AN ACT Relating to sales tax refunds; adding a new chapter to Title 82 RCW; and providing effective dates.

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

NEW SECTION. Sec. 1. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter:

(1) "Department" means the department of community development.

(2) "Household" means an individual or group of individuals living together as an economic unit.

(3) "Poverty level" means, with respect to a household, the income poverty guidelines, in effect at the time an application for a refund is made, for the nonfarm population as established by the United States office of management and budget and as adjusted annually for Washington state.

NEW SECTION. Sec. 2. (1) Households receiving public assistance shall receive sales tax refunds in the form of supplemental grants as provided in this chapter. Households with incomes not exceeding one hundred twenty-five percent of the poverty level for Washington income may apply annually for a refund of the state sales tax.

(2) "Income" means all cash income received by all household members for the twelve calendar months preceding the month of application, including:

(a) Money, wages, and salaries before deductions, less twenty percent;

(b) Net profit from self-employed enterprises including businesses, farms, and professions;

(d) Allowances and stipends, except food stamps, received for food, clothing, shelter, or training;

(e) Payments received from public assistance programs, general assistance, or other assistance programs;

(f) Annuities, pensions, retirement, veterans', or disability benefits; workers' or unemployment compensation; old-age or survivors' benefits; strike benefits; representative payee payments: PROVIDED, That a ten percent deduction shall be allowed for all taxable retirement benefits;

(g) Payments to a household on behalf of a legally assigned foster child or adult;

(h) Support from an absent family member or person not in the household, including gifts, child support, spouse maintenance, alimony, and military family allotments;

(i) Estates, trusts, dividends, interest, royalties, and all other direct cash payments; and

(j) Grants and scholarships.

(3) Households with liquid resources in excess of three thousand dollars, except households with at least one member over the age of sixty, are not eligible for refunds under this chapter. The maximum resource amount shall be adjusted by the department of revenue annually on January 1st beginning January 1, 1988, by the percentage change in the implicit price deflator for personal consumption expenditures as determined by the United States department of commerce for the four-quarter period ending September 31 of the previous year. "Liquid resources" includes cash and noncash assets as defined by the department by rule. Liquid resources counted as income may be deducted from assets.

(4) Sales tax refunds received under this chapter shall not be considered income or resources of the household for any purpose under any state law or program.

NEW SECTION. Sec. 3. Funds will be provided by the department of community development to the department of social and health services for the purpose of providing sales tax refunds to eligible public assistance households in the form of supplemental grants. The supplemental grant shall be equal to two and three-tenths percent of the monthly cash assistance the household receives.

NEW SECTION. Sec. 4. (1) Households applying for sales tax refunds under this chapter for the previous calendar year shall apply to the department of community development, or a private not-for-profit agency designated by the department, on forms prescribed by the department. The department shall adopt such rules as are necessary for the administration of this chapter, including requirements for documentation and verification of income and resources of household members. The department or a designated agency shall review the applications and grant refunds to those households it determines are eligible.

(2) Eligible households shall be granted a sales tax refund equal to the household's cash income received or earned in the state of Washington during the calendar year immediately preceding the year in which the application is made multiplied by two and three-tenths percent. The refund shall be adjusted to exclude any sales tax refunds received under section 3 of this act during the previous calendar year.

NEW SECTION. Sec. 5. The department of community development and the department of social and health services shall provide an annual report to the governor and the ways and means committees of the state legislature on the sales tax refunds granted under this chapter. The report shall include information concerning the number and dollar amount of refunds granted and any recommended changes in income or resource levels.

NEW SECTION. Sec. 6. The sales tax refund fund is hereby established in the custody of the state treasurer. The state treasurer shall deposit in the fund sufficient general state revenues to enable the department of community development and the department of social and health services to pay refunds under this chapter. Disbursements from the fund shall be on authorization of the director of community development or the director's designee. The fund is subject to the allotment procedure provided under chapter 43.88 RCW, but no appropriation is required for disbursements.

NEW SECTION. Sec. 7. Sections 1 through 6 of this act shall constitute a new chapter in Title 82 RCW.

NEW SECTION. Sec. 8. This act shall take effect January 1, 1988, except section 4 of this act which shall take effect January 1, 1989. The department of community development and the department of social and health services may immediately take such action, including the adoption of rules, as is necessary to provide for the implementation of this act as prescribed.