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Published on Wednesday, June 26, 2013

Countdown to the first of July

With five days left, we remain optimistic that the Legislature will pass a state operating budget and avoid a partial government shutdown. Leadership in both chambers continue to negotiate, and the Governor and legislators have publicly stated an agreement is close.

If they fail to reach an agreement, what does it mean for cities?

That’s what we’ve been asking state officials. Since a shutdown has never occurred in Washington State, nobody knows precisely what the impacts will be, and much depends on how long a state government shutdown lasts. Here’s what we do know.

Most revenues distributed to cities from the state, such as sales tax and liquor revenue, are not scheduled to go out until the end of July. According to the state’s contingency plan, the Department of Revenue is planning to have a skeleton crew working to receive tax returns, make deposits, and ensure revenues are distributed to local governments. The State Treasurer will continue to operate the Local Government Investment Pool. The State Auditor will continue conducting local government and performance audits.

We also know that some state services that are intertwined with cities, such as state business licensing and permits, will not operate in the event of a partial shutdown.

Other impacts are less clear. What happens with state grants and contracts will depend on the type of funding and which state agency administers it. We know cities have already received notice that some grants will be suspended on July 1 absent a state budget. Cities concerned about specific grants should contact the agency administering it.

Again, legislators are under significant pressure to reach a deal by Sunday night, and we remain hopeful they will do so. Look for an update in our Legislative Bulletin this Friday.