Background: The 0.1 Percent Local Sales/Use Tax for Criminal Justice. Counties may impose a local sales and use tax of 0.1 percent for criminal justice programs. This tax may be levied only by counties; however, the receipts are shared with cities: 10 percent goes to the county, and the remaining 90 percent is apportioned to the county and all cities within the county on the basis of population. The initial imposition of the tax is subject to potential referendum by the voters. Currently, 32 counties are levying the tax.

The 0.3 Percent Voter-Approved Local Sales/Use Tax for Public Safety. Subject to voter approval, counties may impose a tax up to 0.3 percent. At least one-third of the tax receipts must be devoted to criminal justice purposes, fire protection purposes, or both. A levying county retains 60 percent of the receipts, and the remaining 40 percent is distributed to cities within the county on a per capita basis. The use of tax receipts must be stated in the ballot proposition that goes before the voters. Until calendar year 2010, tax receipts could not supplant (replace) existing funds being used for the purpose of the sales and use tax as provided in the ballot proposition. In 2009 the Legislature amended this non-supplant restriction, allowing counties to partially supplant existing funds until January 1, 2015. The sales and use tax has been implemented in five counties: Kittitas, Walla Walla, Spokane, Whatcom, and Yakima.

The 0.1 Percent Local Sales/Use Tax for Public Safety. Counties may impose a 0.1 percent sales and use tax for mental health and chemical dependency programs. The proceeds of the tax must be devoted to county mental health treatment, chemical dependency, and therapeutic court programs and services. Until calendar year 2010, tax receipts could not supplant (replace) existing funds being used for these programs and services. In 2009 the Legislature amended this non-supplant restriction, allowing counties to partially supplant existing funds until January 1, 2015. The sales and use tax has been imposed in 13 counties: Clallam, Clark, Island, Jefferson, King, Okanogan, San Juan, Skagit, Snohomish, Spokane, Thurston, Wahkiakum, and Whatcom.

Summary of Bill: The voter-approval requirement for the 0.3 percent public safety sales and use tax is eliminated until January 1, 2015. To impose the sales and use tax on or after January 1, 2015, a county must submit (or resubmit) an authorizing proposition to the voters.

The non-supplant restrictions are completely eliminated for the 0.1 percent criminal justice sales and use tax, and 0.3 percent public safety sales and use tax.

The non-supplant restrictions for the 0.1 percent mental health and chemical dependency sales and use tax are completely eliminated through calendar year 2014.

Staff Summary of Public Testimony: PRO: This proposal aligns with other proposals to provide local governments with revenue flexibility during these challenging economic times. Local governments, especially counties, are struggling to provide resources for public safety. Many cities and counties have already cut budgets through a variety of actions, including programmatic cuts, layoffs, and furloughs. Some areas have cut budgets deeply, back to the same levels of ten or more years ago. Yet the demand for basic services is rising. Funding for local programs is decreasing, but not the need. Local governments face the same budget crisis as the state; however, unlike the state, which received federal stimulus money and had funds to transfer, many local governments have had to respond to their falling revenues only with cuts in services and employment. The Legislature should provide locals with more tools and flexibility, particularly for public safety. We are working on a package of proposals, which make temporary and permanent changes to provide locals with some options. Local needs vary by community. Flexibility helps us manage and prioritize services. The locals are united in providing mandated services. Allow us to preserve core services. Last year's local flexibility bill was a good tool for local governments. No amount of flexibility or reductions, however, will close the local governments' budget gaps. We may need additional authority. For example, one option would be to authorize a similar county utility tax in unincorporated areas, similar to the city tax. People rely on these services and we can help our citizens who are pulling themselves up during this economic downturn. Keep local government running while the entire state faces these challenges together. REET has provided revenue for capital projects. Now, we would like to be able to use REET I and II for maintenance and operations to keep up these facilities and keep them open to the public. Another option, SB 5432, would help locals fund veterans' services. Also, a mineral severance tax, shared with the state, could provide necessary funding. Fiscal home rule would allow us to work best in our home communities. Public safety programs or functions are affected. We are doing less with less. Enforcement and other criminal justice functions cannot be maintained at pre-economic-crisis levels. Human services funding has been decimated. Lines at food banks are growing, but the budgets supporting them are being cut or eliminated. Those who serve the most vulnerable populations are working with the cities and counties to try to get additional resources for these basic needs. Programs for basic needs help public safety. Please include more flexibility for local funding to support human services.

CON: These changes to local option taxes send a poor message to voters. Changing voter approved tax authority and dedicated funding mechanisms is a concern. This broadened tax authority for local governments can impact businesses, which must retool their operations and systems to accommodate new local taxes.