HOUSE BILL REPORT

HB 1644

BYRepresentatives Haugen, Schmidt, Fisher, J. Williams, Zellinsky, S. Wilson, Cantwell, Ferguson, Sutherland and Cooper

Revising provisions on sales and use tax equalization.

House Committe on Local Government

Majority Report:  Do pass.  (14)

      Signed by Representatives Haugen, Chair; Cooper, Vice Chair; Beck, Bumgarner, Butterfield, Dorn, Ferguson, Hine, Jones, Nealey, Nelson, Nutley, Rayburn and Zellinsky.

House Staff:Steve Lundin (786-7127)

AS REPORTED BY COMMITTEE ON LOCAL GOVERNMENT FEBRUARY 4, 1988

BACKGROUND:

Counties are authorized to impose sales and use taxes.  These taxes must include a credit for any similar tax imposed by a city or town within the county's boundaries.  Counties were authorized in 1970 to impose sales and use taxes at a maximum rate of five one-hundreds of a percent (.5 percent).  Counties were authorized to impose a second level of sales and use tax in 1982 at a rate of up to five one-hundreds of a percent (.5 percent).

A sales tax equalization account was created to provide money to some counties.  A formula was established to distribute money from this account to counties that do not generate up to a certain level of total sales tax receipts or which do not receive seventy percent of the state-wide weighted average per capita level of county sales and use tax revenues for unincorporated areas.

A certain amount that remains after these distributions is used to pay the county's share of financing the activities of the local governance study commission.  Any remaining money in this account after these payments is returned to the state general fund.

The source of money for the county sales tax equalization account is two percent of the receipts from the state motor vehicle excise taxes that remain after certain moneys have been distributed to local governments providing public transportation that impose a local motor vehicle excise tax.  These remaining receipts additionally are distributed as follows: (1) 17 percent to cities and towns; (2) four and two-tenths percent to the rail development account; and (3) the remainder to the state general fund.

The state imposes an excise tax on timber harvests, in lieu of a property tax being imposed by taxing districts annually on the value of timber.  The state timber harvest excise tax is being reduced from a rate of six and one-half percent to five percent over several years.  Counties are authorized to impose a timber harvest excise tax of four percent.  This local tax is a credit against the state timber harvest tax.  Receipts from the county timber harvest excise tax are distributed to local governments within the county.  Receipts from the state timber harvest tax are placed into the state general fund, after distributions have been made to counties imposing the local timber harvest excise taxes for local distribution.

SUMMARY:

The source of money for county sales tax equalization purposes is altered from a percentage of the state motor vehicle excise tax receipts to all the amount that the state retains from the timber harvest excise tax receipts, after distributions have been made to counties imposing the local timber harvest excise tax for local distributions.

All of the existing laws relating to the distribution of money under the county sales tax equalization account remain in effect, including the transfer to the state general fund of moneys remaining after distributions have been made to eligible counties.

Fiscal Note:      Requested February 4, 1988.

House Committee ‑ Testified For:    Jim Metcalf, Washington Association of County Officials.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    No fiscal impact arises from this change.  Many of the counties that receive distributions under the county sales tax equalization account are timber counties that generate the receipts for the timber harvest tax.

House Committee - Testimony Against:      None Presented.