BREAKING: Gov. Gregoire Proposes Eliminating Annexation Sales Tax Credit
Burien’s proposal to annex the remaining North Highline Unincorporated Area took a major body blow Thursday (Oct. 27).
Only time – and anticipated negotiations between city council members and state legislators and King County officials – will tell if this hit proves fatal.
That blow is included in Gov. Chris Gregoire’s proposed Budget Reduction Alternatives to offset another $2 billion shortfall in anticipated revenues for the current fiscal biennium.
Gregoire’s budget-cutting plan was submitted to legislators this morning. A special session of the Legislature to deal with the state’s latest budget crisis will be held in late November.
Under “Local Government Revenue Sharing,” the governor proposes elimination of the state annexation sales tax credit, which her budget office projects would save $17.8 million, effective Feb. 1.
This would terminate “a tax credit that benefits seven cities in King, Pierce or Snohomish counties,” Gregoire reminded the Legislature.
“Under the credit, cities that annexed an area with a population of at least 10,000 are allowed to retain 0.2 percent of the state’s sales tax generated in the city to fund the cost of extending city services to the annexed area.”
For Burien, the sales tax credit, if it remains on the books, would bring the city an additional $5 million a year for 10 years to offset the costs of annexing North Highline.
Without a guaranteed sales tax credit for the full 10 years, even some ardent supporters of annexation on the city council have questioned whether it would pencil out.
In her message to legislators, Gregoire said, “These budget alternatives will impact real people. They’re all around us. They’re in our neighborhoods, on our streets, in our schools – and they have needs the state will no longer be able to meet….
“This is a beginning,” she continued. “I expect additional feedback from communities and various stakeholder groups that I will certainly consider before I present a more complete budget next month. This list will likely hange before then. But not much – our options are limited.
“We’ve already cut $10 billion from state government over the last three years, which leaves very few options moving forward. I said the work of slashing our budget by another $2 billion would be dreadful, and that’s what it is. Washingtonians are going to get a lot less of what they need.”
More details will be posted on The B-Town Blog later.