Rep. Klicker’s bipartisan legislation to allow local governments to share tax revenue, unanimously approved by the House

The Washington State House of Representatives unanimously passed a bipartisan bill from Rep. Mark Klicker on Thursday that would be a boost to local governments by allowing cities to share certain sales and use tax revenue.

House Bill 2428 would help cities and towns work together on economic development by combining their resources and efforts to attract more businesses. The legislation would allow towns and cities to voluntarily enter interlocal agreements to share a portion of general-purpose local government sales and use tax revenue.

“This legislation would not only help municipalities in my district, but it would assist smaller cities and towns throughout the entire state,” said Klicker, R-Walla Walla. “These smaller government entities would benefit greatly from this bill, especially when it comes to building infrastructure and attracting new retail businesses. It would also eliminate competition for sales tax revenue between neighboring cities because they have the option to enter interlocal agreements and work together.”

An interlocal agreement is formed between local governments or other public agencies to cooperatively conduct government activities or provide services. The agreement must include several specific terms, including:

  • The duration of the agreement.
  • The precise organization of any entity created.
  • The purpose of the agreement.
  • How the undertaking will be financed.
  • How the agreement can be terminated.

In addition to the terms required to be included in any interlocal agreement, an agreement to share sales and use tax revenue must include the area or areas in which the agreement applies, if it is only applicable to revenue collected in certain areas. The amount or proportion of revenue to be shared and the mechanism for sharing must also be included.

“Although this is a simple bill on paper, it would have a huge impact for many towns and communities,” said Klicker. “By being able to share this vital revenue with each other, neighboring towns and cities would be able to do a lot more through their combined efforts than they can on their own. This is a good bipartisan bill and I’m pleased to see it move forward.”

House Bill 2428 now heads to the Senate for further consideration.

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Washington State House Republican Communications
houserepublicans.wa.gov