Multiple Agency Fiscal Note Summary - Tax increment financing (Bill 1189 S HB)
Summary
Multiple Agency Fiscal Note Summary and attached fiscal notes for Bill Number 1189 S HB, titled Tax increment financing. The multi-agency summary lists Department of Revenue estimated operating expenditures of 37,000 from GF-State for 2021-23. The Department of Revenue note states that the substitute bill requires local governments to submit a project plan to the State Treasurer's Office for review before adopting an ordinance to create an increment area. A local government fiscal note states that the substitute bill would have an indeterminate impact on local government revenues.
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“Multiple Agency Fiscal Note Summary - Tax increment financing (Bill 1189 S HB).”
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Multiple Agency Fiscal Note Summary
Bill Number: 1189 S HB Title: Tax increment financing
Estimated Cash Receipts
NONE
Agency Name 2021-23 2023-25 2025-27
GF- State Total GF- State Total GF- State Total
Local Gov. Courts
Loc School dist-SPI
Local Gov. Other Non-zero but indeterminate cost and/or savings. Please see discussion.
Local Gov. Total
Estimated Operating Expenditures
Agency Name 2021-23 2023-25 2025-27
FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total
Department of .1 37,000 37,000 37,000 .0 0 0 0 .0 0 0 0
Revenue
Total $ 0.1 37,000 37,000 37,000 0.0 0 0 0 0.0 0 0 0
Agency Name 2021-23 2023-25 2025-27
FTEs GF-State Total FTEs GF-State Total FTEs GF-State Total
Local Gov. Courts
Loc School dist-SPI
Local Gov. Other Non-zero but indeterminate cost and/or savings. Please see discussion.
Local Gov. Total
Estimated Capital Budget Expenditures
Agency Name 2021-23 2023-25 2025-27
FTEs Bonds Total FTEs Bonds Total FTEs Bonds Total
Department of Revenue .0 0 0 .0 0 0 .0 0 0
Total $ 0.0 0 0 0.0 0 0 0.0 0 0
Agency Name 2021-23 2023-25 2025-27
FTEs GF-State Total FTEs GF-State Total FTEs GF-State Total
Local Gov. Courts
Loc School dist-SPI
Local Gov. Other Non-zero but indeterminate cost and/or savings. Please see discussion.
Local Gov. Total
Estimated Capital Budget Breakout
NONE
FNPID: 62566
FNS029 Multi Agency rollup
Prepared by: Ramona Nabors, OFM Phone: Date Published:
(360) 902-0547 Final 2/28/2021
FNPID: 62566
FNS029 Multi Agency rollup
Department of Revenue Fiscal Note
Bill Number: 1189 S HB Title: Tax increment financing Agency: 140-Department of
Revenue
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.3 0.1
Account
GF-STATE-State 001-1 37,000 37,000
Total $ 37,000 37,000
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
form Parts I-V.
X If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
X Capital budget impact, complete Part IV.
X Requires new rule making, complete Part V.
Legislative Contact: Rachelle Harris Phone: 360-786-7137 Date: 02/19/2021
Agency Preparation: Frank Wilson Phone: 360-534-1527 Date: 02/24/2021
Agency Approval: Don Gutmann Phone: 360-534-1510 Date: 02/24/2021
OFM Review: Ramona Nabors Phone: (360) 902-0547 Date: 02/28/2021
Request # 1189-2-1
Form FN (Rev 1/00) 167,098.00 1 Bill # 1189 S HB
FNS062 Department of Revenue Fiscal Note
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe, by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
Note: This fiscal note reflects language in SHB 1189, 2021 Legislative Session.
COMPARISON OF SUBSTITUTE BILL WITH ORIGINAL:
- Clarifies that regular property taxes do not include excess property taxes, including those levied by local school districts.
- Requires that an increment area takes effect on June 1st of the year following the adoption of the ordinance.
- Includes which administrative expenses incurred by a county assessor and treasurer to the public improvement costs may be
paid for with TIF funds-
- Requires local governments to submit a project plan to the State Treasurer's Office for review prior to adopting of an
ordinance to create an increment area.
- Clarifies exclusion of state levies, port, and public utility districts from repaying debt from TIF apportionment.
- Requires local government to negotiate a mitigation plan with local fire districts if analysis concludes it will affect more than
20% of the assessed value in a fire district.
- Clarifies add-on increment value in relation to 1% growth limit.
PROPOSED LAW:
Authorizes local governments to finance public improvements using TIF.
Prior to establishing an increment area, local governments must complete a project analysis that includes a statement of
objectives, the property the local government intends to obtain, the duration of the TIF area, and the estimated value of the
project.
Public improvements that are financed with TIF may be funded by other revenue sources.
In the calendar year following the passing of the ordinance, the county treasurer shall distribute receipts from regular taxes
imposed on real property in the increment area.
Adds increase in assessed value within a TIF area to add-ons affecting levy limit.
- Clarifies that regular property taxes do not include excess property taxes, including those levied by local school districts.
- Requires that an increment area takes effect on June 1st of the year following the adoption of the ordinance.
- Includes which administrative expenses incurred by a county assessor and treasurer to the public improvement costs may be
paid for with TIF funds-
- Requires local governments to submit a project plan to the State Treasurer's Office for review prior to adopting of an
ordinance to create an increment area.
- Clarifies exclusion of state levies, port, and public utility districts from repaying debt from TIF apportionment.
- Requires local government to negotiate a mitigation plan with local fire districts if analysis concludes it will affect more than
20% of the assessed value in a fire district.
- Clarifies add-on increment value in relation to 1% growth limit.
EFFECTIVE DATE:
The bill takes effect 90 days after final adjournment of the session in which it is enacted.
Request # 1189-2-1
Form FN (Rev 1/00) 167,098.00 2 Bill # 1189 S HB
FNS062 Department of Revenue Fiscal Note
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
This legislation results in no revenue impact to the state property tax levy.
It is unknown which local jurisdictions would create Tax Infrastructure Financing (TIF) areas. Therefore, the revenue
impact to local property taxes is indeterminate.
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the method
by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time and
ongoing functions.
FIRST YEAR COSTS:
The Department of Revenue (Department) will incur total costs of $37,000 in Fiscal Year 2022. These costs include:
Labor Costs – Time and effort equates to 0.28 FTEs.
- Amend ten administrative rules.
ONGOING COSTS:
There are no ongoing costs.
Part III: Expenditure Detail
III. A - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.3 0.1
A-Salaries and Wages 23,100 23,100
B-Employee Benefits 8,300 8,300
E-Goods and Other Services 3,600 3,600
J-Capital Outlays 2,000 2,000
Total $ $37,000 $37,000
III. B - Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in Part I
and Part IIIA
Job Classification Salary FY 2022 FY 2023 2021-23 2023-25 2025-27
EMS BAND 4 119,061 0.0 0.0
MGMT ANALYST4 70,956 0.1 0.0
TAX POLICY SP 2 72,756 0.0 0.0
TAX POLICY SP 3 82,344 0.2 0.1
TAX POLICY SP 4 88,644 0.0 0.0
WMS BAND 3 101,257 0.0 0.0
Total FTEs 0.3 0.2
III. C - Expenditures By Program (optional)
NONE
Request # 1189-2-1
Form FN (Rev 1/00) 167,098.00 3 Bill # 1189 S HB
FNS062 Department of Revenue Fiscal Note
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and dexcribe potential financing methods
NONE
None.
Part V: New Rule Making Required
Identify provisions of the measure that require the agency to adopt new administrative rules or repeal/revise existing rules.
Should this legislation become law, the Department will use the expedited process to amend WAC 458-19-050, titled:
"Definitions", WAC 458-19-020, titled: "Levy limit - method of calculation", WAC 458-19-025, titled: "Restoration of
regular levy", WAC 458-19-030, titled: "Levy limit - consolidation of districts", WAC 458-19-035, titled: "Levy limit -
annexation", WAC 458-19-05001, titled: "Port district levies for industrial development district purposes", WAC
458-19-060, titled: "Emergency medical service levy", WAC 458-19-065, titled: Levy limit - protection of future levy
capacity", WAC 458-19-085, titled: "Refunds - procedures - applicable limits", and WAC 458-19-550, titled: "State levy -
apportionment between counties".
Persons affected by this rule-making would include local governments financing public improvements through the creation
of increment areas, using increment financing.
Request # 1189-2-1
Form FN (Rev 1/00) 167,098.00 4 Bill # 1189 S HB
FNS062 Department of Revenue Fiscal Note
LOCAL GOVERNMENT FISCAL NOTE
Department of Commerce
Bill Number: 1189 S HB Title: Tax increment financing
Part I: Jurisdiction-Location, type or status of political subdivision defines range of fiscal impacts.
Legislation Impacts:
X Cities: increase in property tax revenue for cities that establish an increment area , pass an ordinance, and fund projects with tax
increment financing
X Counties: increase in property tax revenue for counties that establish an increment area , pass an ordinance, and fund projects with
tax increment financing
X Special Districts: increase in property tax revenue for port districts that establish an increment area , pass an ordinance, and fund
projects with tax increment financing
Specific jurisdictions only:
Variance occurs due to:
Part II: Estimates
No fiscal impacts.
X Expenditures represent one-time costs: costs associated with adopting an ordinance, developing a project plan, negotiating a
mitigstion plan
X Legislation provides local option: local governments could establish an increment area and pass an ordinance to fund projects with
tax increment financing
X Key variables cannot be estimated with certainty at this time: which local governments would establish increment areas, property
tax revenue increase gained from increased property values
Estimated revenue impacts to:
Non-zero but indeterminate cost and/or savings. Please see discussion.
Estimated expenditure impacts to:
Non-zero but indeterminate cost and/or savings. Please see discussion.
Part III: Preparation and Approval
Fiscal Note Analyst: Tammi Alexander Phone: 360-725-5038 Date: 02/25/2021
Leg. Committee Contact: Rachelle Harris Phone: 360-786-7137 Date: 02/19/2021
Agency Approval: Allan Johnson Phone: 360-725-5033 Date: 02/25/2021
OFM Review: Ramona Nabors Phone: (360) 902-0547 Date: 02/28/2021
Page 1 of 3 Bill Number: 1189 S HB
FNS060 Local Government Fiscal Note
Part IV: Analysis
A. SUMMARY OF BILL
Provide a clear, succinct description of the bill with an emphasis on how it impacts local government .
CHANGES IN THIS SUBSTITUTE VERSION:
The substitute bill requires local governments to submit a project plan to the Office of the State Treasurer for review prior to adoption of
an ordinance to create an increment area.
It requires local governments to negotiate a mitigation plan with a fire district prior to implementing the increment area if the project
analysis indicates that an increment area will impact at least 20 percent of the assessed value in a fire district .
It clarifies the authority to issue revenue bonds as supplementary to any authority existing in statute , and limits that authority to 25 years. It
also clarifies the exclusion of state levies, port, and public utility districts from repaying debt from TIF apportionment.
SUMMARY OF ORIGINAL BILL VERSION:
The original bill would amend RCW 84.55.010 and add a new chapter to Title 39 RCW and would authorize cities , towns, counties, port
districts, or any combination of those to finance public improvements using tax increment financing . Prior to establishing an increment
area, local governments must complete a project analysis that includes a statement of objectives , the property the local government intends
to obtain, the duration of the TIF area, and the estimated value of the project. Once the increment area is determined, the local government
must adopt an ordinance designating the increment area within its boundaries and specifying the public improvements proposed to be
financed in whole or in part with tax increment financing.
Public improvements that are financed with TIF may be funded by other revenue sources .
In the calendar year following the passing of the ordinance, the county treasurer shall distribute receipts from regular taxes imposed on real
property in the increment area, with instruction. The local government that created the increment area shall
receive an additional portion of the regular property taxes levied by or for each taxing district upon the increment value within the
increment area.
The bill takes effect 90 days after final adjournment of the session in which it is enacted .
B. SUMMARY OF EXPENDITURE IMPACTS
Briefly describe and quantify the expenditure impacts of the legislation on local governments , identifying the expenditure provisions by
section number, and when appropriate, the detail of expenditures. Delineate between city, county and special district impacts.
This substitute bill would have an indeterminate impact on local government expenditures for those that choose this local option . Local
governments choosing to establish increment areas must submit a project plan to the State Treasurer's Office , negotiate a mitigation plan
with the local fire district if applicable, and adopt an ordinance. All representing one-time costs. It is unknown which local governments
would utilize this option.
According to the Local Government Fiscal Note Program unit cost data, the typical cost to adopt an ordinance per jurisdiction ranges from
$555 for a simple ordinance to $5,458 for a complex ordinance. These costs include costs for draft ordinances, advisory commission
meeting and recommendation, finalized ordinance, publication of ordinance, and general public information. The required project plan
and mitigation plan would require additional administrative costs, likely minimal.
Note: These cost estimates are for only one meeting or staff report, more complex ordinances would likely require more meetings and
potentially more staff reports. There would be further costs associated with enforcing or executing the ordinance .
C. SUMMARY OF REVENUE IMPACTS
Briefly describe and quantify the revenue impacts of the legislation on local governments , identifying the revenue provisions by section
number, and when appropriate, the detail of revenue sources. Delineate between city, county and special district impacts.
This substitute bill would have an indeterminate impact on local government revenues . There would be an increase in property tax revenue
for the local governments that choose to establish increment areas for the purpose of using tax increment financing for improvements . It is
unknown what local governments would participate in tax increment financing or the amount that property assessed values would increase
based on the improvements, therefore, the additional tax revenue cannot be calculated.
Page 2 of 3 Bill Number: 1189 S HB
FNS060 Local Government Fiscal Note
Sources:
Department of Revenue fiscal note, 1189 S HB (2021)
House Bill Report, HB 1189, Finance Committee (02/18/2021)
Local Government Fiscal Note Program, Unit Cost Data 2021
Page 3 of 3 Bill Number: 1189 S HB
FNS060 Local Government Fiscal Note
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