures (currently scheduled to expire June 30, 2013) passed out of both the House and Senate. Since the bill was amended by the Senate, the House will need to concur before the bill moves on to the Governor.
  • Metals theft: The metals theft bill, HB 1552, was amended on the floor of the Senate and ultimately passed. The bill will still create additional penalties for metal theft, regulate transactions and record retention of these transactions, establish a state licensing program, a no-buy list for those convicted of metals theft crimes, and a grant program for enforcement efforts to be administered by WASPC. Now both houses must agree to the changes. A funding source is still needed to establish various provisions throughout the bill and that has not yet been identified. Even if the bill passes, the language becomes null and void if no funding source is established.
  • Public Records: Our coalition of public entities failed in efforts to modestly address ways to curb abusive public records requests (SHB 1128). It appears there will be an attempt to have funding in the budget to facilitate discussions between local governments and opponents with a report back to the Legislature on how best to address this issue.
  • LEOFF: Another new policy bill, SB 5916, was introduced on Wednesday in response to the pension spiking and medical benefits issues raised in a series of AP articles that ran last week. Read more on the bill here.