House of Representatives
Office of Program Research
Ways & Means Committee
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.
Brief Description: Concerning the distribution of the public utility district privilege tax.
Sponsors: Senate Committee on Ways & Means (originally sponsored by Senator Parlette).
Hearing Date: 3/14/11
Staff: Jeffrey Mitchell (786-7139).
Public utility district (PUD) privilege tax is an in-lieu-of property tax. It applies to electricity-generating facilities for the privilege of operating in this state. The tax rate has several components including gross income derived from the sale of electricity, the number of kilowatt hours of self-generated energy which is either distributed to consumers or resold to other utilities, and the wholesale value of energy produced in thermal generating facilities.
Public utility districts report the facts pertinent to the calculation of the privilege tax to the Department of Revenue (DOR) once per year. The DOR calculates the tax owed and collects the taxes paid by PUDs. These tax proceeds are deposited with the State Treasurer.
The following distribution requirements apply to PUD privilege taxes collected on electricity generating or distribution facilities (other than the nuclear power plant on the Hanford reservation). The State Treasurer deposits 4 percent of the proceeds from the basic tax rate to the state General Fund. The remaining 96 percent is distributed as follows: 37.6 percent to the state General Fund for public schools; and 62.4 percent to the counties to be redistributed.
A county must distribute funds to each taxing district in the county, except school districts, in a manner the county deems most equitable. However, a city within the county must receive an amount equal to 0.75 percent of the gross revenues obtained from the sale of electricity within the city. There is no provision of law requiring a county to distribute tax revenues to a city on the basis of the city adjoining a reservoir used in the generation of electricity.
Summary of Bill:
If a county receives privilege taxes because a public utility district (PUD) operated by another county owns fee title to property in a city or town in the county, but the PUD has no sales of electrical energy in that city or town, the county may retain 60 percent of the tax proceeds and each city or town where property is owned shall divide the remainder equally. This only applies when the city or town adjoins a reservoir on the Columbia River wholly or partially created by such district's hydroelectric facility which began power generation in 1967.
The bill applies to PUD privilege taxes to be distributed in 2012 and thereafter.
Fiscal Note: Requested on March 12, 2011.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.