Multiple Agency Fiscal Note Summary — Bill Number 5539 SB, Tax Increment Financing (Department of Revenue)
Summary
Multiple Agency Fiscal Note Summary for Bill Number 5539 SB, titled Tax increment financing, prepared by Cheri Keller, OFM, with the Department of Revenue fiscal note attached. The summary lists the Department of Revenue as the agency with estimated operating expenditures of 22,800 for 2023-25, and no estimated capital budget expenditures. The attached Department of Revenue note lists Clinton McCarthy as legislative contact and Frank Wilson for agency preparation. Its local government fiscal note says the amount of additional funds for the city or county that created the LTIF is indeterminate.
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“Multiple Agency Fiscal Note Summary — Bill Number 5539 SB, Tax Increment Financing (Department of Revenue).”
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Multiple Agency Fiscal Note Summary
Bill Number: 5539 SB Title: Tax increment financing
Estimated Cash Receipts
NONE
Agency Name 2023-25 2025-27 2027-29
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 2023-25 2025-27 2027-29
FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total FTEs GF-State NGF-Outlook Total
Department of .1 22,800 22,800 22,800 .0 0 0 0 .0 0 0 0
Revenue
Total $ 0.1 22,800 22,800 22,800 0.0 0 0 0 0.0 0 0 0
Estimated Capital Budget Expenditures
Agency Name 2023-25 2025-27 2027-29
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
Estimated Capital Budget Breakout
Prepared by: Cheri Keller, OFM Phone: Date Published:
(360) 584-2207 Final
FNPID 66178
:
FNS029 Multi Agency rollup
Department of Revenue Fiscal Note
Bill Number: 5539 SB Title: Tax increment financing Agency: 140-Department of Revenue
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Expenditures from:
FY 2024 FY 2025 2023-25 2025-27 2027-29
FTE Staff Years 0.2 0.1
Account
GF-STATE-State 001-1 22,800 22,800
Total $ 22,800 22,800
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).
Capital budget impact, complete Part IV.
X Requires new rule making, complete Part V.
Legislative Contact: Clinton McCarthy Phone:
360-786-7319 Date: 01/23/2023
Agency Preparation: Frank Wilson Phone:
360-534-1527 Date: 01/30/2023
Agency Approval: Valerie Torres Phone:
360-534-1521 Date: 01/30/2023
OFM Review: Cheri Keller Phone:
(360) 584-2207 Date: 01/30/2023
Request # 5539-1-1
Form FN (Rev 1/00) 181,099.00 1 Bill # 5539 SB
FNS062 Department of Revenue Fiscal Note
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Significant provisions of the bill and any related workload or policy assumptions that have revenue or expenditure impact on the responding agency by
section number.
CURRENT LAW:
Current law provides a mechanism for certain local governments to create “local tax increment financing” (LTIF) areas to
fund public improvements within specific boundaries of a county.
The local government must adopt an ordinance designating a specific increment area within its boundaries and the public
improvements that are to be financed. A local government designating a LTIF area may issue general obligation bonds to
finance the public improvements within an increment area to be repaid through regular levies.
The revenue increase is based on an increase in assessed value within the LTIF area, beginning the year following the
passage of the ordinance, and the regular property taxes, distributed and apportioned by the county treasurer to the local
government with the LTIF. Generally, property tax levies apportioned are those subject to the constitutional 1% and $5.90
aggregate limitations. However, property taxes levied by a port district or public utility district for the purpose of bond
payment and the state school levies are excluded from LTIF apportionment.
Each taxing district within the LTIF area continues to receive their portion of regular property tax on real property based on
the assessed value for the year first designated.
The apportionment of increases in assessed valuation in an LTIF area cease when the local government certifies that
allocation revenues are no longer needed to pay the public improvement costs.
The LTIF program also allows a taxing district located in an LTIF area to add to a levy’s 1% growth limit any increase in
assessed value for the LTIF area, like the new construction add-ons.
PROPOSAL:
The proposal makes revision to the LTIF program, as follows:
- Adds a definition of real property to also include privately owned improvements on publicly owned land, as part of the
increment value of a designated LTIF area.
- Clarifies the definitions of public improvements and public improvement costs to include certain improvements, such as the
cost of acquisition of real property and appurtenant rights.
- Makes technical revisions, including clarification of when increment areas go into effect, allocation of tax revenues, and
notice requirements for the creation of a LTIF.
- Allows taxing districts located in an LTIF area to add to a levy’s 1% growth limit any increase in assessed value for the
LTIF area, like the new construction add-ons, when restoring, consolidating, or annexing a property tax levy.
EFFECTIVE DATE:
This bill contains an emergency clause and takes effect immediately upon the Governor’s approval.
II. B - Cash receipts Impact
Cash receipts impact of the legislation on the responding agency with the cash receipts provisions identified by section number and when appropriate,
the detail of the revenue sources. Description of the factual basis of the assumptions and the method by which the cash receipts impact is derived.
Explanation of how workload assumptions translate into estimates. Distinguished between one time and ongoing functions.
ASSUMPTIONS
This bill impacts the calculations for a LTIF area by including privately owned improvements on public land in the base
value.
Request # 5539-1-1
Form FN (Rev 1/00) 181,099.00 2 Bill # 5539 SB
FNS062 Department of Revenue Fiscal Note
REVENUE ESTIMATES
This legislation results in no revenue impact to the state property tax levy.
This bill results in additional revenue for the city or county that created the LTIF. The amount of the additional funds is
indeterminate as there is no way of knowing where LTIF areas will be created, if they will have privately owned
improvements on public land, and what the value of those improvements will be.
II. C - Expenditures
Agency expenditures necessary to implement this legislation (or savings resulting from this legislation), with the provisions of the legislation that result in
the expenditures (or savings) identified by section number. Description of the factual basis of the assumptions and the method by which the expenditure
impact is derived. Explanation of how workload assumptions translate into cost estimates. Distinguished between one time and ongoing functions.
FIRST YEAR COSTS:
The department will incur total costs of $22,800 in fiscal year 2024. These costs include:
Labor Costs – Time and effort equate to 1.7 FTEs.
- Amend six administrative rules.
ONGOING COSTS:
There are no ongoing costs.
Part III: Expenditure Detail
III. A - Expenditures by Object Or Purpose
FY 2024 FY 2025 2023-25 2025-27 2027-29
FTE Staff Years 0.2 0.1
A-Salaries and Wages 14,400 14,400
B-Employee Benefits 4,700 4,700
E-Goods and Other Services 2,500 2,500
J-Capital Outlays 1,200 1,200
Total $ $22,800 $22,800
III. B - Detail: FTEs listed by classification and corresponding annual compensation. Totals agree with total FTEs in Part I and Part IIIA.
Job Classification Salary FY 2024 FY 2025 2023-25 2025-27 2027-29
EMS BAND 4 126,619 0.0 0.0
MGMT ANALYST4 73,260 0.0 0.0
TAX POLICY SP 2 75,120 0.0 0.0
TAX POLICY SP 3 85,020 0.1 0.1
TAX POLICY SP 4 91,524 0.0 0.0
WMS BAND 3 107,685 0.0 0.0
Total FTEs 0.2 0.1
III. C - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
Request # 5539-1-1
Form FN (Rev 1/00) 181,099.00 3 Bill # 5539 SB
FNS062 Department of Revenue Fiscal Note
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Acquisition and construction costs not reflected elsewhere on the fiscal note and description of potential financing methods.
NONE
Part V: New Rule Making Required
Provisions of the bill 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 the following rules:
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 458-19-085, titled: "Refunds-Procedures-Applicable limits"
WAC 458-19-550, titled: "State levy-Apportionment between counties"
WAC 458-19-05001, titled: "Port district levies for industrial development district purposes"
Persons affected by this rulemaking would include certain tax increment finance areas.
Request # 5539-1-1
Form FN (Rev 1/00) 181,099.00 4 Bill # 5539 SB
FNS062 Department of Revenue Fiscal Note
LOCAL GOVERNMENT FISCAL NOTE
Department of Commerce
Bill Number: 5539 SB 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 local tax increment financing areas
X Counties: increase in property tax revenue for local tax increment financing areas
Special Districts:
X Specific jurisdictions only: jurisdictions with local tax increment financing areas
Variance occurs due to:
Part II: Estimates
No fiscal impacts.
Expenditures represent one-time costs:
Legislation provides local option:
X Key variables cannot be estimated with certainty at this time: which jurisdictions with local tax increment financing areas, value of
improvements
Estimated revenue impacts to:
Non-zero but indeterminate cost and/or savings. Please see discussion.
Estimated expenditure impacts to:
None
Part III: Preparation and Approval
Fiscal Note Analyst: Tammi Alexander Phone: 360-725-5038 Date: 01/31/2023
Leg. Committee Contact: Clinton McCarthy Phone: 360-786-7319 Date: 01/23/2023
Agency Approval: Allan Johnson Phone: 360-725-5033 Date: 01/31/2023
OFM Review: Cheri Keller Phone: (360) 584-2207 Date: 01/31/2023
Page 1 of 2 Bill Number: 5539 SB
FNS060 Local Government Fiscal Note
Part IV: Analysis
A. SUMMARY OF BILL
Description of the bill with an emphasis on how it impacts local government.
This bill makes revisions to the Local Tax Increment Financing (LTIF) program by:
- Defining the term real property as it relates to LTIF areas
- Making technical revisions, including clarification of when increment areas go into effect, allocation of tax revenues, and
notice requirements for the creation of a LTIF
- Allowing taxing districts located in an LTIF area to add to a levy’s 1% growth limit any increase in assessed value for
the LTIF area, like the new construction add-ons, when restoring, consolidating, or annexing a property tax levy
B. SUMMARY OF EXPENDITURE IMPACTS
Expenditure impacts of the legislation on local governments with the expenditure provisions identified by section number and when
appropriate, the detail of expenditures. Delineated between city, county and special district impacts.
This bill would not impact local government expenditures because no action is required.
C. SUMMARY OF REVENUE IMPACTS
Revenue impacts of the legislation on local governments, with the revenue provisions identified by section number, and when
appropriate, the detail of revenue sources. Delineated between city, county and special district impacts.
This bill would make changes to the LTIF program that would allow cities or counties with local tax increment financing
areas to collect additional property tax revenue. The impact is indeterminate.
According the the Department of Revenue (DOR) this bill impacts the calculations for a LTIF area by including privately
owned improvements on public land in the base value. This bill results in additional revenue for the city or county that
created the LTIF. The amount of the additional funds is indeterminate as there is no way of knowing where LTIF areas
will be created, if they will have privately owned improvements on public land, and what the value of those improvements
will be.
SOURCES:
Department of Revenue fiscal note, SB 5539 (2023)
Senate Bill Report, SB 5539, Business, Financial Services, Gaming & Trade Committee (1/30/2023)
Page 2 of 2 Bill Number: 5539 SB
FNS060 Local Government Fiscal Note
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