Awash in Water Bills

December 2002

Awash in Water Bills

With less than a month to the beginning of the new legislature proposed bills are beginning to flow. Twenty water bills are currently in the works sponsored by all types of organizations and groups. The Governor directed his water team to develop proposed water legislation for his consideration by the end of the 2nd week in December. Once he has agreed to a package of water bills his “Water Team” will draft final language and begin circulating it to all interest groups.

To be included in the initial package for Locke’s consideration are to be several municipal water bills. Preliminary information seems to indicate that interties, protection of inchoate water, longer development times, flexible use based on water system plans, and conservation are to be included for his consideration.

Environmentalists have indicated their interest in “public interest” test on surface water permits and other water rights actions. The agriculture community would like to see clarification of the exemption for stockwatering, and according to rumors some would like to see the recent Supreme Court decision on exempt wells be corrected through legislation.

Kitsap PUD is proposing a very comprehensive muni water bill and the Eastern Cities have a muni water bill as well. Both would most likely be wrapped into what ever legislation the Governor proposes.

Department of Health has been tasked by the Water Team to develop language that would result in statutory conservation measures. The plan is to provide DOH with adequate legislative direction that they could proceed with comprehensive conservation rulemaking.

Jails In PWTF?

At the December meeting of the Public Works Board, representatives of the Counties and law enforcement proposed that it was now time to open the Public Works Trust Fund to the building of jails and other detention facilities.

Citing the decline in revenue to counties and cities, the inability of some counties to pass bond measures to build jails, county representatives believe access to PWTF loans would allow them to build new detention facilities. Counties claim that since they do not currently receive as many loans as cities and special districts it would be equitable to include jails. County representatives did not suggest new revenue streams to help fund the PWTF, nor did they propose limiting the amount of the Fund they would be allowed to access.

Several Board members expressed concern that the Fund is already oversubscribed and adding detention would deprive utilities of needed funds. The Fund, created in the 1980’s was designed to help specific types of utilities and specified that the Fund recipients would help fund the account. Twenty percent of water distribution taxes paid by water utilities goes to support the Fund while part of the sewerage collection tax goes there as well.

The utility contractors, special purpose districts and others spoke in opposition to the proposed raid on the fund. Everyone seemed to agree that new ways of funding jails must be found and the legislature has to be a key participant in future funding of criminal justice

There is danger from all men. The only maxim of a free government ought to be to trust no man living with power to endanger the public liberty.

John Adams, Journal, 1772

President’s Corner

Here we are in the middle of the holiday season. No matter how you choose to celebrate the holiday season, the common theme seems to be sharing with each other and working together. This is just what we need here at WASWD. What it takes is our willingness to work towards a common goal. To accomplish this we first have to take an active part in our Association. This would also be a good time to remind our members that our dues have been sent out and I would appreciate everyone’s support by remaining a member and working with us to not only keep our family; but hopefully, increase it at the same time.

Over the past month, I have been active as president representing the Association. I am working closely with the Executive Director on day-to-day issues. We met with Gary Rhoads of Evergreen Rural Water to see how the two organizations can work together and complement each other. We met with Bob Archey about the results of our board retreat. As a result, at our November board I created an ad hoc committee to be made up of all the chairs of the new committees. The purpose of this committee is to determine if the Association needs a survey; and if so, what will it look like? Who will do it? What is the question we are trying to answer?

This committee is to report back to the board at the March Board of Directors meeting. If you have any questions, comments, or ideas please contact one of the new chairs or me to give us your input. I have also utilized the ex-officio powers of the president’s office and have attended the following meetings: government relations, leadership and development, finance, by-laws, associate’s member meeting, public relations, legislative workshop, and finally Section III.

I would like to close by saying thank you for all your support and hard work. I invite you to attend our January 27th, 2003, Board of Directors’ Meeting. The new office is nice and has plenty of room so come join us and give us your input.

Happy Holidays

Larry D. Jones

President, W.A.S.W.D.

Governor Drops Infrastructure Funding Tax on Muni Water

Governor Gary Locke received a strong message from legislators and citizens at a recent one day meeting held in Tacoma. The meeting, to unveil the Phase 4 Watershed planning report, was to have been the kickoff event for advancing the $1.50/month tax on domestic water service. Instead legislators voiced strong opposition to the proposed tax in light of the November election results.

The defeat of R-51 and the passage of I-776 sent a clear message to legislators who decided they did not want to impose another tax that did not directly benefit the service being taxed or those paying the tax. While agreeing that the projects proposed to be funded by the tax are important, legislators agreed that a new way of paying for them must be found.

This does not mean there won’t be a utility tax on water and wastewater since cities and counties are proposing a 2% tax on all utility services. (see article on page 5).

WASWD Gains Seat on DOH Water Supply Advisory Committee

At the last meeting of the year, the members of the Water Supply Advisory Board (WSAC) made some new appointments to the Executive Committee. Among those selected to serve on the Executive Committee was Hal Schlomann, Executive Director, WASWD.

Hal will replace retiring Exec. Comm. member, Greg Brizindine, Manager, East Wenatchee Water District. Greg has served many years on the Committee and one year as its Chair.

The WSAC is a legislatively created citizens advisory board to the Department of Health’s Division of Drinking Water. Its purpose is to serve as a sounding board for the Drinking Water Staff and to provide input in their decision making process.

Cities, Counties, and Others Propose Annexation Fix

At a meeting held in Olympia Friday, November 22 a coalition comprised of the Association of Cities, Association of Counties, Assn. of Washington Business, Thousand Friends of Washington, and others announced that they had successfully agreed on an annexation “fix.”

In response to a State Supreme Court decision last March making the city process of petition annexation illegal, the Cities Association created a coalition to help them fix the problem.

The Coalition proposes three fixes. First is the issue of retroactivity. They want a bill passed that freezes all annexations in place on the date of the Court’s decision. Included in the freeze would be the cities of Moses Lake and Yakima which were the annexations considered in the Court’s ruling. Fire Districts have countered that those with open annexation appeals should not be included.

The second issue is petition annexation of uninhabited lands. This type of annexation could be approved by the majority of land holders. No vote would be required.

The third fix is petition annexation of inhabited lands. The Coalition proposes a double petition requiring a majority of land owners and a majority of voters in the area being annexed to approve by petition, no vote required.

The WASWD will not oppose these fixes but will watch the bills as they are developed and begin moving through the legislature to ensure no mischief towards special districts makes its way into legislation.

Looking at the makeup of the Senate and Committees that might hear bills regarding annexation it may be difficult for the cities to get all they would like to achieve this session. Most legislators would prefer to wait and see what the Supreme Court does in its reconsideration.

Tax Questions

We recently received a question from a district regarding taxes on services and income other than revenue received from sale of water.

A quick discussion with Tom McAuliffe of the C.P. McAuliffe company and some subsequent research of the RCWs and WACs revealed that most of a district’s revenue is subject to taxes of some type.

“WAC 458-20-179 Public utility tax. (1) Introduction. Persons engaged in certain public service businesses are taxable under the public utility tax. (See chapter 82.16 RCW.)”

The sale of water and sewer services qualify under this section of the Washington Administrative Code (WAC). In the case of a water district any revenue derived from an existing customer is taxed at the “Public Utility Tax” rate.

If revenue is generated from general facilities charges, connection fees, water availability letters prior to the person receiving delivery of water then the B&O tax applies. As stated in WAC 458-20-179 (4) “... these types of charges are taxable under the service and other business activities B&O tax classification if performed for a customer prior to receipt of the utility services (gas, water, electricity) by a new customer.

A new customer could be an existing customer building a new house and seeking service. Until water is delivered to the new address the customer is considered new in regard to the new dwelling.

Assessments received from ULIDs appear to be about the only income a district receives that is not taxable.

December 2002 PIPELINE articles- Washington Association of Sewer & Water Districts