Bill would withhold money from districts that don’t file reports

OLYMPIA — Special districts that don’t file financial reports with the state auditor each year as required could be barred from spending the tax dollars they collect.

A bill passed by the state House would prevent county treasurers from releasing money to any special purpose district that has failed to turn in its mandated annual report.

Rep. Ross Hunter, D-Medina, wrote the bill in response to an analysis issued in January showing that every year hundreds of small special districts, including several in Snohomish County, don’t turn in information.

Hunter said he spoke with state auditor Troy Kelley before drafting House Bill 2084. It passed 85-15 on March 10.

“Governments should be transparent in how they raise money and how they spend it,” said Hunter, who is chairman of the House Appropriations Committee. “He can’t audit them if he doesn’t have access to the information.”

A 1909 state law requires every local government to file a financial report with the State Auditor’s Office within 150 days of the end of the particular district’s fiscal year.

About one-third of Washington’s 1,956 fire, sewer, diking, drainage, cemetery and other special purpose districts struggle to fully comply each year.

Kelley’s analysis found 31 districts in Snohomish County and 580 others in Washington either did not file annual reports covering the 2013 fiscal year, or turned them in late or incomplete.

For five of those in the county and 295 statewide, it was the third straight year they had failed to file anything.

In Snohomish County, those that did not file reports for 2011, 2012 and 2013 are Snohomish County Fire Protection District 19, Snohomish County Diking Districts 2 and 4, Lake Ketchum Maintenance and Robe Valley Flood Control District.

Special districts are empowered to levy taxes, assessments and fees. Money that is collected is held in an account managed by their county treasurer. Typically, the treasurer disburses the money upon written request from a district’s board members.

Under House Bill 2084, Kelley’s office would tell county treasurers which special purpose districts did not turn in reports. The treasurers could not distribute any of the money from sales or property taxes, or other charges, until the district is in compliance.

“The money’s there. You can see the money. You just have to file the report,” Hunter said. “It’s not that hard.”

Kelley did not request the legislation but is appreciative of Hunter taking the initiative. He also said since the report came out in January more districts are working with his office to comply.

“The small local governments that don’t file these reports represent more than $2.2 million in public funds that go unaudited,” Kelley said. “There is currently no mechanism to address local governments that fail to file. Rep. Hunter’s bill may offer that mechanism.”

Snohomish County treasurer Kirke Sievers, who wasn’t aware of the bill, said he isn’t enthralled by the approach. The reporting requirement can be burden on smallest districts, he said.

He envisioned problems. For example, what happens if a district contracts for work but its money is frozen and the bill isn’t paid.

“We could get sued,” he said. “To me it seems kind of petty for the state to go and do this. They should look at other ways to help them.”

The bill is awaiting a hearing in the Senate Government Operations and Security Committee.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com

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