skip navigation

Finance


How much should a city or county have in general fund reserves?
Reviewed: 04/17

In short, it depends. The Government Finance Officers Association (GFOA) used to provide recommended ranges, but GFOA stopped doing so because there is too much variability and it really depends on the specific needs and circumstances of each jurisdiction. For more guidance, including key questions to consider, examples from other jurisdictions, and links to best practices, see our page on Fund Balance and Reserve Policies.

(Link to this question)

Can you clarify the rates listed for each category in the B & O Tax model ordinance?
Reviewed: 04/17

The maximum rates that can be imposed for a B&O Tax is .0020. The applicable statutory reference is RCW 35.21.710 which states in part:

The taxing authority granted to cities for taxes upon business activities measured by gross receipts or gross income from sales shall not exceed a rate of .0020 . . . .

This maximum rate is applicable to each of the classifications of business, which are: wholesale, retailing, manufacturing, and services.

For more information, see MRSC’s B&O Tax topic page, which provides additional information, such as the current 2016 list of cities that have adopted the B&O Tax, as well as links to AWC materials that contain additional legislative information on this topic.

(Link to this question)

May an agency use public funds to purchase a gift card to be given as a prize to a randomly drawn individual who participated in a survey put out by the agency?
Reviewed: 03/17

Assuming that the survey is collecting information that would assist the agency in its official business (i.e., there is a valid municipal purpose), it is likely permissible to use city funds to purchase the gift card.

For there to be an impermissible “gift” of public funds under article 8, section 7 of the state constitution, the agency would have to receive nothing in return and have the intent that it receive nothing in return.

In this scenario, there is a public/municipal purpose for the drawing—to get greater participation in the survey, which would presumably provide valuable information to be used toward a public purpose. So, the agency receives something of “value” (i.e., information) in return for its expenditure on the drawing prize. Therefore, the expenditure of public funds on a drawing prize to increase participation in an agency’s survey is likely a permissible expenditure of public funds.

(Link to this question)

Can a city, through a vote of the people, institute a public safety property tax levy for its own police/fire when the county it is in has already instituted a public safety levy for its own (county) function?
Reviewed: 02/17

Yes. When it comes to property tax levies, the city and the county do not overlap.

RCW 84.52.052 provides the city with the ability to present to the voters an "excess levy" for general government purposes for a one year levy, or, if the city has levy capacity remaining, it can present a levy lid lift to the voters (RCW 84.55.050).

For more information on levy lid lifts, see MRSC’s Levy Lid Lift topic page, as well as MRSC’s Revenue Guide for WA Cities and Towns.

(Link to this question)

Is an Lodging Tax Advisory Committee limited to reviewing funding applications once per year or can this be done on an on-going, case-by-case manner?
Reviewed: 01/17

Reference should be made to RCW 67.28.1817(2):

(2) Any municipality that proposes imposition of a tax under this chapter, an increase in the rate of a tax imposed under this chapter, repeal of an exemption from a tax imposed under this chapter, or a change in the use of revenue received under this chapter shall submit the proposal to the lodging tax advisory committee for review and comment. The submission shall occur at least forty-five days before final action on or passage of the proposal by the municipality. The advisory committee shall submit comments on the proposal in a timely manner through generally applicable public comment procedures. The comments shall include an analysis of the extent to which the proposal will accommodate activities for tourists or increase tourism, and the extent to which the proposal will affect the long-term stability of the fund created under RCW 67.28.1815. Failure of the advisory committee to submit comments before final action on or passage of the proposal shall not prevent the municipality from acting on the proposal. A municipality is not required to submit an amended proposal to an advisory committee under this section.

While typically, we think, a city or county will solicit requests for funding once a year and then have its lodging tax committee review all of the requests before making a funding recommendation to the legislative body, the above statute does not require that. The statute merely requires that final action be delayed for 45 days and that the committee submit its comments before the commission takes its action. We do not read this statute as requiring review of proposals all at one time. Perhaps that would be the fairest way to consider all possible proposals (assuming that funds are limited), but the statute does not require it. Thus in our opinion, the county could consider a proposal (or proposals) throughout the year.

(Link to this question)

Can cities go out for a Maintenance & Operations (M&O) levy?
Reviewed: 12/16

Yes. There are a few options available to cities with regards to property tax levies:

  • 1 year M&O levy (also known as the excess levy). Here is a link to our Revenue guide and the section on excess levies for general government purposes. You will note that an excess levy can only be run for one (1) year and it requires at least a 60% approval from a voter turnout of 40% of the numbers of people voting in the last general election (or the equivalent of those number of yes votes in the event that you have less than 40% turnout from the last general election).
  • Banked capacity. Does the city have any banked capacity? If it’s unclear, the city should review the DOR’s tax levy detail report for levy year 2015 and discuss the issue with its county assessor.
  • Levy Lid lift. This is another option available to cities in the event that there is no banked capacity available. A levy lid lift requires a vote, but if the city has sufficient levy capacity available to meet the M&O needs the lid lift can be for multiple years rather than just one year like the excess levy. Here is a link to our topic page on levy lid lifts and the various options for the number of years that a levy lid lift may be imposed.

(Link to this question)

Are local governments required to maintain specific reserve fund balance levels? Should a local government continue adding to its operating reserve if it has already met the requirement of the policy?
Reviewed: 10/16

This is always a good topic of conversation and the answer is almost always “it depends.” Financial policies are considered a best practice by the GFOA and at the top of the list of recommended financial management policies by the SAO.

There is no statutory requirement for fund balance levels, nor is there any specific reference within the SAO BARS manual that states that a municipality (whether it’s a county, city, or special purpose district) has to have a specific level of operating reserves (also known as “beginning” or “ending” fund balance). The 15% figure was a previous recommendation made by the GFOA for the general fund. This percentage has since been updated with the 2015 release of the GFOA best practice paper on Appropriate Level of Unrestricted Fund Balance in the General Fund. The recommendations made by the GFOA now speaks of several factors that would lead an entity to adopt a policy that addresses these factors in a way that is specific to them. An excerpt from the best practice paper states:

In establishing a policy governing the level of unrestricted fund balance in the general fund, a government should consider a variety of factors, including:

  1. The predictability of its revenues and the volatility of its expenditures (i.e., higher levels of unrestricted fund balance may be needed if significant revenue sources are subject to unpredictable fluctuations or if operating expenditures are highly volatile);
  2. Its perceived exposure to significant one-time outlays (e.g., disasters, immediate capital needs, state budget cuts);
  3. The potential drain upon general fund resources from other funds, as well as, the availability of resources in other funds;
  4. The potential impact on the entity’s bond ratings and the corresponding increased cost of borrowed funds;
  5. Commitments and assignments (i.e., governments may wish to maintain higher levels of unrestricted fund balance to compensate for any portion of unrestricted fund balance already committed or assigned by the government for a specific purpose). Governments may deem it appropriate to exclude from consideration resources that have been committed or assigned to some other purpose and focus on unassigned fund balance, rather than on unrestricted fund balance.

Depending upon the answer to the above questions, a local government may find that 15% is not adequate to meet their needs. Or to the contrary, a local government may determine that 15% of the operating budget would be more than sufficient.

You additionally asked whether a local government should continue to add to its operating reserve if it has already met the requirement of the policy. This question can only be answered by the policy adopted. You may want to consider expanding your current policy to define such things as “use and replenishment.” You will note that the GFOA best practice paper has a section that speaks to this issue.

Budget is a great time to review financial policies currently in place and to fine tune those policies to meet current fiscal needs.

Here is a link to our Fund Balance and Reserve Policies page, where you will find key questions to consider, examples of what other jurisdictions are doing, and links to best practices. Additionally, here is a link to the SAO - FIT (Financial Intelligence Tool) that will assist in evaluating the financial condition of the county and provide you with fiscal data for your analysis of appropriate fund balance.

(Link to this question)

How many budget hearings are cities required to hold?
Reviewed: 09/16

We believe the number is no less than three. Our Budget Hearings: How Many Do You Need to Hold? blog post additionally speaks to these requirements. Here's a quick overview of the three required hearings:

  • The first public hearing that cities must hold is the revenue hearing (also known as the property tax levy setting). This hearing is required under RCW 84.55.120.
  • The second public hearing is required under RCW 35.33.057, which states that cities and towns must hold hearings on the budget, or its parts, prior to the final budget hearing.
  • RCW 35.33.071 then requires a final budget hearing to be held on or before the 1st Monday in December.

A city may desire to hold more public hearings then state law requires, or it may want to hold additional budget workshops. All of these meetings and hearings are certainly allowed. It's just important to have a minimum of three public hearings in order to meet the requirements under state law.

(Link to this question)

Does the LTAC need a quorum to vote and make recommendations?
Reviewed: 08/16

Yes, the LTAC needs a quorum before it can take any action, including voting and making recommendations. This conclusion is based on the general rule that any such public "governing body" needs a quorum to take action. See RCW 42.30.020(3) (“Final action” means “a collective positive or negative decision, or an actual vote by a majority of the members of a governing body when sitting as a body or entity, upon a motion, proposal, resolution, order, or ordinance." [Emphasis added]).

So, if you have two members who are often absent, three of the five members may make lodging tax recommendations on behalf of the LTAC. As an option with respect to absent members, the LTAC could authorize participation by absent members in LTAC meetings by speakerphone, Skype, or similar technology, as long as there is two-way communication regarding members participating remotely and those LTAC members who are physically present at the meeting.

(Link to this question)

What must applicants for funding from the lodging tax include in their applications to the LTAC?
Reviewed: 08/16

In accordance with RCW 67.28.1816(2), applicants for lodging tax funding must submit their applications to the LTAC in cities, towns, or counties with more than 5,000 in population. The application must include the following information:

Estimates of how any moneys received will result in increases in the number of people traveling for business or pleasure on a trip:
(i) Away from their place of residence or business and staying overnight in paid accommodations;
(ii) To a place fifty miles or more one way from their place of residence or business for the day or staying overnight; or
(iii) From another country or state outside of their place of residence or their business.

The LTAC then reviews the applications, selects the candidates for funding from the applicants, and provides a list of the candidates and recommended amounts of funding to the legislative body of the city, town, or county. Based on RCW 67.28.1817(2), there must be a 45-day time period between submission of the application to the LTAC and when the city, town, or county legislative body can take final action on or passage of the proposal.

A post-event report must also be submitted by those awarded funding evaluating the actual benefits from the estimated benefits in the application.

(Link to this question)

With respect to annual financial report requirements, are we required to identify restricted and unrestricted fund balances for fiduciary funds?
Reviewed: 07/16

No. Fiduciary funds are, by definition, funds that belong to others (see BARS, Fund Types and Accounting Principles). Fiduciary funds are described in the "cash basis" BARS manual as follows:

Fiduciary Funds - should be used to account for assets held by a government in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. These include (a) investment trust funds, (b) pension (and other employee benefit) trust funds, (c) private-purpose trust funds, and (d) agency funds.

The application and classification of fund balance is a result of the implementation of GASB 54 to both GAAP and Cash Basis accounting and reporting entities by the State Auditor's Office (SAO) through its BARS manuals. GASB 54 provides for fund balance classifications of "governmental" funds, which are the general, special, debt, capital, and permanent fund classifications. The SAO has extended this fund balance classification to the "proprietary" funds for cash basis entities (GAAP was already designating fund balance by class).

As a bit of further explanation, all fiduciary funds, in theory, are restricted to the extent that the funds belong to others, but, for accounting purposes, there are no requirements to designate them as restricted funds, because GASB and/or BARS requirements apply only to governmental and proprietary funds.

(Link to this question)

Does the city (or its residents by way of ballot) have the option to add a fee or tax to the motor vehicle fuel tax to fuel sales within its boundaries?
Reviewed: 05/16

No, the city does not have the authority to add a fee or tax to the motor vehicle fuel tax with respect to fuel sales within its boundaries. RCW 82.36.440(1), effective until July 1, 2016, states:

The tax levied in this chapter is in lieu of any excise, privilege, or occupational tax upon the business of manufacturing, selling, or distributing motor vehicle fuel, and no city, town, county, township or other subdivision or municipal corporation of the state may levy or collect any excise tax upon or measured by the sale, receipt, distribution, or use of motor vehicle fuel, except as provided in chapter 82.80 RCW and RCW 82.47.020.

Effective on July 1, 2016 (after consolidation of the motor vehicle fuel tax and special fuel tax statutes), RCW 82.38.280(1) states basically the same thing:

The tax levied in this chapter is in lieu of any excise, privilege, or occupational tax upon the business of manufacturing, selling, or distributing fuel, and no city, town, county, township or other subdivision or municipal corporation of the state may levy or collect any excise tax upon or measured by the sale, receipt, distribution, or use of fuel, except as provided in chapter 82.80 RCW and RCW 82.47.020.

(Concerning the statutes referred to as exceptions in the above statutes, RCW 82.20.010 authorizes a local option gas tax, but that can only be levied by the county and it applies countywide (at a rate equal to 10 percent of the state rate). RCW 82.47.020 authorizes cities located no more than 10 miles from an international border to levy an additional one cent per gallon gas tax with voter approval to mitigate the effects of tourism on their streets.)

(Link to this question)

When does the city real estate excise tax (REET) apply in an annexed area?
Reviewed: 05/16

The city's REET applies to any real property sold within an annexed area beginning on the effective date of the annexation. The REET - which, as the name clearly states, is an excise tax and not a property tax - is on "each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax . . . ." RCW 82.46.010(2)(a); RCW 82.46.035(2). Upon the effective date of an annexation, the corporate limits of the city include the area annexed.

There is no statutory connection between the REET, which is governed by chapter 82.46 RCW, and the property tax, which is governed by Title 84 RCW. RCW 84.09.030, which sets when "the boundaries of counties, cities, and all other taxing districts shall be the established official boundaries of such districts" applies only "for the purposes of property taxation and the levy of property taxes." That provision has no application to the REET.

(Link to this question)

Can a sister city pay travel expenses for officials to visit?
Reviewed: 03/16

Our office has taken the position that a city is authorized to pay reasonable travel expenses for city officials to officially visit a sister city, under the city's sister city program. Since the city can itself pay for these expenses, the city may accept a gift that would be used for the payment of those expenses, just as it may accept any gift. The gift should be made to the city, not to the city officials chosen to make the trip; the city would then directly pay those travel expenses.

(Link to this question)

Can you provide a link to the most current data on assessed valuation of Washington cities?
Reviewed: 01/16

Two sources will provide you with the most current data on the assessed valuation of Washington cities.

The first source is the MRSC Population, Property, and Sales Tax Archive webpage, which contains links to PDF and Excel versions of assessed valuation for Washington cities and counties from 2012 to 2014.

The second source is the Department of Revenue Property Tax 2015 Statistics document. This file contains significantly more data beyond just the assessed valuations. It additionally provides current levies, levy rates, new construction values, and statutory levy limit information for all taxing districts across the state.

The Department of Revenue (DOR) has recently updated its property tax webpage to include a property tax statistical data portal that allows for the selection of data to be viewed. DOR will now be providing more timely information and periodic updates to tables throughout the year, instead of just once a year.

(Link to this question)

May the city impose the criminal justice tax under RCW 82.14.340 and RCW 82.14.450? When is the city required to have the vote to impose this tax? Is the vote city- or county-wide?
Reviewed: 12/15

Under RCW 82.14.450(2)(a), the city council has the authority to present to the voters a sales tax option of up to 0.1%, for criminal justice purposes, as long as the county has not imposed the full 0.3% it is authorized to impose under RCW 82.14.450(1). The maximum combined city and county tax rate is 0.3%. If a city tax is approved by the voters, 15% of the revenues is distributed to the county and the remaining 85% is distributed to the city.

The sales tax measure under RCW 82.14.450(2)(a) may be presented to city voters at either a primary or general election. The vote is city-wide.

Only counties may impose the criminal justice sales tax under RCW 82.14.340, though cities share in the revenues from that tax.

You can use the MRSC Local Ballot Measure Database to review criminal justice sales tax ballot measures that have passed and ballot language used.

(Link to this question)

Looking for recommended requirements for petty cash handling and department self-audits.
Reviewed: 08/15

Internal controls, including those for petty cash funds are an integral part of any organization's financial and business policies and procedures. The use of petty cash funds should be limited by your organization.

The Association of Public Treasurers' Guide to Internal Controls section on petty cash funds states that internal controls for these funds should include the following:

  • The petty cash fund should be locked in a secure place.
  • Access to petty cash should be restricted to the custodian and the backup person; and disbursed by these two individuals as well.
  • Require original receipts in order to disburse petty cash and maintain the receipts in the petty cash fund box for reconciling.
  • The individual to be reimbursed should indicate on the original receipt or petty cash receipt the business purpose and the fund and the account to be charged.
  • The original receipt should be approved and signed by the department head.
  • The petty cash fund should not be used for personal expenses, personal loans, or cashing of personal checks.
  • The custodian of the petty cash fund is responsible for reconciling the petty cash fund account.
  • The department head should perform periodic, surprise counts of the petty cash fund.
  • Any shortage in the fund should be investigated, analyzed, and documented.

Additionally, the petty cash fund should be evaluated to determine if a procurement card may be of better use for the organization.

Departmental self-audits are done to improve internal control and are the responsibility of management. They should be done to evaluate whether policies and procedures are operating efficiently and also provide recommendations for improvement.

The MRSC webpage on Petty Cash Funds includes information on petty cash policies per the BARS Manual and includes code provisions.

The Washington State Auditor's Office Local Government Performance Center, Internal Controls Checklist for Local Governments, is a great departmental self-assessment in which you can use to evaluate areas in which new policies or improvements are needed.

Additionally, the Association of Public Treasurers' Guide to Internal Controls is a guidebook that can be purchased on the Association's website. This guidebook could be used to implement internal control functions agency-wide.

(Link to this question)

Can lodging tax revenues be used to purchase fireworks for 4th of July activities?
Reviewed: 07/15

RCW 67.28.1816 allows lodging tax revenues to be spent for "tourist promotion," and RCW 67.28.080(6) defines that term to include "the operation of special events and festivals designed to attract tourists." A fireworks display for 4th of July activities can, in our opinion, qualify as part of the operation of a special event to attract tourists as well as local residents. The 4th of July event should, however, be intended to draw tourists to the city and be more than just a local celebration.

MRSC has a webpage on the lodging tax that you may find helpful.

(Link to this question)

What should be done with unclaimed warrants that were issued several years ago but never negotiated or presented at our bank?
Reviewed: 04/15

Under RCW 39.56.040, warrants not presented within one year of their issue "shall be canceled by passage of a resolution of the governing body of the municipal corporation." Those canceled warrants then fall under RCW 33.29.190(2)(a), part of the Uniform Unclaimed Property Act, which provides as follows:

Counties, cities, towns, and other municipal and quasi-municipal corporations that hold funds representing warrants canceled pursuant to RCW 36.22.100 and 39.56.040, uncashed checks, and property tax overpayments or refunds may retain the funds until the owner notifies them and establishes ownership as provided in RCW 63.29.135. Counties, cities, towns, or other municipal or quasi-municipal corporations shall provide to the department [of Revenue] a report of property it is holding pursuant to this section. The report shall identify the property and owner in the manner provided in RCW 63.29.170 and the department shall publish the information as provided in RCW 63.29.180.

(Emphasis added.)

RCW 63.29.135, referenced above, provides:

A local government holding abandoned intangible property that is not forwarded to the department of revenue, as authorized under RCW 63.29.190, shall not be required to maintain current records of this property for longer than five years after the property is presumed to be abandoned, and at that time may archive records of this intangible property and transfer the intangible property to its general fund. However, the local government shall remain liable to pay the intangible property to a person or entity subsequently establishing its ownership of this intangible property.

Although RCW 63.29.130 presumes intangible property to be abandoned when it is held by the government (including a city) and is unclaimed for more than two years after becoming payable, we think that warrants canceled under RCW 39.56.040would effectively be presumed abandoned such that the five-year period in RCW 63.29.135 begins upon cancellation of the warrants. Note that abandoned property worth $50 or under need be reported to the Department of Revenue under RCW 63.29.170(2) only in the aggregate.

 

So, basically, it's our conclusion that, after the expiration of five years after a warrant is canceled by the city council, the funds it represents can be returned to the general fund. It's unfortunate that the road to this conclusion isn't easier.

 

Note also for future reference that the Department of Revenue has a website on reporting unclaimed property, as well as a resource entitled Washington State Unclaimed Property Local Government Guide

(Link to this question)

What is the difference between a contingency fund and a cumulative reserve fund?
Reviewed: 03/15

A contingency fund and a cumulative reserve fund are not the same and are often used to fund completely separate activities.

A contingency fund is a sub-fund of the general fund and it supports general fund activities.  RCW 35A.33.145 (for code cities) provides:

Every code city may create and maintain a contingency fund to provide moneys with which to meet any municipal expense, the necessity or extent of which could not have been foreseen or reasonably evaluated at the time of adopting the annual budget, or from which to provide moneys for those emergencies described in RCW 35A.33.080 and 35A.33.090. Such fund may be supported by a budget appropriation from any tax or other revenue source not restricted in use by law, or also may be supported by a transfer from other unexpended or decreased funds made available by ordinance as set forth in RCW 35A.33.120: PROVIDED, That the total amount accumulated in such fund at any time shall not exceed the equivalent of thirty-seven and one-half cents per thousand dollars of assessed valuation of property within the city at such time. Any moneys in the contingency fund at the end of the fiscal year shall not lapse except upon re-appropriation by the council to another fund in the adoption of a subsequent budget.  

The funds set aside in the contingency fund do not lapse at year end; however, these funds are "not restricted" and can be re-appropriated to another fund in a subsequent budget. It is important to note that the monies set aside in the contingency fund must be expended according to RCW 35A.33.080 (Emergency) or RCW 35A.33.090 (Other Emergencies), both of which require a supermajority vote. RCW 35A.33.090 requires that the public be allowed to be heard for or against the emergency ordinance.

Additionally, the following statute applies to withdrawals from this fund. No money can be withdrawn from the contingency fund except when authorized by a resolution or ordinance of the city council, adopted by majority vote of the entire council and stating the facts constituting the reason for the withdrawal. RCW 35A.33.146 states:

No money shall be withdrawn from the contingency fund except by transfer to the appropriate operating fund authorized by a resolution or ordinance of the council, adopted by a vote of the majority of the entire council, clearly stating the facts constituting the reason for the withdrawal or the emergency as the case may be, specifying the fund to which the withdrawn money shall be transferred.

Cumulative reserve funds are different. If the city used RCW 35.21.070 to establish the cumulative reserve fund for specific municipal purposes, once the fund has been established, the moneys in the fund may not be expended for any other purpose than those specified, unless authorized by a two-thirds majority vote of the council

Also, RCW 35.21.080 provides

An item for said cumulative reserve fund may be included in the city or town's annual budget or estimate of amounts required to meet public expense for the ensuing year and a tax levy made within the limits and as authorized by law for said item; and said item and levy may be repeated from year to year until, in the judgment of the legislative body of the city or town, the amount required for the specified purpose or purposes has been raised or accumulated. Any moneys in said fund at the end of the fiscal year shall not lapse nor shall the same be a surplus available or which may be used for any other purpose or purposes than those specified, except as herein provided.

RCW 35.21.080 affirms that the city "may" include an annual budget appropriation but is not required to, which allows the fund to build up reserves. The reference to "any moneys in said fund at the end of the fiscal year shall not lapse" refers to the accumulation of funds and not the issue of budget appropriations. 

(Link to this question)

Must the city council approve a transfer between individual appropriations within one fund or can this be done administratively?
Reviewed: 02/15

Under state law, a transfer within the same fund can be accomplished administratively without council approval, unless your city has adopted specific regulations that limit the ability of the city administration to do this. RCW 35.33.121 provides in relevant part:
 

Transfers between individual appropriations within any one fund may be made during the current fiscal year by order of the city's or town's chief administrative officer subject to such regulations, if any, as may be imposed by the city or town legislative body. Notwithstanding the provisions of RCW 43.09.210 or of any statute to the contrary, transfers, as herein authorized, may be made within the same fund regardless of the various offices, departments or divisions of the city or town which may be affected.


For code cities, see RCW 35A.33.120.

(Link to this question)

Can the county use real estate excise tax (REET) money for a pathway?
Reviewed: 12/14


The REET 1 statute, RCW 82.46.010(6), includes the term "trail" in its definition of "capital project" for which REET 1 funds may be used, and so that should include a "pathway." The REET 2 statute, RCW 82.46.035(5), on the other hand, does not include the term "trail" - or "path" or "pathway" - in its definition of "capital project," though it does include "sidewalks." So, it's our opinion that REET 1 funds could be used to construct improvements along the pathway, but not REET 2 funds, unless the pathway here could be considered a sidewalk.

(Link to this question)

Can local governments make advance payments on contracts?
Reviewed: 12/14


Yes, under certain circumstances. RCW 42.24.080(1) provides:

All claims presented against any county, city, district or other municipal corporation or political subdivision by persons furnishing materials, rendering services or performing labor, or for any other contractual purpose, shall be audited, before payment, by an auditing officer elected or appointed pursuant to statute or, in the absence of statute, an appropriate charter provision, ordinance or resolution of the municipal corporation or political subdivision. Such claims shall be prepared for audit and payment on a form and in the manner prescribed by the state auditor. The form shall provide for the authentication and certification by such auditing officer that the materials have been furnished, the services rendered, the labor performed as described, or that any advance payment is due and payable pursuant to a contract or is available as an option for full or partial fulfillment of a contractual obligation, and that the claim is a just, due and unpaid obligation against the municipal corporation or political subdivision. No claim shall be paid without such authentication and certification.

(Emphasis ours.) The emphasized language allowing for advance payment in certain circumstances was added in 2008. 

(Link to this question)

Are code cities prohibited from fundraising (e.g., for public works projects)?
Reviewed: 08/14

We have opined that code cities have authority to engage in fundraising for any lawful municipal purpose. Code cities have broad home rule authority, which means they have the authority to take action on matters of local concern except where the state has retained authority over such matters or where it is prohibited by state law. In other words, code cities don't necessarily need express authority to conduct fundraising activities, because that activity is not prohibited by state law. And, a code city (along with any other class of city) has the express authority to accept donations (RCW 35.21.100; RCW 35A.11.040), which, in our opinion, implies the authority to solicit donations/engage in fundraising. Also, we have noted that cities have express authority to raise funds through raffles. See, e.g., RCW 9.46.0209(3).

Note, in the specific context of gifts, that RCW 35A.11.040 (above cited) provides:

The legislative body of a code city may exercise any of its powers or perform any of its functions including purchasing, and participate in the financing thereof, jointly or in cooperation, as provided for in chapter 39.34 RCW. The legislative body of a code city shall have power to accept any gift or grant for any public purpose and may carry out any conditions of such gift or grant when not in conflict with state or federal law.

So, given the above authority possessed by a code city, we think that code cities have the authority to engage in fundraising activities, as long as the funds are to be used for a proper municipal purpose.

The following policy adopted by Millwood may be of interest:  

(Link to this question)

May lodging tax monies be spent for a walking map of town?
Reviewed: 06/14


If this walking map of the town is intended for tourists and to be distributed mainly to tourists, we think it would be eligible for funding by the lodging tax. The map would, we think, fall within the definition of "tourism promotion," which is defined in RCW 67.28.080(6) as:

activities, operations, and expenditures designed to increase tourism, including but not limited to advertising, publicizing, or otherwise distributing information for the purpose of attracting and welcoming tourists; developing strategies to expand tourism; operating tourism promotion agencies; and funding the marketing of or the operation of special events and festivals designed to attract tourists.

(Our emphasis.) We think this map would qualify as distributing information for the purpose of welcoming tourists, assuming that is its purpose.

(Link to this question)

How many cities in Washington prepare biennial budgets?
Reviewed: 06/14

There are 281 cities currently. Of that number, we think 38 are doing biennial budgets for 2013-2014. Here is the unofficial list:

Auburn  Mill Creek 
Bainbridge Island Mountlake Terrace 
Battle Ground  Normandy Park 
Bellevue  Oak Harbor 
Bonney Lake  Redmond 
Bothell  Renton
Burien  Sammamish
Fife SeaTac
Federal Way  Seattle 
Hoquiam Steilacoom 
Kelso Sumner 
Kenmore Tacoma 
Kennewick  Tukwila 
Kirkland  Tumwater
Lake Forest Park University Place
Lakewood Vancouver 
Longview  Walla Walla  
Lynnwood  West Richland
Mercer Island Woodinville 

(Link to this question)

When can a city biennial budget begin?
Reviewed: 06/14

RCW 35.34.040 requires that the ordinance establishing a biennial budget "shall be enacted at least six months prior to commencement of the fiscal biennium," and RCW 35.34.030(5) defines "fiscal biennium" to mean "the period from January 1 of each odd-numbered year through December 31 of the next succeeding even-numbered year." So, that means the council could, prior to July 1 of this year (2014), adopt an ordinance establishing a biennial budget that would start on 1/01/2015. If the council doesn't adopt an ordinance establishing a biennial budget prior to July 1 of this year, it could adopt such an ordinance at any time prior to July 1, 2016 to establish a biennial budget that would start on 1/01/2017. In other words, you can't have a biennial budget that begins in an even-numbered year.

(Link to this question)

Is it permissible to exempt all manufacturing from the city B&O tax?
Reviewed: 05/14


The Model B&O Tax Ordinance provisions in chapter 35.102 RCW, with which cities must comply, authorize cities to adopt their own B&O tax exemptions. As part of that chapter, RCW 35.102.040(3) states that "Except for the deduction required by RCW 35.102.160 and the system of credits developed to address multiple taxation under subsection (2)(a) of this section, a city may adopt its own provisions for tax exemptions, tax credits, and tax deductions." (Our emphasis.)

However and despite this statutory authorization to adopt exemptions, the city's B&O tax must still pass muster under constitutional equal protection guarantees. In Forbes v. Seattle, 113 Wn.2d 929 (1990), the state supreme court upheld Seattle's admissions tax, which was imposed upon many activities, including motion picture theaters, but that exempted nonprofit, tax-exempt organizations from the tax. In deciding on the constitutionality of that exemption, the court set out the test for whether the classification in the tax violates equal protection:

(1) does the legislation apply alike to all persons within a designated class; (2) are there reasonable grounds to distinguish between those who fall within the class and those who do not, and (3) does the classification have a rational relationship to the purpose of the legislation.

113 Wn.2d at 943. Focusing on whether there was a reasonable basis for the classification between the two groups, the court stated:

So long as the "classification is neither capricious nor arbitrary, and rests upon some reasonable consideration of difference or policy, there is no denial of the equal protection of the law." In addition, when a classification is challenged, facts are presumed sufficient to justify the classification."

It is well established that legislative bodies have very broad discretion in establishing classifications for economic and social legislation. Furthermore, a legislative body has even broader discretion and greater power in making classifications for purposes of taxation.

(Footnotes and citations omitted.) 113 Wn.2d at 944.

We think that exempting all manufacturing industries from the B&O tax would be a reasonable classification that would not violation equal protection guarantees.

(Link to this question)

May the city require that a certain percentage of employees on a public works contract be local residents?
Reviewed: 02/14

No. There used to be a state statute, RCW 39.16.005, that required that contractors on public works projects employ a certain percentage of Washington State residents, but it was held to be unconstitutional in Laborer's Local Union No. 74 v. Felton Construction Co., 98 Wn.2d 121 (1982), and was later repealed. MRSC consistently advises that it is beyond the authority of local governments to include similar requirements in their bid specifications.

See also AGO 61-62 No. 41, which discusses the lack of authority of local jurisdictions to include any kind of local preference in bidding unless specifically authorized by a specific state statute - which does not exist in this case.

(Link to this question)

We received two bids for parts for our water maintenance department. Both bids were identical, in terms of cost per parts, and total cost. We have used both vendors many times in the past and have no reason to believe either are dishonest, or are colluding on this bid. What should we do?
Reviewed: 02/14


Probably the safest approach would be to flip a coin and award the bid to the firm that wins the flip. There really is no particular process that the city must follow to break the tie here. We suppose the award could be based upon which bid was received first, or which firm has done the most business with the city, etc. But, if you select some criteria not set out in the specifications and call for bids, you may need to be able to justify the result to the losing firm why it was not selected. If you use a coin flip, the losing firm may not like the result, but the result would be fair and defensible.

(Link to this question)

Can the county authorize an incentive in the form of a prepaid visa card for employees to join the county wellness program?
Reviewed: 02/14


You raise an issue about providing your employees an incentive to sign up for the wellness program. The incentive likely would be a prepaid visa card. If enough employees sign up for the county wellness program, this would lower the county medical insurance rates by about 4 percent.

First, there clearly is a public purpose to this type of incentive policy, since it can lead to a significant savings for the county. Second, in order to earn the prepaid visa card, the employees must enroll in the wellness program. So, because the county receives benefits in return (lower insurance premiums and, presumably, healthier and more productive employees), this incentive program does not in our opinion constitute a prohibited gift of public funds.

However, to properly authorize this program, it should be done as part of a policy that has been approved by the county commissioners.

(Link to this question)

Are we supposed to send our final city budget to MRSC? Who should we send it to?
Reviewed: 01/14


Although the applicable statute (RCW 35A.33.075 for code cities, and RCW 35.33.075 for non-code cities) says to send a copy of your final budget to the Association of Washington Cities (AWC), the intent is for it to come to MRSC. If you send it to AWC, they will just forward it to us. In our Budget Suggestions publication's budget process calendar, we indicate that you should send a copy of the final budget to MRSC.

However, we understand that the state auditor's office asked during its regular audit of a city for evidence that they had sent a copy of their budget to AWC, so you might want to provide written notice to AWC that you've sent the copy to us just in case and keep a record of that. If you have your budget on your website, you can just simply send our library staff a link to the document.

(Link to this question)

May a city sell advertising space on public benches installed in main street right-of-way, and, if so, what restrictions may they place on advertising?
Reviewed: 01/14

The city may sell advertising space on its public benches. Doing so does not interfere with any public use of the benches; the flat surface of the benches is essentially "surplus" for these purposes. Advertising on public property, such as buses, is not uncommon.

 

If the city decides to allow advertising on its public benches, it may not, with some exceptions, prohibit certain advertising based on content. However, the city may limit advertising only to commercial messages, excluding noncommercial messages such as political advertisements or religious statements. Lehman v. City of Shaker Heights, 418 U.S. 298, 41 L.Ed 2d 770 (1974); Children of the Rosary v. City of Phoenix, 154 F.3d 972 (9th Cir. 1998), cert. denied, 119 S.Ct. 797 (1999). In that context, a nonpublic forum, as opposed to a public forum (in which noncommercial messages, including political and religious, are allowed), is established. See Uptown Pawn & Jewelry, Inc. v. City of Hollywood, 163 F.3d 341 (11th Cir. 2003) (City's bus benches are a nonpublic forum). In a nonpublic forum, the government may make distinctions based on the subject matter and speaker identity, but not based on the speaker's viewpoint. Children of the Rosary, supra.; see also United Food & Commercial Workers Union v. Southwest Ohio Regional Transit Authority, 163 F.3d 341 (6th Cir. 1998). Restrictions in the context of a nonpublic forum will be upheld if they are reasonable. Examples of reasonable restrictions include no tobacco advertising or advertising involving nudity.

(Link to this question)

If all the bids come in over the amount that the city or county has budgeted for a project, does that make the bids nonresponsive so that the city or county can negotiate with the bidders?
Reviewed: 01/14

No. A bid that is over the amount estimated for the project is not a nonresponsive bid. A responsive bid is defined as one which meets the material terms of the invitation for bids in all material respects when judged on its face. But, price is not one of the specifications in a call for bids and so the fact that the bids are higher than the city or county estimated does not make the bids nonresponsive.

(Link to this question)

Can the city invest trust fund monies in mutual funds?
Reviewed: 01/14

The general statutes governing investment of municipal funds are chapters 35.39 and 39.59 RCW. RCW 39.59.030 provides that some kinds of mutual funds are a permitted investment vehicle if the monies being invested are subject to section 148 of the IRS code. Also, RCW 35.39.060 allows a city to invest its retirement system funds in just about any place it desires, and this could include mutual funds. Similarly, fire pension funds can now be invested in many different kinds of vehicles. RCW 41.16.040(4).These are exceptions, however. In general, most of the city's money cannot be invested in mutual funds.

(Link to this question)

May a city or county enter into a contract for a public works project with a contractor who is not licensed with the state?
Reviewed: 01/14

No. RCW 39.06.010 prohibits a city or county from executing a contract with a contractor who is not registered or licensed as required by the laws of the state.. This is true regardless of whether the contract is required to be let after a call for public bids or not.

(Link to this question)

May a city or county ask for the hourly rate for engineering firms in their announcement for a job?
Reviewed: 01/14

No. The city or county must request statements of qualifications from engineering firms pursuant to Ch. 39.80 RCW.  However, the city or county may not consider price or cost in determining which firm is the most highly qualified.  Price and cost may be considered only after the most qualified firm has been selected, at which time negotiations may take place over price. Therefore, asking for the hourly rate before the most qualified firm has been selected is not allowed.

(Link to this question)

What is the required advertising period for a public works construction project for cities?
Reviewed: 01/14

RCW 35.23.352(1) requires cities other than first class cities to publish a notice calling for sealed bids for the project in their official newspaper or a newspaper of general circulation most likely to bring responsive bids at least 13 days prior to the last date upon which bids will be received .

First class cities have no required advertising period under state statutes. Their own municipal codes will govern their advertising procedures.

(Link to this question)

Do bid requirements apply to contracts for services?
Reviewed: 01/14

As a result of 1994 legislation, competitive bidding for contracts for services is no longer required for counties and cities, though first class cities and code cities over 20,000 population had not been required previously to do so.  However, when contracting for architectural and engineering services, the procedures in chapter 39.80 RCW must be followed.

For guidance, see our Contracting for Services publication.

(Link to this question)

Is the property tax levy established by a city council subject to the initiative process?
Reviewed: 01/14

No. This is a power that has been specifically given to the city council for all classes of city and so is beyond the scope of the initiative power in those code and first class cities that have adopted the powers of initiative and referendum.

 

RCW 35A.33.135 and RCW 35.33.135 each provide that "the legislative body shall determine and fix by ordinance the amount to be raised by ad valorem [property] taxes." Also, RCW 35A.11.020 provides that the "legislative bodies of code cities shall have within their territorial limits all powers of taxation for local purposes except those which are expressly preempted by the state."

These provisions provide the basis for the conclusion that such taxes are not subject to the initiative process. Also, note that RCW 35A.11.090 makes clear that code city ordinances authorizing the levy of taxes cannot be affected by the referendum process either.

(Link to this question)

Is there a statutory provision that imposes a fee if a local government is late making a payment on a contract?
Reviewed: 01/14

Yes. RCW 39.76.011 provides that every state agency and unit of local government must pay interest at a rate of one percent a month on amounts due on written contracts for public works, personal services, goods and services, equipment, and travel whenever the state agency or local government fails to make timely payment. The statute then defines what constitutes timely payment.

 

There are some exceptions outlined in RCW 39.76.020, such as for intergovernmental contracts.

(Link to this question)

Is the sole owner of a business subject to prevailing wage laws?
Reviewed: 01/14

No. WAC 296-127-026 exempts the owner of a sole proprietorship from the prevailing wage requirements of Ch. 39.12 RCW. These companies are not, however, exempt from the remaining requirements of the statute, including the filing of Intent and Affidavit forms.  See L&I's publication on Prevailing Wage Law, at 14.

(Link to this question)

May a county or city grant a preference for bids submitted by local vendors or contractors?
Reviewed: 01/14

A county or city may not grant a local preference for bidders unless there is specific authorization in state law for granting the preference. There is only one preference authorized in state law in relation to the bid law. RCW 39.30.040 was enacted in 1985 and provides that whenever a city or county is required to make purchases from the lowest responsible bidder, it can take into consideration tax revenue it would receive from purchasing the supplies from a source located within the jurisdiction. Tax revenues that may be considered include sales taxes and business and occupation taxes. This preference only applies to purchases of supplies, materials, and equipment, not public works contracts.

(Link to this question)

Are there any procedural requirements for a bid protest?
Reviewed: 01/14

RCW 39.04.105 provides that, if a municipality receives a bid protest, it may not execute a contract for the project with anyone other than the protesting bidder without first providing at least two full business days' written notice of its intent to execute a contract for the project; provided that the protesting bidder submits notice in writing of its protest no later than two full business days following bid opening.  Saturdays, Sundays, and legal holidays are not counted.

Beyond that, there are no statutory requirements. If a city or county does not have any procedure regarding bid protests, it should allow a bidder to protest the award to the appropriate official or body, who can then make a determination whether the protest is valid.

If the city or county rejects the protest, the objecting bidder, to preserve the protest, will have to bring suit for injunctive relief in superior court before the city or county and the low bidder sign the contract. BBG Group, LLC v. City of Monroe, 96 Wn. App. 517, 521 (1999).

(Link to this question)

Is it legal to piggyback onto a bid from a municipality from another state?
Reviewed: 01/14

Yes, a city or county of this state may enter into an interlocal agreement with "any political subdivision of another state," which would include a municipality.  See definition of "public agency" in RCW 39.34.020. Piggybacking, which is a form of interlocal agreement, with a municipality of another state would be permissible as long as the municipality in the other state has complied with the requirements of RCW 39.34.030(5)(b).

(Link to this question)

May a city contract with a county for resurfacing work on city streets without calling for bids?
Reviewed: 01/14

Yes. RCW 35.77.020 authorizes a city to contract with the county for repair of city streets on such terms and conditions as may be mutually agreed upon. However, under RCW 35.77.030, such work performed by a county on city streets that exceeds $10,000 must be done by contract, except in cases of emergency or unless after advertisement and solicitation of bids it appears that bids are unobtainable or that the lowest bid exceeds the amount for which such construction can be done by means other than contract.

Also, RCW 47.24.050 provides that a city council may authorize the county to perform any construction, repair, or maintenance needed for city streets. The city's payment for the work is to be based on the actual cost, and the payment received by the county is to be deposited in the county road fund.

(Link to this question)

Can cities and counties use real estate excise tax funds for planning?
Reviewed: 01/14

Cities and counties cannot use these funds for planning in the sense of developing a capital facilities element or a capital improvements plan. However, MRSC has advised that cities and counties can use these funds for design costs, engineering costs, surveys, etc. for specific projects in their capital facilities element or capital improvements plan. Funds from the second quarter percent (REET 2) can only be used in conjunction with street, water, sewer, and parks projects. RCW 82.46.035(5).

(Link to this question)

For what purposes can the .09 rural county sales tax authorized in RCW 82.14.370 be used?
Reviewed: 01/14

RCW 82.14.370 allows a rural county to levy a sales and use tax of not more 0.09 percent. This tax is not an additional tax. A portion of the 6.5 percent state sales and use tax is paid to the eligible counties.

 Section 3(a) states:

Moneys collected under this section shall only be used to finance public facilities serving economic development purposes in rural counties and finance personnel in economic development offices. The public facility must be listed as an item in the officially adopted county overall economic development plan, or the economic development section of the county's comprehensive plan, or the comprehensive plan of a city or town located within the county for those counties planning under RCW 36.70A.040. For those counties that do not have an adopted overall economic development plan and do not plan under the growth management act, the public facility must be listed in the county's capital facilities plan or the capital facilities plan of a city or town located within the county.

Public facilities" are defined in (3)(c)(i) as:  "Public facilities" means bridges, roads, domestic and industrial water facilities, sanitary sewer facilities, earth stabilization, storm sewer facilities, railroad, electricity, natural gas, buildings, structures, telecommunications infrastructure, transportation infrastructure, or commercial infrastructure, and port facilities in the state of Washington.

"Economic development purposes" are defined n (3)(c)(ii) as "those purposes whihc facilitate the creation or retention of businesses and jobs in a county."

There are also reporting requirements in (3)(b):

Each county collecting money under this section shall report, as follows, to the office of the state auditor, within one hundred fifty days after the close of each fiscal year: (i) A list of new projects begun during the fiscal year, showing that the county has used the funds for those projects consistent with the goals of chapter 130, Laws of 2004 and the requirements of (a) of this subsection; and (ii) expenditures during the fiscal year on projects begun in a previous year. Any projects financed prior to June 10, 2004, from the proceeds of obligations to which the tax imposed under subsection (1) of this section has been pledged shall not be deemed to be new projects under this subsection. No new projects funded with money collected under this section may be for justice system facilities.

Note that in the past a number of counties have spent the money for capital projects that have no economic development purpose, such as a court house and the auditor does check to see how these funds are being spent.
 

(Link to this question)

What restrictions, procedures, etc., apply when a port wants to acquire real property?
Reviewed: 01/14

The only restrictions that apply to a port acquiring real property are that the port should not, based on article 8, section 7 of the state constitution, pay more than the property is worth and should not, based on RCW 53.08.010, purchase the property by mortgage or contract lasting more than 20 years. RCW 53.08.010 provides in relevant part:

A port district may acquire by purchase, for cash or on deferred payments for a period not exceeding twenty years, or by condemnation, or both, all lands, property, property rights, leases, or easements necessary for its purposes . . . .

(Link to this question)

Must cities and counties require public works contract bidders to submit the names of subcontractors for a public works contract on which they are bidding?
Reviewed: 01/14

Yes, but only for certain contracts. RCW 39.30.060 requires that bid invitations for contracts estimated to cost more than $1,000,000 require the names of the subcontractors with whom the bidder, if awarded the contract, will subcontract for performance of the work of: HVAC (heating, ventilation, and air conditioning); plumbing as described in chapter 18.106 RCW; and electrical as described in chapter 19.28 RCW.  Or, the contractor may name itself for this work.. The contractor must submit these names as part of the bid or within one hour of the published bid submittal time.  Failure of a bidder to comply renders the bid nonresponsive.

(Link to this question)

If a city receives bids for a public works project but none are responsive, may the city proceed to negotiate with a contractor without a further call for bids?
Reviewed: 01/14

Yes. RCW 35.23.352(1), which applies to all cities other than first class cities and to towns, provides in part as follows:
If no bid is received on the first call the council or commission may readvertise and make a second call, or may enter into a contract without any further call or may purchase the supplies, material or equipment and perform the work or improvement by day labor.

The issue here is whether receiving bids that are not responsive is equivalent to receiving no bids. According to AGO 1977 No. 18, it is equivalent. Footnote 1 to that opinion states in relation to the above language in RCW 35.23.352: "It goes without saying, we think, that a bid which, by its terms, is not responsive to the call is, in reality, no bid at all."

The statutes governing first class cities does not address this issue; those cities may follow the approach of this statute.

(Link to this question)

Does a city have the right to reject all bids?
Reviewed: 01/14

Yes. Usually, the bid specifications indicate that the city reserves the right to reject any and all bids. Also, RCW 35.23.352 (which applies to cities other than first class cities and to towns) indicates that the city council has the right to award the contract to the lowest responsible bidder, or to reject any and all bids. This would alson be an option for first class cities.

(Link to this question)

What cities and counties can levy the second quarter percent of the real estate excise tax (REET2)?
Reviewed: 01/14

Counties that are required or have chosen to plan under the Growth Management Act (GMA) and the cities located in them. RCW 82.46.035(1)..

(Link to this question)

Does a city or county need a vote of the people in order to levy the second quarter percent of the real estate excise tax (REET 2)?
Reviewed: 01/14

It depends. If the city or county is required to plan under the Growth Management Act, then only an affirmative vote of the legislative body is needed to levy this tax. However, if the city is located in a county that has chosen to fully plan under GMA, this tax may be levied only "if first authorized by a proposition approved by a majority of the voters." RCW 82.46.035(2). Only cities planning under GMA may levy this tax.

(Link to this question)

How and when can a city or county that is planning under the Growth Management Act (GMA) and that has a population of 5,000 or less spend its real estate excise tax revenues?
Reviewed: 01/14

The receipts from the first quarter percent (REET 1) can be spent on "any capital purpose identified in a capital improvements plan and local capital improvements, including those listed in RCW 35.43.040." RCW 82.46.010(2). http://apps.leg.wa.gov/rcw/default.aspx?cite=35.43.040 lists projects for which local improvement districts (LIDs) may be formed and includes everything from street projects to parks to sewers to swimming pools. For a complete list, consult the statute.

2011 legislation (HB 1953, Ch. 354, Laws of 2011) allows cities and counties to use REET 1 revenues for operations and maintenance (O&M) of existing capital projects that are listed in RCW 82.46.010(6). There is a limit, however, on how much can be spent on O&M. The maximum amount of REET 1 that may be spent on O&M is the greater of $100,000 or 35 percent of the available funds, not to exceed $1 million. This legislation sunsets on December 31, 2016.

The second quarter percent (REET 2) cannot be spent until the city or county has completed the capital facilities element of its comprehensive plan. This part of the tax has more limited uses. It can only be spent on street projects, water and sewer projects, and parks projects (excluding the acquisition of land). RCW 82.46.035(5).

2011 legislation (HB 1953, Ch. 354, Laws of 2011) allows cities and counties to use REET 2 revenues for operations and maintenance (O&M) of existing capital projects, as defined in the paragraph above. There is a limit, however, on how much can be spent on O&M. The maximum amount of REET 2 that may be spent on O&M is the greater of $100,000 or 35 percent of the available funds, not to exceed $1 million. Counties only may use REET 2 revenues to pay existing debt service on capital projects listed in RCW 82.46.010(6) - the kinds of capital projects that may be done with REET 1 revenues. This legislation sunsets on December 31, 2016.

(Link to this question)

When and how can a city or county that is planning under the Growth Management Act (GMA) and that has a population of over 5,000 spend its real estate excise tax revenues?
Reviewed: 01/14

Revenues from the first quarter percent (REET 1) may be spent only on capital projects in a capital facilities plan element of a comprehensive plan. RCW 82.46.010(2). RCW 82.46.010(6) lists these projects and the list seems to include everything a city or county might ever put in a capital facilities element, including the acquisition of land for parks. Since the projects must be in the capital facilities plan, obviously, the plan must be complete before any REET funds can be spent.

2011 legislation (HB 1953, Ch. 354, Laws of 2011) allows cities and counties to use REET 1 revenues for operations and maintenance (O&M) of existing capital projects that are listed in RCW 82.46.010(6).  There is a limit, however, on how much can be spent on O&M. The maximum amount of REET 1 that may be spent on O&M is the greater of $100,000 or 35 percent of the available funds, not to exceed $1 million. This legislation sunsets on December 31, 2016.

Like REET 1 revenues, those from the second quarter percent of the real estate excise tax (REET 2) cannot be spent until the capital facilities element is finished. Allowable expenditures are street projects, water and sewer projects, and parks projects (excluding the acquisition of land). RCW 82.46.035(5).

2011 legislation (HB 1953, Ch. 354, Laws of 2011) allows cities and counties to use REET 2 revenues for operations and maintenance (O&M) of existing capital projects, as defined in the paragraph above. There is a limit, however, on how much can be spent on O&M. The maximum amount of REET 2 that may be spent on O&M is the greater of $100,000 or 35 percent of the available funds, not to exceed $1 million. Counties only may use REET 2 revenues to pay existing debt service on capital projects listed in RCW 82.46.010(6) - the kinds of capital projects that may be done with REET 1 revenues. This legislation sunsets on December 31, 2016.

 

(Link to this question)

When and how can a city or county (of any size) that is not planning under the Growth Management Act spend its real estate excise tax revenues?
Reviewed: 01/14

The receipts from the first quarter percent (REET 1) can be spent on "any capital purpose identified in a capital improvements plan and local capital improvements, including those listed in RCW 35.43.040." RCW 82.46.010(2). RCW 35.43.040 lists projects for which local improvement districts (LIDs) may be formed and includes everything from street projects to parks to sewers to swimming pools.  These entities may not levy the second quarter percent (REET 2).

2011 legislation (HB 1953, Ch. 354, Laws of 2011) now allows cities and counties to use REET 1 revenues for operations and maintenance (O&M) of existing capital projects that are listed in RCW 82.46.010(6). There is a limit, however, on how much can be spent on O&M. The maximum amount of REET 1 that may be spent on O&M is the greater of $100,000 or 35 percent of the available funds, not to exceed $1 million. This legislation sunsets on December 31, 2016.

(Link to this question)

Must the bid specifications for a public works project state that prevailing wages must be paid and that a performance bond be provided if the bid is awarded?
Reviewed: 01/14

Under RCW 39.12.030, bid specifications for all public works projects must state the prevailing wage that is to be paid to workers. There is no similar statutory requirement of notification of the requirement that a performance bond be provided on the project. However, as a practical matter, that should also be stated in the bid specifications.

(Link to this question)

Is a performance bond required when a city is undertaking a public works project in an emergency situation where it is avoiding competitive bidding procedures?
Reviewed: 01/14

Unless it is an "extreme emergency" (e.g., fire, earthquake, flood) that falls under the provisions of Ch. 38.52 RCW, a performance bond is probably still required. The requirement of a performance bond in RCW 39.08.010 is separate from competitive bidding requirements in RCW 35.23.352 or RCW 35.22.620. The exemption from competitive bidding requirements in RCW 39.04.280(1)(e) in the event of an emergency does not address performance bonds. However, for extreme emergencies, RCW 38.52.070(2) provides:
 
Each political subdivision is authorized to exercise the powers vested under this section in the light of the exigencies of an extreme emergency situation without regard to time-consuming procedures and formalities prescribed by law (excepting mandatory constitutional requirements), including, but not limited to, budget law limitations, requirements of competitive bidding and publication of notices, provisions pertaining to the performance of public work . . . .

The emphasized language probably includes the requirement of a performance bond under RCW 39.08.010.

Nevertheless, as a practical matter, even if it does not rise to the level of an emergency situation addressed by chapter 38.52 RCW, a situation may call for such immediate action that a city would find it prudent to forgo the requirement of a performance bond if procuring it would cause a delay that would result in further damage or costs that the city would not wish to incur. The ultimate consequence of failing to require a performance bond is potential liability for the contractor's debts with respect to the project (e.g., payments to workers and suppliers). RCW 39.08.015. A city may be willing to incur that risk rather than delay a project in the event of an emergency. Also, it may well be the case that, if a city avoids requiring performance bonds even in the event of an extreme emergency that would qualify under the provisions of chapter 38.52 RCW, it still may be subject to potential liability under RCW 39.08.015. So, it would appear that common sense and an assessment of relative risks should govern the decision in an emergency situation whether or not to require a performance bond.

(Link to this question)

May a city or county comply with affirmative action plan requirements in federal contracts without violating Initiative 200?
Reviewed: 01/14

Affirmative action was effectively abolished in Washington State by Initiative 200 (codified as RCW 49.60.400), passed by the voters in 1998. This statute contains the following exemption:

 

This section does not prohibit action that must be taken to establish or maintain eligibility for any federal program, if ineligibility would result in a loss of federal funds to the state.

There are no court cases that have addressed this exemption. However, the state attorney general's office has analyzed this exemption in an "Issue Paper" on Initiative 200, stating:

Section 1(6) [RCW 49.60.400(6)] provides that the Initiative "does not prohibit action that must be taken to establish or maintain eligibility for any federal program, if ineligibility would result in a loss of federal funds to the state." Federal agencies often require states to have "affirmative action" programs, but most allow discretion in how to operate those programs. Rather than specifying requirements, the federal law will call for state agencies to submit, as part of a funding request, a proposal describing how the state would meet the general "affirmative action" program requirements. The federal agency then approves or disapproves the program. On rare occasion, federal law will vary the nature of requirements depending on whether a certain component is prohibited by state law. Thus, the interaction of federal law and Initiative 200 could be somewhat complex for agencies who must submit proposals which will satisfy federal funding requirements without overstepping any limits imposed by Initiative 200. The Initiative imposes two conditions to actions "excused" under this subsection: (a) the action "must be taken" to establish or maintain eligibility for a federal program, and (b) ineligibility would result in a loss of federal funds. The limits of this exception to the Initiative's "no-preference" rule, then, depend on whether federal funds would be lost if the state agency's practice were changed. In some cases, the agency's current practices are part of a contract with a federal agency, presumably subject to enforcement under contract principles. In other cases, federal law may provide the federal government with various enforcement mechanisms, including loss of federal funds. Thus, there may be arguments about the likelihood of loss of federal funds with regard to various programs. The Initiative also raises questions as to whether state agencies should look strictly to the letter of federal law in deciding what action "must be taken," or might also assess such factors as a federal agency's administrative interpretations of the law and the likelihood of impacts on federal funding. There may be occasions in which no federal statute explicitly requires "affirmative action" but where the administering federal agency contends that affirmative action measures are required. In such a case, the state agency must determine whether to look to the agency's policies or strictly to the letter of federal law.

So, if an affirmative action plan is required of a city or county through a federal program to establish or maintain eligibility for that program and eligibility for the program is necessary for the receipt of federal funds, then establishing such a plan would not violate Initiative 200 (RCW 49.60.400). The city or county needs to find out if and where (and probably under what authority) an affirmative action plan is required by a federal program in which it is participating.

(Link to this question)

May a city provide for a credit for new business start-ups in its B&O tax ordinance? 
Reviewed: 01/14

Yes, you have some leeway in crafting your own B&O tax credits. The statutes governing the state B&O tax do not apply to the city's B&O tax; the city's B&O tax authority derives from RCW 35.21.706 -.710, and is restricted by the provisions of the model B&O tax ordinance developed pursuant to the mandate in chapter 35.102 RCW. See the AWC web page on the Model B&O ordinance for more information on the model ordinance. The city is free to develop tax credits not addressed by the mandatory provisions of the model ordinance; RCW 35.102.040(3) states that “Except for the deduction required by RCW 35.102.160 and the system of credits developed to address multiple taxation under subsection (2)(a) of this section, a city may adopt its own provisions for tax exemptions, tax credits, and tax deductions.” (Emphasis added.)

The other potential limitation of the ability of the city to provide a tax credit is the state constitution. It could be argued that a tax credit for start-ups would be an unconstitutional gift of public funds, in violation of article 8, section 7 of the state constitution. But, we think it is a reasonable classification, the credit has a proper municipal purpose, and there is no “donative intent” here. So, yes, we think the city could develop a credit for a uniform class of employers that are start-ups, e.g., during their first three years of operation in the city.

(Link to this question)

May lodging (hotel-motel) tax revenues be used for banners?
Reviewed: 01/14

In our opinion, lodging tax funds may not be used for banners that would simply be for city beautification, such as those decorative ones that might hang from light posts. We do not think that would be considered "tourism promotion" for which lodging tax money may be spent under RCW 67.28.1815. That term is defined in RCW 67.28.080(6): as follows:

"Tourism promotion" means activities, operations, and expenditures designed to increase tourism, including but not limited to advertising, publicizing, or otherwise distributing information for the purpose of attracting and welcoming tourists; developing strategies to expand tourism; operating tourism promotion agencies; and funding the marketing of or the operation of special events and festivals designed to attract tourists.

However, lodging tax funds probably may be used for a banners that, for example, announce upcoming events that tourists might attend, such as an upcoming annual festival.

(Link to this question)

May lodging tax revenues be awarded to a local arts guild to be used in promoting/operating/sponsoring an event that will take place outside city limits?
Reviewed: 01/14

This type of event could conceivably qualify for lodging tax funds even though it will actually take place outside the city limits. The real issue is not whether the event itself will take place outside the city limits but whether it will attract tourists from outside the area, some of whom will stay in the city to attend the event.

You can still, after 2013 amendments to the lodging tax statutes, spend lodging tax funds on tourism promotion, including operating special events and festivals, in addition to marketing. So the general concept of spending lodging tax funds to advertise and support a festival that will attract tourists is consistent with lodging tax requirements.

If your city is the nearest city to this event and you can argue in good faith that this festival will attract tourists, not just to the event but also to your city, then this should qualify for lodging tax funds.

(Link to this question)

Must a local government have a small works roster to use the limited public works process authorized in state law?
Reviewed: 01/14

Yes. The limited public works process is a type of small works roster process, but it applies only to contracts estimated to cost less than $35,000. To use this process, the local government must solicit electronic or written quotations from a minimum of three contractors from the appropriate small works roster. Other procedural requirements in RCW 39.04.155(3) must also be followed. Note that the local government may then waive the payment and performance bond requirements of chapter 39.08 RCW and the retainage requirements of chapter 60.28 RCW.

(Link to this question)

Real estate excise tax (REET) coming in is at .25%. We understand that this rate could be up to .5% if we are a "growth management" city. What would be the process to increase the rate to its maximum?
Reviewed: 01/14

Pass this ordinance: Sample Real Estate Excise Tax Ordinance.

Let your county treasurer know that you have passed the tax. Also ask him or her if you should be notifying someone at the state or if he or she (the treasurer) does that.

Keep this "REET 2" money in a separate account from "REET 1" receipts because they have different permissible uses.

(Link to this question)

Is it allowable for the city to enter into an agreement with the county for crack sealing and seal coating (rather than going out for a public bid)? The county has its own forces and they are willing to do our streets, provided we can enter into an interlocal agreement.
Reviewed: 01/14

Yes. There is authorization in RCW 35.77.020 for a city to contract with the county in which it is located to perform any or all repair and maintenance work on city streets on the terms and conditions as are mutually agreed upon. This can be done without going out to public bid.

Actually, that is sufficient authority but there is also another source of authority to contract with the county in RCW 47.24.050. This statute also allows a city to contract with the county for repair or maintenance of a city street without going out to bid.

(Link to this question)

May a city put on the ballot an increase in the sales tax for a specific purpose such as criminal justice or public safety?
Reviewed: 01/14

Yes, they may levy a tax of 0.1 percent as long as the county has not already levied a tax of more than 0.2 percent. See RCW 82.14.450. There is a discussion of the 2010 amendment that made this possible in A Revenue Guide for Washington Counties, page 26-27. It is not discussed in the city revenue guide because that was published in 2009.

(Link to this question)

What local bid preferences are available?
Reviewed: 01/14

RCW 39.30.040, enacted in 1985, provides that whenever a unit of local government is required to make purchases from the lowest bidder or from a supplier offering the lowest price, the unit of local government may, at its option, take into consideration tax revenue it would receive from purchasing the supplies, materials, or equipment from a source located within its boundaries. The statute indicates that the local government must award the purchase contract to the lowest bidder after such tax revenue has been considered. Tax revenues that may be considered include sales taxes and business and occupation taxes. So, there is statutory authority for a local "preference" in a bid situation but only to the extent allowed by RCW 39.30.040.

Note that the language of this statute, which allows a city to take local tax revenue into consideration when awarding contracts, speaks only of contracts for purchases of supplies, materials, or equipment. There is no reference to public works contracts for construction that may involve, as a component, the purchase of materials, supplies, etc. Indeed, it would be difficult to fit the option to take tax revenues into account into a public works bid consideration as such action would essentially require a contractor to agree to purchase from local suppliers, and the city would need to enforce this provision. So, this statute applies only to purchase, and not to public works contracts. MRSC has consistently taken the position that a local government may not include a preference for local contractors in the bid specifications for public works projects.

(Link to this question)

Is the elected official chair of the county lodging tax advisory committee a voting member?
Reviewed: 01/14

It's our opinion that the chair of the Lodging Tax Advisory Committee (LTAC), who in this case is a county councilmember, may vote on LTAC grants and on anything else. In other words, the county councilmember/chair is a full voting member of the LTAC. The relevant statute regarding the LTAC, RCW 67.28.1817, provides in part that "One member shall be an elected official of the municipality who shall serve as chair of the committee." That language does not limit the voting authority of the elected official/chair. Note that the next sentence of this statute provides that “An advisory committee for a county may include one nonvoting member who is an elected official of a city or town in the county.” (Emphasis added.) So, if the legislature intended the elected official/chair to be a nonvoting member, it would have said so as it did for the optional city/town elected official member.

(Link to this question)

May the county waive the filing charges for another governmental entity?
Reviewed: 01/14

In our opinion, the county cannot do this because of the restriction in RCW 43.09.210, which in relevant part states:

All service rendered by, or property transferred from, one department, public improvement, undertaking, institution, or public service industry to another, shall be paid for at its true and full value by the department, public improvement, undertaking, institution, or public service industry receiving the same, and no department, public improvement, undertaking, institution, or public service industry shall benefit in any financial manner whatever by an appropriation or fund made for the support of another.

This statutory language was discussed and interpreted in AGO 1997 No. 5:

From its context, RCW 43.09.210 might be read as affecting only transfers and transactions within a government (such as the transfer of a tractor from a city's street department to its park department). However, the Supreme Court decided, in State v. Grays Harbor County, 98 Wn.2d 606, 656 P.2d 1084 (1983), that this section also applies to transactions between two different governments. In the Grays Harbor County case, the Court found that, in the absence of some other statute providing otherwise, RCW 43.09.210 required the state to pay the same fees for filing documents with the county auditor that other parties were required to pay, because otherwise the county would, in effect, subsidize state government by providing 'free' services. Thus, RCW 43.09.210 provides a 'background' or 'default' rule that governments pay full value for transfers of property or services, except where the Legislature has otherwise provided.

That opinion later describes the "central purposes" of this statute as "making governments fully accountable for their property and assuring that the resources allocated by law to one government are not used to subsidize the activities of a different government."

(Link to this question)

Does the city council need to hold a public hearing to amend the budget for the purpose of eliminating or laying off positions?
Reviewed: 01/14

With the exception of certain emergency expenditures ( RCW 35A.33.090), the city council is not required to hold public hearings when amending the budget. RCW 35A.33.120 is the basic statutory authorization for a code city to amend its budget, and it contains no public hearing requirement. Although a public hearing prior to amending the budget may perhaps be desirable from a policy standpoint, it is not a legal requirement.

(Link to this question)

What taxes does the city pay in connection with swimming pools?
Reviewed: 01/14

The examples in WAC 458-20-189(9) are helpful on swimming pools and other recreation activities.

 


 First, is the pool a governmental or an enterprise activity? An enterprise activity is one where user fees cover more than 50 percent of the direct and indirect costs as defined in WAC 458-20-183(2)(d) and (h).

If it is a governmental activity, the only tax due is sales tax on admission fees. Physical fitness classes (here, it would be water exercise classes) are considered a "retail sale" (RCW 82.04.050(3)(g)), but municipalities' physical fitness classes are exempt from the sales tax. RCW 82.08.0291.

If it is an enterprise activity, all revenue is subject to the B&O tax. Retailing B&O must be paid on all revenue except lessons. That includes the exercise class. Lessons are considered a service and so B&O tax must be remitted at the service rate. WAC 458-20-189(4)(a)(v). Sales tax must be collected on admissions.

(Link to this question)

May a city may use the first one-quarter percent real estate excise tax (REET) revenues to contribute to the improvement of a school district stadium/athletic field that the city would use for certain city recreational activities?
Reviewed: 01/14

Yes, under certain circumstances. The relevant statute, RCW 82.46.010(2) states as follows:
 

The legislative authority of any county or any city may impose an excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the selling price. The revenues from this tax shall be used by any city or county with a population of five thousand or less and any city or county that does not plan under RCW 36.70A.040 for any capital purpose identified in a capital improvements plan and local capital improvements, including those listed in RCW 35.43.040.

 

After April 30, 1992, revenues generated from the tax imposed under this subsection in counties over five thousand population and cities over five thousand population that are required or choose to plan under RCW 36.70A.040 shall be used solely for financing capital projects specified in a capital facilities plan element of a comprehensive plan and housing relocation assistance under RCW 59.18.440 and 59.18.450.

 

To comply with the expenditure restrictions in this statute, the stadium/athletic field would need to be in the capital facilities plan element of the city's comprehensive plan. Nothing appears to prohibit a city from including a school stadium/athletic field in their comprehensive plan, either as part of the school district's capital facilities plan element which could be adopted by reference into the city's comprehensive plan or as a specific capital project in the city's capital facilities plan element. In fact this would be necessary if a jurisdiction were to impose impact fees for schools. RCW 82.02.050(4) provides that

Impact fees may be collected and spent only for public facilities defined in RCW 82.02.090 which are addressed by a capital facilities plan element of a comprehensive land use plan adopted pursuant to the provisions of RCW 36.70A.070 or the provisions for comprehensive plan adoption contained in chapter 36.70, 35.63, or 35A.63 RCW.

 

"Public facilities" includes school facilities. RCW 82.02.090(7). Also, RCW 82.02.050 contemplates that a city or county could include facilities that may be the responsibility of a special district:

If the capital facilities plan of the county, city, or town is complete other than for the inclusion of those elements which are the responsibility of a special district, the county, city, or town may impose impact fees to address those public facility needs for which the county, city, or town is responsible.

 

If this requirement of inclusion of the facility in the city's capital facilities plan element or in the school district's plan element adopted by reference by the city is met, these REET revenues could be used for this facility if the expenditure has a city purpose. In AGO 1988 No. 19, the attorney general's office addressed whether REET revenues may be used by a county to fund capital improvements on property owned by a city. Although, this opinion addressed by pre-GMA version of RCW 82.46.010, the opinion still applies to the issue presented in this inquiry. That opinion states:

 

We believe the critical question, under both the relevant statutes and the state constitution, is whether the capital improvement at issue is to be constructed or operated for a county purpose. The statutes do not establish a per se requirement that the improvement itself or the underlying real property be owned by the county. Where neither factor is present, however, it is highly problematical whether the improvement is truly intended to serve a county purpose. Absent any additional facts indicating that such a purpose would be served by the capital improvements referred to in your question, we conclude that the funding of such improvements would not be authorized.

 

Since the stadium/athletic field would be used for city recreational programs, it would appear that there exists the requisite city purpose.

 

We recommend that the city and the school district enter into an interlocal agreement that identifies the city's contribution to the improvement of the facility and what the city's use of the facility will be.

(Link to this question)

Is a purchase by a city or county of real property through the condemnation process subject to the real estate excise tax?
Reviewed: 01/14

No. RCW 82.45.010(3)(g) specifically exempts transfers of property through condemnation proceedings from the definition of "sale" for purposes of the real estate excise tax.

(Link to this question)

May lodging (hotel-motel) tax revenues be used to build a public restroom in city park used by tourists?
Reviewed: 01/14

Yes. Lodging tax revenues may, in our opinion, be used for construction and/or maintenance of public restrooms that would be used by tourists. The relevant statute regarding the purposes for which lodging tax revenues may be spent is RCW 67.28.1815, which states in relevant part as follows:

 

all revenue from taxes imposed under this chapter shall be credited to a special fund in the treasury of the municipality imposing such tax and used solely for the purpose of paying all or any part of the cost of tourism promotion, acquisition of tourism-related facilities, or operation of tourism-related facilities.

(Emphasis added.) "Acquisition" is defined in RCW 67.28.080(1) to include "construction," and a "tourism-related facility" is defined in RCW 67.28.080(7) to mean:

[R]eal or tangible personal property with a usable life of three or more years, or constructed with volunteer labor that is . . . used to support tourism, performing arts, or to accommodate tourist activities.

(Emphasis added.) It is our opinion that a public restroom in an area used by tourists accommodates tourist activities, for obvious reasons. Nevertheless, we would recommend seeking the concurrence of the state auditor's office in advance of use of these funds for the purpose in question.

(Link to this question)

Can a county take credit cards for fees, and is it legal to then pay a credit card fee to the bank?
Reviewed: 01/14

Yes, a county may accept credit cards in payment of fees, and, yes, a county may pay credit card fees to the issuing bank, although it may also pass those costs onto the person paying the fee. RCW 36.29.190 states as follows:

County treasurers are authorized to accept credit cards, charge cards, debit cards, smart cards, stored value cards, federal wire, and automatic clearinghouse system transactions, or other electronic communication, for any payment of any kind including, but not limited to, taxes, fines, interest, penalties, special assessments, fees, rates, charges, or moneys due counties. A payer desiring to pay by a credit card, charge card, debit card, smart card, stored value card, federal wire, automatic clearinghouse system, or other electronic communication shall bear the cost of processing the transaction in an amount determined by the treasurer, unless the county legislative authority or the legislative authority of a district where the county treasurer serves as ex officio treasurer finds that it is in the best interests of the county or district to not charge transaction processing costs for all payment transactions made for a specific category of nontax payments received by the county treasurer, including, but not limited to, fines, interest not associated with taxes, penalties not associated with taxes, special assessments, fees, rates, and charges. The treasurer's cost determination shall be based upon costs incurred by the treasurer and may not, in any event, exceed the additional direct costs incurred by the county to accept the specific form of payment utilized by the payer.

Here is an example from Snohomish County of a county deciding to absorb some of those transaction costs: Snohomish County Ordinance No. 02-004.

[See also RCW 36.23.100 - Electronic payment of court fees and other financial obligations - Authorized.]

(Link to this question)

May monies from the general fund be used to support the water utility fund should a deficit develop?
Reviewed: 01/14

Yes. In fact, RCW 35.37.020 provides that "any deficit for operation and maintenance of utilities and institutions owned and controlled by cities and towns having less than twenty thousand inhabitants, over and above the revenue therefrom, shall be paid out of the current expense fund."

(Link to this question)

Can a city or county spend hotel-motel tax funds to pay for police and public works overtime in conjunction with a festival?
Reviewed: 01/14

Yes, RCW 67.28.1816(1)(b) allows lodging tax funds to be spent on the marketing and operations of special events and festivals.   The addition of  "operations" to "marketing of special events and festivals" first came in the definition of "tourism promotion" in RCW 67.28.080(6) in ch. 497, Laws of 2007.

(Link to this question)

Can the rural county sales tax in RCW 82.14.370 be applied to infrastructure planning such as a capital facilities plan (CFP) update?
Reviewed: 01/14

These funds cannot be used for general infrastructure planning. RCW 82.14.370(3)(a) states that the funds must be used for public facilities that are listed in your economic development plan:

(3)(a) Moneys collected under this section shall only be used to finance public facilities serving economic development purposes in rural counties and finance personnel in economic development offices. The public facility must be listed as an item in the officially adopted county overall economic development plan, or the economic development section of the county's comprehensive plan, or the comprehensive plan of a city or town located within the county for those counties planning under RCW 36.70A.040. For those counties that do not have an adopted overall economic development plan and do not plan under the growth management act, the public facility must be listed in the county's capital facilities plan or the capital facilities plan of a city or town located within the county.

The types of public facilities are spelled out in RCW 82.14.370(3)(c):

(i) "Public facilities" means bridges, roads, domestic and industrial water facilities, sanitary sewer facilities, earth stabilization, storm sewer facilities, railroad, electricity, natural gas, buildings, structures, telecommunications infrastructure, transportation infrastructure, or commercial infrastructure, and port facilities in the state of Washington.

The planning asked about here does not qualify as a public facility under the above definition. Of course, once you have decided on a project, you are going to have "planning" costs for that project in terms of design costs, engineering costs, surveys, etc., and these funds may be spent on those costs.

We have opined that the uses of real estate excise tax receipts are similarly limited. They cannot be used to pay for developing a comprehensive plan or CFP.

(Link to this question)

Can a city use lodging tax funds for way-finding signs throughout the city?
Reviewed: 01/14

We think that lodging taxes could be used for directional signs that help people find their way to tourist activities/facilities (e.g., museum) in the city.

"Supporting the operations and capital expenditures of tourism-related facilities  owned or operated by a municipality or public facilities district..." is set out as a permitted use in RCW 67.28.1816(1)(c).  Such signs would fall within the definition of "tourism-related facility" in RCW 67.28.080(7), because they would constitute "tangible personal property with a usable life of three or more years" that is "used to support tourism . . . or to accommodate tourist activities." So, the expenditure would have to be specific to that type of directional signage.

(Link to this question)

May the costs of street sweeping be paid for from the stormwater utility fund?
Reviewed: 01/14

Yes, this is allowable, and it is being done by many jurisdictions. The real benefit of street sweeping often is primarily for the stormwater utility rather than for the street itself. Therefore, some jurisdictions allocate this cost entirely to the stormwater utility, some to the street fund, and some split the costs between the two.

In a February 2012 survey of 55 jurisdictions, 16 (29 percent) paid for street sweeping out of the street fund, 24 (43 percent) paid for this out of the stormwater utility fund, and 15 (27 percent ) split the costs between the two.

(Link to this question)

Do fire districts set levies on individual properties the same way cities do?
Reviewed: 01/14

All taxing districts, including fire districts, levy their taxes in exactly the same way.

They calculate (or their assessor tells them) what their maximum allowable levy is for the coming year. That number will include: banked capacity (if there is any); new construction, etc.; and a one percent increase (or maybe less for entities with a population over 10,000), if the taxing district is not already at its maximum rate.

Then the legislative body decides how much to levy, which may be less than the maximum. Once the levy request is received, the assessor calculates the tax rate necessary to bring in that amount of money, given the assessed value of the entire taxing district. The assessor then takes the assessed value of each parcel, divides it by 1000, and multiplies the result by the tax rate. That sets the levy for that parcel.

(Link to this question)

Is it allowable for a public employee to leave a tip at a restaurant and be reimbursed by their local government employer? If so, what is the percent limit?
Reviewed: 01/14

Yes, it is allowable for a public employee to leave a tip at a restaurant and be reimbursed for that expense, assuming of course that the meal is a part of official business. There is not a strict limit on the amount of the tip, but clearly a tip of 15 or even 20 percent would be considered to be reasonable.

In Bellevue v. State, 92 Wn.2d 717 (1979), the state supreme court upheld a city of Bellevue policy of reimbursement for restaurant tips while on city business. The court held that this does not involve a gift of city funds. Restaurant tips are an established custom and practice and are considered a basic part of the compensation paid to restaurant employees. 92 Wn.2d at 720.

The same reasoning should apply to other situations where tips are customary and expected (e.g., taxi rides, bellhop service). Thus, a local government should be able to reimburse employees for such tipping incurred in the course of public business. The local government should provide in their travel reimbursement policy that reimbursement for tips will be permitted and what the percentage limit will be.

(Link to this question)

Are there are any court rulings or state laws that would exempt non-profit agencies from paying city B&O taxes?
Reviewed: 01/14

There is nothing in state law that addresses whether nonprofit organizations are exempt from paying city B&O taxes. That is up to the individual city imposing a B&O tax; there is no requirement that nonprofit organizations be exempt. See the Association of Washington Cities' 2012 Model B&O Tax Ordinance Guidelines, at Sec. .090, which allows for an exemption for "non-profit" organizations, those who qualify under Sec. 501(c)(3) of the Internal Revenue Code. A city could adopt specific exemptions for certain activities by nonprofit organizations.

 

In Forbes v. Seattle, 113 Wn.2d 929 (1990), the state supreme court ruled that Seattle's admissions tax, which was imposed upon many activities but exempted nonprofit, tax-exempt organizations, did not violate constitutional equal protection guarantees. That reasoning would apply also to a B&O tax that exempts nonprofit organizations.

(Link to this question)

Request for help in explaining to citizens why property taxes on some properties can increase by more than one percent if the total can only go up by one percent?
Reviewed: 01/14

The State Department of Revenue's Web site offers the following helpful explanation:

The one percent limit applies to the maximum increase in tax revenue levied by an individual taxing district. It does not apply to individual homes, which tend to increase in assessed valuations at varying rates depending on location and other factors. Taxes on individual homes could increase by more or less than one percent depending on how they change in value relative to other properties in a district.

Example:

  • Home A increases from $200,000 to $220,000 in assessed value within a city (a 10 percent increase); 
  • Home B increases from $200,000 to $240,000 in assessed value (a 20 percent increase); 
  • Home C increases from $200,000 to $230,000 in assessed value (a 15 percent increase - the average increase in assessed valuations for all properties.)

The city collected $1,000,000 in property taxes in 2006 at a rate of $1.00 per $1,000 assessed value, on a total valuation of $1 billion. The city can increase its 2007 levy by 1 percent to $1,010,000 in 2007 (not counting any additional tax revenue from new construction added to the tax rolls in the past year). The total taxable value of properties in the district increased 15 percent from $1 billion to $1.15 billion (not counting new construction). In order to keep from collecting more than 1 percent additional tax on existing properties, the city must lower its tax rate to $0.878261 from $1.00 per $1,000 assessed value.

In 2007, each of these three homes paid $200 in taxes on $200,000 of assessed value at the $1.00 rate. In 2008, the tax depends on how their assessed values change compared to other properties in the city. 

  • Home A - value increased by 10 percent; taxes drop to $193.22 on $220,000 of assessed value at $0.878261 rate (3.39% decrease); 
  • Home B - value increased by 20 percent; taxes rise to $210.78 on $240,000 of assessed value at $0.878261 rate. (5.39% increase); 
  • Home C - value increased by 15 percent; taxes rise to $202.00 on $230,000 of assessed value at $0.878261 rate (1% increase).

(Link to this question)

May the city pay for dinner for councilmembers and planning commission members at a working dinner held within the city?
Reviewed: 01/14

Yes, this likely is permissible so long as official city business is being conducted during the dinner. It is not required that travel occur before city officials can be reimbursed for meal expenses in all cases.

This is the conclusion in a memo from the Office of the Attorney General, dated May 14, 1987, from James Pharris, to Lee Reaves, Chief Examiner, Office of the State Auditor entitled Eating and Drinking at Public Expense. As far as we are aware, this is still the position of the Office of the Attorney General.

(Link to this question)

May a city use hotel-motel tax funds to pay for the operation of a museum that is owned and managed by a private historical society?
Reviewed: 01/14

Yes,  RCW 67.28.1816(1)(d), as amended by ESHB 1253 in 2013, reads in part:

 

1 . Lodging tax revenues under this chapter may be used, directly or by any municipality or indirectly through a convention and visitors bureau or destination marketing organization for:

 

d. Supporting the operations of tourism related facilities owned or operated by nonprofit organizations described under 26 U.S.C. Sec. 501(c)(3) and 26 U.S.C. 501 (c)( ) of the internal revenue code of 1986, as amended.

 

 

(Link to this question)

What is the maximum amount that a city or county may increase its property tax levy without a vote of the people?
Reviewed: 01/14

Here are the "rules" since the passage of Initiative 747.

 

In taxing districts with a population of under 10,000, the legislative body may, by a simple majority, vote to increase its levy by a maximum of one percent of the highest levy of the past three years (note WAC 458-19-065 says since 1986 and that is the date that the assessors use) plus the revenue resulting from new construction, increases in assessed value due to construction of electric generation wind turbine facilities classified as personal property, and improvements to property, and any increase in the assessed value of state-assessed property. If the taxing district has a population of 10,000 or more, it can only increase its levy by an amount equal to the increase in the implicit price deflator (IPD) from the prior July or one percent, whichever is less, plus new construction and state-assessed utility revenue. This can be done with a simple majority vote. RCW 84.55.010.

When the increase in the IPD is less than one percent, if a majority plus one of the city or county council finds "substantial need," it can increase its levy by an amount up to one percent, assuming that its maximum statutory rate is not reached. The vote of two of three county commissioners is needed, plus a finding of substantial need. RCW 84.55.0101. Of course, since the increase in the IPD is likely to be greater than one percent (except that it was -.848!! in 2009), this provision is not as useful as it was before the passage of Initiative 747.

(Link to this question)

When are budget amendments required and by what vote must they be passed?
Reviewed: 01/14

Cities

 

Budget amendments are required for cities only when the appropriation level in a fund is being changed. The statutes give four different examples.

  1. RCW 35.33.081, RCW 35.34.140, RCW 35A.33.140, and RCW 35A.34.140 discuss "nondebatable"emergencies, such as natural disasters and wars, and say that the council may approve expenditures incident to these events with the vote of a majority of the entire council plus one, without notice ora hearing.
  2. RCW 35.33.091, RCW 35.34.150, RCW 35A.33.090, and RCW 35A.34.150 all deal with "emergencies" of a lesser sort. The city finds it needs or wants to make some expenditures that were not foreseen at the time the budget was adopted. Because this will require increasing the appropriation level in one or more funds, an amendment is needed. The statutes stipulate that the budget-amending ordinance must be introduced five days before being voted on, that citizens must be heard, and that the vote be by a majority of the entire council plus one.
  3. RCW 35.33.121(4), RCW 35.34.200(1)(d), RCW 35A.33.120(4), and RCW 35A.34.200(1)(d) discuss the situation where a city receives more revenue  during the year (or biennium for biennial budgets) than anticipated in the budget. If the city council chooses, it may spend the money during the year (biennium). However, since theappropriation level in a fund is being changed, a budget amendment is required. Only a simple majority vote is needed, presumably because spending unanticipated revenue requires less scrutiny than, for example, spending reserves under RCW 35.33.091, RCW 35.34.150, RCW 35A.33.090, or RCW 35A.34.150.
    Note that a city need not pass a budget amendment to recognize unanticipated revenue unless it wishes to spend it during the current year (biennium). If "ignored," it will simply "drop down" into ending fund balance and will be available for appropriation in the next year (biennium).
  4. If a council wishes to decrease the appropriation levels in any fund during the year (biennium), it may do so by a vote of a majority of the entire council plus one. It is not completely clear why this level of approval is required, but since a council sometimes reduces the appropriation level in one fund and transfers it to another fund, perhaps the legislature thought this higher level of approval to be necessary. See final paragraph in RCW 35.33.121 and RCW 35A.33.120; and RCW 35.34.200(3) and RCW 35A.34.200(3).

RCW 35.33.121(5) and RCW 35.34.200(2) address the situation where the appropriation level in the fund is not changed. They state:

Transfers between individual appropriations within any one fund may be made during the current fiscal year by order of the city's or town's chief administrative officer subject to such regulations, if any, as may be imposed by the city or town legislative body. Notwithstanding the provisions of RCW 43.09.210 or of any statute to the contrary, transfers, as herein authorized, may be made within the same fund regardless of the various offices, departments or divisions of the city or town which may be affected.

There is similar language in RCW 35A.33.120(5) and RCW 35A.34.200(2). Except when restricted from doing so by the council, the chief administrative officer may make transfers within a fund without a budget amendment.

Counties

Counties have similar language. RCW 36.40.180 discusses nondebatable emergencies, such disasters and threats to public health. A unanimous vote of the commissioners present at the meeting is required, and no public notice or hearing is necessary. "Emergencies," such as those described in item 2 for cities above, are addressed in RCW 36.40.140. The commissioners must adopt a resolution, stating how much money is required to meet the emergency. The resolution must be published with a notice of a public hearing to be held not less than one week after the publication.

Unique to counties is a procedure set out in RCW 36.40.150 - .170 by which any taxpayer may petition the superior court to review the order issued under RCW 36.40.140 stating the emergency and authorizing the expenditure. The filing of such petition will suspend the order until the court determines it propriety.

RCW 36.40.100 somewhat parallels the city statutes listed in item 3 above, but limits any increase in appropriations to revenues from unanticipated federal or state funds. The commissioners must provide notice for two consecutive weeks prior to the meeting at which the supplemental appropriation will be adopted. The statute provides for this same procedure for transfers or revisions within departments. There is no explicit discussion of transfers between departments. We believe that those fall under the emergency provisions of RCW 36.40.140. Finally, there is no county statute that discusses what must be done when an appropriation level in a fund is decreased. Presumably the board or council passes a resolution to that effect with a simple majority.

(Link to this question)

Can real estate excise tax funds be used for maintenance?
Reviewed: 01/14

2011 legislation (HB 1953, Ch. 354, Laws of 2011) allows cities and counties to use REET 1 revenues for operations and maintenance (O&M) of existing capital projects that are listed in RCW 82.46.010(6). There is a limit, however, on how much can be spent on O&M. The maximum amount of REET 1 that may be spent on O&M is the greater of $100,000 or 35 percent of the available funds, not to exceed $1 million. This legislation sunsets on December 31, 2016.

The same legislation allows cities and counties to use REET 2 revenues for operations and maintenance (O&M) of existing capital projects listed under RCW 82.46.035(5). There is the same limit on how much can be spent on O&M. The maximum amount of REET 2 that may be spent on O&M is the greater of $100,000 or 35 percent of the available funds, not to exceed $1 million. This legislation sunsets on December 31, 2016

(Link to this question)

May a city or county use real estate excise tax revenues to pay debt service on a councilmanic bond?
Reviewed: 01/14

Yes, as long as the project is one for which these revenues may be used. For example, revenues from the second quarter percent (REET 2) can only be spent on projects listed in RCW 82.46.035(5) -- street, water, sewer, and parks (excluding land acquisition) projects . Therefore, these revenues could not be used to pay debt service on a new city hall or county courthouse. Note that if the real estate excise tax receipts fall short of the amount needed to pay debt service, the general fund must make up the difference.

In addition, until December 31, 2016, counties only may use REET 2 revenues to pay existing debt service on capital projects listed in RCW 82.46.010(6) - the kinds of capital projects that may be done with REET 1 revenues.  See RCW 82.46.35(7), which states:

(7) From June 30, 2012, until December 31, 2016, a city or county may use the greater of one hundred thousand dollars or thirty-five percent of available funds under this section, but not to exceed one million dollars per year, for operations and maintenance of existing capital projects as defined in subsection (5) of this section, and counties may use available funds under this section for the payment of existing debt service incurred for capital projects as defined in RCW 82.46.010. If a county uses available funds for payment of existing debt service under RCW 82.46.010, the total amount used for payment of debt service and any amounts used for operations and maintenance is subject to the limits in this subsection.

Emphasis added.

(Link to this question)

Does the city have to show its utility tax as a separate item on the customer's bill?
Reviewed: 12/13

Cities are not required to show the tax on its utilities as a separate item on its utility bills. The utility tax is a tax on the utility, not a tax on the ultimate consumer of the utility service. Therefore it need not be shown on the bill. For more information, see our Revenue Guide for Washington Cities which discusses utility taxes on several pages.

(Link to this question)

If a hotel has part of the building leased out long-term, is the charge for these rooms exempt from the hotel-motel tax?
Reviewed: 12/13

Yes. The hotel-motel tax (and the sales tax also) only applies to stays of less than one month. RCW 67.28.180 and RCW 82.04.050(2)(f).  If, in addition to the basic two percent tax, a city or county levies a "special tax" under RCW 67.28.181(1) it will, of course, not receive these funds either for long-term stays.

(Link to this question)

May a city hire a private auditor?
Reviewed: 12/13

Yes, but it might not prove to be cost effective. RCW 43.09.230 specifies that the annual reports shall be certified by the Office of the State Auditor. Also, RCW 43.09.260 gives the Office of the State Auditor the power to examine all the financial affairs of every public office and officer. Therefore, even if a private auditor has examined the city's financial records and declared them satisfactory, the state examiner has the right to do a full-scale audit and charge the city the full amount for the audit services.

(Link to this question)

What are the consequences of not adopting the budget by December 31?
Reviewed: 12/13

Your jurisdiction is likely to get an audit finding.

State law requires that cities adopt a budget in its final form and content "prior to the beginning of the fiscal year" or "fiscal biennium." RCW 35.33.075, RCW 35.34.120, RCW 35A.33.075, RCW 35A.34.120. There is no similar language in the county budget statutes, but RCW 36.40.071 states that the final budget hearing must begin no later than the first Monday in December and RCW 36.40.070 provides that the hearing last no more than five days, after which the budget is adopted. In practice, the State Auditor's Office is happy if it is passed by December 31.

 

If no budget is passed before the fiscal year or biennium begins, the city or county will, legally, be unable to make any expenditures at all. Practically, essential police and fire department functions, at least, would need to be provided and the city or county would be spending illegally. We advise cities and counties to pass something. The budget can be amended in the coming year.

(Link to this question)

What procedures do we need to follow if we are planning to increase our property taxes?
Reviewed: 12/13


In addition to holding a hearing to discuss this increase, all taxing districts must pass a separate ordinance or resolution authorizing the increase in both dollars and percentage. RCW 84.55.120. This provision was added by the passage of Referendum 47 in 1997. You can write your own or download a form from the Department of Revenue Web site www.dor.wa.gov

(Link to this question)

Do cities and counties need to have public hearings on the preliminary budget?
Reviewed: 12/13

We believe that cities must have such hearings. RCW 35.33.057, RCW 35.34.090(2), RCW 35A.33.055, and RCW 35A.34.090(2) all provide:

 

Prior to the final hearing on the budget, the legislative body or a committee thereof shall schedule hearings on the budget or parts thereof, and may require the presence of department heads to give information regarding estimates and programs.

Because the statutes themselves make no reference to notice, it is likely that less cumbersome notice requirements are necessary for the preliminary budget hearings than for the final budget hearing. (Recall that for the latter, the statutes require that the clerk publish a notice of the final hearing during each of the first two weeks of November.)  RCW 35.22.288, RCW 35.23.221, RCW 35.27.300, and RCW 35A.12.160 require the council to "establish a procedure for notifying the public of upcoming hearings."

If a city council holds workshops at which citizens may comment and ask questions, it is likely that these workshops would satisfy the hearings requirement for the preliminary budget.

There is no such statutory requirement for counties. Only a final hearing on the budget is required. RCW 36.40.060, RCW 36.40.070, RCW 36.40.071. As a practical matter, citizens can listen to the commissioners deliberate budget matters during their meetings and, in most cases, contribute comments. This is not a hearing, but input is provided.

(Link to this question)

May a city differentiate in the gambling tax rate for punchboards and pull-tabs between commercial businesses and nonprofit organizations?
Reviewed: 12/13

Yes. This is clearly provided in RCW 9.46.110(3)(e). That statute provides that taxation of punchboards and pull-tabs for charitable or non-profit organizations is based on gross receipts from the operation of the games less the amount awarded as cash or merchandise prizes, and shall not exceed a rate of 10 percent.

In regard to commercial operators, the tax may be based on gross receipts from the operation of the games, and may not exceed a rate of five percent, or may be based on gross receipts from the operation of the games less the amount awarded as prizes, and may not exceed a rate of 10 percent.

(Link to this question)

Does the gambling tax lien authorized by RCW 9.46.110 apply to real property owned by a landlord if the individual operating the gambling business is the tenant?
Reviewed: 12/13

Probably. The lien authorized by RCW 9.46.110 for unpaid gambling taxes applies to the personal and real property used in the gambling activity. In a similar way, the lien authorized by RCW 35.67.200 for unpaid sewer charges applies to the real property, even if the service is provided to the tenant. It is not unusual to have government liens for unpaid services or taxes apply to the real property even if the services or taxes involve the tenant on the premises.

(Link to this question)

May a city tax satellite parimutuel horse racing?
Reviewed: 12/13

No. The statute that governs city and town gambling taxes (RCW 9.46.110) does not list parimutuel horse racing as an activity that a city may tax. In addition, the state preempts this area, in RCW 82.02.020, with regard to a B&O tax.

(Link to this question)

May a city or county expend funds to determine why the voters voted as they did in recently rejecting a city property tax levy or other tax increase?
Reviewed: 12/13

Yes. This would be a proper expenditure of unrestricted general fund revenues.

The proposed expenditure does not violate RCW 42.17A.555 which prohibits the use of the "facilities" (including funds) of a public office or agency to support or oppose a ballot proposition, because the ballot proposition in question (the property tax levy) has already been voted upon. Also, the proposed expenditure is neutral as to that proposition.

We are not aware of any other law or constitutional provision the proposed expenditure would violate. It has a proper municipal purpose - to determine why the voters voted as they did, presumably so that the city or county can determine what kind of a property tax levy the voters may in the future be willing to support. It goes without saying that a city or county may expend its funds to decide whether to place a levy before the voters and what that levy should ask for. This proposed expenditure would help the city or county make that decision.

(Link to this question)

We currently do a biennial budget and the city council is thinking about returning to an annual budget for 2015. What steps need to be taken to do this?
Reviewed: 12/13

Take a look at RCW 35A.34.040, which reads:

All code cities are authorized to establish by ordinance a two-year fiscal biennium budget. The ordinance shall be enacted at least six months prior to commencement of the fiscal biennium and this chapter applies to all code cities which utilize a fiscal biennium budget. Code cities which establish a fiscal biennium budget are authorized to repeal such ordinance and provide for reversion to a fiscal year budget. The ordinance may only be repealed effective as of the conclusion of a fiscal biennium. However, the city shall comply with chapter 35A.33 RCW in developing and adopting the budget for the first fiscal year following repeal of the ordinance.

So, it appears that all you need to do is to, effective December 31, 2014 (the last day of the 2013-2014 biennium), adopt an ordinance repealing the ordinance that adopted the biennial budget and start working on your annual budget, paying attention to all the provisions of chapter 35A.33 RCW.

(Link to this question)

Can the city provide fuel or funds to a community sponsored float?
Reviewed: 12/13

A city may provide fuel or funds for a float under certain conditions.

RCW 35.21.700 states:

Any city or town in this state acting through its council or other legislative body shall have power to expend moneys and conduct promotion of resources and facilities in the city or town, or general area, by advertising, publicizing, or otherwise distributing information for the purpose of attracting visitors and encouraging tourist expansion.

So, a city may spend general fund money for the purposes described. We are assuming, of course, that the float goes to festivals in surrounding communities and, thus, advertises the city.

A city may also spend hotel-motel tax money for float expenditures. RCW 67.28.1815 allows a city (or county) to spend hotel-motel tax funds for "tourism promotion" and RCW 67.28.080(6) defines "tourism promotion" as:

... activities, operations, and expenditures designed to increase tourism, including but not limited to advertising, publicizing, or otherwise distributing information for the purpose of attracting and welcoming tourists; developing strategies to expand tourism; operating tourism promotion agencies; and funding the marketing of or the operation of special events and festivals designed to attract tourists.

The city also would need a contract with the organization that is building and managing the activities of the float that specifies what it is going to do - where the float will be travelling, what expenditures city funds will be covering, etc. It will need to report back to you to show it fulfilled the contract.

In a municipality of at least 5,000 population, the LTAC receives all applications for lodging tax revenue and recommends a list of candidates and funding levels to the municipality’s legislative body for final determination.  The legislative body “may only choose recipients from the list of candidates and recommended amounts provided by the local lodging tax advisory committee.”

(Link to this question)

Are home-grown agricultural sales subject to sales tax?
Reviewed: 12/13

While it is true that the sale of home-grown fruits and vegetables does not require a local business license (see RCW 36.71.090), that does not necessarily mean that the sale is tax exempt. Here is an excerpt from the Department of Revenue’s Agriculture Tax Guide:

Retail Sales Tax

If the product sold at retail is not an exempt food product or is not otherwise exempt from sales tax, retail sales tax must be collected. (For more information, see sales and use tax exemptions.) Sellers that fail to collect and remit sales tax can be held liable for the tax. Sellers must collect the tax based on the rate in effect where the buyer receives the goods or services. The following are examples of agricultural products and other items sold by farmers that are subject to retail sales tax:

  • Turf
  • Flowers
  • Plants, including fruit and vegetable starts
  • Trees
  • Shrubs
  • Vines
  • Moss
  • Plantation or other Christmas Trees
  • Soap from goats’ milk
  • Candles
  • Decorative items
  • Hay/Haylage (feed) except sales for breeding animals registered with a nationally recognized breeding association are considered sales for resale and not subject to retail sales tax. To validate the wholesale sale, the animal owner must give a completed Farmers' Certificate for Wholesale Purchases and Sales Tax Exemption (Section 2 of the form) to the seller stating that the animal is registered with a nationally recognized breeding association and is used for breeding purposes.

Reference: RCW 82.08.020

(Link to this question)

What federal or state law says that cities may not tax the monthly fee paid by subscribers to satellite broadcast services?
Reviewed: 12/13

The federal Telecommunications Act of 1996, at 602(a), preempts all local government taxation of DBS services, except sales of equipment (such as satellite reception dishes). The exact wording of the federal statute is: A provider of direct-to-home satellite service shall be exempt from the collection or remittance, or both, of any tax or fee imposed by any local taxing jurisdiction on direct-to- home satellite service. The definitions of terms used in the above sentence are provided in 602(b) of the Act.

(Link to this question)

Do we need to have a hearing on revenue sources and possible property tax increases for the budget?
Reviewed: 12/13

Yes. In 1995, language was added to RCW 84.55.120 that provided that all taxing districts must hold a hearing on revenues and discuss any property tax increase. This hearing must be held even if your taxing district does not plan to increase property taxes.

If the only proposed increase in tax revenue will come from new construction and increases in state-assessed utility revenue, this increase should be discussed at the hearing.

(Link to this question)

What is the definition of "substantial need?"
Reviewed: 12/13

None is given in the statutes. Presumably, determination of substantial need will be unique for each jurisdiction.

(Link to this question)

Do cities and counties need to have a public hearing to amend the budget?
Reviewed: 12/13

It may be good public policy, but there is no statutory requirement for cities to have hearing. Counties, however, do need a public hearing for all "emergency" amendments made under RCW 36.40.140.

(Link to this question)

Can counties levy a local option fuel tax for local transportation improvements?
Reviewed: 12/13

Yes, the authority has been in place since 1990, through RCW 82.80.010. Any county may levy a local option fuel tax of up to 10% of the state motor vehicle fuel tax, currently $0.375 per gallon. The commission or council must first approve the measure and then have it approved by a majority of the voters. The proceeds are then distributed to the county and its cities and towns based on a formula where each county resident is given a weight of 1.5 and each city and town resident a weight of 1.0. For example, if there are 400 people in the unincorporated area, they would be counted as the equivalent of 400 x 1.5 = 600 people. If there are 300 people living in cities and towns, then the total "population" is 600 + 300 = 900. The county share would be 600/900 = 66.6%.

(Link to this question)

Does the proposed preliminary budget that the chief administrative officer (CAO) has to give to city council under RCW 35A.33.135 have to be balanced?
Reviewed: 12/13

We don't think so, although some city councilmembers might argue otherwise (and some CAOs wouldn't want to give the council something that wasn't balanced). If the city is strictly following the dates in the budget calendar, the CAO does not have time to balance the budget between the time he or she gets the proposed preliminary budget from the clerk (the first business day in October) and the first Monday in October when the proposed preliminary budget is to go to the council. As a practical matter, the CAO will have to give the council what he or she gets from the clerk. What the CAO would get from the clerk would most likely be revenue estimates and department requests, not a balanced budget document. The balancing gets done during the remainder of October and the preliminary budget is filed with the clerk no later than 60 days before the ensuing fiscal year. Note that cities can always start the budget process earlier than the dates given in the budget calendar.

For more information on these statutes, see the material we have excerpted from Budget Suggestions for 1996.

(Link to this question)

Can you charge the public for copies of the preliminary budget? The final budget?
Reviewed: 12/13

The statutes dealing with budgets are not clear on this issue.  For cities, RCW 35.33.055, RCW 35.34.080, RCW 35A.33.052, and RCW 35A.34.080 provide, in part:
The clerk shall provide a sufficient number of copies of such preliminary budget and budget message to meet the reasonable demands of the taxpayers . . .

And, RCW 35.33.061 and RCW 35A.33.060 require the clerk to publish a notice stating that a copy of the preliminary budget "will be furnished to any taxpayer who will call at the clerk's office therefor . . ."  RCW 35.34.100 and RCW 35A.34.100, dealing with biennial budgets, have similar language that states that a copies of the preliminary budget will be made "available" to taxpayers at the clerk's office. 

For counties, RCW 36.40.060 states, in part:

The county legislative authority shall then publish a notice stating that it has completed and placed on file its preliminary budget for the county for the ensuing fiscal year, a copy of which will be furnished any citizen who will call at its office for it . . .

None of the above statutes specify that a city or county may or may not charge taxpayers for copies of the preliminary budget.  While it is a reasonable interpretation of these statutes that they imply that copies should be provided at no charge, it is also reasonable to argue that, while cities and counties must make copies available at no charge for the public to review, the statutes must be more specific to require them to provide, free of charge, documents that they otherwise would have the authority to charge for.   Particularly in larger cities, it would be impractical from a financial standpoint to make an unlimited number of copies of what is typically a large document available for the taking at no charge.  MRSC recommends that cities and counties adopt a policy as to how they handle this issue.

As to the final budget, there are no statutes that address providing copies to the public.  So, cities and counties may provide copies under the same rules that they provide copies of other public records.   They can charge 15 cents a page (see RCW 42.56.120), if they have to copy it, or the price of printing it, whichever is less.

(Link to this question)

May a county provide services to another governmental entity without receiving any value in return?
Reviewed: 12/13

In most circumstances, the answer will be no. When one governmental entity provides equipment or services to another governmental entity, it needs to receive full value from the other governmental entity. This conclusion is based on RCW 43.09.210, which is sometimes referred to as the Accountancy Act and which provides in part as follows:

All service rendered by, or property transferred from, one department, public improvement, undertaking, institution, or public service industry to another, shall be paid for at its true and full value by the department, public improvement, undertaking, institution, or public service industry receiving the same, and no department, public improvement, undertaking, institution, or public service industry shall benefit in any financial manner whatever by an appropriation or fund made for the support of another.

This statutory language was discussed and interpreted in an Attorney General's Opinion, AGO 1997 No. 5:

From its context, RCW 43.09.210 might be read as affecting only transfers and transactions within a government (such as the transfer of a tractor from a city's street department to its park department). However, the Supreme Court decided, in State v. Grays Harbor County, 98 Wn.2d 606, 656 P.2d 1084 (1983), that this section also applies to transactions between two different governments. In the Grays Harbor County case, the Court found that, in the absence of some other statute providing otherwise, RCW 43.09.210 required the state to pay the same fees for filing documents with the county auditor that other parties were required to pay, because otherwise the county would, in effect, subsidize state government by providing 'free' services. Thus, RCW 43.09.210 provides a 'background' or 'default' rule that governments pay full value for transfers of property or services, except where the Legislature has otherwise provided."

That opinion later describes the "central purposes" of this statute as "making governments fully accountable for their property and assuring that the resources allocated by law to one government are not used to subsidize the activities of a different government."

There is some flexibility in what constitutes "full value." It does not have to be payment in money in all cases; for example, there may be a way to trade services, but there must be value received. There is a good discussion of the concept in AGO 1997 No. 5.

There are some limited exceptions to this general rule. For example, RCW 35.21.730 permits a city, town or county to transfer to any public corporation, commission, or authority created under that section, with or without consideration, any funds, real or personal property, property interests, or services. RCW 36.100.010 permits the legislative authority of a county to transfer property to a public facilities district created under chapter 36.100 RCW, with or without consideration.

In absence of such a specific statutory exemption, the general principle requiring full value must be followed.

(Link to this question)

Is a vote of the people necessary to impose or raise utility tax rates?
Reviewed: 12/13

If a city wants to levy a tax with a rate of six percent or less on an electric, gas, or telephone utility, council action is all that is needed. If a tax rate of more than six percent is proposed, then voter approval must first be obtained (RCW 35.21.870(1). Also, no rate change for the tax on these businesses may take effect until at least sixty days have elapsed following the enactment of the ordinance (RCW 35.21.865).

No vote is needed to raise the rate over six percent for other utilities such as water, sewer, stormwater and cable television.

MRSC recommends that every utility tax ordinance include a referendum clause. This is because a utility tax may be considered a business and occupation tax for which a referendum procedure is statutorily required, both when the tax is first imposed and when it is increased. If a citizen files a referendum petition with enough signatures, then a vote of the people is required for any utility tax rate action.

(Link to this question)

May the city tax direct satellite TV?
Reviewed: 12/13

No. Cities may not do this. Direct broadcast satellite television services are preempted from all local government taxation except for the sales of equipment, such as satellite reception dishes. This preemption is a federal one and is contained in the Telecommunications Act of 1996.
 

(Link to this question)

Does an interfund loan need to be approved by ordinance or resolution? What if the loan is from an enterprise fund to a governmental fund?
Reviewed: 12/13

You do need to pass an ordinance or a resolution to make an interfund loan. The ordinance or resolution should include all the procedures listed in the BARS Manual, Pt. 3, Ch.1, P.1.

You can, however, pass an ordinance (not a resolution) that sets out rules under which the mayor or city manager, as the case may be, may do some interfund loans without council approval. It would still need to set out the same procedures as set out in the BARS Manual, but it would also state that as long as, say, the loan was under $X thousand dollars, the city manager or mayor could make the loan without the explicit approval of the council. Or, it may state that the city manager or mayor can make the loan only if it is for less than some time period (Y months) to cover a fund's cash flow needs. The ordinance should state that the city manager or mayor will make a report to the city council of all interfund loans made within _____ (insert here whatever time period you want).

There are no special rules for loans from enterprise funds to a governmental fund.

(Link to this question)

What process must a city use to accept a donation?
Reviewed: 12/13

Every city and town in the state has the authority to accept donations. There is no specific process set out in state law, and a public hearing is not required before the donation can be accepted.

RCW 35.21.100 provides:

Every city and town by ordinance may accept any money or property donated, devised, or bequeathed to it and carry out the terms of the donation, devise, or bequest, if within the powers granted by law. If no terms or conditions are attached to the donation, devise, or bequest, the city or town may expend or use it for any municipal purpose.

Although this language can reasonably be interpreted to mean that a city must pass an ordinance to accept each and every donation it receives, many cities interpret it to mean that the city must establish by ordinance a procedure for accepting donations. Some cities authorize a particular city official, such as a clerk-treasurer or city manager/administrator, to accept donations on behalf of the city. Others provide that the council will do so, and, unless specified, that could be done by motion or resolution.

In the absence of a delegation of authority to accept donations, we recommend, at a minimum, that the city council pass a motion or resolution accepting the donation.

(Link to this question)

Is a city or county exempt from the real estate excise tax when purchasing real property?
Reviewed: 12/13

No. A sale of city or county real property is exempt from the real estate excise tax because such a sale is not included within the definition of "sale "for real estate excise tax purposes. However, in 1993, the legislature eliminated the same exemption for purchases of real property by a city, county, or other governmental entity. Purchases of real property (other than those by condemnation) by a city or county are thus subject to the tax.

(Link to this question)

Can the real estate excise tax be levied even though the city or county is not yet allowed to spend it?
Reviewed: 12/13

Yes. The tax can be levied and placed in a municipal or county improvements fund until the city or coutny completes the capital facilities element of its comprehensive plan.

(Link to this question)

Does MRSC have some sample lodging tax application forms?
Reviewed: 12/13

We found several lodging tax applications that might be useful to you: 

(Link to this question)

Can a city or town give a third party a "power of attorney" over part of their investment portfolio?
Reviewed: 12/13

No, says the state auditor's office. An investment firm was proposing that a city give it control over the portion of the city's portfolio that was not needed on a short-term basis. The firm would make trades without conferring with the city and send it monthly reports. The auditor says even though all of the investments are going to be made in authorized investments as listed in chapter 39.59 RCW, the investments must be made by city officials.

(Link to this question)

May the city or county offer a prize of $100 for the best motto for the city? May a city or county award cash prizes to employees as incentives?
Reviewed: 12/13

Yes, if the legislative body establishes the amount of the prize, and it is reasonable in view of the goal of the contest. It is not a gift of funds because the city receives value for the rights to the motto, logo, or other product of the contest.

Yes, if such a policy is established by the legislative body. The policy should include a description of the basis on which the city will make the awards, the process by which such awards will be made, and a description of the type of award to which the employee will be entitled.

Note that these payments are considered wages for income tax purposes and are subject to withholding and deductions for social security and Medicare. 

(Link to this question)

May cities spend money on hosting and gifts related to sister city visits?
Reviewed: 12/13

No, this would be an unconstitutional gift of public funds. Although article 8, section 8 of the state constitution permits port districts to do promotional hosting, there is no similar authority for cities. Consequently, a city’s provision of meals, gifts, and the like to private individuals under a sister city program would violate article 8, section 7 of the state constitution, which prohibits cities from making a gift of public funds. An Attorney General Memorandum (August 30, 1999, No. 13), from Mary Jo Diaz, Asst. Attorney General, to Karen Stromme, King County Audit Manager addresses this issue in more detail.

Also, note that not only is a city prohibited from spending its funds on such activities directly, they also cannot do so indirectly by donating moneys to a private organization that is hosting a sister city.

(Link to this question)

Must a city or county pay finance charges?
Reviewed: 12/13

Yes, if it does not pay a bill within 30 days. RCW 39.76.011(1) says, in part:

...every state agency, county, city, town, school district, board, commission, or any other public body shall pay interest at a rate of one percent per month, but at least one dollar per month, on amounts due on written contracts for public works, personal services, goods and services, equipment, and travel, whenever the public body fails to make timely payment.

(Link to this question)

May a city pay for placement of large flower pots along the sidewalks of a private shopping center?
Reviewed: 12/13

A city has the authority to beautify the public sidewalks in the commercial district of the city. However, although the beautification purpose is the same, city funds may not be used to enhance the appearance of the private shopping center. The shopping center is responsible for doing its own beautification. Note that hotel-motel tax money may not be used for beautification.

(Link to this question)

May a city or county spend municipal funds on Christmas cards?
Reviewed: 12/13

MRSC's legal staff has generally taken the position that it is probably not an appropriate use of public funds, and that such an expenditure might be questioned by the State Auditor. Spending public funds for this purpose would probably be a violation of Article I, Section 11 of the Washington State Constitution, which provides that public money shall not be appropriated or applied for any religious worship or the support of any religious establishment. Sending Christmas cards is not a proper municipal function and does not accomplish an appropriate municipal purpose.

(Link to this question)

Is labor on street project subject to sales tax?
Reviewed: 12/13

No. Although the retail sales tax is imposed upon each retail sale in this state (RCW 82.08.020(1)), the terms "sale" and "sale at retail" and "retail sale" exclude the charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right-of-way, mass public trans-portation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state and which is to be used primarily for foot or vehicular traffic.

(Link to this question)

Must sales tax be paid on construction of pathways in a park project?
Reviewed: 12/13

Yes. RCW 82.04.050(8) provides an exemption from the sales tax for labor and services used for a sidewalk or pedestrian path within a street right-of-way. Pathways within a park are not exempt from sales tax.

(Link to this question)

What should be in the advertisement for a city public works project?
Reviewed: 12/13

The advertisement in the newspaper should include, as a minimum, the following items:

1. Title of project.

2.  Nature and scope of the work to be performed.   Materials and equipment to be furnished.

3.   Statement of mandatory contractor criteria and notice of any supplemental criteria under RCW 39.04.350.

4.   Where contract documents (plans and specifications) may be reviewed and/or obtained, including the URL of any electronic posting. 
5.   Cost, if any, to obtain a set of contract documents, or instructions for downloading or printing electronic documents.

 6.   The time after which bids will not be received.

 7.   The place, date, and time set for opening of the sealed bids.

 8.   Requirements for an accompanying bid bond.

 9.   Statement that the city retains the right to reject any and all bids and to waive minor irregularities in the bidding process.

(Link to this question)

Must the bid opening for a public works project be public?
Reviewed: 12/13

The bidding statutes do not specifically require that bid openings be public. However, many cities have ordinances that require all bid openings be public, and most bid packets contain information sheets stating that bids will be opened at a certain time and place. Opening bids in public helps assure all parties that the procedures are fair.

(Link to this question)

If the lowest bidder on a project on the small works roster withdraws his bid, may a city or county use the next lowest bidder?
Reviewed: 12/13

Yes, this does not violate the bid law in any way.  It is not necessary to start over soliciting bids if there is another available bidder. The city or county may contact the next low bidder and award the contract. The city or county should document that the low bidder withdrew voluntarily.

 

(Link to this question)

Who has the authority to negotiate a contract on behalf of the city, the council or the mayor?
Reviewed: 12/13

There is no statute that clearly defines who has contract negotiation authority. Since a city council has the ultimate authority to approve city contracts, the council also has the power to deal with the details of contracts. Though many councils frequently authorize the mayor/city manager/administrator to conduct contract negotiations, there is no statute that prohibits a council from taking over that role.

(Link to this question)

May a city or county reform a defective low bid when the bid contains an error (bid would be low bid regardless of error)?
Reviewed: 12/13

No. The choices available to the city or county are:
  • Allow the bidder to escape performance under the defective bid by withdrawing the bid. The city or county would then award the contract to the next lowest bidder. (If the city or county was contacted immediately, the error was apparent, and there is no detriment to the city or county, the bidder would not be liable to the city or county); 
  • If the bidder is willing to proceed with his bid regardless of the error (or if the bidder takes action inconsistent with withdrawal of the bid), the city or county may award its contract to the low bidder; or
  • Reject all bids. 

The city or county may not now reform the bid, by correcting the error and allowing the corrected bid to be considered along with the other bids. Courts will generally refuse to reform a bid or contract, as to do so would be contrary to the general concept of competitive bidding.

However, if the bid solicitation used the WSDOT Standard Specifications for Road, Bridge, and Municipal Construction, Sec. 1-03.1 of that document provides that the contracting agency will check the bids for correctness of extensions of the prices per unit and the total price; it provides:

If a discrepancy exists between the price per unit and the extended amount of any bid item, the price per unit will control.  The total of extensions, corrected where necessary, will be used by the Contracting Agency for award purposes and to fix the amount of the contract bond.

(Link to this question)

Who should be signing contracts on behalf of the city in council-manager cities?
Reviewed: 12/13

There is not a specific statute in the council-manager plan that designates specifically who should sign contracts. The statutes relating to the city manager form of government do provide that the city manager is to have general supervision over the administrative affairs of the city. We would expect signing contracts to be part of the duties as chief administrative officer. Remember that the mayor in this form of government serves as ceremonial head of the city but not the administrative head.

Nevertheless, it probably would be best for the council to clarify this in a resolution so there is no doubt. RCW 35A.13.080 provides that the role of the city manager is to perform such other duties as the council may determine by ordinance or resolution. If this is causing confusion, the council should provide clarification in a resolution.

(Link to this question)

Must the city council approve the award of a contract for a public works project that costs about $300,000 and for supplies and equipment that will cost over $7500?
Reviewed: 12/13

As general background, the council is the body within a city that has general authority over the award of all contracts, whether for a public works contract or for a purchase of supplies or equipment. So, the authority to award a bid - which precedes the actual contract - rests with the city council. I would expect the council to follow this approach when awarding large contracts. So the award of a bid on a public works contract that is worth $300,000 or on an expensive purchase should be first approved by the city council.

However, the council may delegate to an administrative officer the authority to enter into contracts below a certain amount without prior council approval (this assumes the contract is within the appropriate budget appropriation). Some cities have, for example, applied such a delegation to purchases costing under $10,000 or to an even higher amount. This should be done expressly in a council resolution, in the city's purchasing policy, or the like, that specifically indicates the monetary limits of that delegation.

(Link to this question)

May the city postpone work on a contract after the bid has been awarded?
Reviewed: 12/13

Yes, if the bid laws have all been properly followed and the contractor is willing to complete the project on the same terms at the same price at a later date. In this case, both parties agree that, due to the current weather conditions, it would be better to wait until spring to begin work on the project.

(Link to this question)

Can a library charge user fees for services provided to non-residents?
Reviewed: 11/13

Yes. AGO 1992 No. 31 reviews this issue, noting that basic library services must be provided free of charge to residents of the political jurisdiction which supports the library through taxation. The corollary is that public libraries can charge user fees to those who do not live within the jurisdiction which provides the tax revenues to pay for the library. In fact, if a public library provides services to non-residents without charging a fee, an argument can be made that the library is violating the "gift clause" of the state constitution. Libraries can charge for ancillary services such as copying machines, phones, fax machines, etc. - that issue is also covered in the AGO.

(Link to this question)

Can cities still use REET 1 and 2 revenues for debt service on capital projects?
Reviewed: 10/13

Judy Cox, MRSC Finance Consultant, wrote this article as a post on the MRSC Insight blog updating MRSCs information on the use of REET 1 and 2 funds as a result of the 2011 legislation: You May Need to Amend Your Real Estate Excise Tax Ordinances. At the end of this blog post see this footnote which should answer your question:

[2] Note that since REET 1 was first authorized in 1982, cities and counties have been able to spend REET 1 revenues for debt service on projects eligible for the use of REET 1 revenues. And, cities and counties have been able to spend REET 2 revenues for debt service on projects eligible for the use of REET 2 revenues since it was introduced in 1990. What is new in this legislation is that counties (and counties only) may spend REET 2 revenues on existing debt service for projects that are eligible for the use of REET 1 revenues - those listed in RCW 82.46.010(6). Yes, it is confusing. (emphasis added)

Based on this we believe there should be no change in the city's use of REET 1 and REET 2 funds for debt service. All the legislation did in this instance was to allow counties to use REET 2 funds for debt service on REET 1 eligible projects.

(Link to this question)

Is a gift to a city or county or special purpose district tax deductible?
Reviewed: 03/13

A gift to a city, county, or other political subdivision is tax deductible if it is made solely for "public purposes." The IRS Code, at 26 U.S.C.170(c)(1), defines a "charitable contribution" (which is tax deductible) to include "a contribution or gift to or for the use of ":

A State, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.

It will, of course, depend upon the circumstances of a particular gift as to whether it was made for public purposes.

The Internal Revenue Service will issue a "government affirmation letter" upon request. This letter describes the government entity exemption from federal income tax and cites applicable Internal Revenue Code sections pertaining to deductible contributions and income exclusion.  Most organizations and individuals will accept the government affirmation letter as the substantiation they need. To get such a letter, call the IRS Tax-Exempt/Government Entity Cincinnati Call Site at 1-877-829-5500.

(Link to this question)

Is snow plowing and de-icing of city streets subject to sales tax?
Reviewed: 02/13

We think the snow plowing and de-icing would both come within the sales tax exemption for labor and services regarding a street work, under RCW 82.04.050(10) and WAC 458-20-171. The statute states:

The term does not include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind.

The regulation elaborates and defines the term "building, repairing or improving of a publicly owned street, place, road, etc.," to include "clearing, grading, graveling, oiling, paving and the cleaning thereof." Snow plowing and de-icing could fall within either or both "clearing" or "cleaning."

(Link to this question)

May a local government deposit funds in a credit union?
Reviewed: 02/13

Yes, a local government may deposit funds in a credit union if the credit union is a qualified public depositary as is required by chapter 39.58 RCW. However the amount the local government deposits is limited by RCW 39.58.240 to no more than the maximum deposit insured by the National Credit Union Share Insurance Fund. Currently that amount is $250,000.
 

(Link to this question)

When should known unencumbered cash carry-overs be reflected in the budget under consideration for the ensuing year?
Reviewed: 01/13

Ideally, the sooner the better. There will always be some variance between the estimates of ending cash balance and the actual cash balance at the end of the year simply because of the timing of invoices from vendors, any unexpected expenses near the year-end, or expected expenses that are not incurred. With that understood, however, if the funds are unencumbered, they should be shown as early as practical since they are part of the revenue available for the next year. This is obviously more important if the amounts are significant and less so if they fall within the plus or minus amounts that may be needed to finish the year. This is where it helps to work closely with department directors and managers to estimate as accurately as possible what they'll need to close out the year.

So, the short answer is that, if the amount of cash is significant, I would show it sooner rather than later. This also demonstrates transparency and reduces the likelihood of having to explain a big discrepancy between a low estimated ending cash balance and a higher actual beginning cash balance.

(Link to this question)

May mayor use a signature stamp to sign warrants?
Reviewed: 01/13

Yes, the mayor may use a signature stamp to sign warrants (or checks), if the provisions of the "Uniform Facsimile Signature of Public Officials Act," contained in chapter 39.62 RCW, are followed. This act requires that the mayor or other "authorized officer" must file with the secretary of state his or her manual signature before a facsimile signature (e.g., signature stamp) may be used on a "public security," such as a bond or note, or an "instrument of payment," such as a warrant or a check. An "authorized officer" is defined as an official whose signature on a public security or instrument of payment is required or permitted.

However, if the mayor's signature is to be the only signature on the warrant, then it must be entered manually. RCW 39.62.020(1).

(Link to this question)

 more