House revenue proposal related to House budget moves out of committee

HB 2186, the House revenue proposal released in conjunction with the House proposed budget passed out of the House Finance Committee last week with a few amendments placing sunset dates and on new taxes and reporting requirements on tax preferences related to B&O and REET. The bill awaits further action in the House Rules Committee, which is not expected to occur until further negotiations take place on the differences between the House and Senate budget proposals.

As the letter AWC sent to the House and Senate budget leaders indicated, AWC supports the Legislature in securing sufficient revenue to fund state programs and obligations. AWC also continues to support new proposed revenues that include a local government share and promote local economic security, such as requiring sales tax collections or reporting of customers for use taxes by internet retailers, and removal of the bottled water sales tax exemption. The expected revenue increase from sales tax changes in the bill is $71 million for cities for the 2017-19 biennium.

At further direction by the AWC Board, we expressed support for the provision establishing a graduated rate for the state Real Estate Excise Tax. It would result in a lower 0.75 percent rate on residential sales under $250,000, the same 1.28 percent rate on sales $250,000 to $1 million, higher rates of 2 percent for sales $1 million to $5 million, and 2.5 for sales over $5 million. (For more information, see From the Director.)

AWC also expressed concern with one provision requiring cities to collect information on subcontractors for projects that receive building permits. This new mandate would put significant liability on cities, placing new enforcement responsibility on our building inspectors and creating a new disincentive for contractors to apply for local building permits.

AWC will continue to evaluate and monitor these proposals and seek direction from the AWC Board as needed as budget negotiations move forward.