SENATE BILL REPORT

SB 5642

BYSenators Patterson, Vognild and Williams; by request of Governor

Providing major tax reform.

Senate Committee on Transportation

Senate Hearing Date(s):February 7, 1989

Senate Staff:Gene Schlatter (786-7316)

AS OF FEBRUARY 6, 1989

BACKGROUND:

The current gas tax is 18 cents per gallon.  There are two parts of the 18 cent allocation:  (A) 17 cents distributed to state and local jurisdictions; and (B) one cent, which is divided into thirds and distributed to UAB, RAP and DOT.  Gross weight fees for trucks have not been adjusted for nearly 20 years.

SUMMARY:

Increase in Motor Fuel Tax.  The proposed increase in the legislation recommends that the current rate of 17 cents per gallon be increased to 20 cents per gallon, effective July 1, 1989.  In reality, the total rate of 18 cents increases to 21 cents under the proposal.

Effective July 1, 1991, the Department of Licensing will adjust the tax rate on July 1 of each succeeding year multiplying 21 cents by a percentage of:  (1) the CPI for the year before the adjustment is to be made; and (2) the CPI as of December 31, 1988.

The CPI to be used for the indexing is the U.S. City average for all urban consumers.  The index is to be submitted by March 1 of each year to the Legislature by the Department of Licensing.

Proceeds of the revenues are to be distributed on a monthly basis after 17 cents is deducted as follows:

      1)15 percent to transportation improvement fund; of the 85 percent remaining revenues:

      2)47 percent to state highway purposes

      3)34 percent to counties

      4)19 percent to cities and towns

License Fees Increased and Indexed.  All vehicle license fees are subject to CPI adjustment on January 1 of each year (CPI adjustment same as in section 1501).  Fee increases of 60 percent are imposed on gross weight, overloads, and vehicles by class and type.  Subject to indexing of CPI as in Increase in Motor Fuel Tax section.

Effective Dates.  The gas tax increase is effective July 1, 1989 and indexing July 1, 1991.  License fee increases are effective January 1, 1990 and indexing is effective January 1, 1992.

Intent.  Finding of regional differences for transportation needs; financing mechanisms inadequate; funding on a regional basis.

Definitions.  Public agencies; regional transportation plans; local government service agreements.

Regional Transportation Program.  Within four years, counties, cities, metros, PTBA's, other interested parties may develop regional transportation plans.  Plans are specified as to identification of problems; multiple modes of transportation; land use issues; financing; and provisions for collecting taxes.  The plan must be approved by counties; if not, then the plan is submitted to cities within the region.

Regional Agreements.  Public agencies within the region may enter into agreements for administration of a regional plan; the financing thereof; the collection of taxes; and the duration of agreements.

Financing of Regional Transportation Plans.  Voters of counties within regions to vote on imposition of taxes; simple majority vote.  Taxes authorized:  (1) motor fuel tax (county imposed) of five cents per gallon; (2) license fees (county imposed), in addition to license fees imposed by state in the act (not to exceed $5 per vehicle; (3) Motor Vehicle Excise Tax (county imposed) of not more than 0.5 percent of value of vehicles; (4) computer tax (county imposed) not to exceed $4 per full-time employee per month; (5) income tax (county imposed)--the percentage of tax cannot exceed 25 percent of state tax imposed under the proposed act; (6) receive private contributions (county); and (7) all taxes authorized under this section may only be submitted to voters if the total amount does not exceed 80 percent of the proceeds of all taxes if imposed at maximum rates.

Governor to Create Regional Transportation.  The Governor may create regional authorities for any county or groups of counties that has not submitted a proposal to the voters or has not developed a plan within four years.  The Governor's authority is vested in 11 members, appointed by the Governor.  The authority is to develop regional plans; taxing plans may be submitted as provided under the section on Financing of Regional Transportation Plans (county basis).

County May Adopt Taxes.  Any county may, by ordinance, adopt taxes listed in the section on Financing of Regional Transportation Plans for not more than four years; the taxing authority expires with the approval of a regional plan; taxes to be submitted to voters for approval by a simple majority.  Counties may form LID's for transportation purposes.  Authorized taxes may only be submitted to voters if the amount of each tax does not exceed 40 percent of the allowed maximum rate under the section on Financing of Regional Transportation Plans.

Amendment to Interlocal Cooperation Act.  RCW 39.34 (interlocal cooperation act) is amended to state that agreements made pursuant to the Intent section will not require all parties to exercise all powers pursuant to an agreement.

Local Motor Fuel Taxation.  Eliminates the statutory ban on local governments imposing a motor fuel tax as authorized in the sections on Financing of Regional Transportation Plans and County May Adopt Taxes.

Local Motor Fuel Taxation.  Eliminates statutory ban on local governments imposing an excise tax on motor fuel as authorized in the sections on Financing of Regional Transportation Plans and County May Adopt Taxes.

Severability Clause.  There is a severability clause.

Effective Dates.  All provisions except proposed increases in the motor fuel tax take effect January 1, 1990 if the proposed constitutional amendment authorizing an income tax and a balanced budget system are approved by the voters November 1989.  If not approved by the voters, the entire act is null and void.

Appropriation:    none

Revenue:    yes

Fiscal Note:      requested