HOUSE BILL REPORT
SHB 2554
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.
As Passed House:
February 19, 2008
Title: An act relating to levy lid lift ballot propositions.
Brief Description: Requiring lid lift ballot propositions to expressly indicate a permanent increase to the levy base.
Sponsors: By House Committee on Finance (originally sponsored by Representatives Dickerson and McIntire).
Brief History:
Finance: 1/25/08, 2/6/08 [DPS].
Floor Activity:
Passed House: 2/19/08, 95-0.
Brief Summary of Substitute Bill |
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HOUSE COMMITTEE ON FINANCE
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 8 members: Representatives Hunter, Chair; Hasegawa, Vice Chair; Condotta, Assistant Ranking Minority Member; Conway, Ericks, McIntire, Roach and Santos.
Minority Report: Do not pass. Signed by 1 member: Representative Orcutt, Ranking Minority Member.
Staff: Jeff Mitchell (786-7139).
Background:
In addition to constitutional and statutory limits on property tax rates, there is a statutory 1
percent limit on revenue growth for taxing districts. Under this revenue "lid" the amount of
revenue collected from a regular (i.e., non-voter-approved) property tax levy cannot be more
than 1 percent above the highest one year amount collected in the prior three years. Taxing
districts may exceed this 1 percent cap if the voters in the district approve a "lid lift" which
allows voters in a district to agree to tax themselves above the lid. Prior to 2003, lid lifts
were limited to one year. In 2003 the Legislature authorized counties, cities, and towns to
seek voter approval for multi-year lid lifts for up to six consecutive years. For a multi-year
lid lift, each year's maximum legal levy is the base for the following year. In 2007 the
Legislature, through the enactment of ESB 5498, extended multi-year lid lift authority to all
taxing districts. The ESB 5498 also made non-substantive, technical changes to the lid lift
statute.
Prior to the passage of ESB 5498, a multi-year lid lift's levy base increase was presumed
temporary unless the ballot measure explicitly made the increase permanent. After ESB 5498
became effective, the Department of Revenue (Department) modified its interpretation
regarding the temporary or permanent nature of the levy base increase for multi-year lid lifts.
A multi-year lid lift ballot proposition is now interpreted to permanently increase a taxing
district's levy base unless the increase is limited in duration in the ballot measure. The
Department's modified interpretation of the lid lift statute did not change the default rule for
single-year lid lifts. The default rule for single-year lid lifts is analogous to the revised rule
for multi-year lid lifts: a levy base increase is permanent unless explicitly limited in the
ballot proposition.
Summary of Substitute Bill:
Taxing districts are required to explicitly indicate in any lid lift ballot proposition (single-year
or multi-year) that the district's levy base will be permanently increased. If the ballot
proposition does not expressly indicate that the final levy will be used for the purpose of
computing subsequent levies, the levy base increase is presumed temporary. This bill applies
to lid lift ballot propositions approved on or after the effective date of the act.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony: None.
Persons Testifying: None.