Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS
Finance Committee
HB 1042
Brief Description: Authorizing cost recovery for county treasurers.
Sponsors: Representatives Wylie, Volz and Stonier.
Brief Summary of Bill
  • Authorizing a county treasurer to charge local taxing districts a cost recovery fee for administrative costs associated with billing, collecting, and distributing property taxes.
Hearing Date: 2/13/25
Staff: Tracey Taylor (786-7152).
Background:

Counties and cities impose two basic types of taxes—property and sales and use taxes.  Revenues from most of these basic types of taxes are general revenues that may be expended for any county purpose.  Counties and cities may also impose a variety of excise taxes, including a local option real estate excise tax and dedicated sales and use taxes.

 

In addition to city and county governments, there are a variety of special purpose districts (SPDs).  Some of these SPDs have the ability to levy a property tax.  These SPDs that are also local taxing districts include fire protection districts, port districts, and public hospital districts.

 

The county treasurer collects various taxes for the benefit of cities and SPDs.  County treasurers can recover costs from taxing districts for the treasurer's direct costs associated with certain administrative duties, such as issuing tax refunds.  Other administrative costs are not recoverable, including billing, collecting, and distributing property taxes.

 

Local taxing districts can levy a refund levy for property taxes refunded by the county treasurer, along with the administrative fee charged by the county treasurer for issuing the refund and any applicable interest charged.
Summary of Bill:

A county treasurer is authorized to charge local taxing districts a cost recovery fee to recover administrative costs associate with billing, collecting, and distributing property taxes.  Recoverable administrative costs are all costs incurred by a county treasurer during a prior 12-month period for the billing, collection, and distribution of real and personal property taxes.  Capitalized expenditures may not be recovered for a period that exceeds the useful life of the asset.

 

The cost recovery fee is based on actual allowable costs for the prior year and is applied on a pro rata basis to each local taxing district. The first $50,000 of the local taxing district's aggregate collections is excluded from the cost recovery fee.  The cost recovery fee is based on the size of the county:

  • For counties with a population larger than 250,000, the cost recovery fee may not exceed 1 percent of the taxing district's tax roll.
  • For counties with a population less than 250,000, the cost recovery fee may not exceed 2 percent of the taxing district's tax roll.

 

When the county is establishing the cost recovery fee, the prior year collection rates may be considered.  The county treasure must furnish the cost recovery fee to affected local taxing districts no later than September 1 of the current year.

 

Recovered costs must be credited to the county treasurer's cost recovery account without regard to budget limitations to fund ongoing billing, collection, and distribution operations.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.