HOUSE BILL REPORT
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 House Committee On:
Title: An act relating to removing disincentives to the voluntary formation of regional fire protection service authorities by equalizing certain provisions with existing laws governing fire protection districts and by clarifying the formation process.
Brief Description: Removing disincentives to the voluntary formation of regional fire protection service authorities by equalizing certain provisions with existing laws governing fire protection districts and by clarifying the formation process.
Sponsors: Representatives Reykdal, Stokesbary, Van De Wege and Springer.
Local Government: 1/29/15, 2/5/15 [DPS].
HOUSE COMMITTEE ON LOCAL GOVERNMENT
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 6 members: Representatives Takko, Chair; Gregerson, Vice Chair; Griffey, Assistant Ranking Minority Member; Fitzgibbon, McBride and Peterson.
Minority Report: Do not pass. Signed by 3 members: Representatives Taylor, Ranking Minority Member; McCaslin and Pike.
Staff: Ethan Moreno (786-7386).
Regional Fire Protection Service Authorities.
In 2004 the Legislature authorized the creation of regional fire protection service authorities (RFAs) as separate taxing districts charged with providing regional fire protection and emergency services within their jurisdictional boundaries. An RFA is formed when elected officials from two or more adjacent fire protection jurisdictions develop a plan for the creation, financing, operation, and governance of an RFA that is subsequently approved by voters. For purposes of RFA formation provisions, "fire protection jurisdiction" means a fire district, city, town, port district, municipal airport, or Indian tribe. No fire protection jurisdiction may participate in more than one RFA.
Imposition of Benefit Charges.
An RFA may impose property taxes, benefit charges, or both. Imposed benefit charges are on personal property and improvements to real property within the RFA. The benefit charges must be paid by the property owners and must be reasonably proportioned to the measurable benefits to property resulting from the services afforded by the RFA. The initial imposition or reauthorization of benefit charges requires approval by 60 percent of the voters voting on the ballot measure.
Certain limitations and requirements associated with the imposition of benefit charges are specified in statute. For example, benefit charges may be imposed for a maximum term of six years, although consecutive terms are permitted. Also, the aggregate amount of benefit charges in any one year may not exceed an amount equaling 60 percent of the operating budget for the year in which the benefit charge is to be collected. An RFA that imposes a benefit charge is barred from imposing 50 cents of the total property tax levy of $1.50 per $1,000 dollars of assessed valuation that an RFA may otherwise impose through resolutions of its governing body. Additionally, in accordance with specified requirements, the governing body of an RFA must hold a public hearing on its proposal to impose benefit charges. The public hearing must be held before the election at which the proposition to impose benefit charges is to be decided.
Property Tax Rate Limits, Prorationing, and Protection from Prorationing Requirements.
The Washington Constitution limits regular property tax levies to a maximum of 1 percent of the property's value ($10 per $1,000 of assessed value). Voters within a taxing district can vote to tax themselves higher than this 1 percent limit with an excess levy.
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, and 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, and most other special purpose districts, also have specific statutory rate limits. The tax rates for senior taxing districts and most junior taxing 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 district levies must be proportionally reduced or eliminated (a process referred to as prorationing) to conform to the $5.90 limit. Fire districts are listed late in the order of prorationing, so they are among the last of the junior taxing districts subject to mandatory levy reductions.
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 50 cent "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, fire protection districts, but not RFAs, may protect up to 25 cents per $1,000 of assessed value levy authority through exceptions to general prorationing requirements.
Protection of Future Levy Capacities.
The regular property tax levy for fire and other districts may be set at the amount which would be allowed otherwise if the property tax levy for the district had been set at the full amount authorized by law, including any fire protection district levy that would have been imposed but for provisions barring the imposition of the levy because of the imposition of a benefit charge.
The expressly stated purpose of these levy protection provisions is to:
remove the incentive for a taxing district to maintain its levy at the maximum level; and
protect the future levy capacity of a district that reduces its levy below the level that it otherwise could impose by removing the adverse consequences to future levy capacities resulting from levy reductions.
Summary of Substitute Bill:
Continued Imposition of Benefit Charges - Approval by Simple Majority.
The continued imposition of benefit charges of a RFA must be approved by a majority, rather than 60 percent, of the voters of the RFA voting at a general election or special election called for that purpose.
Authority to Participate in the Creation of a Regional Fire Protection Service Authority.
The definition of "fire protection jurisdiction" established in RFA provisions is modified to specify that the term can include an RFA. The effect of this change is that RFAs are allowed to be partnering jurisdictions in the creation of new RFAs. An RFA, however, is barred from participating in more than one created RFA.
Financial Protections - Prorationing Exemption and Future Levy Capacity.
An RFA may protect up to 25 cents per $1,000 of assessed value levy authority through an exception to general prorationing requirements. Additionally, future levy capacity protections are extended to RFAs that impose benefit charges so that the levy of an RFA may be set at the amount which would otherwise be allowed if the property tax levy for the RFA had been set at the full amount authorized by law, including any levy that would have been imposed but for provisions barring the imposition of the levy because of an imposed benefit charge. The levy-related provisions for RFAs apply to property taxes levied for collection in 2016 and thereafter.
Public Hearing Provision.
The public hearing required before an election authorizing the imposition of benefit charges by an RFA may be conducted by an RFA planning committee, rather than only by the governing board of an RFA, if the benefit charge is proposed as part of the initial formation of the RFA.
Substitute Bill Compared to Original Bill:
The substitute bill makes the following changes to the original bill:
amends the definition of "fire protection jurisdiction," thereby allowing an RFA to participate in the creation of an RFA;
deletes an amended definition of "participating fire protection jurisdiction;"
specifies that a RFA may not participate in more than one created RFA;
includes cross-references in property tax provisions to properly reference levy protections for RFAs proposed in the underlying bill; and
makes the levy-related provisions in the underlying bill applicable to property taxes levied for collection in 2016 and thereafter.
Fiscal Note: Not requested.
Effective Date of Substitute Bill: This bill takes effect 90 days after adjournment of the session in which the bill is passed, except for section 6 relating to levy limitations which takes effect January 1, 2018.
Staff Summary of Public Testimony:
(In support) This bill is intended to help local communities and junior taxing districts, including first responders. Regional fire protection service authority statutes need modernization, and it is beneficial to have jurisdictions considering regionalization when doing so makes sense. Currently, we have statutes that provide certain protections to fire districts, but not to RFAs. This bill encourages regionalization, economies of scale, and putting more money into resources rather than into administration.
This is a clean-up bill that will create greater equity between fire districts and RFAs. Technical amendments have been worked out and will be offered. Regional fire authorities have saved millions of dollars, have improved efficiencies, and have reduced voters' taxes. Fire districts have prorationing protections and need only majority approval for continuing the imposition of benefit charges; this bill will extend those provisions to RFAs. This bill provides authority for RFAs to merge together, will sustain fires services, and is widely supported by fire officials.
Persons Testifying: Representative Reykdal, prime sponsor; Dylan Doty, Washington Fire Chiefs; Eric Robertson, Valley Regional Fire Authority; and Jim Schneider, Kent Fire Department Regional Fire Authority.
Persons Signed In To Testify But Not Testifying: None.