New bill would replace city of Kent’s potential loss of state revenue

A bill sponsored by State Rep. Debra Entenman, D-Kent, to assist communities such as Kent and Auburn with large warehousing and manufacturing sectors, passed the House Wednesday 84-12.

“This bill ensures that communities like Kent and Auburn will have the necessary revenue to maintain roads and services in our warehousing and manufacturing centers,”Entenman said in a House Democrats news release. “The warehousing and manufacturing centers in these cities help drive the state’s economy and it should not fall exclusively on Kent and Auburn taxpayers to maintain the roads they rely on.”

House Bill 1948 creates a Warehousing and Manufacturing Job Centers Account which will ensure that cities who received substantial mitigation funds from the Streamlined Sales Tax Mitigation Account will continue to receive funds. These funds are vital for public safety, public works and economic development, according to the release.

In 2007, Kent and Auburn lost sales tax revenue because of a change in tax structure by multiple states to simplify the collection of sales taxes from online purchases. To mitigate that lost revenue the Legislature created the Streamlined Sales Tax Account.

Legislators during the 2019 session approved for Kent to continue to receive about $4 million per year through 2021 and potentially through 2023. The funds were initially set up by the state in 2008 to help compensate Kent and other cities for revenue lost when legislators changed Washington from an origin-based system for local retail sales tax to a destination-based system, which took away Kent’s tax revenue from its many distribution and wholesale warehouses.

The Legislature passed a bill in 2017 to end streamlined sales tax mitigation payments in October 2019. But state leaders changed their minds the past session after Kent officials and several legislators lobbied to keep the program.

The Legislature ended the Streamlined Sales Tax Account in 2017, speculating that changes resulting from the Marketplace Fairness Act would compensate for the lost revenue. But in cities with large warehousing and manufacturing centers, this was not the case. In 2018 and 2019, the city of Kent still received over $4.5 million but the Legislature continues to consider removal of the Streamlined Sales Tax funds.

If those funds go away as planned, this bill will allow the cities of Kent and Auburn to maintain their current budgets without additional tax increases.

Monies would come from the state’s general fund starting on July 1, 2020, and continuing each year through July 1, 2031, according to the bill.

This legislation now goes to the Senate for consideration. The 60-day legislative session is scheduled to conclude on March 12.