April 3, 2015
LEAD: Legislative Education, Advocacy & Direction
2015 Edition 5

Week 12 at the Legislature

Substantive bill committees are wrapping up the last of their hearings for the 2015 session.   There are not many bills moving through the process this year, although a large number were introduced – about 2,400.   The tight margins between the majority and minority parties in both chambers of the Legislature were the likely cause of slow moving parts.

Bills must have the blessing of both parties to survive this year since the Republicans control the Senate and the Democrats control the House.   In the end, only a few bills remain on the Legislative Committee’s tracking sheet.

*NEW BILL* ‘Promoting economic recovery in the construction industry’

One of the most notable land use bills in 2015 is the Senate Bill 5923 (Report).   As amended, this bill will do the following:

  • Obligates counties, cities, and towns to adopt deferral systems for the collection of impact fees from applicants for residential building permits through a covenant-based process, or through a process that delays payment until final inspection, certificate of occupancy, or an equivalent certification.
  • Authorizes counties, cities, and towns to adopt alternative impact fee collection deferral systems if certain criteria are met.
  • Exempts counties, cities, and towns that have pre-existing impact fee delay processes meeting certain requirements from the obligation to establish a new impact fee deferral system.
  • Delays the start of a six-year time frame for satisfying concurrency provisions of the Growth Management Act (GMA) until after the county or city receives full payment of all deferred impact fees. 

The Budget

The budget proposals are being unveiled.  The House proposal depends on over $1.5 billion of new revenue and partially funds the latest class size initiative 1351.   The budget bill and the summaries can be found HERE. The House Appropriations Committee will hear the budget bill, PSHB 1106 on Monday, March 30th.  

As mentioned above, the House proposal relies on new revenue sources.

Here they are:

•   5% tax on capital gains on investment income over $50,000 for couples and $25,000 for individuals. The proposal exempts retirement funds, sales of permanent residence, and agriculture and timber producers. It is estimated to affect 31,500 Washington residents and generate $550 million.

•   Increase Business and Operation (B&O) rate on services from 1.5% to 1.8%, while providing an enhanced small business B&O tax exemption. The B&O increase is estimated to generate $530 million.

•   Eliminate the seven existing tax exemptions, generating $272 million. These include:

  • Preferential B&O for travel agents and tour operators ($14.3 million)
  • Preferential B&O rate for resellers of prescription drugs ($34.6 million)
  • Preferential B&O for royalties ($42.5 million)
  • Use tax exemption for extracted fuel, except hog fuel ($30.3 million)
  • Refund of state portion of sales tax to nonresidents ($51.5 million)
  • Sales tax exemption on bottled water ($44.4 million)
  • Real Estate Excise Tax (REET) exemption on foreclosure sales by lenders ($81.9 million)

•   Capture sales and B&O taxes on sales into Washington by out-of-state businesses and on-line retailers. The proposal is similar to the Federal Marketplace Fairness Act proposal. The proposal will generate approximately $85.2 million for the state and $30 million for cities and counties.

•   The House revenue proposal does not include a carbon charge.

The Senate is expected to release its budget proposal by the end of this week.  And ‘rumor has it’, don’t rely on any new revenue.   The contrast between the two approaches does not bode well for forwarding a budget everyone agrees on, to the Governor by the end of the regular session – April 26th.

If you have any questions about the Chapter’s Legislative Committee, please contact Josh Peters or Esther Larsen, the LC Co-Chairs. Have questions or ideas for this bulletin? Contact: Leila Willoughby-Oakes, LEAD Editor.

American Planning Association, Washington Chapter
office@washington-apa.org • 206-682-7436 • www.washington-apa.org