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Updated Revenue Forecasts for Motor Vehicle Appropriations and Marijuana Tax Distributions


October 7, 2015 by Toni Nelson
Category: Revenues

The first distribution of new state shared revenues was made by the Office of the State Treasurer (OST) last week and boy, what a flurry of inquiries that generated! So much so that I thought it best to send out a blog to help explain what the numbers are telling us.

Question 1: What is MVA-City and MVA-County and where should I be recording this income?

As we explained in the 2016 Budget Suggestions publication, ESSB 5987, the transportation package, provided a new revenue source for cities and counties that is in addition to the motor vehicle fuel tax revenues that are received each month by cities and counties. The bill added Section 331, which provides for a direct distribution in the 2015 – 2017 state biennium of $11,719,000. This direct distribution comes from two different sources:

  • Motor Vehicle Fund in the amount of $5,469,000.
  • Multimodal Fund in the amount of $6,250,000.

These combined sums will be shared equally between cities and counties and are to be distributed each quarter of the biennium. Cities will share the direct distribution on a per capita basis and counties will have their half distributed based upon the formula currently used for the distribution of the motor vehicle fuel tax revenues. All of the funds being distributed are restricted to expenditure for transportation purposes (RCW 46.68.070, 47.30.030, 47.66.070).

You’re probably wondering why I’m going into so much detail over the source of this distribution. Well, the reason is that somehow the multimodal funds did not get appropriated in the transportation budget and therefore the distribution received by both cities and counties last week is from the Motor Vehicle Fund portion only. So what does this mean? Well the consensus is that the multimodal funds will be put into the supplemental transportation budget once the legislature reconvenes and that the September and December 2015 distributions will be made in 2016.

We have revised our revenue forecasts in our Budget Suggestions publication to reflect these changes. Per capita revenues for cities and towns from the 2015 gas tax ESSB 5987 (Table 4, Row 2) are now:

  • For fiscal year 2015:  $0.31  (down from $0.65)
  • For fiscal year 2016:  $1.62  (up from $1.28)

Counties should have received their distribution formulas from CRAB.

Question 2: What will the marijuana excise tax distributions be and will there be restrictions on its use?

As I stated in the Budget Suggestions publication, we were unable to provide a revenue forecast due to the methodology established by HB 2136, Section 1603 that provided for a maximum appropriation of $6,000,000 for cities and counties that is ratably based upon sales from the prior year. The sales from last year have now been provided to the OST and the distributions received by all cities and counties on September 30 shall remain the distribution amount that will be received each quarter for the first year of the state biennium. Sub-section (d) of HB 2136, Section 1603 states that “by September 15 of each year, the state Liquor and Cannabis Board must provide the state treasurer with the annual distribution amount, if any, for each county and city.” Therefore, the distribution amounts for the second year of the state biennium will be released next September. For those receiving the tax, you will now have a revenue forecast number for the first half of the 2016 budget year which is more than we had before. Estimating the second half of 2016 could be a bit tricky depending upon the activity within your jurisdiction.

As for the use of these funds, HB 2136, Section 101 states in part, "The legislature further intends to share marijuana tax revenues with local jurisdictions for public safety purposes and to facilitate the ongoing process of ensuring a safe regulated marijuana market in all communities across the state."

This is the only language that we see in the bill that speaks to the use of this new state shared revenue and therefore it is our opinion that the monies can be deposited into the general/current expense fund where public safety appropriations typically occur.

About Toni Nelson

Toni has over 24 years of experience with Local Government finance and budgeting. Toni's area of expertise include "Cash Basis" accounting and reporting, budgeting, audit prep and the financial issues impacting small local government.

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