FINAL BILL REPORT

SHB 298

                                  C 138 L 87

BYHouse Committee on Local Government (originally sponsored by Representatives Haugen, Brough, P. King, Holm and Unsoeld)

Allowing library districts, metropolitan park districts, fire protection districts, and public hospital districts to withdraw areas from their boundaries, and to submit ballot propositions to voters allowing the $9.15 cumulative property tax limitation to be increased temporarily to allow the district to impose its tax levy.

House Committe on Local Government

Rereferred House Committee on Ways & Means/Revenue

Senate Committee on Governmental Operations and Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

The constitution and statutes establish several restrictions on property taxes.

Statutes establish the maximum tax rate that each taxing district may impose.  These rate limitations are expressed in terms of a dollar value per $1,000 of assessed valuation.

Statutes place a cumulative rate limitation on most of the regular property tax levies of most taxing districts at $9.15 per $1,000 of assessed valuation that may be imposed on any property.  The relative status of the various taxing districts has been established so that the senior taxing districts (counties, road districts, cities and towns and the state for educational purposes) are permitted to impose their tax levies before the remaining taxing districts (referred to as junior taxing districts) impose their tax levies.  Different status levels have been established for the regular property tax levies of various junior taxing districts.  If the requested rates of tax levy exceed this $9.15 limit on any property, levy rates of the junior status tax levies and junior taxing districts are reduced or eliminated to remain within this cumulative ceiling rate.  The reduction or elimination occurs on the lowest status levies and districts before the next highest are affected.

Statutes limit regular property taxes imposed by a taxing district in any year to not more than 106 percent of the highest taxes it imposed in the last three years, not including taxes on new construction.

The constitution requires a taxing district to impose its property taxes uniformly throughout its boundaries.

SUMMARY:

Library districts, public hospital districts, fire protection districts and metropolitan park districts are authorized to de-annex areas, or withdraw the areas from their boundaries if it appears that the retention of the areas within their boundaries would cause a reduction of their tax rates under operation of the $9.15 limitation.  A de-annexation would occur upon:  (1) request by the junior taxing district; and (2) approval by the city or town if the area were inside the city or town, or by the county if the area were outside of a city or town.

If territory were so removed from a junior taxing district's boundaries, then its tax receipts under the 106 percent limitation are calculated as if the territory never had been in the district's boundaries.  If a city or town were removed from a library or fire district's boundaries, the city's or town's tax receipts under the 106 percent limitation are calculated as if the library or fire district had not been within its boundaries.

If an area were withdrawn from one of these junior taxing districts that is coterminous with the boundaries of another taxing district, the boundaries for taxation purposes are established on October 1 of that year instead of March 1 of that year.

A re-annexation into the area so de-annexed could occur upon:  (1) request by the junior taxing district; and (2) approval by the city or town if the area were inside the city or town, or by the county if the area were outside a city or town.  Potential referendum action by voters in the area to be re-annexed could be taken.

Library districts, public hospital districts, metropolitan park districts and fire protection districts are authorized to submit ballot propositions to their voters which, if approved by a simple majority vote, would permit both:  (1) the taxing district to impose a higher rate of taxation than it otherwise could impose due to the $9.15 limitation, but still subject to the 106 percent limitation and the maximum rate limitation for the taxing district; and (2) increase the $9.15 limitation by an amount equal to this increased tax but not to exceed $9.50 per $1,000 of assessed valuation.  Fire districts may only receive this authorization for their first 50 cents per $1,000 of assessed valuation tax levy.  The increase in the $9.15 limitation would be only for the taxing district that received such voter approval.  Other taxing districts would not be affected.

When two or more taxing districts that occupy part of the same area receive this voter approval, they would share in the increased amount of taxing capacity.  If the requested taxing rates exceed the $9.50 limitation, these taxing districts would have their requested levy rates adjusted in the same manner as if the rates were being reduced due to the $9.15 limitation.

The voter-approved, six-year tax levies of up to 25 cents per $1,000 of assessed valuation for emergency medical services are still above this $9.50 limitation.

County assessors are required to report tax information to the Department of Revenue on standardized forms.

VOTES ON FINAL PASSAGE:

      House 85  10

      Senate    47     2

EFFECTIVE:April 22, 1987