Time is starting to run out on Kent city leaders and staff as they once again lobby the Legislature to keep streamlined sales tax mitigation funds.
Things didn’t go so well for the city two years ago in Olympia when the Legislature passed a bill to end streamlined sales tax mitigation payments in October 2019. The funds were initially set up by the state in 2008 to help compensate Kent for revenue lost when legislators changed Washington from an origin-based system for local retail sales tax to a destination-based system, taking away the city’s tax revenue from its many warehouses.
Kent gets about $5 million per year from the state – funds that will stop starting in late 2019. The City Council approved a 2019-2020 city budget proposed by Mayor Dana Ralph to raise business and occupation taxes to help compensate for the anticipated lost revenue.
Gov. Jay Inslee released his proposed budget in mid-December that goes along with the Legislature’s plan from two years ago to end streamlined sales tax mitigation payments. Ralph and other mayors as well as more than 25 legislators sent a letter to Inslee to extend the payments, but he declined to take that step.
“The Legislature passed a bill the session before last that has streamlined sales tax mitigation payments ending on Sept. 30 of 2019,” Inslee’s spokeswoman Tara Lee said in a Dec. 27 email. “The governor’s budget did not change that policy.”
City of Kent lobbyist Briahna Murray, vice president of Tacoma-based law firm Gordon Thomas Honeywell, told the council’s Operations Committee that streamlined sales tax mitigation remains Kent’s top priority for the 2019 legislative session that begins Jan. 14. City leaders want the mitigation payments to continue through 2021.
“Streamlined sales tax mitigation is above the others,” Murray said about her focus in Olympia. “The others will receive equal treatment.”
The Legislature approved ending the payments in part because of a new Marketplace Fairness Act it passed in 2017 to collect online retail sales taxes. But cities that receive streamlined sales tax mitigation funds have that amount reduced by how much they get from the new online tax.
The city of Kent received $358,247 from the new tax between Jan. 1, 2018, and Sept. 30, 2018, according to the state Department of Revenue. Those revenues are insufficient to fully offset the loss of streamlined sales tax mitigation funds, according to city staff.
Other priorities approved by the council to lobby for in Olympia include:
• Capital funding for Mill Creek flood plain stabilization
The city will request an additional $2 million to fund the Mill Creek project to improve flood protection and the salmon habitat. The total cost of the project is $10 million, which includes dredging about a 3-mile stretch from Earthworks Park to South 204th Street. The city plans to spend $6 million of its funds and has received $2 million from the state.
• Early delivery of the Puget Sound Gateway Project
This project will extend State Routes 509 and 167 as part of the $16 billion statewide transportation project approved in 2015 by the Legislature, with a cost of about $1.8 billion for the Puget Sound Gateway Project. The funding package includes about $180 million in tolling, and legislators still need to approve tolling the highway. The city also wants the project done sooner than the proposed 2025 timeline. In Kent, the project includes extension of Veterans Drive underneath Interstate 5 and a new I-5 interchange at SR 516 aka Kent Des Moines Road.
Murray said the state Department of Transportation is looking at creative financing options, such as to move money from later years to earlier years and short-term loans in an effort to deliver the project sooner.
• Funding for South 224th phase 2
The city wants $2 million to help complete the South 224th Street phase 2 of the Veterans Drive/228th Street corridor. Kent is finishing up the new Highway 167 overpass but needs more money to extend the street up the East Hill. Murray said state transportation tax revenues are not coming in as high as expected, so it will be a tough challenge for the city to receive more funds.
• Authorize pilot program to address street racing
Hundreds of street racers show up in the north Kent industrial area on nice weekends – mainly in the spring and summer – to illegally race. Kent wants legislators to authorize a new program that utilizes technology to automatically issue tickets for vehicles with illegal (loud) exhaust systems to deter racing. The device reportedly measures noise that triggers a camera to capture the vehicle’s license plate, similar to red-light cameras and school zone traffic cameras that catch speeding drivers.
“It’s a pilot program idea to try something new to address the problem,” Murray said.