2010 Legislative Summary

Property Tax Bills – Passed in 2010 Regular Session

E2SHB 1597 Improving the administration of state and local tax programs
SHB 2402 Property owned by nonprofit organizations used for a farmers market
HB 2406 Joint Legislative Audit and Review Committee technical corrections
ESHB 2776 Funding distribution formulas for K-12 education
SHB 2893 Changing school levy provisions
SHB 2962 Electronic bill presentment and payment
SHB 3066 Creating uniformity among annual tax reporting survey provisions
ESSB 6143 Relating to revenue and taxation
ESSB 6241 Creating community facilities districts
SSB 6271 Annexations by cities and code cities located within the boundaries of a regional transit authority
ESB 6287 Disposition of existing voter-approved indebtedness at the time of annexation of a city, partial city, or town to a fire protection district
SSB 6379 Streamlines vehicle and vessel registration and title provisions
SB 6418 Cities and towns annexed to fire protection districts
E2SSB Infrastructure financing for local governments
SSB 6712 Extends expiring tax incentives for certain clean alternative fuel vehicles, producers of certain biofuels, and federal aviation regulation part 145 certificated repair stations
ESSB 6737 Property tax exemption for aircraft used to provide air ambulance service
SB 6855 Exempting community centers from property tax and imposing leasehold taxes on such property

E2SHB 1597 On July 1, 2008, Washington came into full compliance with the Streamlined Sales and Use Tax Agreement (Agreement) and became a full member state on the Streamlined Sales Tax Governing Board. Current law requires the Department of Revenue to "propose legislation as may be necessary to keep Washington in compliance with the agreement." Currently there are changes to state law necessary to incorporate the Agreement's definition of retail sale.

The purpose of this bill is to improve the administration of state and local taxes by providing greater clarity relating to confidentiality and disclosure of tax information, being in compliance with the Agreement, eliminating obsolete provisions, and correcting technical errors. The confidentiality of taxpayer information is protected by state law. The protected information may only be disclosed in certain circumstances as provided in law.

As the Department administers excise and property tax programs, technical errors are discovered in current law that need to be corrected and obsolete language that should be removed. This bill makes various technical changes and removes obsolete language. The changes respective to property taxation affect the following programs;

Current Use

Grammatical corrections are made to the current use program, and references to surviving domestic partners are included.

Nonprofit Exemptions

An outdated cross reference defining daycares is updated. The definition contained in the cross reference was inadvertently moved by the Code Reviser from a DSHS statute to the Department of Early Learning without updating our exemption statute. This bill corrects that reference. Additionally, an updated cross-reference for hospital districts is added to include Harborview Hospital.

Senior Exemptions

The bill allows DOR to update the definitions of "disability" and "service-connected disability" by rule when federal definitions are updated. This change allows us to update our definitions when they change at the federal level. The renewal requirement for senior/disabled exemptions is changed from every 4 years to every 6 years to allow more flexibility by the assessors in how frequently exemptions are reviewed.

Limited Income Deferrals

The bill clarifies that only 2nd half taxes can be deferred, and that senior and limited income deferrals cannot be claimed in the same year. These clarifications correspond to our rules for this program. Additionally, the 2011 review of the limited income deferral program will be conducted by the Citizen's Commission for Tax Preferences, instead of by the Joint Legislative Audit Review Committee.

Levies, Collections, and Appeals

This bill makes several technical changes to statutes concerning property taxation such as removing inaccurate references to terms and inaccurate cross-references. For example, "shall" has been replaced with "must" in several statutes. The phrase "October session" has been removed as a reference for officials or boards to levy property taxes in RCW 84.52.030, making the November 30th reference a consistent date reference. The reference to "mills" has been replaced with "cents" in RCW 84.52.080 as a consistent reference. RCW 84.55.080 has been repealed as this statute is no long used in tax increment financing law. Language is clarified in RCW 84.48.050 concerning the abstract of the tax rolls of the county.

SHB 2402 Under current law, up to one acre of land owned by a nonprofit organization to operate a public assembly hall or meeting place is exempt from property taxation, as long as the property is used exclusively for public gatherings and is available for use by all organizations or persons. Churches have a property tax exemption which requires the exempted property to be used for church purposes only.

This law allows churches and nonprofit public assembly halls or meeting places to use the exempted property for activities related to a farmers market for 53 days a year and continue their property tax exemption. Income from the rental income is to be used for maintenance and operation of the property. Public assembly halls and meeting places may also use the income for capital improvements and exempt purposes.

A qualifying farmer's market means an entity that sponsors a regular assembly of vendors at a defined location for the purpose of promoting the sale of agricultural products with:

  • at least 5 vendors who are farmers selling their own products,
  • the total annual sales of venders who are farmers exceeds the total of vendors who are processors or resellers,
  • the total annual sales of vendors who are farmers, processors, or resellers exceeds the total annual sales of vendors who are not farmers, processors, or resellers,
  • imported items and secondhand items are prohibited, and
  • no vendor is a franchisee.

The bill applies to property taxes levied for collection in 2011 through 2020 and these changes would expire December 31, 2020.

HB 2406 This bill extends its broad authority and access to state government books, records files and accounts and extends this access and authority to local government as well. The authority provided includes the ability to administer oaths, issue subpoenas, compel attendance of witnesses and the production of any papers, books, accounts, documents and testimony. This authority also provides access to confidential records needed to discharge JLARC's performance audit duties, however any confidential records requested does not change their confidential nature.

The Joint Legislative Audit and Review Committee (JLARC) is a joint legislative committee that works to make state government operations more effective, efficient, and accountable. The Committee is comprised of an equal number of House and Senate members, Democrats and Republicans.

JLARC pursues its mission by conducting performance audits, program evaluations, sunset reviews, and other analyses. Assignments to conduct studies are made by the Legislature and the Committee itself. Based on these assignments, JLARC's non-partisan staff auditors, under the direction of the Legislative Auditor, independently seek answers to audit questions and issue recommendations to improve performance.

This bill takes effect on June 10, 2010.

ESHB 2776 This bill addresses funding distribution formulas for K-12 education and creates a working group, which requires DOR participation and support. The local funding working group is convened by April 1, 2010, and must report to the Legislature by June 30, 2011. The group is convened by OFM by April 1, 2010, and the deadline to report to the Legislature is extended from the current December 1, 2011 to June 30, 2011.

The duties of the working group are not specifically specified in this bill but the group is tasked with examining local school district facility capacity in order to phase in full day kindergarten and reducing K-3 class sizes; and provide the Quality Education Council with analysis on the use of local funds that may become available as a result of increased state allocations for pupil transportation and maintenance, supplies and operating costs.

SHB 2893 The legislature recognizes that school districts request voter approval for two-year through four-year levies based on their projected levy capacities at the time that the levies are submitted to the voters. It is the intent of the legislature to permit school districts with voter-approved maintenance and operation levies to seek an additional approval from the voters, if subsequently enacted legislation would permit a higher levy. This bill modifies school levy allocations and extends I-728 and I-732 base through 2017. Increases maximum levy percentage from 22 to 24 percent in 2010, 28 percent from 2011 through 2017, and 24 percent therafter. Allows additional funding for local school districts by:

  • Adjusting the levy base for local districts to restore funding for I-728 & I-732;
  • Increasing the levy authority percentage to 28% for 2011 – 2017;
  • Allowing school districts to impose additional concurrent M&O levies when the legislature enacts bills that increase districts' levy base or maximum levy percentage;
  • Increasing the local effort assistance percentage from 12% to 14%.

The bill contains an emergency clause, and the levy base for 2011 through 2017 along with the local effort assistance percentage change expire 1/1/2018.

SHB 2962 Property taxes are generally paid to the county treasurers twice a year. The first half payment is due April 30 and second half is due October 31. Statements of tax due are mailed to property owners.

This bill authorizes, but does not require, the county treasurer to collect taxes, assessments, fees, rates and charges by electronic bill presentation and payment. Electronic bill payment is also optional for the taxpayer. The electronic bill presentation and payment may be monthly or on some other periodic basis as determined by the county treasurer. The county treasurer must electronically provide a payment agreement which must be approved by the taxpayer prior to the taxpayer being sent an electronic bill.

The purpose of the bill is to provide an option to taxpayers to pay their property taxes electronically and prepay their tax in monthly or periodic payments. Providing tax statements electronically will save mailing costs

SHB 3066 Persons claiming tax preferences are often required to file an annual accountability report or survey with the Department. The information to be included in these annual reports and surveys, due dates, extension options, and penalties for not filing are prescribed by law. These provisions are not uniform for all required reports and surveys. The purpose of this bill is to create two sets of uniform reporting requirements that apply to the tax preferences to better compare the effectiveness of tax preference programs.

The bill creates uniform reporting requirements for those persons who are required to prepare an annual report while eliminating redundant statutes and language for applicants claiming property tax exemptions under RCW 84.36.645 (property tax exemption for M&E used in manufacturing semiconductor materials) and under RCW 84.36.655 (property tax exemption for buildings, M&E, and other personal property used for manufacture of superefficient airplanes.)

ESSB 6143 This was an omnibus revenue and taxation bill. The bill clarifies that the public utility privilege tax applies to all amounts received from the sale of electric energy, including any regularly recurring charge billed to consumers as a condition of receiving electric energy, and excluding any tax levied by cities. This portion of the bill went into effect on May 1, 2010.

ESSB 6241 Creates a new type of taxing district – a community facilities district – to facilitate voluntary landowner financing of community facilities and local, sub-regional, and regional infrastructure. All landowners within the district must sign a petition authorizing formation of the district. The district is authorized to impose special assessments and in Section 401(i), they can also issue revenue bonds in accordance with chapter 39.46.

The bill contains provisions related to the formation of these districts, the composition and duties of the governing body, the powers of the district, finances of the district, and other miscellaneous provisions.

Depending on the location of property within the district, a county treasurer or city treasurer is the district treasurer. The bill is unclear about the mechanisms of how assessments are billed, when the assessments are due, or how the district treasurer is to handle delinquencies or refunds. The bill does contain a requirement that a notice be mailed to notify owners that the property is subject to the assessments but it is unclear whether this notice is separate from the billing statement.

The effective date of this bill is June 10, 2010. The Department of Revenue will write rules in order to clarify how special assessments should be collected and how to handle delinquencies or refunds.

SSB 6271 If a city or code city is located within a regional transit authority, and the city or code city annexes territory, the regional transit authority boundaries change at the same time as the city. The city is responsible for notifying the authority of the change.

ESB 6287 Both cities and fire districts are authorized to pay for construction of fire protection facilities through voter-approved excess property tax levies.

If a city is annexed to a fire district, property owners in the city, who are now also in the fire district, continue to pay any pre-existing city levy for fire protection facilities, along with any such pre-existing fire district levy

This bill creates an express exemption from any pre-existing fire district levy for fire protection facilities, if a city is annexed to a fire district and property in the city is subject to a pre-existing city levy for fire protection facilities

The purpose of this bill is to assure that property within a city that annexes into a fire district is not subject to more fire protection-related property tax than other property that is within the district but outside the city.

SSB 6379 Changes the terminology "certificate of ownership" to "certificate of title" and requires payment of all taxes prior to transfer of ownership. DOL to notify assessor of change in ownership or location of manufactured home.

An owner of a manufactured home must apply for a certificate of title or eliminating the certificate of title.

If the mobile home manufacture date is before 6-15-1976, the registered owner must sign a form concerning the failure of the mobile home to meet federal standards, or to meet fire regulations by DLI.

The applicant must provide evidence that any taxes due on the sale of the manufactured home have been paid before submitting the application for a certificate of title. DOL will notify the county assessor as to the location and ownership transfer of the manufactured home. If the certificate of title is eliminated or not issued, the application is recorded with the county auditor. All vehicle license fees & taxes due must be paid prior to filing the document with the auditor. DOL may adopt rules to implement this section.

This bill takes effect July 2011.

SB 6418 The bill increases the population limitation of a city or town being annexed into a fire district from 100,000 to 300,000. The bill removes limitations as to where a fire protection district can be established. A fire protection district (district) is created to provide fire prevention, fire suppression, and emergency medical services within a district's boundaries. A district is governed by a board of commissioners consisting of either three or five members. The district finances their activities and facilities by imposing regular property taxes, excess voter-approved property tax levies, and benefit charges.

Generally, a district serves residents outside of cities or towns, except when cities and towns have been annexed into a district or when the district continues to provide service to a newly incorporated area.

Under former law a city or town adjacent to a district may be annexed into such a district provided the population of the city or town does not exceed 100,000. Such annexation is initiated through the adoption of an ordinance by the legislative authority of the city, or town approving annexation into the district, and stating a finding that the public interest is served by such annexation. The annexation must then be authorized through the concurrence of the district's board of fire commissioners. Following such approval of the annexation, notification must be sent to the governing body of the county or counties in which both the district and city/town are located. The pertinent county legislative authorities must then call a special election in the city or town to be annexed, as well as the district, so as to allow the voters in each jurisdiction to determine the annexation issue. The annexation is complete if a majority of voters in each jurisdiction vote in favor of annexation.

This bill removes the requirement that fire protection districts be authorized in areas outside of cities and town, except where the cities and towns have been annexed into a fire protection district or where the district is continuing service, is removed. A city or town adjacent to a district may be annexed into such a district provided the population of the city or town does not exceed 300,000.

This bill becomes effective on June 10, 2010.

E2SSB 6609 The purpose of this bill is to provide additional state funding from sales and use tax and property tax for local infrastructure that will create jobs and increase state and local tax revenues. This bill also makes some significant changes for property taxation.

The local revitalization financing (LRF) program allows local jurisdictions to designate revitalization areas from which incremental local sales and use tax revenues and incremental local property tax revenues are measured and used to pay bonds issued to finance public improvements in the revitalization area. The local incremental revenues and any additional funds from local public sources are used as matching funds for a state contribution.

  • State contributions are provided through the authority to impose a local sales and use tax that is credited against the state sales and use tax (often referred to as LRF Tax).
  • Applications to receive a state contribution are submitted to the Department of Revenue for approval.
  • The LRF tax does not increase the overall tax rate paid by consumers but instead diverts state sales and use tax revenues to the local jurisdiction.
  • In 2009, the maximum $2.7 million per fiscal year of state contributions has been awarded to thirteen projects.
  • Six projects remain on a waitlist for additional state funding if provided and applications are no longer being accepted.

For property taxation this bill also includes the following changes for LRF and LIFT:

  • Clarifies what taxing districts can participate in the LRFT and LIFT program rather than stating which taxing districts cannot participate in the programs.
  • Allows Community Revitalization Financing (CRF) and LRF areas to overlap under certain conditions.
  • Updates the definition of "participating taxing district" to include a taxing district that has a revitalization are wholly or partially within its geographic boundaries; levies or has levied for regular property taxes a defined in RCW 39.104.020; has not taken action as provided in RCW 39.104.060(2).
  • Defines "bond" as a note or other evidence of indebtedness, including but not limited to a lease-purchase agreement or an executor conditional sales contract.
  • Through an inter-local agreement between the sponsoring local government and a participating taxing district, a participating taxing district can exclude some of their regular property taxes from the LRF project. For example a port district may have multiple regular levies, they may choose to only use one of their levies in the LRF project.
  • The sponsoring local government must notify the county assessor of each participating taxing authority and participating taxing district.

This bill becomes effective on June 10, 2010.

Local Infrastructure Financing Tool Program:

The local infrastructure financing tool (LIFT) program allows local jurisdictions to designate revenue development areas (RDAs) from which incremental local sales and use tax revenues and incremental local property tax revenues are measured and used to pay for public improvements, and bonds issued to finance public improvements, in the revitalization area.

  • The local incremental revenues and any additional funds from local public sources are used as matching funds for a state contribution.
  • State contributions are provided through the authority to impose a local sales and use tax that is credited against the state sales and use tax (often referred to as LIFT Tax).

The maximum $7.5 million per state fiscal year statewide was awarded by the Community and Economic Revitalization Board (CERB) to nine LIFT projects throughout the state and applications are no longer being accepted. This bill adds $1.95 million a fiscal year in new state funding for six LRF demonstration projects specified in the bill. The six projects are the same projects that were placed on the LRF waitlist for funding. The maximum amount of state contributions that can be approved for these are projects are as follows:

  1. Richland Revitalization Project up to $330,000
  2. Lacey Gateway Project up to $500,000
  3. Mill Creek East Gateway Project up to $330,000
  4. Puyallup River Road Revitalization Project up to $250,000
  5. Renton South Lake Washington Project up to $500,000, and
  6. New Castle Downtown Project up to $40,000.

To be approved for a state contribution these projects must update and resubmit updated LRF application to the Department by September 1, 2010. In addition to the application the Department must receive an economic analysis by a qualified researcher at the Department of Economics at the University of Washington that confirms there is an 85 percent probability that the application's assumptions and estimates of jobs created and increased tax receipts will be achieved by the project and determines that net state tax revenue will increase as a result of the project by an amount that equals or exceeds the LRF state contribution award amount.

If approved, the earliest date when the new demonstration projects could impose the local LRF tax is July 1, 2012.

SSB 6712 This bill extends tax incentives passed in prior legislative sessions that were about to expire. Included among the incentives being extended are sales and use tax exemption for alternative fuel vehicles in order to help Washington reach its goals for the reduction of green house gases. Also included is an extension of the reduced B&O tax rate for aircraft repair facilities classified as federal aviation regulation Part 145 certificated repair stations to expire July 1, 2024.

The property tax and leasehold tax exemptions for qualified manufacturing facilities will encourage the production of renewable fuels. Property used primarily in the manufacturing of alcohol fuel, wood biomass fuel, biodiesel fuel, or biodiesel feedstock are currently exempt from property tax and leasehold excise tax for six years. Claims for these exemptions may be made through December 31, 2009. The bill extends the exemptions to December 31, 2015.

ESSB 6737 Aircraft used in the state are subject to either an annual excise tax or the property tax. The purpose of the bill is to reduce the cost of owning an aircraft used to provide air ambulance services.

The excise tax is actually an annual fee based on the type of aircraft. The fee applies to all aircraft unless exempted. The major exceptions are aircraft owned by the government or by interstate commercial companies. The fee is administered by the Department of Transportation.

Aircraft not subject to the aircraft excise tax are subject to the personal property tax unless exempted. This bill provides a property tax exemption and an aircraft excise tax exemption for aircraft that are:

  • owned by a nonprofit exempt from federal income tax under 26 U.S.C Sec. 501(c)(3); and
  • used exclusively to provide emergency medical transportation services.

The exemption applies to taxes levied for collection in 2011 and thereafter. The Act expires January 1, 2020.

SB 6855 This bill is designed to help neighborhood community centers that are housed in facilities that are no longer needed by school districts and now owned by nonprofit organizations and used to deliver coordinated services for community members.

Under current law property owned by federal, state and local governments are exempt from state and local property taxes. However a private lease of publicly owned property is subject to state and local leasehold taxes. The measure of the leasehold tax is generally the amount of rent paid for use of that property. The combined state and local leasehold tax rate is 12.84 percent.

This bill allows buildings owned by a school district but have been determined to be surplus property and are consequently purchased by a nonprofit organization to be exempt from property taxes for up to 40 years from the point of aquisition. The nonprofit organization must convert the buildings into community facilities (community centers) for the delivery of nonresidential coordinated services for community members.

Lessees of the community center properties (real or personal) are subject the state and local leasehold taxes.

The bill is effective for taxes levied for collection in 2011 and thereafter

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