AN ACT Relating to an emergency reserve fund; amending RCW 82.08.020; adding a new chapter to Title 43 RCW; repealing RCW 43.88.520, 43.88.525, 43.88.530, 43.88.535, and 43.88.540; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that the dynamic nature of the state's economy presents difficulties in accurately forecasting available general state revenues for a biennium and that unforeseen fluctuations in economic circumstances resulting in unanticipated revenue shortfalls have had a detrimental effect on the state's ability to maintain government programs at the levels authorized by the legislature. The legislature also finds that neither short-notice expenditure reductions nor ad hoc tinkering with the state's tax system are desirable methods for responding to revenue shortfalls.

It is, therefore, the intent of the legislature to establish an emergency reserve fund to provide protection against significant unanticipated shortfalls in general state revenues relative to authorized appropriations and to thereby promote stability in the activities of the state while enhancing the budget planning process, encouraging sound fiscal management, and preserving scarce resources for critical public needs.

NEW SECTION. Sec. 2. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Excess balance" means any balance in the emergency reserve fund in excess of ten percent of the concurrent biennium's official state revenue forecast.

(2) "General state revenues" means those revenues defined by Article VIII, section 1(c) of the state Constitution.

(3) "Official state revenue forecast" means the June 20th official state economic and revenue forecast prepared in odd-numbered years in accordance with RCW 82.01.120 and adopted by the economic and revenue council or its successor in accordance with RCW 82.01.130.

NEW SECTION. Sec. 3. The state treasurer shall, on a monthly basis beginning July 1, 1987, withdraw from general state revenues received by the state treasurer and deposit into the emergency reserve fund, hereby created in the state treasury, two percent of general state revenue collections.

NEW SECTION. Sec. 4. (1) Any excess balance in the emergency reserve fund shall be transferred by the state treasurer to the general fund.

(2) The legislature may appropriate moneys in any biennium from the emergency reserve fund only upon the occurrence of significant unanticipated shortfalls from the official state revenue forecast for that biennium. These appropriations shall be approved by at least two-thirds of the members of the senate and the house of representatives and the governor.

Sec. 5. Section 1, chapter 32, Laws of 1985 and RCW 82.08.020 are each amended to read as follows:

(1) There is levied and there shall be collected a tax on each retail sale in this state equal to six and five-tenths percent of the selling price.

(2) The rate provided in this section shall be reduced by the department by the amount necessary to eliminate by the end of the current biennium in the emergency reserve fund any excess balance, as defined in section 2 of this 1986 act, which is transferred to the general fund under section 4(1) of this 1986 act.

(3) The tax imposed under this chapter shall apply to successive retail sales of the same property.

((~~(3)~~)) (4) The rate provided in this section applies to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

NEW SECTION. Sec. 6. Sections 1 through 4 of this act shall constitute a new chapter in Title 43 RCW.

NEW SECTION. Sec. 7. The following acts or parts of act are each repealed:

(1) Section 1, chapter 280, Laws of 1981 and RCW 43.88.520;

(2) Section 2, chapter 280, Laws of 1981, section 52, chapter 57, Laws of 1985 and RCW 43.88.525;

(3) Section 3, chapter 280, Laws of 1981, section 2, chapter 36, Laws of 1982 1st ex. sess. and RCW 43.88.530;

(4) Section 4, chapter 280, Laws of 1981, section 3, chapter 36, Laws of 1982 1st ex. sess. and RCW 43.88.535; and

(5) Section 5, chapter 280, Laws of 1981, section 11, chapter 138, Laws of 1984 and RCW 43.88.540.

NEW SECTION. Sec. 8. This act shall take effect on July 1, 1987, if the proposed amendment to Article VIII of the state Constitution which would establish an emergency reserve fund is validly submitted to and is approved and ratified by the voters at the general election to be held in November, 1986. If the proposed amendment is not so approved and ratified, this act shall be null and void in its entirety.