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SubjectsPlanning › Annexation Agreements - Revenue Sharing
Updated 01/2011

Annexation and Growth Management Agreements - Revenue Sharing

These agreements address transition of public service provision from counties to cities and generally provide compensation to counties, at least on a transitional basis, for lost revenues. They usually focus on re-allocation of property and sales taxes. We have several agreements that address revenue cost sharing and service transition for annexations in general. Other examples address revenue sharing or adjustments related to specific large developments. A few include preliminary agreements that set in motion work toward future agreements to share or adjust revenues.

The Skagit County/Anacortes agreement, the Douglas County/East Wenatchee agreement and the Walla Walla County/city of Walla Walla agreement all provide for city reimbursement to the county of some percentage of the county’s lost sales tax revenue within the annexed area. That percentage declines over a period of years, as described in the agreements. The Kitsap County agreement also addresses ad valorem property tax and admission tax lost by the county. In a different twist, the Kitsap County agreement also provides for county reimbursement to the city for sales that that the city loses when a major retail business relocates from the city to the city urban growth area while still under county jurisdiction.  

Grant County and the city of Moses Lake reached a mediated agreement to provide for timely annexations by Moses Lake, while protecting the financial viability of the Grant County Road fund. The agreement contains reimbursement formulas to help the county adjust to reduced road revenues. The city will reimburse the county at a decreasing rate over a six-year period, corresponding with the time frame of the county's capital improvement program. Separate formulas are established for resource-based and non-resource based property annexations. The agreement also addresses city-county cost sharing for maintenance costs on a specific road. The city will also reimburse the county for the locally funded portion of any capital investments made by the county within the unincorporated UGA, at the time of annexation.

Sample county/city agreements that address revenue-sharing:  

We would appreciate any other examples of revenue-sharing agreements or studies that counties would like to share.

Need more information?

Feel free to Ask MRSC. Washington cities, counties, and our contract partners can call or email MRSC for more information and advice - free of charge.