STATE FISCAL IMPACT SUMMARY	FY 1998/99	FY 1999/2000
State Revenues General Fund Other Fund
State Expenditures General Fund Other Fund
FTE Position Change	None	None
Local Government Impact — This bill will increase local government costs for annexation elections, public hearings, judicial reviews, legal services, and annexation impact reports.

This bill provides a definition for “adjacent community”, “unincorporated community”, and “urban development” with regard to the annexation procedures for municipalities. The remaining provisions of the bill affect the following:

• the eligibility requirements for annexation, including conditions to demonstrate whether a community of interest exists;

• the requirements that qualified electors be eligible to vote at elections concerning the annexation of enclaves, partly surrounded land, and municipally owned land;

• the rights and procedures for landowners in the adjacent community to petition the annexing municipality to conduct an annexation election and to hold public hearings;

• the requirements for the preparation and distribution of impact reports, including that they can no longer be waived;

• the requirements for the content of impact reports to include additional information such as effects of the annexation on open space plans, environmental assessments, effects of the annexation on regional agreements, economic impacts, and effects on the tax base of the affected county;

• the requirements for the governing body, by resolution, to set forth its findings on the impact report, to make the report a part of the public record, and subject the report to judicial review;

• the rights of landowners in adjacent communities to vote in annexation elections;

• the rights of landowners in adjacent communities or incorporated communities within three miles of the area to request judicial reviews; and

• the rights of landowners within vacant land that is annexed to petition for disconnection if utility installation has not been completed within three years of annexation.

The bill will become effective on July 1, 1998. The bill will not affect state revenue or expenditures, but will affect local government expenditures. Therefore, the bill is assessed as having a local fiscal impact.

During FY 1996-97, 223 municipal annexations were filed with the state. The provisions of this bill will affect the process for municipal annexations, but this fiscal note cannot ascertain whether the number of potential annexations will be affected in the future.

The bill will increase local government costs for annexation elections due to: 1) the requirement that enclave annexations be subject to elections, and 2) the ability of landowners in adjacent communities to petition for an election. The bill increases the opportunity for legal challenges through additional public hearings and judicial reviews which may increase local government legal services costs. Local government administrative costs to prepare and distribute impact reports will be increased because: 1) the bill eliminates current law provisions that allow an impact report to be waived, and 2) expands the content and distribution of the report. The amount of these cost increases has not been estimated.

This fiscal note would imply that no new state spending authority or appropriations are required for FY 1998-99 to implement the provisions of this bill.