SENATE BILL REPORT

SB 5459

BYSenators Barr, DeJarnatt, Patterson, Hansen, Conner and Matson

Providing for tax distribution to local governments.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 27, 1989

Senate Staff:Terry Wilson (786-7715)

AS OF FEBRUARY 27, 1989

BACKGROUND:

In 1982, the Legislature authorized cities and counties to impose an additional .5 percent sales and use tax or an additional .5 percent real estate excise tax.  Because of the disparities of per capita sales tax revenues among cities and counties, the Legislature also created the local sales tax equalization program.  It provided for distributions of a portion of the state motor vehicle excise tax to cities and counties receiving below average per capita revenues from the sales tax.  It also provided a distribution to counties to raise county sales tax revenues to a minimum amount of $150,000.  This minimum amount is adjusted by the Department of Revenue annually and is $199,009 for 1989.

Total distributions to cities under this program for the 1987- 1989 biennium are estimated to be $31.5 million.  Total distributions to counties under this program for the 1987-1989 biennium are estimated to be $10.5 million.

SUMMARY:

A new distribution is provided to cities that have both below average per capita sales tax revenues and below average per capita property valuation.  The distribution is funded from a portion of the interest earnings on the local sales and use tax account.

The minimum distribution to counties under the current program is increased to $350,000 for 1990.  This distribution is funded from the state motor vehicle excise tax and a portion of the interest earnings on the local sales and use tax account.

Appropriation:    $120,000 to Stevens County

Revenue:    yes

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect July 1, 1989.