SENATE BILL REPORT

SB 6683

BYSenators DeJarnatt and Lee

Authorizing a county tax on utility services.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 4, 1988

Senate Staff:William Bafus (786-7715)

AS OF FEBRUARY 4, 1988

BACKGROUND:

Local governments have experienced increasing demands for services and increased mandates to provide services.  At the same time, their revenue growth has not kept pace in recent years.  This is particularly true for counties which have not had an increase in general taxing authority since the authorization of the second half-cent sales and use tax in 1982.  Counties in rural areas with largely resource-based economies have been hit especially hard.  Many have suffered declines in revenues, leading to declines in county employment and in the levels of basic services provided to their residents, including public health and law enforcement.

Some counties receive revenue via distributions from the county sales tax equalization account which is funded from a portion of the receipts from the motor vehicle excise tax.  This program applies to counties receiving less than $150,000 per year from the first one-half cent and the second half-cent, respectively, of local sales and use tax yield from unincorporated areas during any year.  These counties receive payments from the equalization account equal to the difference between their yields and this floor amount.  These same counties receive additional payments, if funds are available, equal to the difference between their tax yield per person of unincorporated population and 70 percent of the statewide average per capita (unincorporated population) yield from the sales and use tax.

SUMMARY:

Counties are authorized to levy a county-wide tax at a maximum rate of 1 percent upon the retail sales of electrical, gas, telephone, water and sewer utilities.  Counties which levy this tax must accept full financial responsibility for funding county- wide public health and voter registration programs.  Counties which levy this first tax are also authorized to levy an additional tax at a maximum rate of 5 percent upon the retail sales of these same utilities in the unincorporated areas of the county.  A specific exemption for electrical energy used in aluminum smelting is provided.  Other exemptions, special rates for specific classes of ratepayers, rebates for specific classes of ratepayers, etc. may be established by the counties levying these taxes.

The floor amount for determining distributions from the county sales tax equalization account is increased to $500,000.  The percentage of the proceeds from the motor vehicle excise tax to be placed in this account is adjusted accordingly.

Appropriation:    none

Revenue:    yes

Fiscal Note:      requested February 4, 1988