SENATE BILL REPORT

HB 1829

As Reported by Senate Committee On:

Local Government, March 21, 2019

Title: An act relating to veterans' assistance levies.

Brief Description: Concerning veterans' assistance levies.

Sponsors: Representatives Chapman, Goehner and Reeves.

Brief History: Passed House: 3/05/19, 66-32.

Committee Activity: Local Government: 3/19/19, 3/21/19 [DP-WM].

Majority Report: Do pass and be referred to Committee on Ways & Means.

Signed by Senators Takko, Chair; Salomon, Vice Chair; Short, Ranking Member; Honeyford and Lovelett.

Staff: Greg Vogel (786-7413)

Background: Property Tax. All real property is subject to a tax each year based on the highest and best use, unless a specific exemption is provided by law. The annual growth of all regular property tax levy revenue other than the state levies is limited as follows:

• for jurisdictions with a population of less than 10,000, revenue growth is limited to 1 percent; and

• for jurisdictions with a population of 10,000 or more, revenue growth is limited to the lesser of inflation, or 1 percent plus the value of new construction.

The Washington Constitution limits regular levies to a maximum of 1 percent of the property's value—$10 per $1,000 of assessed value (AV), constitutional 1 percent levy limit. There are 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 AV;

• county general levies are limited to $1.80 per $1,000 of AV;

• county road levies are limited to $2.25 per $1,000 of AV; and

• city levies are limited to $3.375 per $1,000 of AV.

For property tax purposes, the state, 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, flood control zone, and most other special purpose districts, each have specific rate limits as well.

The tax rates for senior and junior taxing districts, excluding the state, must fit within an overall rate limit of $5.90 per $1,000 of AV. If the statutory $5.90 or constitutional $10 limit are exceeded, statute establishes the sequential order in which the levies must be proportionally reduced or eliminated, a process referred to as prorationing, to conform to the statutory and constitutional limits.

Veterans' Relief Fund Levy. County legislative authorities are required to collect a levy dedicated to a veterans' assistance fund (fund). The fund may only be used for:

• veterans' assistance programs for indigent veterans and families;

• burial or cremation of deceased indigent veterans or deceased family members of indigent veterans; and

• direct and indirect costs incurred in the administration of the fund.

The rate is within the county's maximum general levy rate of $1.80 per $1,000 of AV. The minimum levy rate is $0.01125 per $1,000 of AV, although the county legislative authority may levy a lesser amount if there are sufficient funds residing in the fund. The maximum levy rate is $0.27 per $1,000 of AV. The county legislative authority has the option of changing the veterans' assistance levy amount based on changes in the county general levy.

As part of the county general levy, the levy is subject to both the $5.90 per $1,000 of AV and constitutional 1 percent levy limit. The county general levy limit factor depends on the county's population. The revenue may not grow more than 101 percent per year, unless the voters approve a levy lid lift.

Summary of Bill: County legislative authorities are permitted to continue collecting the veterans' assistance levy as they do under current law, or they may collect the veterans' assistance levy as a separate levy, outside of the county's general levy rate. If collected as a separate levy, the levy is not subject to the $5.90 per $1,000 of AV limitations but is subject to the constitutional 1 percent levy limit. The separate levy continues to have the same statutory minimum and maximum levy rates, ranging from $0.01125 to $0.27 per $1,000 of AV. The limit factor for the separate levy is the greater of 101 percent, or 100 percent plus inflation.

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: This is an important bill for counties and veterans.  Most counties do not take the max levy because of its impact on the general levy.  The funds go towards things such as heat, rental assistance, and health care for veterans.  By taking it out as a separate levy, veterans’ programs will no longer have to compete with public safety, public health, and other general fund purposes.

Persons Testifying: PRO: Representative Mike Chapman, Prime Sponsor; Ted Wicorek, citizen; Juliana Roe, Washington State Association of Counties.

Persons Signed In To Testify But Not Testifying: No one.