SENATE BILL REPORT
SHB 2428
As of February 14, 2024
Title: An act relating to allowing cities to voluntarily share certain sales and use tax revenue.
Brief Description: Allowing cities to voluntarily share certain sales and use tax revenue.
Sponsors: House Committee on Local Government (originally sponsored by Representatives Klicker, Rude and Springer).
Brief History: Passed House: 2/8/24, 97-0.
Committee Activity: Local Government, Land Use & Tribal Affairs: 2/15/24.
Brief Summary of Bill
  • Allows cities and towns to enter into an interlocal agreement to share a portion of general purpose local government sales and use tax revenue.
SENATE COMMITTEE ON LOCAL GOVERNMENT, LAND USE & TRIBAL AFFAIRS
Staff: Karen Epps (786-7424)
Background:

Retail Sales and Use Tax. Retail sales taxes are imposed on retail sales of most articles of tangible personal property, digital products, and some services.  A retail sale is a sale to the final consumer or end user of the property, digital product, or service.  If retail sales taxes were not collected when the user acquired the property, digital products, or services, then use tax applies to the value of property, digital product, or service when used in this state.  The state, all counties, and all cities levy retail sales and use taxes.  The state sales and use tax rate is 6.5 percent; local sales and use tax rates vary from 0.5 percent to 4 percent, depending on the location.

Interlocal Cooperation Act. Washington's Interlocal Cooperation Act authorizes public agencies to contract with other public agencies via interlocal agreements that enable cooperation among the agencies to perform governmental activities and deliver public services. All interlocal agreements must either be filed with the county auditor or posted on a public agency's website or other electronically retrievable public source. All interlocal agreements executed between two or more public agencies must, at a minimum, specify the:

  • duration of the agreement;
  • precise organization, composition, and nature of any separate legal or administrative entity created;
  • purpose;
  • financing and budget; and
  • method by which to terminate the agreement.
Summary of Bill:

Revenue from sales and use taxes imposed by a city may be shared with another city as part of an interlocal agreement.  Cities and towns may enter into an interlocal agreement to share a portion of general purpose sales and use tax revenue. In addition to the terms required to be included in any interlocal agreement, an agreement to share sales and use tax revenue must include:

  • the area or areas in which the agreement applies, if it is only applicable to revenue collected in certain areas, and how the parties will calculate the revenue collected in those areas;
  • the amount or proportion of revenue to be shared; and
  • the mechanism or method that will be used by the parties to share the revenue.
Appropriation: None.
Fiscal Note: Available.  New fiscal note requested on February 13, 2024.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.