County Sales Tax Legislation Moves Forward
The House Appropriations Committee recently amended and approved the latest version of the Optional County Sales Tax Plan. The latest legislative proposal is HB 1858 (PN 2533), which would allow counties to adopt a 1 percent sales tax and provide more than $500 million in county and local government property tax relief and offsets for tax-exempt property.

PSATS and the other local government associations are working hard to move HB 1858 forward as part of the 2009-2010 budget debate. Township officials are strongly encouraged to contact their state representative and senator in support of HB 1858.

Under HB 1858, counties could choose to levy a 1 percent sales tax on the same goods and services subject to the state’s 6 percent sales tax. Municipalities would have to adopt a resolution to participate and receive their share of the funds in the county. HB 1858 was amended to authorize counties to keep 50 percent of the money and municipalities to share 50 percent of the funds. Earlier versions of the legislation allocated only 40 percent to municipalities and 10 percent to a Municipal Collaborative Efforts Fund in each county. HB 1858 was amended to eliminate any reference to this fund.

Funds would be distributed to participating municipalities through a specific formula, with half based on population and half based on weighted tax revenues, defined as a municipality’s total tax revenues divided by its market value per capita. The committee also amended the bill to reduce the percentage of funds that county and local governments would be required to use for property tax relief or tax-exempt property offsets from 60 to 50 percent. The remaining money could be placed in the general fund.

Important Documents:

• 4/20 News Conference: Local Governments Call for Property Tax Reform through Optional County Sales Tax
• HB 1858 (PN 2533) – bill text 
• Key Facts - Optional County Sales Tax
• Collections for the Optional County Sales Tax
• Distribution of Optional County Sales Tax Collections