AN ACT Relating to property taxes; amending RCW 39.67.010, 39.67.020, 84.52.010, 84.52.100, and 84.55.092; adding a new section to chapter 82.14 RCW; adding a new section to chapter 84.52 RCW; creating a new section; and making an appropriation.

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

Sec. 1. Section 1, chapter 107, Laws of 1986 and RCW 39.67.010 are each amended to read as follows:

Any agreement or contract between two taxing districts other than the state which is otherwise authorized by law may be made contingent upon a particular property tax levy rate of an identified taxing district other than the state where such rate affects the regular property tax rate of one of the parties to the contract and therefore affects the party's resources with which to perform under the contract.

((~~This section shall expire December 31, 1988.~~))

Sec. 2. Section 2, chapter 107, Laws of 1986 and RCW 39.67.020 are each amended to read as follows:

Any taxing district other than the state may transfer funds to another taxing district other than the state where the regular property tax levy rate of the second district may affect the regular property tax levy rate of the first district and where such transfer is part of an agreement whereby proration or reduction of property taxes is lessened or avoided.

((~~This section shall expire December 31, 1988.~~))

Sec. 3. Section 84.52.010, chapter 15, Laws of 1961 as last amended by section 1, chapter 255, Laws of 1987 and RCW 84.52.010 are each amended to read as follows:

Except as is permitted under RCW 84.55.050, all taxes shall be levied or voted in specific amounts.

The rate percent of all taxes for state and county purposes, and purposes of taxing districts coextensive with the county, shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the county, as shown by the completed tax rolls of the county, and the rate percent of all taxes levied for purposes of taxing districts within any county shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the taxing districts respectively.

When a county assessor finds that the aggregate rate of tax levy on any property, that is subject to the limitations set forth in RCW 84.52.043 or 84.52.050, as now or hereafter amended, exceeds the limitations provided in either of these sections, the assessor shall, after the adjustments to levies have been made as provided in section 7 of this 1988 act, recompute and establish a consolidated levy in the following manner:

(1) The full certified rates of tax levy for state, county, county road district, and city or town purposes shall be extended on the tax rolls in amounts not exceeding the limitations established by law: PROVIDED, That ((in the event of a levy made pursuant to RCW 84.34.230, the rates of levy for county and county road district purposes shall be reduced in such uniform percentages as will result in a consolidated levy by such taxing districts which will be no greater on any property than a consolidated levy by such taxing districts would be if the levy had not been made pursuant to RCW 84.34.230)) any state levy shall take precedence over all other levies and shall not be reduced for any purpose other than that required by RCW 84.55.010; and

(2) The certified rates of tax levy subject to these limitations by all junior taxing districts imposing taxes on such property shall be reduced or eliminated as follows to bring the consolidated levy of taxes on such property within the provisions of these limitations:

(a) First, the certified property tax levy rates of those junior taxing districts authorized under RCW 36.68.525, 36.69.145, and 67.38.130 shall be reduced on a pro rata basis or eliminated;

(b) Second, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of flood control zone districts shall be reduced on a pro rata basis or eliminated;

(c) Third, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of all other junior taxing districts, other than fire protection districts, public hospital districts, metropolitan park districts, and library districts, shall be reduced on a pro rata basis or eliminated;

(d) Fourth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized to fire protection districts under RCW 52.16.140 and 52.16.160 shall be reduced on a pro rata basis or eliminated; and

(e) Fifth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized to fire protection districts under RCW 52.16.130, and the certified property tax levy rates of public hospital districts, metropolitan park districts, and library districts, shall be reduced on a pro rata basis or eliminated.

Sec. 4. Section 7, chapter 138, Laws of 1987 and RCW 84.52.100 are each amended to read as follows:

(1) The governing body of any library district, public hospital district, metropolitan park district, or fire protection district may provide for the submission of a ballot proposition to the voters of the taxing district authorizing the taxing district to maintain its otherwise authorized tax levy rate, and authorizing an increase in the cumulative regular property tax limitation of nine dollars and fifteen cents per thousand dollars of assessed valuation within the taxing district, as provided in this section. A fire protection district may use this authority to increase its regular property tax levy up to fifty cents per thousand dollars of assessed valuation.

(2) A resolution by a governing body, requesting that a special election be called to submit such a ballot proposition to the voters, must be transmitted to the county legislative authority of the county, or county legislative authorities of the counties, within which the taxing district is located, at least forty-five days before the special election date at which the ballot proposition is submitted. The ballot proposition shall be worded substantially as follows:

"Shall the cumulative limitation on most regular property tax rates be increased by an amount not exceeding thirty-five cents per thousand dollars of assessed valuation for a five consecutive year period allowing (insert the name of the taxing district) to maintain its otherwise statutory authorized property tax rate?"

The ballot proposition for a fire protection district shall be worded substantially as follows:

"Shall the cumulative limitation on most regular property tax rates be increased by an amount not exceeding thirty-five cents per thousand dollars of assessed valuation for a five consecutive year period allowing (insert the name of the taxing district) to permit the fire protection district to impose its property tax at a value up to fifty cents per thousand dollars of assessed valuation?"

Approval of this ballot proposition by a simple majority vote shall authorize the following for the succeeding five consecutive year period: (a) Property tax rates of junior taxing districts are calculated first as if this proposition had not been approved; (b) subject to the one hundred six percent limitation, the regular property tax rate of the taxing district receiving such authorization is increased to a level not exceeding the lesser of: (i) Its maximum statutory authorized regular property tax rate; or (ii) whatever tax rate it otherwise would have been able to impose plus an additional thirty-five cents per thousand dollars of assessed valuation; and (c) the cumulative property tax rate limitation is increased within the boundaries of the taxing district receiving this authorization to an amount equal to nine dollars and fifteen cents per thousand dollars of assessed valuation plus the increased amount of the regular levy rate of this taxing district, but not to exceed nine dollars and fifty cents per thousand dollars of assessed valuation.

(3) If two or more taxing districts that occupy a portion of the same territory receive such approval, the additional authorized taxing capacity above nine dollars and fifteen cents per thousand dollars of assessed valuation shall be distributed among these taxing districts by adjusting their levy rate requests in the same manner and under the same conditions as if they were the only taxing districts in the area subject to adjustment of their property tax rates and the levy rate adjustments were being made with the cumulative limitation of nine dollars and fifteen cents per thousand dollars of assessed valuation.

(4) Levies authorized under RCW 84.52.069 are not subject to the rate adjustments and the nine dollar and fifty cent per thousand dollar of assessed valuation cumulative limitation on regular property tax rates established by this section.

Sec. 5. Section 3, chapter 107, Laws of 1986 and RCW 84.55.092 are each amended to read as follows:

The regular property tax levies for each taxing district ((~~other than the state for taxes due in 1987 through 1991~~)) that reduces or has its tax rate reduced under RCW 39.67.010, 39.67.020, or section 7 of this 1988 act may be set at the amount which would otherwise be allowed under this chapter if the regular property tax levy for the district ((~~for taxes due in 1986 and 1987~~)) in the year or years when its tax rate was so reduced had been set at the full amount allowed under this chapter.

((~~This section shall expire December 31, 1991.~~))

NEW SECTION. Sec. 6. A new section is added to chapter 82.14 RCW to read as follows:

There is hereby created in the state treasury an account to be known as the "municipal buy-down account." Effective July 1, 1989, one-half of the investment income earned on moneys in the local sales and use tax account created by RCW 82.14.050 and which has not been distributed according to RCW 82.14.060 shall be placed in this account. Any moneys in the account on May 1 and on November 1 of each year shall be transferred to the general fund.

NEW SECTION. Sec. 7. A new section is added to chapter 84.52 RCW to read as follows:

(1) If the aggregate levies for the state, a county, and any municipality located within counties of the fifth class and under exceed the aggregate limitations in RCW 84.52.043 or 84.52.050, the municipality's levy shall be reduced in the following manner:

(a) The municipality's levy rate shall be reduced in the amount necessary that the limitations shall not be exceeded; and

(b) The state treasurer, upon direction of the department of revenue, shall distribute to the municipality from the account created by section 6 of this act, an amount equal to the amount the levy rate is reduced times the assessed value of the municipality. If there are insufficient funds in the account to make the distribution under this subsection (1)(b), the county in which the municipality is located shall pay to the municipality the amount of the insufficiency.

(2) If the aggregate levies of all taxing districts under RCW 84.52.010(2)(e) that are coexistent with any municipality, after any reduction required by subsection (1) of this section, exceed the aggregate limitations in RCW 84.52.043 or 84.52.050, the municipality's levy shall be reduced in the following manner:

(a) The municipality's levy rate shall be reduced in the amount necessary that the limitations shall not be exceeded; and

(b) The junior taxing districts coexistent with the municipality shall distribute to the municipality an amount equal to the amount the levy rate is reduced times the assessed value of the municipality. The amount distributed shall be prorated between each junior taxing district based upon the amount that each district would have had its total levy reduced if this subsection were not in effect.

(3) Fifty-five percent of the amount under subsection (1) of this section shall be distributed on or before April 30 of the tax collection year for which the levy is reduced and forty-five percent on or before October 31 of that year.

(4) Fifty-five percent of the amount under subsection (2) of this section shall be distributed on or before May 31 of the tax collection year for which the levy is reduced and forty-five percent on or before November 30 of that year.

NEW SECTION. Sec. 8. The department of revenue shall adopt such rules consistent with this act as shall be necessary or desirable to permit its effective administration. The rules shall provide how section 7(2) of this act shall apply to a taxing district that has received authorization to increase its levy according to RCW 84.52.100 and use the method that will be the least costly to all taxing districts involved.

NEW SECTION. Sec. 9. The sum of fifty thousand dollars is transferred from the general fund to the municipal buy-down account created by section 6 of this act and is appropriated from this account to the state treasurer, for the biennium ending June 30, 1989, for the purposes of this act.