HOUSE BILL REPORT

SHB 1689

BYHouse Committee on Local Government (originally sponsored by Representatives Haugen, Beck, Cooper, Zellinsky, D. Sommers, Butterfield, Sutherland, Bristow, Nutley, Nealey, Jones, Prince, Ballard and Rayburn)

Revising the distribution and payment of investment earnings on property tax receipts.

House Committe on Local Government

Majority Report:  The substitute bill be substituted therefor and the substitute bill 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 PASSED HOUSE FEBRUARY 16, 1988

BACKGROUND:

Each county treasurer collects property taxes that are imposed by all taxing districts on property located within the county. County treasurers are required to distribute or disbursed these tax receipts to the taxing districts imposing the taxes as follows: (1) collections of property taxes for taxing districts, other than the state, cities and towns, that are made in each month are distributed to these taxing districts on the first day of the following month;  (2) collections of property taxes for cities and towns that are made in each month are disbursed to cities and towns on or before the tenth day of the following month; and (3) collections of property taxes for the state that are made in each month are distributed immediately after the last day of the month, but if payments are not made to the state treasurer before the twentieth day of this succeeding month, the state treasurer makes a sight draft on the county treasurer for such amount that is due the state.

County treasurers invest money that is in their possession in a variety of investments until the money is disbursed according to law.  The county retains investment income earned from the money in its possession.  However, a municipal corporation can receive earnings on its money that is in the possession of a county treasurer if the municipal corporation designates how the county treasurer should invest its money.

SUMMARY:

Counties are required to pay local governments a certain amount of interest earnings on property tax receipts of the local governments that are held beyond the date by which such moneys are required to be distributed or disbursed.  The dates by which such tax receipts are to be distributed or disbursed are not changed.  The amount of interest earnings that must be paid by the county for each day after the distribution or disbursement is required to be made is a compounded daily rate equal to the average daily earned interest yield of the local government investment pool over the preceding month.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Sharon Shrader, Kitsap County Treasurer; Ruth Wylie, Skagit County Treasurer; Michael J. Murphy, Thurston County Treasurer; Ron Strabbing, Grays Harbor County Treasurer; and Jim Metcalf, Washington Association of Counties.

House Committee - Testified Against:      Stan Finkelstein, Association of Washington Cities; and Jorgen Bader, City of Seattle.

House Committee - Testimony For:    This clarifies when and if interest shall be held on late distributions or disbursements.  The county performs several services for cities for which no reimbursement is provided. Counties should be able to retain investment earnings off of these tax receipts until the tax receipts are required to be paid.

House Committee - Testimony Against:      This is city and special district money.  They should receive interest payments from when collections are made until distributions are made.  The superior court in King County ruled in favor of Seattle on this issue last year.