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Budget, Budget, Budget
State has been dealing with budget shortfalls since FY 2009 $2 billion shortfall in the fall of 2011
2013 – 2015 biennium (July 1, 2013 – June 30, 2015) Final enacted operating budget = $33.5 billion $2.2 billion higher than 2011 - 13
Nearly $1 billion more for K-12 education $3.6 billion capital budget
Association of Washington Cities 2
AWC Priorities
Ensure fiscal sustainability & flexibility Restore local liquor revenue & retain other state shared revenues Preserve current revenue authorities, like B&O, & develop new options Retain flexibility in lodging tax uses
Foster and invest in infrastructure & economic development
Increase transportation funding & expand revenue options Authorize tax increment financing & fine-tune other tools Maintain critical infrastructure programs, like the Public Works Trust
Fund, and refrain from diverting capital investment dollars
Enhance service provision Allow cities flexibility to respond to fiscal challenges, like managing
personnel costs Provide state funding for mandates, like municipal stormwater permits Curb abusive public records requests
Association of Washington Cities 3
State budget –State shared revenues
Association of Washington Cities 4
Permanent diversion of local liquor revenue in 2012 ESHB 2823 permanently diverts $10 million per year
of liquor excise tax from cities and counties to state general fund and freezes profit distributions at 2011 levels.
Attempts to restore local liquor revenue SB 5703/HB 1368 sought to restore liquor taxes
and historic profit growth. (Did not pass) HB 2067 sought to restore historic profit growth.
(Did not pass.)
State budget –State shared revenues
Association of Washington Cities 5
Enacted budget cut local share of liquor taxes Legislators sought 50% reduction this biennium May have inadvertently cut by 2/3 AWC seeking resolution
Retains all other shared revenues, including: Criminal justice assistance funds; city-county
assistance account; SST mitigation; & annexation sales tax credit
State budget - Infrastructure funding
Capital budget sweeps Public Works Trust Fund No funding for 2014 Construction Loan List Swept $277M from the Public Works Assistance Account into the
General Fund
HB 2051 redirects 67% of the Real Estate Excise Tax, 100% of the Public Utility Tax, and 100% of the Solid Waste Tax revenues from the PWAA to the Education Legacy Account through FY 2019 Leaves only a portion of REET revenues and loan repayments to
fund construction loans over the next six years.
Association of Washington Cities 6
State budget - Infrastructure funding
Stormwater $100 million ($81 million in competitive grants, up to $15
million can be used for grants for project planning and design)
Development of an ongoing comprehensive, statewide stormwater financial assistance program to be implemented beginning no later than July 1, 2015
$1.98M for Low Impact Development Training program
Association of Washington Cities 7
State budget – Transportation
No transportation revenue package
Special session in November?
Association of Washington Cities 8
Telecommunications taxes
Part of state budget deal, HB 1971: Removes sales tax exemption for all residential phone
lines – expected to generate $5M in local sales taxes per year
Fixes issues raised in Sprint Spectrum case – may have required local governments to refund an estimated $249.5M in sales tax refunds
Association of Washington Cities 9
Lodging tax
HB 1253 maintains most uses of local lodging taxes set to expire on July 1, 2013 May continue to fund the operations of special events and
festivals (as opposed to just “marketing”) May continue to fund the operations of tourism-related facilities
owned by non-profits. May not fund the capital expenditures of tourism-related
facilities owned by non-profits
New application/funding process in municipalities over 5,000 Applications submitted to LTAC for recommendations
New reporting requirements for applicants & recipients
Fact sheet available on AWC’s website: www.awcnet.org
Association of Washington Cities 10
Other city finance bills
Passed Legislature SB 5110 – Authorizes local governments to contract for
purchase of supplies, materials, or equipment to the lowest bidder before sales and business and occupation taxes imposed by any local government are applied
Did not pass SB 5656 – Mandating city use of the state’s business
license system SB 5688 – Requiring uniformity in state and city B&O tax
classifications SB 5697 – Reducing the frequency of local sales tax
changes HB 1287 – Tribal property tax exemption HB 1828 - Local Government Fiscal Health Commission
Association of Washington Cities 11
2014 session preview
State budget woes will continue The legislature must show “real and measurable progress”
towards compliance with the McCleary decision by 2018 Estimated total cost of $9 billion through state FY 2019 Only provided $1 billion this biennium
Can local liquor revenue & the Public Works Trust Fund be restored?
Continued discussions about city business licenses & taxes
Association of Washington Cities 12
Questions
Victoria Lincoln [email protected]
Association of Washington Cities360-753-4137
www.awcnet.org
Association of Washington Cities 13