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2011, 10-04 Study Session Minutes MINUTES SPOKANE VALLEY CITY COUNCIL REGULAR MEETING STUDY SESSION FORMAT Spokane Valley City Hall Council Chambers Spokane Valley, Washington October 4, 2011 6:00 p.m. Attendance: Councilmembers Staff Tom Towey, Mayor Mike Jackson, City Manager Gary Schimmels, Deputy Mayor Cary Driskell, City Attorney Bill Gothmann, Councilmember Mark Calhoun, Finance Director Dean Grafos, Councilmember John Hohman Community Dev. Director Brenda Grassel, Councilmember Mike Stone, Parks & Recreation Director Arne Woodard, Councilmember Neil Kersten, Public Works Director Steve Worley, Senior Engineer Absent: Scott Kuhta, Planning Manager Chuck Hafner, Councilmember MaryKate McGee, Building Official Lori Barlow, Senior Planner Carolbelle Branch, Public Information Officer Chris Bainbridge, City Clerk Mayor Towey called the meeting to order at 6:00 p.m. At the request of Mayor Towey, City Clerk Bainbridge called the roll. All councilmembers were present except Councilmember Hafner. It was moved by Deputy Mayor Schimmels, seconded and unanimously agreed to excuse Councilmember Hafner from tonight's meeting. 1. Review of Le�islative A�enda — Mike Jackson/Briahna Ta.� Lobbyist Briahna Taylor of Gordon, Thomas, Honeywell, explained that the purpose of tonight's agenda item is to begin conversation and discussion on revising the Spokane Valley 2012 Legislative Agenda. Ms. Taylor went over the "Legislative Agenda Discussion" items including the process to amend the legislative agenda, what to expect in the 2012 legislative agenda process, discussion on legislative agenda items, and discussion on issues to add to the legislative agenda. She explained that the goal would be to finalize any changes sometime this month. Ms. Taylor said that the state will have $1.4 billion less in expected revenues so cuts will need to be made accordingly, and that the Governor will call a special session and distribute a"roadmap" for generating revenue and/or making additional cuts. There are revenue proposals to fund human services and education and Ms. Taylor said those issues are still being discussed and could come forward in the future; and future discussions would include a tax increase to fund additional bonds for construction projects, which would generate additional jobs, and to clarify, Ms. Taylor said these consh-uction projects include actual brick and mortal projects, sewer projects, renovating schools to make them more efficient, and other construction projects which will generate jobs; and said that will be and is the focus for this budget. Ms. Taylor said transportation revenue proposals are being discussed concerning revenue options and said the possible revenue proposals could go forward on a ballot, all of which will be decided during the special session starting late November; she said the predominant conversations and focus in Olympia will be revenue and budget cuts, adding that it is all very unclear what will happen. Ms. Taylor recommended removing items from the Council's legislative agenda that have been accomplished, such as the food bank sprinkler system and the passage of the port of entry legislation; and said we don't want to forget these successes even though the items are being removed; and she Council Study Session Minutes October 4, 2011 Page 1 of 7 Approved by Council: October 25, 2011 recommended updating the agenda so items can be added. Ms. Taylor asked for council discussion for any additional items they may want to include and no suggestions were forthcoming. Regarding the law enforcement district legislation, Ms. Taylor explained that the City of Burien was working to pursue forming a law enforcement district; that the idea started out as a"conversation starter" but the City of Burien ultimately decided not to pursue that legislation at this time. Ms. Taylor explained that this is a controversial issue with a tax element, and it would be difficult for this city to take the lead without the assistance of other jurisdictions; or we could leave it on with the expectation of not taking the lead, but if it comes up later, we would be supportive; or take the option of removing it with the understanding it could be added later, and she asked for Council's opinion. It was determined that this item will be removed from the legislative agenda. Mr. Jackson said the plan is to bring a revised legislative agenda to the October 18 meeting, and discuss the agenda further with the idea of having a subsequent council meeting to consider approval of the revised agenda. Regarding SEPA (State Environmental Protection Act) reform, Ms. Taylor explained that she and City Planner Mike Basinger participated in a workshop on what proposals might look like to streamline the SEPA process; that during that workshop, the work group broke into smaller groups and discussed specific issues in more detail; she said she is optimistic about the conversations and said we continue to participate. Several councilmembers noted their preference in keeping this item on the agenda. Concerning the issue of communications interoperability, she said that last year's transportation budget had an appropriation of $40 million to the Washington State Patrol to begin state-wide interoperability; that there is more to be done but the $40 million will get the programs started; that there are two options for this legislative agenda item, one would be to leave it on and amend the language to recognize the appropriation secured last year and indicate ongoing support; or remove it since funding has been appropriated. Ms. Taylor said there are two issues for this topic, one state-wide and one on the local level; and said for the local level, we have raised the revenue and we are interoperable; but additional funding is needed at the state level to make the entire state interoperable and that is what this legislative item addresses; and she explained that this is funded through the transportation budget on a state level. City Manager Jackson asked Ms. Taylor if she might know why this issue isn't included on AWC's (Association of Washington Cities) agenda or what their preference is regarding support; and perhaps if AWC doesn't support this, council should follow suit. Ms. Taylor said this is on AWC's agenda but is not a top priority. Mr. Jackson said staff will contact AWC to determine how they prioritized this item and of their stance on this topic. Ms. Taylor reminded everyone that by the State appropriating $40 million in the last transportation budget, the state has made a decision to support this item. Andy Hale of the Fire Department said that function of state interoperability is very important in order to have all the first- responders speak with each other and other state agencies. Mayor Towey said he feels gathering more information from AWC would be beneficial. Regarding adding items to the legislative agenda, Ms. Taylor explained the idea behind recouping costs for enforcing code compliance; she said the city could pursue legislation making it easier for the City to recover code enforcement costs by pursuing a lien authority that is not subject to the homestead right or by other means. City Attorney Driskell added that when we get a judgment from court, we still try to get the property owner to clean up and if they don't, we get authority from the court to go in and clean it up; but since the city incurred a cost, we get the court to rule those costs into the final judgment; we file that with the Spokane County Auditor's office but that lien generally waits until they transfer the property; and the goal is to have these types of liens be re-classified as a materialmens and mechanics lien, which has a specific process with a short timeline where jurisdictions can have courts enforce that lien through this additional process, and he said this will help us clean up these properties that are such a blight on the community. Attorney Driskell talked about the properties we put judgment liens on in the past and estimated there were in excess of fifty properties, but not all of them would be properties we actually cleaned up; and said there were probably only about five to seven properties where we imposed this full judgment but that is partly because there is less certainty in getting compensated for the cleanup. City Manager Jackson said we hesitate to clean up a property at a$5,000 cost as that's essentially lost money Council Study Session Minutes October 4, 2011 Page 2 of 7 Approved by Council: October 25, 2011 to the city, but it could come back when and if the property transfers; and said if the court passes judgment and the property owner does not clean up the property, that responsibility rests with the city; therefore, we feel the owner should reimburse the city for that effort, otherwise, they get their property cleaned up for free. Mr. Driskell stressed that this would be used in cases where we actually go onto the property and clean it up pursuant to a court order. Mr. Jackson said we hesitate to spend the money, but at this point, we have spent an estimated $20,000 to $30,000 in property cleanup. Mr. Driskell said as property has transferred, we actually were reimbursed for three or four cleanups. Councilmember Gothmann asked if council wants this included on the legislative agenda and said he feels it would be reasonable to pursue this issue. Mayor Towey and other councilmembers ageed, and Ms. Taylor confrrmed that this will be included in the revised agenda to come before council October 18` Streamlined sales tax mitigation payments was discussed next and Ms. Taylor brought council attention to the report from the Joint Legislative Audit and Review Committee, and she discussed the old rule and new rule, as Washington decided to participate in the nation-wide procedure in determining which jurisdictions receive the local sales tax; that the old source was if someone ordered something, the sales tax went to the jurisdiction where the item was purchased; and under the new source, the sales tax goes to where the item is delivered; she explained the state implemented mitigation payments under the new system since several jurisdictions would end up on the losing side of the revenues; so the state determined it would make mitigation payments, and Spokane Valley was one of those cities receiving mitigation payments. According to the "Summary of Mitigation Payments" included by Ms. Taylor, she explained that Spokane Valley ranks #8, so we are one of the highest jurisdictions, and that we receive about $585,000 annually as a result of the agreement reached in 2008 when the state switched to this new type of sales tax source. She explained that this is one of the funds the state is looking at to reduce their $4.1 billion budget; and she said several other jurisdictions on the list are working on a letter to send to the Governor's explaining that the only reason they agreed to this change, was because they would continue to receive these mitigation payments; and that they would oppose any cuts to take away this funding. Ms. Taylor said a number of these jurisdictions reached out to her to ask if Spokane Valley would be agreeable in signing that letter as well. In response to Councilmember Gothmann's question about whether the mitigation payments would cease, Mr. Jackson said he is not aware of any sunset clause in that regard; and jurisdictions expected this to be on-going; and he said these funds are budgeted, and it would have a huge financial impact on our city if the payments were to cease, and he encouraged council to sign a letter, and said that a letter can be brought back for council's review and eventual signature. Ms. Taylor said that this streamlined sales tax revenue is one pot of money the city receives from the state, and that there are other pots of money where the city receives state revenues including liquor profits and liquor taxes; and said at the last legislation session all those revenues were cut 3.4%; and she recommended adding an item to the legislative agenda that expresses the City's desire to protect the state shared revenues the city receives; one of which includes the streamlined sales tax mitigation; and she suggested including all those funds, such as the liquor profits, liquor taxes, and others. Mayor Towey agreed, and Mr. Jackson said the total state shared revenues budgeted for 2011, adding that we typically budget low and receive more, was $1.7 million, which is a significant amount of money. There were no objections to participating in the letter and adding this as a legislative agenda item. Mr. Jackson said staff will research what state shared revenues the city does not receive, and come back with that information. Discussed next was the Association of Washington Cities preliminary top priorities, and Ms. Taylor indicated that Spokane Valley's legislative agenda includes supporting the Association of Washington Cities' legislative agenda items that serve the best interests of the City of Spokane Valley. Ms. Taylor said AWC is currently discussing their final legislative agenda, but they have identified their top priorities as noted in the handout; and said AWC will be grouping these priarities into different subject areas. As an example, Ms. Taylor explained that the top priority of "tax increment financing/local revitalization financing" would be moved into a larger priority of supporting economic development tools, with various tools listed; and said they are still working on the priorities. Regarding Capital projects Ms. Taylor said if they will be funded, it would be linked to a revenue proposal to general construction projects; and Council Study Session Minutes October 4, 2011 Page 3 of 7 Approved by Council: October 25, 2011 regarding the land acquisition project we currently have on our agenda to acquire park land adjacent to Park Road Pool, that since the state is looking at projects that will generate jobs, land acquisition doesn't fit; and she recommended keeping it on the agenda, but not to expect any funding at this time since it does not meet the state's criteria. Several councilmembers voiced their preference in keeping the agenda item on for future consideration. Mayor Towey said in speaking with several legislators, it appears the tourism funds were cut in Washington while Oregon and Canada's tourism funding was increased; and he asked Ms. Taylor about pursuing that. Ms. Taylor said she did not have any specific information, but could research the issue, adding that if the funding has already been cut, the likelihood of the legislators increasing funding for this without a revenue package, especially while they are making additional cuts elsewhere, is unlikely; and said she feels it would not be worthwhile to ask for programs to be re-funded as cuts are being made elsewhere. Mayor Towey and several other councilmembers said they would appreciate more information on this issue. Councilmember Grassel added that by not funding this one department, jobs will be at risk, and said she thought that tourism was the fourth largest "employer" for the state. Ms. Taylor asked if Council had anything else to add or any research requests. Mr. Jackson asked and council confirmed, to keep the Park Road Pool item on the agenda. 2. Shoreline Matters — Cary Driskell, Ken Harper City Attorney Driskell said that council had asked to have an outside attorney with expertise on shoreline issues, come discuss the issues and intricacies of that legislation, and Mr. Driskell introduced Ken Harper, Attorney with Menke, Jackson, Beyer, Ehlis and Harper in Yakima. Mr. Driskell said that Mr. Harper represents the City in several litigation matters and has extensive background in advising and defending local jurisdictions on shoreline issues. Mr. Driskell also mentioned that the open house scheduled for November will be postponed as a result of internal discussion with the Community Development Department and their desire to wait until council has more opportunity to review and discuss these issues; to get the draft goals and policies before the Planning Commission, and then talk with council about scheduling preferences. In response to Councilmember Gothmann's question about where we are in the process currently, Mr. Driskell said this has not yet been befare the Planning Commission; and Mr. Jackson added that we were going to have a joint session with the Planning Commission but that was also postponed until council is prepared to move forward. Attorney Harper gave a little background on himself and said that three points he wanted to make in reference to his background are that council has a sense of how he looks at issues, to talk about how Spokane Valley got where it is in this process, and then about where Spokane Valley is in the process. After giving his background on his land use work, he said he sees these matters as a pragmatist, and not an idealist or policymaker; that when he is looking at shorelines permitting or planning, his main consideration is to find the main channel and to avoid exposing his clients to unintended risk; that his job is to provide frank and candid legal analysis of the pros and cons so his clients don't find themselves in expensive legal disputes. Mr. Harper said that shoreline planning is a controversial topic, and in order to have effective communication about the process, he gave a brief history of what has occurred over the last ten to fifteen years concerning the SMA (Shoreline Management Act), which act, he explained is about forty years old. He spoke of controversy over changing guidelines as a result of a series of Growth Management Hearings and Pollution Control Board cases; and that settlement agreements were signed off by various groups; and of the Department of Ecology adopting a series of guidelines for shoreline management; and said he wanted to just touch on a few points of the SMA, and mentioned the state statutes as well as WAC (Washington Administrative Code) 173.26, which he said was a result of buy-in by a wide spectrum of stakeholders, among others. Mr. Harper explained some of the aspects of the guidelines, which serve to clarify the statutes, and said the litmus test is "no net loss for shoreline ecological function." Further, he stated that GMA (Growth Management Act) speaks in terms of protecting critical areas, but that there is a lot of litigation over the definition of "protect." He said stakeholder groups wanted to have a clearer standard for SMA purposes other than "protection of critical areas" as stated in the GMA context, so they came up with the "no net loss of shoreline ecological functions" and said much of what is left after that is up to local discretion. He said how the baseline Council Study Session Minutes October 4, 2011 Page 4 of 7 Approved by Council: October 25, 2011 matters for lakes or rivers will vary, but the "no net loss" is the common touchstone. Mr. Harper said as per the guidelines, the first principle of implementing a SMA update is to do the inventory and characterization. Regarding including the gravel pits, Mr. Harper said the SMA applies to surface waters of greater than twenty acres. Mr. Harper said we are now in the process of understanding what this inventory means and of the cumulative effect of the goals and policies; and said it will be very important for Spokane Valley to maintain public input opportunities for those goals and policies; that once the inventory is complete, the next step is to define how to implement that key standard of "no net loss of functions" keeping in mind property rights; and again mentioned that the best way to form meaningful guidelines and policies is via the public outreach process to include meaningful stakeholder groups and to accept meaningful comments; and added he realizes the input is underway, and eventually the output of all this will be regulations that will have to be proposed to the Department of Ecology for approval. In response to Councilmember Grassel's question about which guidelines are flexible and which are mandated, Mr. Harper said mandated is no net loss; but they establish preference for certain activities which are stated in the state statutes and expanded in the guidelines; and said once council gets input from the stakeholders, council will be mare able and ready to make decisions; that the policies are designed to achieve the no net loss; and regarding specific terminology, he said the word "guarantee" is an effort but "ensure" would be equally valid, and the point is not so much if the word ensure or guarantee is a right or wrong term, but how those phrases are implemented. Mayor Towey called for a brief recess at 7:57 p.m. and reconvened at approximately 8:10 p.m. 3. Sullivan Brid e Ti�er Grant Application - Steve Wor1eX Senior Engineer Worley explained that we have an opportunity to apply for some grant money for the Sullivan Bridge through the Federal Discretionary TIGER grant program; that this is a two-step process and as of yesterday, staff submitted the necessary pre-application in anticipation that we may want to move ahead; he said we do not know if we passed the pre-application process, or even when we might find out if we passed the process; but if we do pass, the final application is due October 31, which he said is a very short timeline. Mr. Worley said if council desires staff to move forward, we would need to hire a consultant to help prepare for the fmal application; he said there is approximately $527 million available nationwide after a previous allocation of $2.1 billion nationwide; and said the minimum project award for urban governments is $10 million with a minimum 20% non-federal match. Mr. Worley said that staff previously identified CH2M Hill as the design consultant for the new bridge, and that they ageed to assist us in moving forward with the final grant application if that is the direction council desires; and he brought Council's attention to funding scenarios on the reverse of the Request for Council Action form; and said staff would coordinate with the Finance Department to identify funds to provide the needed match. Finance Director Calhoun added that there is some funding in one of the street arterial funds which could be used to pay for this if we decided to move forward. Mr. Worley asked if council would like to consider stating a consensus on whether to pursue this grant opporiunity. Discussion included concern about the timeline, especially in that prospective projects must be ready to obligate construction funds by June 30, 2013; and Mr. Worley said they interviewed three consultants and asked them about getting the environmental and design process by June 2013 in order to obligate construction funds, and he said they all agreed the timeline could be met; and said if we move forward, everyone will work to get through the environmental process quickly to meet the deadline; and that if we don't get the grant, we would be out $40,000; and without the grant, we would have to find the money to replace the $10 million. Mr. Worley said that WSDOT (Washington State Department of Transportation) does not consider economic impacts as emergencies; that WSDOT is planning three projects to submit under this program, there are fifteen projects from the State of Washington to apply for these funds with only $500 million; and said we do not know how we compare until we get through the pre-application Council Study Session Minutes October 4, 2011 Page 5 of 7 Approved by Council: October 25, 2011 process. Weighing the cost of the consultant with the possible loss of $10 million; there was Council consensus for staff to move forward. 4. Proposed Municipal Code Amendments — John Hohman Community Development Director Hohman brought council's attention to the September 28, 2011 interoffice memorandum from Planning Manager Kuhta, which lists current amendments and dates for the Planning Commission's consideration, as well as proposed amendments that staff would like to bring forward; and explained that items 1, 2, and 3 are already on the Planning Commission or Council agenda for review or public hearing; while items 4 through 8 are proposed future amendments; and Mr. Hohman briefly described those eight items. Director Hohman said he wants to focus on number 4"Building Code Chapter 24.40, and on number 5 Boundary Line Adjustments; he said #4 is a general cleanup of Chapter 24.40 which deals with building permits, and said they want to provide flexibility for staff and the development community to have our codes as workable as possible, and that some amendments in that chapter will help provide that flexibility to applicants. Regarding #5, Mr. Hohman said currently requiring a survey for every boundary line adjustment adds cost and delay, and staff is working on providing some flexibility and changing the language in certain circumstances, from "shall" to "may." Mr. Hohman said item 6, Code Compliance amendments will come to council October 18 as part of a broader report on code enforcement activities, #7 will provide some protections to drinking water wells, #8 includes several batch amendments to correct errors in the code and correct items that have changed, making sure references are appropriate, and an additional #9 will include examining the temporary use permits, especially concerning seasonal sales in commercial areas; and he explained that there are some fruit and vegetable retailers that are tied into a six month period, and that it doesn't make sense to hold to a six-month period but could move to a seven or eight-month period to allow more flexibility. Mr. Hohman added that the desire is also to clean up some language which refers to out-dated building codes. Building Official McGee went over some of the actual proposed language changes, noting other changes are consolidating administrative provisions under one section, or cleanup of citations; and she explained that the three yellow highlighted areas of the Chapter 24.40 which she distributed, are the significant language changes; and she discussed some of the proposed changes such as the time limit of applications and permits, and that if an application is submitted during one state building code cycle, the applicant would have the benefit of a full code cycle after that, or six years, and once the project is started, it would be good for two years; adding that most places only permit 180 days with discretionary extensions. Director Hohman noted that staff is working to permit a development by phases instead of by an entire project. Building Official McGee also noted the section on page 3 of 8, #4: "design professional require," and said the idea is to provide some guidance so everyone knows what they can do without using a design professional. Mr. Hohman said concerning title 24 specific to building permits, that that is not land use regulations so staff can come directly back to council and move it through the normal process; but that the other amendments will go before the Planning Commission, then on to Council. It was determined staff will bring this issue back for an administrative report prior to moving on for a first reading of an ordinance. At approximately 8:55 p.m., it was moved by Deputy Mayor Schimmels, seconded and unanimously agreed to extend the meeting forty-five minutes. 5. Lod�,in� Tax Fundin� Award Process — Mark Calhoun Finance Director Calhoun explained the process and timeline for the 2012 lodging tax funding allocations. 6. Advance A�enda — Mavor Tow� City Manager Jackson mentioned the added items to the October 18 agenda, and noted that Interim Deputy City Manager Crum will be back October 12 and shortly thereafter will report on the railroad quiet zone issue. Council Study Session Minutes October 4, 2011 Page 6 of 7 Approved by Council: October 25, 2011 7. Spokane Valley Proposition 1, Ballot Lan�ua�e This was for information only and was not reported or discussed. 8. Council Check-in � Councilmember Grassel said she is not clear on the process for the Shoreline Master Plan and feels they are at a standstill; she said it is difficult to go through the paperwork and completely understand all the impacts of those goals and policies and therefore, she proposed to retain a specialist in shoreline masterplans who has dealt with municipalities and the Department of Ecology; adding that she is not comfortable in the wording on some of the goals and policies. Councilmember Woodard agreed council needs someone who can advise on our city's unique situation; and Councilmember Grafos agreed and asked staff to bring forward some names of experts who could advise council in the process. Councilmember Gothmann agreed since the issue is now in the hands of the Planning Commission, that it would be premature to try to outguess what the Planning Commission would do; and Mayor Towey agreed and asked at what point in the process do we solicit that expertise. City Manager Jackson said staff will discuss how best to approach this or have some outside counsel advise Council; and he mentioned putting together a statement of qualifications of what criteria council seeks. Councilmember Grassel suggested perhaps Council and the Planning Commission meet jointly to go through the working draft line by line to make sure the wording is correct so everyone knows what is mandatory and what is suggestive. 9. City Manager Comments — Mike Jackson Mr. Jackson had no comments. 10. Executive Session: Pendin�,/Potential Liti at� ion [RCW 4230.110(1� It was moved by Deputy Mayor Schimmels, seconded, and unanimously agreed to adjourn into executive session for approximately thirty minutes to discuss pending or potential litigation, and that no action will be taken upon return to open session. Council adjourned into executive session at 9:14 p.m. At 9:54 p.m., Mayor Towey declared council out of executive session. It was then moved by Councilmember Gothmann, seconded and unanimously agreed to adjourn. The meeting adjourned at approximately 9:55 p.m. .— � ��•- .. E Thomas E. owey, Mayor / � `" / ,..,�,� Christine Bainbridge, City Cle Council Study Session Minutes October 4, 2011 Page 7 of 7 Approved by Council: October 25, 2011 . • • . • � . _� _ �_ � � . _ � � _ � . Location Jurisdiction Mitigation payment Ranking Jurisdiction type Net revenue impact made Code 1 KING COUNTY METRO TRANSIT PTBA ($1,529,271.68) $ 1,529,271.68 _._,.�__... __ ____ ___... __ ...,.__.__ 2 KENT 11715 ,City ($1,237,586.28) $ 1,237,586.28 � ._ 3 SOUND TRANSIT _:.� Other _._,.__._�..__.___ ._ ($825,431.54) $ 825,431.54 . �. .____ _ ,�.. _, . . __.._.... ._...... .. __. . 4 AUBURN 1702 City ($497,866.85) $ 497,866.85 _.- s..�.._ . _ : _..�.._ _ .__ 5 KING COUNTY 1700 County ($377,045.10)' $ 377,045.10 6 TUKWILA ' 1729 Ciry ($305,849.90)` $ 305,849.90 _. _. �- - m_� _ � __ 7 ISSAQUAH 1714 City ($199,798.24) $ 199,798.24 ______�,�. 8 SPOKANE VALLEY 3213 Ci -� � . . . . .__ ���.�. ty ($146,497.64), $ 146,497.64 9 FIFE 2706 Ci �_� .� ty ($134,660.65) $ 134,660.65 ___. 10 WOODINVILLE 1735 Ci � m ty ($134,126.30) $ 134,126.30 _ _ ,_._ . ____.,...._.__.. 11 SUMNER 2716 City ($108,120.24) $ 108,120.24 _ ._._.___. ._._._.... _. _, ._.._.__._.__.. 12 EVERETT 3105 City T ($87,570.16) $ 87,510.16 _..__.._._____ _.____._____�.- _ 13 LYNNWOOD 3110 Ci _---_ .____.,.. ....__..______._______ _ ty ($62,684.20) $ 62,684.20 14 EVERETT TRANSIT SYSTEM � .� PTBA _ . .... ._—._. . _.. . __._______. _ ($62,246.85) $ 62,246.85 15 PIERCE TRANSIT � PTBA � � _~ � __� _ ($56,151.15) $ 56,151.15 16 SPOKANE COUNTY PTBA PTBA � ($52,945.26) $ 52,945.26 _ ._ ..__ _ . 17 MARYSVILLE 3111 Ci .� .. � .... . _. ty ($44,234.00) $ 44,234.00 _..____._,-- - - __ ._. _ ...,__ _ _ . 18 PASCO 1104 City ($39,678.95) $ 39,678.95 19 BELLEVUE Y ` 1704 Ci . __._.. _.___--- ___ ty ($35,260.93) $ 35,260.93 __...w._.....__.._._..T. �._. ._...__ —_.. ................_�..____a..... 20 TACOMA 2717 City ($34,506.10) $ 34,506.10 . 21 BURLINGTON 2902 Ci ^ . .. . .,. , __._.�__.. ty ($34,148.37) $ 34,148.37 __ __ _.w.. �._�..._. 22 MONROE 3112 City ($33 843.73) $ 33,843.73 23 FOOTBALL STADIUM AUTHORITY �� Other .. ._ _ ._...._.._.._.._..._._.. . ($27,461.67)' $ 27,461.67 24 LYNDEN 3705 Cit _._......._ ...,._ y ($26,696.96) $ 26,696.96 25 ARLINGTON . _ 3101 Cit --._..,___.___...___._,......_....... _.�M___n.__�_ y ($25,320.87) $ 25,320.87 26 MILTON 1731 Cit Y ($24,198.13) $ 24,198.13 27 -0THELLO � 0103 Cit � � y ($24,041.38) $ 24,041.38 28 KIRKLAND � 1716 Cit .�. --- µ µ.� � Y ($21,838.80) $ 21,838.80 29 FERNDALE � 3704 Cit � y ._ ) _.__._._.. Y ($17,391.74 $ 17,391 J4 30 WENATCHEE 0405 Ci '--°°-...........,._�...�......_,. ty ($15,436.13) $ 15,436.13 31 LIBERTY LAKE � 3212 Ci _._._ ____._._ ..._.._.., _._----..__.__ ty ($14,738.47) $ 14,738.47 32 LAKEWOOD � 2721 Cit . _. _ . . _ .. ._._.._, __,. ._ , _,_. _ y ($13,467.50) $ 13,467.50 33 SEDRO WOOLLEY 2908 City ($12,313.50) $ 12,313.50 _..r. ._. 34 PACIFIC 1723 Cit � _. _.__...�.. _ _. v ($s,ss�.ss> $ s,ss�.ss 35 RIDGEFIELD � 0604 Cit y ($9,173.66) $ 9,173.66 ____�.. _ ____.__�.. 36 CLARK COUNTY 600 Count y ($9,004.82) $ 9,004.82 37 HOQUTAM - 1404 Ci .. °__. . .__� _ . ._. ty ($s.27o.22>' $ s,27o.2z __. . . ... . _ _ _�..Y.._._ ..__ 38 KENMORE 1738 Cit v ($s,2sz.�s> $ s,2s2.�s 39 TOPPENISH 3910 Cit � y ($5,011.25) $ 5,011.25 . __.� . _._.__ __._.,...._ _._. 40 COULEE CITY 1301 Ciry ($4,295.69) $ 4,295.69 41 CHEHALIS 2102 City ($4,128.88) $ 4,128.88 _..�..______________.__,_____. 42 COLVILLE 3302 Ci "`�_ _._ .._ . _�_ _. _ _.__ _. _.. ty ($3,557.21) $ 3,557.21 _._..... _u...�_._._..._.,.. . :. � ,... 43 LONG BEACH 2502 City ($2,661.53) $ 2,661.53 �____._._.� . 44 DEER PARK 3203 Ci ���_ W ��� V v y � ty ($2,547.69) $ 2,547.69' � ......_____. ,_._ _..._..._.._._.__,_.,.__.....__ ,_ 45 MOXEE CITY 3905 City ($2,268.31) $ 2,268.31 _....._. _....___.__.. __. _ __ .m______ ----_ _ ___..__.._ . ____..__ _._ _. 46 ST. JOHN 3814 City ($2,163.53) $ 2,163.53 SEE OVER 1 Department of Revenue /d -��% . • • . � � . '� ' •' 1 1 ' - • � 1 ' Location Jurisdiction Mitigation payment Ranking Jurisdiction Code tyPe Net revenue impact made 47 ALGONA 1701 City ($2,146.62) $ 2,146.62 -.._ s_._.., .._......,, �__�_.......,._..._�..._...._,. _. 48 NOOKSACK 3706 City � ($1,919.81) $ 1,919.81 _ ... ___....., �....,......_. _ 49 �ELMA 1403 City ($1,875.10) $ 1,875.10 _ _.._...._� _._..____.._.__ � ___..._,.__�.,.,. .. _..._,.,.. 50 FAIRFIELD 3204 City ($1,855.82) $ 1,855.82 __�_.__..., w____W. ._..__...__..____,.,...__,.__.._.. 51 SUNNYSIDE 3908 City ($1,792.19) $ 1,792.19 52 UNION GAP 3911 City '� ($1,772.44) $ 1,772.44 53 MORTON 2103 Cit ^ Y ($878.92) $ 878.92 54 YAKIMA TRANSIT PTBA ($868.32) $ 868.32 _ _ _ . . _.... ) 55 LATAH 3205 City ($778.74 $ 778J4 56 WOODLAND 0805 City �($569.40) $ 569.40 ____..._.. _ 57 UNION GAP TRANSIT PTBA � �...�.....�... ($463.06) $ 463.06 58 LA CROSSE 3807 Cit � •rt ._ �� � y ($95.55) $ 95.55 ___ _ _..._._ _..___. _._._._._.__ _. 59 HARRINGTON 2204 City ($57.69) $ 57.69 ......._,.._ __....._. _.,...._._.__ _.__ ._ .,_ . _ 60 UNIONTOWN 3816 City ($54.53) $ 54.53 61 METALINE 2603 City ($36.46) $ 36.46 ota uns ictions eceiwng ayments , 44,8 7.45) , 44, 7.45 1 SEATTLE `1726 City $ 380,597.08 - 2 KITSAP COUNN PTBA w � Y PTBA $ 142,153.61 _. _..�......_� _ ._.._..�._._. 3 WHATCOM COUNTY 3700 County $ 140,003.63 _ _._,... �......�_._._.. 4 BENTON COUNTY 300 County $ 129,142.87 - .. . _ . __..---�--- 5 KITSAP COUNTY 1800 County $ 121,977.79 - ___.. _ ...._. 6 THURSTON COUNTY 3400 County $ 118,921.79 _ . _..___....____.._.__.�___.._� _ ._ 7 COMMUNITY TRANSIT PTBA $ 114,093.45 _:., .,.--°�_._ _ _ 8 BEN-FRANKLIN TRANSIT PTBA $ 104,867.12 9 THURSTON COUNTY PTBA PTBA $ 103,389.74 10 OLYMPIA �� 3403 City $ 86,803.67 11 GRANT COUNTY � � `1300 County $ 85,420.81 12 ISLAND COUNTY 1500 County $ 81,135.00 13 RICHLAND 0304 City $ 80,336.53 14 SNOHOMISH COUNTY � 3100 County $ 78,600.11 ��� 15 KENNEWICK 0302 City $ 72,513.17 16 YAKIMA COUNTY � 3900 County $ 70,042.56 17 KITTITAS COUNTY 1900 County $ 62,551.51 18 SNOHOMISH CITY 3115 City $ 61,617.84 19 WHATCOM TRANSIT AUTHORITY PTBA $ 59,060.64 20 ISLAND COUNTY PTBA PTBA $ 55,228.87 � .__,.. _ _ - 21 CLALLAM COUNTY 500 County $ 54,852.35 22 LEWIS COUNTY 2100 County $ 51,266.60 23 BREMERTON ��� 1801 City $ 51,001.32 24 CLALLAM TRANSIT PTBA $ 46,693.80 25 MERCER ISLAND ��� 1719 City $ 45,316.17 � 26 BOTHELL 1706 City $ 45,098A2 � 27 GIG HARBOR � ~� � 2708 City $ 41,559.49 - 28 LACEY #M ���� - .. 3402 City .-. $ 40,348.98 - T.__...,.____.---�_.---_�.._.._..__. .�. _�.___�_.____._ _.._. 29 EDMONDS 3104 City $ 39,709.62 2 Department of Revenue Agenda Item #1 Streamlined Sales Tax Mitigation Proposed Final Report Joint Legislative Audit & Review Committee January 5, 2011 Peter Heineccius, JLARC Staff Statute Mandates Study RCW 44.28.815 directs JLARC to review the mitigation provisions enacted when Washington became a full member of the Streamlined Sales and Use Tax Agreement Streamlined Sales Tax Mitigation January 5, 2011 2 1 /U -% // • Agenda Item #1 What is the Streamlined Sales a Use T Agre e m ent (SS U T A)� • Multistate agreement to simplify state tax laws and facilitate taxation of interstate sales • Currently 20 full member states • Washington became a full member on July 1, 2008 ■ SSUTA Full Member . � :.� SSUTA Membership Has Two Primary Efifects on Loeal Sales Tax O New revenue from out-of-state retailers registered with SSUTA • Membership required changes to Washington's sales tax laws Report p, 4 Streamlined Sales Tax Mitigation January 5, 2011 4 2 Agenda Item #1 � 1�New Revenue From SSUTA Re gist er e d Refiaile • Generally, states cannot require out-of-state retailers to collect and remit sales tax ➢Internet retailers without a physical presence in WA do not need to collect sales tax on sales in WA • However, retailers registered with SSUTA voluntarily collect and remit sales tax to SSUTA member states This new source of revenue is known as "Vo/untarv Compliance Revenue" 2�, Required Changes to WA's Saies Tax Sourcing Laws • Sourcing laws determine the taxable location of a sale • Location determines the sales tax rate and which jurisdictions receive local sales tax Old Rule: New Rule: Origin Sourcing D Sourcing � '�� ������ Kent received local sales tax Seattle receives local sales tax -__ -- — -- – ---- _ __ _ __ Report p. 5-6 Streamlined 8ales Tax Mitigation January 5 2011 fi 3 Agenda Item #1 Change ta Sourcing Rules Impacted 364 Loca Ta Juris diction s ��� - ---. -, , � , , � , , " y x� \ ;�� — � i , �" � \l\�� `� \ , H aj _ ' ,�. \� � \ �� il?� � � I ' ' � ����� ��\��\� ��Y ^�y 1\4 ,� \1 � ... � � ��♦ 1 ���� V ,��. .��„ � � '� � ����� '" � � � �������� .����, .a �1�,�����:�<��.� � � � ����\ � ��y;��•.� � �• � � ������,��� � , �,� ��I Counties (39) ���` � � �� \ � .�� a�.�. � �\\ \ �\� �t `. ��`��` � \� . . n .� . � \\\���` ' \�.������ "���'`��\��`����: y „ � i '-' Cities/Towns (281) � `: ..��. �' � ���.\ � 1 ���;�� - 1 ������ ,�� � : �� y � _ ° , � Transit Areas (27) , � \���� � ���,,� p �� Othe ( ot d p y y�� �___. `, �`--�- �\\\\\ I ' r 17 n is la ed ���� \. ,.-.- � �, , � , ��\� � , �` �\ �•�.}�, � 1 . ;_ ` I � , � ____-J` � __. '__ —_ ��y"';;� 1 ._..�attlSt__—'. � i u� � � ¢ I � , �'�;`�.i-�� � _ � � __ Change to Saurcing Rules S�hifted Distribution of Lacal Sales Tax • Majority of jurisdictions experienced a gain in local sales tax revenue due to sourcing change • Minority of jurisdictions experienced a loss _.,, � __; �, .<. :::� , ,.. .0 . Revenue from Origin Sourcing: $3 $1 Revenue from Destination Sourcing: $1 $3 Gain/Loss From Sourcing Change: -$2 +$2 Report p. 6-7 Streamlined Sales Tax Mitigation January 5, 2011 8 4 Agenda Item #1 Legislature Enacted Provisions to Miti Net Las • Net loss equals the loss from sourcing change, offset by voluntary compliance revenue • Jurisdictions receive mitigation payments for net losses Mitigation Loss From Sourcing Change: -$2 Payment Voluntary Compliance Revenue: +$1 Net Loss: -$1 C�verview of J LARC Qbservations • DOR and Treasurer followed statutory provisions • Payments and revenues lower than expected • Extent that payments mitigate actual losses unclear • Mitigation provisions may not address all losses • No other states have mitigation provisions 5 Agenda Item #1 DOR ar�d Treasurer Followed Sta Provis FY 2ooa FY 2009 1. DOR compares tax return data from Sales Data Sales Data before and after the sourcing change for '' '- �' changes in businesses' sales patterns Quarterly Quarterly '. Sourcing + � Quarterly � Mitigation ''j Loss Net Loss payment 2. DOR estimates a jurisdiction's quarterly sourcing loss 3. DOR offsets a jurisdiction's sourcing loss by its voluntary compliance revenue to determine its quarterly net loss 4. State Treasurer makes quarterly mitigation payments to the local jurisdiction from the State General Fund Payments and Revenues Lower Than Expected • Currently 62 jurisdictions receive payments • Nine quarterly mitigation payments to date ��• � � Fiscal Note Actual Fiscal Note Actual Estimate Amount Estimate Amount Mitigation Payments $31.6 M $21.4 M $41.5 M $26.1 M Voluntary Compliance $49.1 M $5.6 M $59.0 M $7.1 M Revenue Report p. N-i2 Streamlined Sales Tax Mitigation +� " `. 6 Agenda Item #1 Extent That Payments M itigate Actuai Lo sses Un � Payments are based on DOR's estimates of the losses caused by the sourcing change • Data is not available to calculate the actual impact of the sourcing change • Cannot verify DOR's estimates against actual amount of losses Mitigation Provisions May Not Address All Losses • Future Payments: -All payments are based on DOR's estimates of losses experienced in Fiscal Year 2009 -Losses experienced in future years will not be reflected in future payments • Past Payments: -Corrections or refinements to DOR's estimate only apply going forward -DOR does not make retroactive adjustments for payments that have already been made � Agenda Item #1 No Other States Have Mitigation Provision • Other full member states did not experience a similar impact to local sales tax revenues - Already used destination sourcing - Do not have local sales tax - Local sales tax structured differently • States similar to Washington have delayed implementing the change to destination sourcing Association and Agency Comments • Association of Washington Cities: -Mitigation is still an important effort -"Origin sourcing" used by other states is not the same as origin sourcing used in Washington � Washington State Association of Counties: - WSAC concurred with the report • Washington State Transit Association: -Noted concern with the accuracy of the fiscal note • DOR / OFM: -JLARC review important, no additional comments 8 Agenda Item #1 Contact I nfQrmation Staff Contact Information: Peter Heineccius 360-786-5123 Peter. Heineccius@leg.wa.gov www. j I a rc. I e g. wa . g ov s