New Legislation Changes When Cities Receive Property Tax Revenues After Annexation of Territory in a Fire or Library District

SB 5836 (Ch. 285, Laws of 2007) provides that, when cities annex territory within a fire protection or library district, they will now begin receiving, as of the date of annexation, the district-levied property tax revenues that are not delinquent but have not yet been collected by those districts within the annexed territory.

The current situation that this legislation changes is that, when a city annexes territory within a fire protection or library district, it does not receive property tax revenues based on its own tax levy from that territory until the calendar year following the annexation, if the annexation is effective before June 1, or not until the start of the second calendar year following the annexation, if the annexation is effective after June 1. The effect of this situation is that, for a period of time, property annexed by a city that is within a fire protection and/or library district will be receiving services from the city while still paying property taxes to the district or districts. For more detail about the current situation, see the final bill report.

The new legislation provides that, as with county road taxes, any fire or library district taxes on annexed property that were levied, but not collected and not delinquent, must be paid to the annexing city when collected, at times required by the county, but no less frequently than July 10 for collections through June 30th and January 10 for collections through December 31st following the annexation. Taxes that were delinquent but not collected on the date of annexation are to be paid to the districts. The annexing city is to notify the fire and/or library district, as well as the county assessor and treasurer, of the annexation at least 30 days prior to its effective date; the county treasurer is required to pay to the annexing city only those fire and library district taxes collected 30 or more days after receipt of the notice.

SB 5836 also provides that, if the annexed property is subject to an outstanding general obligation bond, the bonded indebtedness of the fire or library district remains an obligation of the taxable property annexed to the city.

Lastly, this legislation amends RCW 84.09.030 to change from March 1 to August 1 the date when, for purposes of the following year's property tax levies, the boundaries of cities and other taxing districts are set.

This legislation is effective July 22, 2007.