SENATE BILL REPORT

ESB 6913

BYSenators Hayner, Vognild and Patrick; by request of Governor

Providing for local criminal justice and other fiscal assistance.

Senate Staff:Randy Hodgins, Terry Wilson, Steve Jones (786-7715)

                June 11, 1990

AS PASSED SENATE, JUNE 5, 1990

BACKGROUND:

City and county governments have experienced significant increases in the demand for public services.  This is largely due to the impact of population increases and changing patterns of legal and illegal behavior.  Many localities are unable to meet these demands within available resources.

A major concern to local governments is their ability to provide needed criminal justice system services resulting from increasing crime, in particular those services associated with the dramatic increase in the illegal use of drugs.  Statewide drug arrests decreased over the period of 1982-1986 to 7,300 but then increased by 3,700 in 1987, another 4,700 in 1988, and last year by another 6,100 for a total of 21,900 in 1989.  Another indicator, felony filings, has been increasing by an average of over 2,000 filings a year since 1984.  Finally, county jail population has increased by 1,785 since 1986 to a total of 6,241.

The failure to provide adequate resources has resulted in workloads that overwhelm the ability of law enforcement officers, prosecutors, public defenders, courts and jails to deal with cases efficiently and effectively.  There are a number of local government financing options which can address these needs.  These include tax base sharing, modification of local government revenue distributions, direct appropriations from the state general fund, and local taxing options.

SUMMARY:

A variety of revenue sources are made available to local governments, most of which are limited to counties and cities and are earmarked for criminal justice purposes.  A total of $99.4 million is made available to counties and cities in fiscal year 1991.  The legislation provides general fund appropriations, tax base sharing, increased local government revenue distributions, and increased county taxing authority.

CRIMINAL JUSTICE FUNDING DISTRIBUTIONS

A total of $55 million is distributed to cities and counties for fiscal year 1991.  In FY 1992 this amount is estimated at $37.2 million and in FY 1993, $39.6 million.  In fiscal year 1991, $32.5 million is directed to the counties through a formula distribution based on population, reported crime and felony criminal court filings.  Of this amount, $25 million is from the motor vehicle excise tax (MVET).  This represents a percentage of total MVET collections and will continue to be distributed along with revenue growth for two more years.  The $7.5 million balance is from the state general fund and for the first year only.

An additional $2.5 million is provided to the counties from the state general fund for one-time assistance in fiscal year 1991.  This is distributed on a per capita basis only.  Distributions to cities in fiscal 1991 include $10 million allocated on a per capita basis to 24 cities experiencing extraordinary crime rates.  This includes $5 million from the MVET, which will continue to be allocated with growth for two more years, and $5 million of one-time funding from the state general fund.  An additional $10 million is provided to all cities in the state on a per capita basis, including $2.5 million to cities under 10,000 population.  Again, $5 million of the total is a MVET distribution which will continue for two more years, and $5 million is one-time funding from the state general fund.

Distributions will be made quarterly beginning in July 1990.  All funds must be used exclusively for criminal justice purposes and may not be used to supplant existing funding.

LOCAL SALES TAX DISTRIBUTION

The state distribution of local sales taxes to counties, cities and transit districts is made monthly rather than bimonthly.  In addition, investment earnings on the balances in these accounts will be credited to the account rather than the general fund.  This is a permanent change.  In fiscal year 1991 it will yield $1.6 million to counties, $2.8 million to cities, and $1.7 million to transit districts.  The spending of these receipts is not restricted to criminal justice purposes.

UNCLAIMED PROPERTY

Local governments may retain and spend certain types of unclaimed intangible property, rather than distributing the property to the state.  (This does not alter any responsibility of the local government to make restitution should the property be claimed.)  The intangible property includes: warrants that have been canceled because they were not presented for payment, property tax overpayments, and excess proceeds from property tax and irrigation district foreclosures.  This is a permanent change and has an estimated impact of $200,000 per year for county governments.

PARKING VIOLATIONS

The Department of Licensing requirements are modified for the enforcement of parking violations.  The current requirement that the Department be notified at least 150 days prior to license renewal is reduced to 120 days.  The requirement that there be at least three parking tickets prior to enforcement is reduced to two parking tickets.  Also, the charge for administration is increased from $10 to $15.  These changes are permanent and will increase city revenues by $4.0 million in fiscal year 1991.  Spending of the revenue derived from these changes is not restricted to criminal justice purposes.

SIX YEAR LEVIES

Subject to approval of a constitutional amendment, taxing districts are permitted to propose to their voters excess levies for periods of up to six years.  The spending of the excess levy receipts is not restricted to criminal justice purposes.

More restrictive authority, which certain districts have under present law, is eliminated in favor of this broad limitation.  School district authority for two-year excess levies and six-year capital levies is replaced.  Unique regular levy authority for emergency medical service districts, park and recreation service areas, and cultural arts, stadium and convention center districts is also replaced.

Some ballot proposition requirements would also be changed.  When proposing an excess levy, districts may state the proposal in terms of a maximum levy rate.  This is an alternative to the present method of stating a dollar amount and an estimate of levy rate.

These changes will be permanent, subject to the approval of a constitutional amendment in November, 1990.  Their revenue impacts cannot be estimated.

INITIATIVE 62 REVISIONS

Initiative 62 is amended to eliminate confusion over the issue of reimbursement for local government costs which result from state enactments.  The question has been whether there must be direct reimbursement for each cost or whether any revenue distributions and taxing authority could constitute reimbursement.  This change clarifies that after 1979, any increased revenue distributions and taxing authority constitutes reimbursement.  Existing litigation would not be affected by this provision.

SALES TAX EQUALIZATION FOR NEW CITIES

A sales tax equalization system for new cities is created.  This system allows new cities to base distribution on a few months of collection experience rather than a full year.  It would permit sales tax equalization payments to begin within several months of incorporation.  The present system would delay funds for over a year.  The spending of these receipts is not restricted to criminal justice purposes.

GAS TAX RECONCILIATION

Technical changes are made to the motor vehicle excise tax distribution.  These changes are made to reconcile this legislation with the distribution system included within the 1990 transportation revenue act. 

LOCAL SALES TAX

A local sales tax of 0.1 percent is authorized for certain large counties.  This taxing authority expires January 1, 1994, and the revenues may only be spent for criminal justice purposes.  These counties are those with populations in excess of 200,000 and those with populations in excess of 150,000 as well as a population increase of 24 percent during the preceding nine years.  Presently affected counties are King, Pierce, Clark, Snohomish, Spokane and Thurston.  This optional sales tax must be approved by the voters of the county.  It can be placed on the ballot by action of the county legislative authority or collective action of city governing bodies representing a majority of the county population. 

Tax proceeds would be distributed as follows:  10 percent to the county and the remaining 90 percent to the cities and the counties based on population.  The county population used in this calculation would be for the unincorporated area only. 

The tax has a potential yield of $36 million per year with cities receiving 56 percent of the revenues.

A transit system imposing the optional 1.0 percent local sales tax for high capacity transit would be limited to a maximum of 0.9 percent if the 0.1 percent county tax for criminal justice is being levied.

TASK FORCE ON CITY AND COUNTY FINANCES

A task force will examine issues of city and county financing with particular emphasis on criminal justice requirements.  The group will be comprised of five members from each house with three from each majority caucus.  In addition, the task force will include two nonvoting representatives of the Governor.

The task force will submit a report to the Governor and the Legislature by September 1, 1992.  Appropriations totaling $100,000 are made to the House and Senate for the operation of the task force during the current biennium.

PUBLIC DISCLOSURE OF GOVERNMENT DOCUMENTS

The effective date of 1990 legislation on the public disclosure of personal information by local governments and state agencies is delayed from June 7, 1990, to March 1, 1991.  Under the legislation (Chapter 256, Laws of 1990), a person may prevent a government agency from publicly disclosing the person's work and home addresses if the disclosure would threaten his or her life, physical safety, or property.

Appropriation:  yes

Revenue:   yes

Fiscal Note:    none requested