SENATE BILL REPORT

SHB 1689

BYHouse Committee on Local Government (originally sponsored by Representatives Haugen, Beck, Cooper, Zellinsky, D. Sommers, Butterfield, Sutherland, Bristow, Nutley, Nealey, Jones, Prince, Ballard and Rayburn)

Revising the distribution and payment of investment earnings on property tax receipts.

House Committe on Local Government

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 23, 1988; February 26, 1988

Majority Report:  Do pass as amended.

      Signed by Senators McCaslin, Chairman; Zimmerman, Vice Chairman; DeJarnatt, Garrett, Halsan, Metcalf

Senate Staff:Barbara Howard (786-7410)

                  February 26, 1988

AS REPORTED BY COMMITTEE ON GOVERNMENTAL OPERATIONS, FEBRUARY 26, 1988

BACKGROUND:

Each county treasurer collects property taxes imposed by all taxing districts on property located within the county.  County treasurers are required to distribute or disburse these tax receipts to the taxing districts imposing the taxes as follows: (1) collections of property taxes for taxing districts, other than the state, cities and towns, that are made in each month are distributed to these taxing districts on the first day of the following month;  (2) collections of property taxes for cities and towns that are made in each month are disbursed to cities and towns on or before the tenth day of the following month; and (3) collections of property taxes for the state that are made in each month are distributed immediately after the last day of the month, but if payments are not made to the state treasurer before the twentieth day of this succeeding month, the state treasurer makes a sight draft on the county treasurer for such amount that is due the state.

County treasurers invest money in their possession in a variety of investments until the money is disbursed according to law.  The county retains investment income earned from the money in its possession.  However, a municipal corporation can receive earnings on its money that is in the possession of a county treasurer if the municipal corporation designates how the county treasurer should invest its money.

SUMMARY:

Counties are required to pay local governments a certain amount of interest earnings on property tax receipts of the local governments that are held beyond the date by which such moneys are required to be distributed or disbursed.  The dates by which such tax receipts are to be distributed or disbursed are not changed.  The amount of interest earnings that must be paid by the county for each day after the distribution or disbursement is required to be made is a compounded daily rate equal to the average daily earned interest yield of the local government investment pool over the preceding month.

SUMMARY OF PROPOSED SENATE AMENDMENTS:

The time requirements are made consistent for distributing or disbursing taxes to both special taxing districts and to cities and towns.  Every month, the county treasurer must make such distributions on or before the tenth of the month after collection.

Additional provisions are made for distributions in May and November only, following the deadlines for half-yearly payment of property taxes.

In class A and AA counties, the county treasurer must make the distributions by the second Friday in the month for taxes collected in the first week, by the third Friday for taxes collected in the second week, and by the fourth Friday for taxes collected in the third week of the month.

In counties other than class A and AA, the distributions must be made by the third Friday in the month for taxes collected in the first week and by the fourth Friday for taxes collected in the second week.

If any of the above deadlines are not met, the county treasurer must include an interest payment with the distribution or disbursement.

There is no authority to proceed with a lawsuit filed after January 1, 1988, by a city, town or other taxing district to recover interest on taxes that were distributed or disbursed before January 1, 1989, but this prohibition may not affect any lawsuit begun before January 1, 1988.

The sections concerning tax distributions and disbursements become effective January 1, 1989.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested February 19, 1988

Senate Committee - Testified: County Treasurers Sharon Shrader, Kitsap (for); Ruth Wylie, Skagit (for); Doug Lasher, Clark (for); David Wood, King (for); Burce Michieli, Educational Service District 112 (against); Dale Sciuchetti, City of Spokane (against); Peter Lutropp, City of Tacoma (against); Stan Finkelstein, Association of Washington Cities (against); Jack McKenzie, City of Seattle (against)