SENATE BILL REPORT

HB 2330

BYRepresentatives Haugen, Ferguson, Cooper, Wang, Raiter, Horn, Zellinsky, Jones, Brumsickle, Basich, Kremen, McLean, Todd, Nealey, Ballard, Morris and Kirby

Modifying levy rate provisions for senior and junior taxing districts.

House Committe on Local Government

Rereferred House Committee on Revenue

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 20, 1990

Majority Report:  Do pass.

      Signed by Senators McCaslin, Chairman; Thorsness, Vice Chairman; DeJarnatt, Patrick, Sutherland.

Senate Staff:Eugene Green (786-7405)

                  February 21, 1990

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, FEBRUARY 20, 1990

BACKGROUND:

Statutes establish a cumulative ceiling on the rate of most regular property taxes that may be imposed by most taxing districts.  Under these limitations, the state is authorized to impose regular property taxes of up to $3.60 per $1,000 of assessed valuation, at the state equalized value, to fund K-12 education.  Under these limitations, most other taxing districts may impose regular property taxes at a combined rate not to exceed $5.55 per $1,000 of assessed valuation.  The following are not subject to the $5.55 per $1,000 of assessed valuation limitation: (1) up to 6.25 cents per $1,000 of assessed valuation for conservation futures; (2) up to 25 cents per $1,000 of assessed valuation for emergency medical services for each of six years, when authorized by a 60 percent vote, with a 40 percent validation requirement; and (3) up to 35 cents per $1,000 of assessed valuation to protect the regular tax levy of some junior taxing districts for each of five consecutive years, when authorized by a simple majority vote.

Relative status levels of various taxing districts that are subject to the $5.55 limitation have been established.  These status levels under the $5.55 limitation include counties, cities, towns, and road districts, as senior taxing districts.  The remaining taxing districts that are subject to the $5.55 limitation are referred to as junior taxing districts, e.g., library districts, fire protection districts, public hospital districts, etc.  Different status levels within the junior taxing districts have been established.

If a situation arises where regular property taxes are sought to be imposed in an area that exceeds this $5.55 limitation, then a process of reducing and eliminating tax levies occurs to keep the cumulative level of such regular property taxes within the $5.55 limitation.  This process of reducing or eliminating tax levies is referred to as prorationing.  Under this process, the junior taxing districts with the lowest status level have their property taxes reduced proportionately, or eliminated.  If the cumulative limitation still is not reached, then the property taxes of taxing districts of the next lowest status level are proportionately reduced or eliminated, and so on until the $5.55 limitation has been reached.

Various laws have been enacted in the last few years attempting to address this prorationing situation.  One of these measures allows voters of some junior taxing districts to approve a ballot proposition permitting the junior taxing district to retain its property taxes that would otherwise have been reduced, up to an amount not exceeding an additional 35 cents above the $5.55 limitation for five consecutive years.  Voters in several areas have approved such ballot measures.  Another of these measures terminated last year.  This measure provided for an automatic reduction of the taxes of a geographically small junior taxing district, in return for transfers of money from a geographically large junior taxing district.

SUMMARY:

The potential of reducing or eliminating junior taxing district property tax levies is reduced by altering property tax laws as follows:

(1) The extra 35 cents per $1,000 of assessed taxing capacity that voters may approve for certain junior taxing districts is eliminated.

(2) The $5.55 per $1,000 of assessed valuation ceiling is increased by 35 cents to become a $5.90 limitation.

(3) The maximum regular property tax levies for both public hospital districts and metropolitan park districts is altered from a single levy of 75 cents per $1,000 of assessed valuation at the highest junior taxing district tax status, by splitting each of these taxes into two separate tax levies, one of 50 cents per $1,000 of assessed valuation at the highest junior taxing district tax status, and the other at 25 cents per $1,000 of assessed valuation at the third status level, immediately following the status level for the second and third 50 cents per $1,000 of assessed tax levy for fire protection districts.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: Jim Salatino, Metro Park District (pro); Pete Spiller, Fire Commissioners (pro); Greg Vigdor, WA State Hospital Association (pro); Mark Allen WA Library Association (pro); Suzanne Curtis, Pierce County Chamber of Commerce