SENATE BILL REPORT

HB 1940

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 Reported by Senate Committee On:

Ways & Means, March 24, 2015

Title: An act relating to exempting levies imposed by qualifying flood control zone districts from certain limitations upon regular property tax levies.

Brief Description: Exempting levies imposed by qualifying flood control zone districts from certain limitations upon regular property tax levies.

Sponsors: Representatives Stokesbary, Fitzgibbon, Ryu, Magendanz, Kochmar, Hargrove, Rodne, Bergquist, Hurst, Gregerson, Orwall and Jinkins.

Brief History: Passed House: 3/11/15, 69-29.

Committee Activity: Ways & Means: 3/24/15 [DPA, w/oRec].

SENATE COMMITTEE ON WAYS & MEANS

Majority Report: Do pass as amended.

Signed by Senators Hill, Chair; Braun, Vice Chair; Dammeier, Vice Chair; Honeyford, Vice Chair, Capital Budget Chair; Hargrove, Ranking Member; Keiser, Assistant Ranking Member on the Capital Budget; Ranker, Ranking Minority Member, Operating; Bailey, Becker, Billig, Brown, Conway, Fraser, Hasegawa, Hatfield, Hewitt, Kohl-Welles, O'Ban, Rolfes, Schoesler and Warnick.

Minority Report: That it be referred without recommendation.

Signed by Senators Padden and Parlette.

Staff: Juliana Roe (786-7438)

Background: All real and personal property is subject to property tax each year based on its value, unless a specific exemption is provided by law. The Washington State Constitution (Constitution) requires that taxes be uniform within a class of property. Uniformity requires both an equal rate of tax and equality in valuing the property taxes.

The Constitution limits regular property tax levies to a maximum of 1 percent of the property's value – $10 per $1,000 of assessed value. The Legislature has established individual district rate maximums and aggregate rate maximums to keep the total tax rate for regular property taxes within the constitutional limit. For example:

the state levy rate is limited to $3.60 per $1,000 of assessed value;
county general levies are limited to $1.80 per $1,000 of assessed value;
county road levies are limited to $2.25 per $1,000 of assessed value; and
city levies are limited to $3.375 per $1,000 of assessed value.

For property tax purposes, the state, counties, and cities, with respect to the levies listed above, are collectively referred to as senior taxing districts. Junior taxing districts, a term that includes fire, hospital, flood control zone, and most other special purpose districts, each have specific rate limits as well. The tax rates for senior and junior districts, excluding the state, must fit within an overall rate limit of $5.90 per $1,000 of assessed value. If the $5.90 limit is exceeded, statute establishes the sequential order in which the levies of various junior taxing districts must be proportionally reduced or eliminated – a process referred to as prorationing – to conform to the $5.90 limit.

Some regular property tax levies, including levies for port districts, emergency medical services, and criminal justice purposes, are not subject to the $5.90 aggregate rate limit. These levies have protections from general prorationing requirements and exist within the $0.50 gap that remains after subtracting the $3.60 state levy and the $5.90 in local regular levies from the constitutional $10 limit per $1,000 of assessed value.

Under current law, qualifying flood control zone districts may protect up to $0.25 per $1,000 of assessed value levy authority through exceptions to general prorationing requirements if their levy within the $5.90 limit is subject to prorationing. To qualify, a flood control district must be located in a county with a population of 775,000 or more and whose boundaries are coextensive with the county. This provision is set to expire in 2018.

Summary of Bill (Recommended Amendments): A qualifying flood control zone district may protect up to $0.25 per $1,000 of assessed value levy authority from general prorationing requirements if its levy within the $5.90 limit is subject to prorationing until January 1, 2023.

EFFECT OF CHANGES MADE BY WAYS & MEANS COMMITTEE (Recommended Amendments): The authority to protect the $0.25 per $1,000 of assessed value levy authority expires January 1, 2023 – the authority is no longer permanent. This authority is extended to those counties within the Chehalis River basin.

Appropriation: None.

Fiscal Note: Available.

Committee/Commission/Task Force Created: No.

Effective Date: The bill takes effect on January 1, 2018.

Staff Summary of Public Testimony on House Bill: No public hearing was held.

Persons Testifying: N/A.

Persons Signed in to Testify But Not Testifying: N/A.