Finance-Related Legislation Passed During The 2019 Session
May 21, 2019
Category: Finance , New Legislation and Regulations
Each year at this time (after the legislature has adjourned), we evaluate and assess the various bills the legislature passed, and the governor signed—and note if there were portions of the bill that were vetoed. My focus will be on those bills that have fiscal impacts, such as increased and/or decreased uses, new resource capabilities, or other items that will ultimately impact the development of your budget or the delivery of services.
While there were numerous bills presented to the legislature there are only a handful that will have direct fiscal impacts and many others that will indirectly impact municipalities. For example, the state budget provides for additional law enforcement training, from providing funding for temps while the officers are at the academy for those jurisdictions with 10 or fewer patrol officers to providing funding for the Washington Association of Sheriff & Police Chiefs (WASPC) to administer a proactive policing grant program for local law enforcement.
Here are some of the recently passed bills.
Increased Use or Authority to Increase Taxes
Emergency communication systems
ESSB 5272 – Emergency Communication Systems and Facilities – Local Sales tax rate amends RCW 82.14.420(2) by increasing the maximum rate from 0.1% to 0.2% with voter approval.
This county authority to impose a sales tax for E-911 services has been voter approved in 19 of the 29 counties. For those counties with a current E-911 tax in place it will require a vote to increase from 0.1% to 0.2%.
Pre-LOEFF pension funds
SSB 5894 – Firefighters’ Pension Levy amends RCW 41.16.060, which provides for pension funding of pre-LEOFF firefighters under the Firefighters’ Relief and Pensions – 1947 Act (Chapter 41.16 RCW) and expands use by adding a new subsection (4) to allow for increased use of levy provisions provided within the statute for LEOFF 1 medical benefits.
Currently the statute provides for a levy of $0.225 cents per thousand of assessed value against all the taxable property within those jurisdictions that have pension obligations under the 1947 Firefighters’ Relief & Pension act. SSB 5894 adds a new subsection (4) wherein if a municipality no longer has any beneficiaries receiving benefits the levy may be used for payment of benefits under RCW 41.26.150 (1), which are LEOFF 1 medical benefits or other municipal purposes. However, subsection (4) goes on to state that the additional levy must be annually expended for those LEOFF 1 medical benefits provided in RCW 41.26.150 (1) prior to being spent for any other purpose.
Last year there were 45 jurisdictions with Pre-LEOFF pension funds (43 cities and 2 fire districts).
Affordable housing/homelessness projects
EHB 1219 – Real Estate Excise Taxes extends use to affordable housing and homelessness projects by amending RCW 82.46.035 (REET 2) and RCW 82.46.037 (REET 2-Maintenance).
This bill removes the ‘housing for the homeless’ previously placed in RCW 82.46.037(1)(b), and now expands and places the definition in RCW 82.46.035 by adding new subsections to RCW 82.46.035(5). These subsections break down the definition of capital projects into three distinct groups within subsection (5). They are subsections (a), (b) and (c). All three of these new subsections speak to ‘capital projects’ definitions that allow for the use of REET 2 revenues.
The most significant change to the statute is the inclusion of subsection (c), which adds homelessness and affordable housing projects, and while there are no changes to the original definition of capital projects provided in the REET 2 statute (RCW 82.46.035), it’s interesting to note the separation of this definition into categories between transportation, water, storm and sewer infrastructure, and parks. Here are the three new subsections for REET 2 allowed projects:
- RCW 82.46.035(5)(a): Planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets, roads, highways, sidewalks, street and road lighting systems, traffic signals, bridges, domestic water systems, storm and sanitary sewer systems
- RCW 82.46.035(5)(b): Planning, construction, reconstruction, repair, rehabilitation, or improvement of parks; and
- RCW 82.46.035(5)(c): Until January 1, 2026, planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of facilities for those experiencing homelessness and affordable housing projects.
Additionally, the bill adds subsections (6) and (7), which provide some limitations and reporting requirements for the use of REET 2 monies for affordable housing and homelessness projects as defined in subsection (5)(c). These new subsections are the same requirements that were in RCW 82.46.037. In summary, these new subsections require:
- “A county or city may use the greater of one hundred thousand dollars or twenty-five percent of available funds, but not to exceed one million dollars, for capital projects as defined in subsection (5)(c)” (i.e.., affordable housing and homelessness projects).
- The limits do not apply to any county or city that used revenue under this section for the acquisition, construction, improvement, or rehabilitation of facilities to provide housing for the homeless prior to June 30,2019.
- A county or city using funds for uses in subsection (5)(c) must document in its capital facilities plan (RCW 36.70A.070(3)) that it has funds during the next two years for capital projects in subsection (5)(a) of this section (see above).
It should be noted that while the Governor vetoed a portion of this bill, the veto was only applicable to Section (1) of EHB 1219, which provided a description of legislative intent. There was not impact on the allowance for use of REET 2 monies for homelessness and affordable housing.
All bills discussed above are effective July 28, 2019.
Our office will continue to review and assess the numerous bills as well as the state budget, which was recently adopted by the 2019 legislative session. The 2020 Budget Suggestions publication will be released in the second half of July and it will speak to state shared revenues. We will automatically update our newly published Revenue Guides for Cities/Towns and Counties to incorporate the changes discussed above, and as well as any other bills that we discover during this period of legislative analysis.
Our public works consultant Judy Isaac is preparing both a blog and webinar to speak to the many changes impacting your purchasing and contracting projects. There will be more to follow from her and from all of MRSC's in-house consultants. In the meantime, should you have any questions, please do not hesitate to contact me with your finance questions at firstname.lastname@example.org or online at Ask MRSC.
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