State and Local Government Finance System

--Begin vertical—

1. To ensure a system of taxation that provides revenue sufficient to meet the changing needs of the people of the state through adoption of taxes, rates, rate schedules, revenue and finance measures that:

            a. meet tests of treating equal tax circumstances equally (horizontal equity) and promoting a progressive tax structure (vertical equity);

            b. provide adequate revenue at the time of adoption as well as contributing to a system with good cyclical adequacy and that grows with the economy (elasticity);

            c. a preference for measures that:

                        1) contribute to the flexibility of the system;

                        2) are accompanied by analyses of potential economic effects that are available to the governing body and general public prior to adoption;

                        3) simplify the tax system and/or provide for efficient collection and distribution of revenue;

                        4) facilitate accountability to the public by the unit of government that collects the revenue and that that delivers services;

                        5) make provision for persons unable to pay fees or charges levied on essential community wide services.

--End vertical--

Adequacy of Revenue

2. To ensure adequacy of revenue by:

            a. retention of existing sources of revenue with bases as broad as possible consistent with fairness;

--Begin vertical--

            b. a variety of revenue sources available to local governments including a wide range of local taxes that meet tests of equity and adequacy and that take into account flexibility, economic effects, simplicity, efficiency and accountability;

            c. local revenue sources including fees, with provision for persons unable to pay fees or charges levied on essential community wide services; and benefit assessments, when benefits accrue primarily to those paying and that contain a protest and appeals process that is simple, clear, speedy, widely publicized, in which the appellant has access to assessment records necessary to prepare an appeal;

            d. use by local governments of tax base sharing; state and federal assistance; and cost saving management techniques;

--End vertical--

            e. state reimbursement to local governments for revenue losses due to state imposed exemptions;

            f. a state imposed resource severance tax.

Equity

3. To ensure fair sharing of the tax burden by:

            a. acceptance of ability to pay as the primary but not exclusive criterion for distributing the tax burden, with emphasis on income based taxes;

            b. tax expenditures measures that include provision for mandatory, periodic review and justification by the legislature;

            c. a preference for tax expenditures that:

                        1) contribute to tax equity;

                        2) are in the interest of the general public and not just a specific group;

                        3) provide social benefits that significantly outweigh the increased tax burden to others;

                        4) simplify tax administration;

            d. exemption from the sales tax of food, prescription drugs and other goods purchased by prescription, baseline utility costs, repair and services;

            e. consideration of expanding the sales tax base to include carefully defined non-essential food items, such as candy, and admissions to amusements;

            f. responsibility for funding health and welfare services by the program mandating level of government;

            g. collection by the state of any income or sales tax;

            h. distribution of the local portion of sales tax revenue by a formula that takes into account population, and local and regional needs, as well as point of sale;

            i. allocation of other funds from the state to local governments on the basis of population; environmental, economic, and/or social impact; need for service, and revenue raising ability.

Flexibility of Revenue

4. To ensure flexibility of revenue by:

            a. legislative control of state tax sources and rates;

            b. establishment of a general frame work for local revenues by the legislature;

--Begin vertical—

            c. minimal use of direct voting by citizens on tax sources and rates;

            d. governing body adoption of user fees and fine schedules;

            e. a simple majority vote by the public or the governing body to adopt, repeal or change a revenue or finance measure;

            f. public program and funding priorities that give primary consideration to meeting the basic needs of the general population, attaining program objectives economically, and using procedures that promote flexibility and permit diversity of services;

            g. selective reductions within and among programs rather than across-the-board cutbacks when funding is reduced;

            h. each fund or tax "earmarked" for a specific purpose containing an automatic sunset date and provisions for mandatory government body review and reauthorization;

            i. adoption of designated "ear marked" funds and taxes only in those situations where social benefit significantly outweighs the loss of flexibility;

--End vertical--

            j. "earmarking" in all cases statutory rather than in the state constitution;

            k. periodic review of the allocation formula for tidelands oil revenue to accommodate changing needs;

--Begin vertical—

            l. a continuing search for better ways to finance government.

--End vertical--

State and Local Government Processes

--Begin vertical—

5. To ensure flexible government processes by:

            a. adoption of budgets, appropriations, taxes, other revenue sources, and changes in rates and schedules by a simple majority vote of the governing body;

            b. repeal or changes in statutory tax expenditures by a simple majority vote;

            c. mid-budget appropriations adjustments through joint action of the executive and legislature or governing body so that checks and balances are retained;

            d. consideration of options such as two-year budget cycles and budget formats that emphasize performance and outcomes.

--End vertical--

Long Term Debt Financing

--Begin vertical-

6. To ensure provision for long term debt financing of certain capital projects by:

            a. approval of bond issues that take into account:

                        1) the current bond rating status of the state or local jurisdiction, including cumulative impacts and how the adoption of additional debt will impact ability to finance future projects;

                        2) the viability and comparative cost of other means of finance such as "pay as you go," leasing and lease purchase;

                        3) how the bond issue fits within debt management and infrastructure plans, statutory caps on bonded indebtedness or recommended debt ratios (levels of debt service within a budget);

                        4) current urgent needs, such as repairs following a disaster, that may not fall within adopted infrastructure plans;

            b. use of bond financing for:

                        1) construction of capital projects;

                        2) purchase of facilities for public use;

                        3) repair and retrofitting of existing public facilities and structures when other means of financing are not available;

            c. provision for voter approval of state and local bond measures by a simple majority vote.

--End vertical--

Property Tax Equity

7. To ensure property tax equity by:

            a. the requirement that all types of property subject to the property tax bear a fair share of the property tax burden;

            b. separation of residential from commercial/industrial properties for taxing or assessment purposes in order to achieve fair sharing of the tax burden;

            c. provision for property tax relief for those on low or fixed in comes, especially the elderly.

Property Tax Base

8. To ensure a broad property tax base by requiring that:

            a. the property tax be levied on both land and improvements;

            b. tax exempt properties pay for services directly rendered them.

Property Tax Use

--Begin vertical—

9. To ensure use of the property tax primarily for those services directly related to property such as police, fire protection, streets, water, sewer-age, and street lighting; for such other local services as libraries, parks, recreation, the general administrative costs of local government and public schools.

--End vertical--

Property Tax Assessments

--Begin vertical—

10. To ensure sound assessment practices and policies that provide:

            a. an adequate budget for the assessor's office to permit accurate appraisals, a staff of qualified personnel required to take ongoing training, and use of modern appraisal tools whenever the cost can be justified;

            b. regular, frequent reappraisals;

--End vertical—

            c. the use of market value as the standard for assessments with effective alternatives to preserve agricultural land and open space;

--Begin vertical—

            d. an appeals process that is simple, clear, speedy and widely publicized and in which the appellant has access to the assessment records necessary to prepare an appeal;

            e.  uniformity throughout the state.

--End vertical--