HOUSE BILL REPORT

HB 2780

BYRepresentatives Fraser, Belcher, Haugen, Brumsickle, Sayan, Wang, Bowman and Holland

Changing provisions relating to levies.

House Committe on Revenue

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (14)

      Signed by Representatives Wang, Chair; Pruitt, Vice Chair; Holland, Ranking Republican Member; Horn, Assistant Ranking Republican Member; Appelwick, Brumsickle, Fraser, Fuhrman, Grant, Haugen, Morris, Phillips, Rust and Silver.

House Staff:Rick Wickman (786-7150).

AS REPORTED BY COMMITTEE ON REVENUE FEBRUARY 3, 1990

BACKGROUND:

When a court orders a refund of property taxes that were found to be unlawfully collected, the county pays the refund out of the county's tax refund account.  This account is then replenished by a additional property tax levy the next year.  These tax refund levies have precedence over all other tax levies for the county or other taxing districts.

When so imposed, these levies are excluded from the 106 percent statutory lid law governing other tax levies.

A recent court decision concerning railroad rolling stock of two railroad companies has reduced actual property taxes paid for several years to 35 counties statewide.  The years affected for one railroad company were 1985 through 1988 and for another company, 1986 through 1989.  The court decision resulted in a reduction of actual property taxes paid for the years affected by approximately 17 percent or $4.5 million.  The taxpayer's taxes were reduced, rather than refunded.  Therefore, the counties do not have the authority to impose a refund levy to recover the reduced taxes.

SUMMARY:

SUBSTITUTE BILL:  In addition to the existing authority to levy additional taxes to pay for refunds, local taxing districts may impose property tax levies equal to the following amounts:

1)  Personal property taxes canceled as uncollectible within preceding 12 months; and

2)  Taxes not collected because of a change in assessed value made by the State Tax Appeals Board, the County Board of Equalization, or a court.

This new levy is not subject to the 106 percent property tax levy limit.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The substitute deletes language giving the new levy precedence over other levies and clarifies the assessed value changes that will result in a levy.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Requested January 30, 1990.

House Committee ‑ Testified For:    Mike Murphy, Thurston County Treasurer; Ron Strabbing, Grays Harbor County Treasurer, and Phil Sanders, Property Tax, King County.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    There is a need to clarify the imposition of property tax refund levies in the event of changes in assessed valuation as a result of decisions made by courts, the State Board of Tax Appeals, or County Boards of Equalization.

House Committee - Testimony Against:      None.