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FIFTY EIGHTH LEGISLATURE - REGULAR SESSION

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NINETEENTH DAY

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House Chamber, Olympia, Friday, January 30, 2004

The House was called to order at 10:00 a.m. by the Speaker (Representative Lovick presiding). The Clerk called the roll and a quorum was present.

The flag was escorted to the rostrum by a Sergeant at Arms Color Guard, Pages Isha Daramy and Jordan Taylor. The Speaker (Representative Lovick presiding) led the Chamber in the Pledge of Allegiance. Prayer was offered by Pastor Robert Christiansen, Olympia-Lacey Church of God.

Reading of the Journal of the previous day was dispensed with and it was ordered to stand approved.

RESOLUTIONS

HOUSE RESOLUTION NO. 2004-4683, By Representatives DeBolt, Kessler, Ahern, Alexander, Anderson, Armstrong, Bailey, Benson, Blake, Boldt, Buck, Bush, Cairnes, Campbell, Carrell, Chandler, Chase, Chopp, Clements, Clibborn, Cody, Condotta, Conway, Cooper, Cox, Crouse, Darneille, Delvin, Dickerson, Dunshee, Edwards, Eickmeyer, Ericksen, Flannigan, Fromhold, Grant, Haigh, Hankins, Hatfield, Hinkle, Holmquist, Hudgins, Hunt, Hunter, Jarrett, Kagi, Kenney, Kirby, Kristiansen, Lantz, Linville, Lovick, Mastin, McCoy, McDermott, McDonald, McIntire, McMahan, McMorris, Mielke, Miloscia, Moeller, Morrell, Morris, Murray, Newhouse, Nixon, O'Brien, Orcutt, Ormsby, Pearson, Pettigrew, Priest, Quall, Roach, Rockefeller, Rodne, Romero, Ruderman, Santos, Schindler, Schoesler, Schual-Berke, Sehlin, Shabro, D. Simpson, G. Simpson, Skinner, Sommers, Sullivan, Sump, Talcott, Tom, Upthegrove, Veloria, Wallace, Wood and Woods

WHEREAS, It is the policy of the House of Representatives to recognize excellence in all fields of endeavor; and

WHEREAS, Comil Pelagio Padayao exhibited true excellence during his tenure as a state employee; and

WHEREAS, Comil Pelagio Padayao was born February 28, 1944, in Spokane, Washington, to Emma Ludella and Paul Padayao and had two younger brothers, Darrell and Rick Padayao; and

WHEREAS, Comil Pelagio Padayao attended Broadway Baptist Church in Spokane as a child where he experienced a life-changing conversion at the age of fourteen, later was a longtime member of Fourth Memorial Church in Spokane, and during the last fourteen years of his life was an active member of Olympia-Lacey Church of God in Lacey, Washington; and

WHEREAS, Comil Pelagio Padayao graduated from Lewis and Clark High School in 1962, and attended Spokane Community College; and

WHEREAS, Comil Pelagio Padayao was active as a youth in Junior Achievement and the Spokane Junior Police where he reached the level of Chief; and

WHEREAS, Comil Pelagio Padayao came to work for the Legislature in 1965 as a 20-year-old; and

WHEREAS, Comil Pelagio Padayao began his service with the Legislature as Parking Attendant, and while finishing 31 sessions he also served as Mail Clerk, Bill Clerk, Committee Clerk, Doorman in the House Chamber, Garage Supervisor, and Assistant Sergeant of Arms, and he retired as Assistant Supervisor for Facilities with the Washington State House of Representatives in 2003; and

WHEREAS, Comil Pelagio Padayao enjoyed both legislative and campaign politics, served as a delegate to the National Republican Convention in 1970, and participated in numerous party activities over the years in many capacities; and

WHEREAS, Comil Pelagio Padayao had a compassionate, humble servant's heart, an infectious smile and wit, and an incredible and enthusiastic zest for life in whatever he did and whatever circumstances he found himself in, always ready to listen, to encourage, to pray and to offer help to those in need; and

WHEREAS, Comil Pelagio Padayao was a true saint of a man respected for his sincerity, his honesty, his kindness, and his friendship, and was a man who loved God, a man who loved his family, and a man who loved people; and

WHEREAS, Comil Pelagio Padayao exhibited great strength and faith as he suffered from many ailments over many years without complaining, and he passed away to his eternal reward on January 16, 2004, at age 59 leaving a wonderful heritage for his mother, Emma, his two brothers, Darrell and Rick, and his many nieces and nephews;

NOW, THEREFORE, BE IT RESOLVED, That the House of Representatives of the state of Washington honor Comil Pelagio Padayao for his many years of dedicated service, his personal and professional integrity, and his faithfulness to the principles and ideals that were the basis of his character and life; and

BE IT FURTHER RESOLVED, That copies of this resolution be immediately transmitted by the Chief Clerk of the House of Representatives to Emma Ludella Padayao, Darrell Padayao, and Rick Padayao.

Representative DeBolt moved the adoption of the resolution.

Representatives DeBolt and Kessler spoke in favor of the adoption of the resolution.

HOUSE RESOLUTION NO. 4683 was adopted.

HOUSE RESOLUTION NO. 2004-4684, By Representatives Linville, Morris and Quall

WHEREAS, R.H. "Andy" Anderson has had a long and illustrious career in broadcasting and politics; and

WHEREAS, Andy began as a sports photographer for Lincoln High School in the last half of the 1940s, and had his political "birth" covering House Un-American Activities Committee hearings in Seattle as a University of Washington journalism student in 1950; and

WHEREAS, His love of jazz led him to AM radio, where he pulled records and then did free news breaks at KRSC and later KVI; and

WHEREAS, Andy joined KRKO in Everett as a radio news reporter in 1952, ignited by his longtime interest in politics and the Army vs. McCarthy hearings; and

WHEREAS, The way some folks love baseball, Andy was totally engrossed by politics, fascinated by the players in that 'danse Macabre'; and

WHEREAS, In 1955, Andy moved to KVOS radio and TV in Bellingham, where he did "rip and read" news and commercials from a 7 foot by 10 foot studio with one camera, and developed his forte--politics and broadcasting--especially during campaign and election times; and

WHEREAS, Andy befriended a political and jazz soul mate, Al Swift, who joined KVOS as an announcer in 1956, and along with Bill Clement, became a Democratic troika in Whatcom County politics; and

WHEREAS, Andy wrote scripts and produced feature films and commercials for CANAWEST Film Productions in Canada from 1965 to 1976, when he moved back to KVOS as news director; and

WHEREAS, He developed an impressive news crew at KVOS, until the station was taken over in 1983 and the management eliminated the news department and told Andy he had one week to 'clear his desk'; and

WHEREAS, Al Swift was then the U.S. Representative from the Second Congressional District when his district manager Bill McDonald (Dean Mac) passed away. Al needed someone who knew him and his politics so he offered the job to Andy because their history made a perfect match; and

WHEREAS, Al decided not to run again in 1994, so Andy was given the sad task of closing the office and decided to retire; and

WHEREAS, Andy ran a consulting business for a few years, until young Rick Larsen won the Second district seat. Larsen hired as his district director Jill McKinnie, who had worked for Al Swift and then Senator Patty Murray. She suggested Andy to her new boss, for the north part of the district, and Andy was rejuvenated; and

WHEREAS, Andy loves politics but now needs time to travel, work in his vegetable garden, and kick back after his incredible ride giving his talents, knowledge, and love to his job for many years;

NOW, THEREFORE, BE IT RESOLVED, That the House of Representatives of the State of Washington commend the life, the work, and the dedication of R.H. "Andy" Anderson for his commitment and service to journalism and politics in Whatcom County, Washington State and the United States; and

BE IT FURTHER RESOLVED, That copies of this resolution be immediately transmitted by the Chief Clerk of the House of Representatives to Andy Anderson and his family.

HOUSE RESOLUTION NO. 4684 was adopted.

HOUSE RESOLUTION NO. 2004-4685, By Representative McCoy

WHEREAS, The Washington State Legislature recognizes the many years of service that Susan Mae Wilbur, Lop-che-alh, gave to the people of the Swinomish Tribe and to the State of Washington, and desires to celebrate her life and applaud her many contributions and accomplishments; and

WHEREAS, Susan Mae Wilbur was Vice Chair of the Swinomish Tribe and a true leader of the Swinomish Tribe and servant to her people; and

WHEREAS, In addition to acting as Swinomish Vice Chair, Susan Mae Wilbur served as Chair of the Budget Committee and Swinomish Housing Authority Board, gave unselfishly of herself, and devoted countless hours of her time and energy; and

WHEREAS, Susan Mae Wilbur was elected to both the Swinomish Senate and the La Conner School Board for more than two decades, and served the people of her community in countless ways; and

WHEREAS, Susan Mae Wilbur worked as a youth alcohol counselor, the Swinomish Tribe's Recreation Director, and was the Director of the Swinomish Tribe's Day Care Center since its inception in 1992, and, as such, profoundly impacted the lives of a generation of Swinomish children and their families; and

WHEREAS, Susan Mae Wilbur served on the Northwest Portland Area Indian Health Board, the American Indian Health Commission, the Northwest Washington Service Unit Health Board, and the Tribes Personnel Committee, and devoted her life to ensuring the health and well-being of her tribe and the people of the State of Washington; and

WHEREAS, Susan Mae Wilbur also contributed her talents by serving on the Skagit River System Cooperative Board and the Swinomish Gaming Commission;

NOW, THEREFORE, BE IT RESOLVED, That the House of Representatives of the State of Washington honor the spirit, the devotion, and servitude of Susan Mae Wilbur and extend its deepest condolences to the family and friends of Susan Mae Wilbur; and

BE IT FURTHER RESOLVED, That copies of this resolution be immediately transmitted by the Chief Clerk of the House of Representatives to her husband, Todd Wilbur.

HOUSE RESOLUTION NO. 4685 was adopted.

The Speaker assumed the chair.

There being no objection, the House advanced to the sixth order of business.

SECOND READING

HOUSE BILL NO. 2439, By Representatives Conway, Hankins, Campbell, Cooper, Kenney, Wood, D. Simpson, Chase, G. Simpson, Moeller, Morrell, Hudgins and Dickerson; by request of Governor Locke and Washington State Apprenticeship and Training Council

Providing for apprenticeship utilization requirements on public works projects.

The bill was read the second time. There being no objection, Substitute House Bill No. 2439 was substituted for House Bill No. 2439 and the substitute bill was placed on the second reading calendar.

SUBSTITUTE HOUSE BILL NO. 2439 was read the second time.

With the consent of the House, amendment (760) was withdrawn.

Representative McMorris moved the adoption of amendment (761):

On page 1, line 12, after "Apprenticeship" insert "and other"

On page 1, line 14, after "for" strike "apprenticeship" and insert "apprentice and trainee"

On page 2, after line 17, insert the following:

"(5) "Trainee" means a worker participating in a formal training program other than a state-approved apprenticeship training program.

(6) "Training program" means a formal training program in which a worker has the opportunity to obtain knowledge and skills equivalent to those that may be obtained in a state-approved apprenticeship training program, and that is conducted by: (a) An employer and approved by the awarding agency; (b) a public community or technical college; or (c) a not-for-profit nationally accredited technical or trade school licensed by the work force training and education coordinating board under chapter 28C.10 RCW."

On page 2, line 21, after "apprentices" insert "and/or trainees"

On page 2, line 24, after "apprentices" insert "and/or trainees"

On page 2, line 28, after "apprentice" insert "and/or trainee"

On page 3, line 5, after "number" insert ", and/or the name of each trainee"

On page 3, line 9, after "apprentices" insert "and/or trainees"

On page 3, line 24, after "apprentice" insert "and trainee"

Representatives McMorris, Talcott and McMorris (again) spoke in favor of the adoption of the amendment.

Representative Conway spoke against the adoption of the amendment.

An electronic roll call vote was demanded and the demand was sustained.

MOTION

On motion of Representative Santos, Representative Quall was excused.

The Speaker stated the question before the House to be adoption of amendment (761) to Substitute House Bill No. 2439.

ROLL CALL

The Clerk called the roll on the adoption of amendment (761) to Substitute House Bill No. 2439, and the amendment was not adopted by the following vote: Yeas - 45, Nays - 52, Absent - 0, Excused - 1.

Voting yea: Representatives Ahern, Alexander, Anderson, Armstrong, Bailey, Benson, Boldt, Buck, Bush, Cairnes, Carrell, Chandler, Clements, Condotta, Cox, Crouse, DeBolt, Delvin, Ericksen, Hankins, Hinkle, Holmquist, Jarrett, Kristiansen, Mastin, McDonald, McMahan, McMorris, Mielke, Newhouse, Nixon, Orcutt, Pearson, Priest, Roach, Rodne, Schindler, Schoesler, Sehlin, Shabro, Skinner, Sump, Talcott, Tom and Woods - 45.

Voting nay: Representatives Blake, Campbell, Chase, Clibborn, Cody, Conway, Cooper, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hatfield, Hudgins, Hunt, Hunter, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, O'Brien, Ormsby, Pettigrew, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 52.

Excused: Representative Quall - 1.

Representative Orcutt moved the adoption of amendment (759):

On page 2, line 21, after "apprentices" insert "if the successful bidder employed fifty or more full-time equivalent employees in the previous year"

Representatives Orcutt spoke in favor of the adoption of the amendment.

Representatives Hudgins spoke against the adoption of the amendment.

An electronic roll call vote was demanded and the demand was sustained.

The Speaker stated the question before the House to be adoption of amendment (759) to Substitute House Bill No. 2439.

ROLL CALL

The Clerk called the roll on the adoption of amendment (759) to Substitute House Bill No. 2439, and the amendment was not adopted by the following vote: Yeas - 46, Nays - 51, Absent - 0, Excused - 1.

Voting yea: Representatives Ahern, Alexander, Anderson, Armstrong, Bailey, Benson, Boldt, Buck, Bush, Cairnes, Campbell, Carrell, Chandler, Clements, Condotta, Cox, Crouse, DeBolt, Delvin, Ericksen, Hankins, Hinkle, Holmquist, Jarrett, Kristiansen, Mastin, McDonald, McMahan, McMorris, Mielke, Newhouse, Nixon, Orcutt, Pearson, Priest, Roach, Rodne, Schindler, Schoesler, Sehlin, Shabro, Skinner, Sump, Talcott, Tom and Woods - 46.

Voting nay: Representatives Blake, Chase, Clibborn, Cody, Conway, Cooper, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hatfield, Hudgins, Hunt, Hunter, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, O'Brien, Ormsby, Pettigrew, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 51.

Excused: Representative Quall - 1.

There being no objection, the rules were suspended, the second reading considered the third and the bill was placed on final passage.

Representatives Conway and Cooper spoke in favor of passage of the bill.

Representatives Orcutt, McMorris, Alexander, Hinkle, Holmquist and Boldt spoke against the passage of the bill.

The Speaker stated the question before the House to be the final passage of Substitute House Bill No. 2439.

ROLL CALL

The Clerk called the roll on the final passage of Substitute House Bill No. 2439 and the bill passed the House by the following vote: Yeas - 54, Nays - 44, Absent - 0, Excused - 0.

Voting yea: Representatives Blake, Campbell, Chase, Clibborn, Cody, Conway, Cooper, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hankins, Hatfield, Hudgins, Hunt, Hunter, Jarrett, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, O'Brien, Ormsby, Pettigrew, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 54.

Voting nay: Representatives Ahern, Alexander, Anderson, Armstrong, Bailey, Benson, Boldt, Buck, Bush, Cairnes, Carrell, Chandler, Clements, Condotta, Cox, Crouse, DeBolt, Delvin, Ericksen, Hinkle, Holmquist, Kristiansen, Mastin, McDonald, McMahan, McMorris, Mielke, Newhouse, Nixon, Orcutt, Pearson, Priest, Quall, Roach, Rodne, Schindler, Schoesler, Sehlin, Shabro, Skinner, Sump, Talcott, Tom and Woods - 44.

SUBSTITUTE HOUSE BILL NO. 2439, having received the necessary constitutional majority, was declared passed.

HOUSE BILL NO. 2546, By Representatives McIntire, Morris, Hunter, Ruderman, Kessler, Lovick, Hunt, Grant, Hatfield, Fromhold, Clibborn and Clements; by request of Governor Locke

Modifying high technology and research and development tax incentive provisions.

The bill was read the second time. There being no objection, Substitute House Bill No. 2546 was substituted for House Bill No. 2546 and the substitute bill was placed on the second reading calendar.

SUBSTITUTE HOUSE BILL NO. 2546 was read the second time.

With the consent of the House, amendment (757) was withdrawn.

Representative McIntire moved the adoption of amendment (762):

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 82.63.005 and 1994 sp.s. c 5 s 1 are each amended to read as follows:

The legislature finds that high-wage, high-skilled jobs are vital to the economic health of the state's citizens, and that targeted tax incentives will encourage the formation of high-wage, high-skilled jobs. The legislature also finds that tax incentives should be subject to the same rigorous requirements for efficiency and accountability as are other expenditure programs, and that tax incentives should therefore be focused to provide the greatest possible return on the state's investment.

The legislature also finds that high-technology businesses are a vital and growing source of high-wage, high-skilled jobs in this state, and that the high-technology sector is a key component of the state's effort to encourage economic diversification. However, the legislature finds that many high-technology businesses incur significant costs associated with research and development and pilot scale manufacturing many years before a marketable product can be produced, and that current state tax policy discourages the growth of these companies by taxing them long before they become profitable.

The legislature further finds that stimulating growth of high-technology businesses early in their development cycle, when they are turning ideas into marketable products, will build upon the state's established high-technology base, creating additional research and development jobs and subsequent manufacturing facilities.

For these reasons, the legislature hereby establishes a program of business and occupation tax credits for qualified research and development expenditures. The legislature also hereby establishes a tax deferral program for high-technology research and development and pilot scale manufacturing facilities. The legislature declares that these limited programs serve the vital public purposes of incenting expenditures in research and development, supporting, and sustaining as they develop new technologies and products, and creating quality employment opportunities in this state. The legislature further declares its intent to create a contract within the meaning of Article I, section 23 of the state Constitution as to those businesses that make capital investments in consideration of the tax deferral program established in this chapter.

Sec. 2. RCW 82.04.4452 and 2000 c 103 s 7 are each amended to read as follows:

(1) In computing the tax imposed under this chapter, a credit is allowed for each person whose research and development spending during the year in which the credit is claimed exceeds 0.92 percent of the person's taxable amount during the same calendar year.

(2) The credit ((is equal to)) shall be calculated as follows: (a) Determine the greater of the amount of qualified research and development expenditures of a person or eighty percent of amounts received by a person other than a public educational or research institution in compensation for the conduct of qualified research and development((, multiplied)); (b) subtract 0.92 percent of the person's taxable amount from the amount determined under (a) of this subsection; (c) multiply the amount determined under (b) of this subsection by the rate provided in RCW 82.04.260(3) in the case of a nonprofit corporation or nonprofit association engaging within this state in research and development, and the person's average tax rate ((provided in RCW 82.04.290(2))) for every other person.

(3) Any person entitled to the credit provided in subsection (2) of this section as a result of qualified research and development conducted under contract may assign all or any portion of the credit to the person contracting for the performance of the qualified research and development.

(4) The credit, including any credit assigned to a person under subsection (3) of this section, shall be taken against taxes due for the same calendar year in which the qualified research and development expenditures are incurred. The credit, including any credit assigned to a person under subsection (3) of this section, for each calendar year shall not exceed the lesser of two million dollars or the amount of tax otherwise due under this chapter for the calendar year.

(5) Any person taking the credit, including any credit assigned to a person under subsection (3) of this section, whose research and development spending during the calendar year in which the credit is claimed fails to exceed 0.92 percent of the person's taxable amount during the same calendar year shall be liable for payment of the additional taxes represented by the amount of credit taken together with interest, but not penalties. Interest shall be due at the rate provided for delinquent excise taxes retroactively to the date the credit was taken until the taxes are paid. Any credit assigned to a person under subsection (3) of this section that is disallowed as a result of this section may be taken by the person who performed the qualified research and development subject to the limitations set forth in subsection (4) of this section.

(6) Any person claiming the credit, and any person assigning a credit as provided in subsection (3) of this section, shall file an ((affidavit)) annual report in a form prescribed by the department which shall include the amount of the credit claimed, ((an estimate of)) the ((anticipated)) qualified research and development expenditures during the calendar year for which the credit is claimed, ((an estimate of)) and the taxable amount during the calendar year for which the credit is claimed, and such additional information as the department may prescribe. The report is due by March 31st following any year a credit is taken.

(7)(a) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.

(b) A person claiming the credit shall agree to ((supply the department with information necessary to measure the results of the tax credit program for qualified research and development expenditures)) complete an annual survey. The annual survey is in addition to the annual report due under subsection (6) of this section. The survey is due by March 31st following any year in which a credit is taken. The survey shall include the amount of the tax credit taken, the number of new products or research projects by general classification, and the number of trademarks, patents, and copyrights associated with the research and development activities for which a credit was taken. The survey shall also include the following information for employment positions in Washington:

(i) The number of total employment positions;

(ii) Full-time, part-time, and temporary employment positions as a percent of total employment;

(iii) The number of employment positions according to the following wage bands: Less than thirty thousand dollars; thirty thousand dollars or greater, but less than sixty thousand dollars; and sixty thousand dollars or greater. A wage band containing fewer than three individuals may be combined with another wage band; and

(iv) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.

(c) The department may request additional information necessary to measure the results of the tax credit program, to be submitted at the same time as the survey.

(d) All information collected under this subsection, except the amount of the tax credit taken, is deemed taxpayer information under RCW 82.32.330 and is not disclosable. Information on the amount of tax credit taken is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request except that persons taking less than ten thousand dollars of credit during the period covered by the survey may request the department to treat the

tax credit amount as confidential under RCW 82.32.330.

(e) If a person fails to complete the survey required under this subsection by the due date, the person entitled to the credit provided in subsection (2) of this section is not eligible to take or assign the credit provided in subsection (2) of this section in the year the person failed to complete the survey.

(8) The department shall use the information from subsection (7) of this section to prepare summary descriptive statistics by category. No fewer than three taxpayers shall be included in any category. The department shall report these statistics to the legislature each year by September 1st.

(9) The department shall use the information ((required under)) from subsection (7) of this section to ((perform three assessments on)) study the tax credit program authorized under this section. ((The assessments will take place in 1997, 2000, and 2003. The department shall prepare reports on each assessment and deliver their reports by September 1, 1997, September 1, 2000, and September 1, 2003. The assessments)) The department shall report to the legislature by December 1, 2009, and December 1, 2013. The reports shall measure the effect of the program on job creation, the number of jobs created for Washington residents, company growth, the introduction of new products, the diversification of the state's economy, growth in research and development investment, the movement of firms or the consolidation of firms' operations into the state, and such other factors as the department selects.

(((9))) (10) For the purpose of this section:

(a) "Average tax rate" means a person's total tax under this chapter for the reporting period divided by the taxpayer's total taxable income under this chapter for the reporting period.

(b) "Qualified research and development expenditures" means operating expenses, including wages, compensation of a proprietor or a partner in a partnership as determined under rules adopted by the department, benefits, supplies, and computer expenses, directly incurred in qualified research and development by a person claiming the credit provided in this section. The term does not include amounts paid to a person other than a public educational or research institution to conduct qualified research and development. Nor does the term include capital costs and overhead, such as expenses for land, structures, or depreciable property.

(((b))) (c) "Qualified research and development" shall have the same meaning as in RCW 82.63.010.

(((c))) (d) "Research and development spending" means qualified research and development expenditures plus eighty percent of amounts paid to a person other than a public educational or research institution to conduct qualified research and development.

(((d))) (e) "Taxable amount" means the taxable amount subject to the tax imposed in this chapter required to be reported on the person's combined excise tax returns during the year in which the credit is claimed, less any taxable amount for which a credit is allowed under RCW 82.04.440.

(((10))) (11) This section expires ((December 31, 2004)) January 1, 2015.

Sec. 3. RCW 82.63.010 and 1995 1st sp.s. c 3 s 12 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Advanced computing" means technologies used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment.

(2) "Advanced materials" means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials.

(3) "Applicant" means a person applying for a tax deferral under this chapter.

(4) "Biotechnology" means the application of technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, or to transform biological systems into useful processes and products or to develop microorganisms for specific uses.

(5) "Department" means the department of revenue.

(6) "Electronic device technology" means technologies involving microelectronics; semiconductors; electronic equipment and instrumentation; radio frequency, microwave, and millimeter electronics; optical and optic-electrical devices; and data and digital communications and imaging devices.

(7) "Eligible investment project" means an investment project which either initiates a new operation, or expands or diversifies a current operation by expanding, renovating, or equipping an existing facility. The lessor or owner of the qualified building is not eligible for a deferral unless:

(a) The underlying ownership of the buildings, machinery, and equipment vests exclusively in the same person((, or unless)); or

(b)(i) The lessor by written contract agrees to pass the economic benefit of the deferral to the lessee ((in the form of reduced rent payments));

(ii) The lessee that receives the economic benefit of the deferral agrees in writing with the department to complete the annual survey required under RCW 82.63.020(2); and

(iii) The economic benefit of the deferral passed to the lessee is no less than the amount of tax deferred by the lessor and is evidenced by written documentation of any type of payment, credit, or other financial arrangement between the lessor or owner of the qualified building and the lessee.

(8) "Environmental technology" means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, and the development of alternative energy sources.

(9) "Investment project" means an investment in qualified buildings or qualified machinery and equipment, including labor and services rendered in the planning, installation, and construction or improvement of the project.

(10) "Person" has the meaning given in RCW 82.04.030 and includes state universities as defined in RCW 28B.10.016.

(11) "Pilot scale manufacturing" means design, construction, and testing of preproduction prototypes and models in the fields of biotechnology, advanced computing, electronic device technology, advanced materials, and environmental technology other than for commercial sale. As used in this subsection, "commercial sale" excludes sales of prototypes or sales for market testing if the total gross receipts from such sales of the product, service, or process do not exceed one million dollars.

(12) "Qualified buildings" means construction of new structures, and expansion or renovation of existing structures for the purpose of increasing floor space or production capacity used for pilot scale manufacturing or qualified research and development, including plant offices and other facilities that are an essential or an integral part of a structure used for pilot scale manufacturing or qualified research and development. If a building is used partly for pilot scale manufacturing or qualified research and development, and partly for other purposes, the applicable tax deferral shall be determined by apportionment of the costs of construction under rules adopted by the department.

(13) "Qualified machinery and equipment" means fixtures, equipment, and support facilities that are an integral and necessary part of a pilot scale manufacturing or qualified research and development operation. "Qualified machinery and equipment" includes: Computers; software; data processing equipment; laboratory equipment, instrumentation, and other devices used in a process of experimentation to develop a new or improved pilot model, plant process, product, formula, invention, or similar property; manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; vats, tanks, and fermenters; operating structures; and all other equipment used to control, monitor, or operate the machinery. For purposes of this chapter, qualified machinery and equipment must be either new to the taxing jurisdiction of the state or new to the certificate holder, except that used machinery and equipment may be treated as qualified machinery and equipment if the certificate holder either brings the machinery and equipment into Washington or makes a retail purchase of the machinery and equipment in Washington or elsewhere.

(14) "Qualified research and development" means research and development performed within this state in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, and environmental technology.

(15) "Recipient" means a person receiving a tax deferral under this chapter.

(16) "Research and development" means activities performed to discover technological information, and technical and nonroutine activities concerned with translating technological information into new or improved products, processes, techniques, formulas, inventions, or software. The term includes exploration of a new use for an existing drug, device, or biological product if the new use requires separate licensing by the federal food and drug administration under chapter 21, C.F.R., as amended. The term does not include adaptation or duplication of existing products where the products are not substantially improved by application of the technology, nor does the term include surveys and studies, social science and humanities research, market research or testing, quality control, sale promotion and service, computer software developed for internal use, and research in areas such as improved style, taste, and seasonal design.

(17)(a) "Initiation of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031 for:

(i) Construction of the qualified building, if the underlying ownership of the building vests exclusively with the person receiving the economic benefit of the deferral;

(ii) Construction of the qualified building, if the economic benefits of the deferral are passed to a lessee as provided in subsection (7) of this section; or

(iii) Tenant improvements for a qualified building, if the economic benefits of the deferral are passed to a lessee as provided in subsection (7) of this section.

(b) "Initiation of construction" does not include soil testing, site clearing and grading, site preparation, or any other related activities that are initiated before the issuance of a building permit for the construction of the foundation of the building.

Sec. 4. RCW 82.63.020 and 1994 sp.s. c 5 s 4 are each amended to read as follows:

(1) Application for deferral of taxes under this chapter must be made before initiation of construction of, or acquisition of equipment or machinery for the investment project. The application shall be made to the department in a form and manner prescribed by the department. The application shall contain information regarding the location of the investment project, the applicant's average employment in the state for the prior year, estimated or actual new employment related to the project, estimated or actual wages of employees related to the project, estimated or actual costs, time schedules for completion and operation, and other information required by the department. The department shall rule on the application within sixty days.

(2)(a) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.

(b) Applicants for deferral of taxes under this chapter shall agree to ((supply the department with nonproprietary information necessary to measure the results of the tax deferral program for high-technology research and development and pilot scale manufacturing facilities)) complete an annual survey. If the economic benefits of the deferral are passed to a lessee as provided in RCW 82.63.010(7), the lessee shall agree to complete the annual survey and the applicant is not required to complete the annual survey. The survey is due by March 31st of the year following the calendar year in which the investment project is certified by the department as having been operationally complete and the seven succeeding calendar years. The survey shall include the amount of tax deferred, the number of new products or research projects by general classification, and the number of trademarks, patents, and copyrights associated with activities at the investment project. The survey shall also include the following information for employment positions in Washington:

(i) The number of total employment positions;

(ii) Full-time, part-time, and temporary employment positions as a percent of total employment;

(iv) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.

(c) The department may request additional information necessary to measure the results of the deferral program, to be submitted at the same time as the survey.

(d) All information collected under this subsection, except the amount of the tax deferral taken, is deemed taxpayer information under RCW 82.32.330 and is not disclosable. Information on the amount of tax deferral taken is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.

(3) The department shall use the information from this section to prepare summary descriptive statistics by category. No fewer than three taxpayers shall be included in any category. The department shall report these statistics to the legislature each year by September 1st.

(4) The department shall use the information to ((perform three assessments on)) study the tax deferral program authorized under this chapter. ((The assessments will take place in 1997, 2000, and 2003.)) The department shall ((prepare reports on each assessment and deliver their reports by September 1, 1997, September 1, 2000, and September 1, 2003)) report to the legislature by December 1, 2009, and December 1, 2013. The ((assessments)) reports shall measure the effect of the program on job creation, the number of jobs created for Washington residents, company growth, the introduction of new products, the diversification of the state's economy, growth in research and development investment, the movement of firms or the consolidation of firms' operations into the state, and such other factors as the department selects.

Sec. 5. RCW 82.63.030 and 1994 sp.s. c 5 s 5 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, the department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project.

(2) No certificate may be issued for an investment project that has already received a deferral under chapter 82.60 or 82.61 RCW or this chapter, except that an investment project for qualified research and development that has already received a deferral may also receive an additional deferral certificate for adapting the investment project for use in pilot scale manufacturing.

(3) This section shall expire ((July)) January 1, ((2004)) 2015.

Sec. 6. RCW 82.63.045 and 2000 c 106 s 10 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, taxes deferred under this chapter need not be repaid.

(2)(a) If, on the basis of ((a report)) survey under RCW 82.63.020 or other information, the department finds that an investment project is used for purposes other than qualified research and development or pilot scale manufacturing at any time during the calendar year in which the investment project is certified by the department as having been operationally completed, or at any time during any of the seven succeeding calendar years, a portion of deferred taxes shall be immediately due according to the following schedule:

Year in which use occurs	% of deferred taxes due
1	100%
2	87.5%
3	75%
4	62.5%
5	50%
6	37.5%
7	25%
8	12.5%

(b) If a recipient of the deferral fails to complete the annual survey required under RCW 82.63.020 by the date due, 12.5 percent of the deferred tax shall be immediately due. If the economic benefits of the deferral are passed to a lessee as provided in RCW 82.63.010(7), the lessee shall be responsible for payment to the extent the lessee has received the economic benefit.

(c) If an investment project is used for purposes other than qualified research and development or pilot scale manufacturing at any time during the calendar year in which the investment project is certified as having been operationally complete and the recipient of the deferral fails to complete the annual survey due under RCW 82.63.020, the portion of deferred taxes immediately due is the amount on the schedule in (a) of this subsection. If the economic benefits of the deferral are passed to a lessee as provided in RCW 82.63.010(7), the lessee shall be responsible for payment to the extent the lessee has received the economic benefit.

(3) The department shall assess interest at the rate provided for delinquent taxes, but not penalties, retroactively to the date of deferral. The debt for deferred taxes will not be extinguished by insolvency or other failure of the recipient. Transfer of ownership does not terminate the deferral. The deferral is transferred, subject to the successor meeting the eligibility requirements of this chapter, for the remaining periods of the deferral.

(((3))) (4) Notwithstanding subsection (2) of this section, deferred taxes on the following need not be repaid:

(a) Machinery and equipment, and sales of or charges made for labor and services, which at the time of purchase would have qualified for exemption under RCW 82.08.02565; and

(b) Machinery and equipment which at the time of first use would have qualified for exemption under RCW 82.12.02565.

Sec. 7. RCW 82.63.070 and 1994 sp.s. c 5 s 9 are each amended to read as follows:

Applications ((and other information)) received by the department under this chapter are not confidential and are subject to disclosure.

Sec. 8. RCW 82.04.190 and 2002 c 367 s 2 are each amended to read as follows:

"Consumer" means the following:

(1) Any person who purchases, acquires, owns, holds, or uses any article of tangible personal property irrespective of the nature of the person's business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than for the purpose (a) of resale as tangible personal property in the regular course of business or (b) of incorporating such property as an ingredient or component of real or personal property when installing, repairing, cleaning, altering, imprinting, improving, constructing, or decorating such real or personal property of or for consumers or (c) of consuming such property in producing for sale a new article of tangible personal property or a new substance, of which such property becomes an ingredient or component or as a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale or (d) purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon;

(2)(a) Any person engaged in any business activity taxable under RCW 82.04.290; (b) any person who purchases, acquires, or uses any telephone service as defined in RCW 82.04.065, other than for resale in the regular course of business; (c) any person who purchases, acquires, or uses any service defined in RCW 82.04.050(2)(a) or any amusement and recreation service defined in RCW 82.04.050(3)(a), other than for resale in the regular course of business; and (d) any person who is an end user of software;

(3) Any person engaged in the business of contracting for the building, repairing or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state of Washington or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind as defined in RCW 82.04.280, in respect to tangible personal property when such person incorporates such property as an ingredient or component of such publicly owned street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle by installing, placing or spreading the property in or upon the right of way of such street, place, road, highway, easement, bridge, tunnel, or trestle or in or upon the site of such mass public transportation terminal or parking facility;

(4) Any person who is an owner, lessee or has the right of possession to or an easement in real property which is being constructed, repaired, decorated, improved, or otherwise altered by a person engaged in business, excluding only (a) municipal corporations or political subdivisions of the state in respect to labor and services rendered to their real property which is used or held for public road purposes, and (b) the United States, instrumentalities thereof, and county and city housing authorities created pursuant to chapter 35.82 RCW in respect to labor and services rendered to their real property. Nothing contained in this or any other subsection of this definition shall be construed to modify any other definition of "consumer";

(5) Any person who is an owner, lessee, or has the right of possession to personal property which is being constructed, repaired, improved, cleaned, imprinted, or otherwise altered by a person engaged in business;

(6) Any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation; also, any person engaged in the business of clearing land and moving earth of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW. Any such person shall be a consumer within the meaning of this subsection in respect to tangible personal property incorporated into, installed in, or attached to such building or other structure by such person, except that consumer does not include any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for the United States, or any instrumentality thereof, if the investment project would qualify for sales and use tax deferral under chapter 82.63 RCW if undertaken by a private entity;

(7) Any person who is a lessor of machinery and equipment, the rental of which is exempt from the tax imposed by RCW 82.08.020 under RCW 82.08.02565, with respect to the sale of or charge made for tangible personal property consumed in respect to repairing the machinery and equipment, if the tangible personal property has a useful life of less than one year. Nothing contained in this or any other subsection of this section shall be construed to modify any other definition of "consumer";

(8) Any person engaged in the business of cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development; and

(9) Until July 1, 2003, any person engaged in the business of conducting environmental remedial action as defined in RCW 82.04.2635(2).

NEW SECTION. Sec. 9. A new section is added to chapter 82.04 RCW to read as follows:

This chapter does not apply to amounts received by any person for research and development under the federal small business innovation research program (114 Stat. 2763A; 15 U.S.C. Sec. 638 et seq.).

NEW SECTION. Sec. 10. A new section is added to chapter 82.04 RCW to read as follows:

This chapter does not apply to amounts received by any person for research and development under the federal small business technology transfer program (115 Stat. 263; 15 U.S.C. Sec. 638 et seq.).

NEW SECTION. Sec. 11. Sections 9 and 10 of this act take effect July 1, 2004."

Correct the title.

Representative Boldt moved the adoption of amendment (763) to amendment (762):

On page 4 of the amendment, line 19, after "subsection" strike everything through "82.32.330" on line 26 and insert "is deemed taxpayer information under RCW 82.32.330 and is not disclosable"

Representatives Boldt and Orcutt spoke in favor of the adoption of the amendment.

Representative Fromhold spoke against the adoption of the amendment.

An electronic roll call vote was demanded and the demand was sustained.

The Speaker stated the question before the House to be adoption of amendment (763) to amendment (762) to Substitute House Bill No. 2546.

ROLL CALL

The Clerk called the roll on the adoption of amendment (763) to amendment (762) to Substitute House Bill No. 2546, and the amendment was not adopted by the following vote: Yeas - 45, Nays - 53, Absent - 0, Excused - 0.

Voting nay: Representatives Blake, Campbell, Chase, Clibborn, Cody, Conway, Cooper, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hatfield, Hudgins, Hunt, Hunter, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, O'Brien, Ormsby, Pettigrew, Quall, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 53.

Representative McIntire spoke in favor of the adoption of amendment (762).

The amendment was adopted. The bill was ordered engrossed.

There being no objection, the rules were suspended, the second reading considered the third and the bill was placed on final passage.

Representatives McIntire, Cairnes, O'Brien, Orcutt, Kagi, Carrell, Ahern, Morris and Chandler spoke in favor of passage of the bill.

Representative Darneille spoke against the passage of the bill.

The Speaker stated the question before the House to be the final passage of Engrossed Substitute House Bill No. 2546.

ROLL CALL

The Clerk called the roll on the final passage of Engrossed Substitute House Bill No. 2546 and the bill passed the House by the following vote: Yeas - 86, Nays - 12, Absent - 0, Excused - 0.

Voting yea: Representatives Ahern, Alexander, Anderson, Armstrong, Bailey, Benson, Blake, Boldt, Buck, Bush, Cairnes, Campbell, Carrell, Chandler, Clements, Clibborn, Condotta, Cooper, Cox, Crouse, DeBolt, Delvin, Dickerson, Dunshee, Edwards, Eickmeyer, Ericksen, Fromhold, Grant, Haigh, Hankins, Hatfield, Hinkle, Holmquist, Hudgins, Hunt, Hunter, Jarrett, Kagi, Kenney, Kessler, Kirby, Kristiansen, Lantz, Linville, Lovick, Mastin, McCoy, McDonald, McIntire, McMahan, McMorris, Mielke, Miloscia, Morrell, Morris, Murray, Newhouse, Nixon, O'Brien, Orcutt, Pearson, Pettigrew, Priest, Quall, Roach, Rockefeller, Rodne, Ruderman, Santos, Schindler, Schoesler, Sehlin, Shabro, D. Simpson, Skinner, Sommers, Sullivan, Sump, Talcott, Tom, Upthegrove, Veloria, Wallace, Woods and Mr. Speaker - 86.

Voting nay: Representatives Chase, Cody, Conway, Darneille, Flannigan, McDermott, Moeller, Ormsby, Romero, Schual-Berke, G. Simpson and Wood - 12.

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2546, having received the necessary constitutional majority, was declared passed.

There being no objection, the House advanced to the seventh order of business.

THIRD READING

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1869, By House Committee on Finance (originally sponsored by Representatives McIntire, Gombosky, Morris, Conway, Santos, Haigh, Kagi, Hunt, Linville, Dunshee, Chase, G. Simpson, Moeller, Lovick, Cody, Murray, Upthegrove, Veloria and Wood)

Requiring performance audits for tax preferences.

The bill was read the third time.

Representatives McIntire, Morris, Santos, Simpson, Morrell, Ruderman, Hunt and Romero spoke in favor of passage of the bill.

Representatives Orcutt, Cairnes, Ahern, Buck, Roach, Roach (again), Mielke and Ericksen spoke against the of passage of the bill.

The Speaker stated the question before the House to be the final passage of Engrossed Substitute House Bill No. 1869.

ROLL CALL

The Clerk called the roll on the final passage of Engrossed Substitute House Bill No. 1869 and the bill passed the House by the following vote: Yeas - 58, Nays - 40, Absent - 0, Excused - 0.

Voting yea: Representatives Anderson, Blake, Campbell, Chase, Clibborn, Cody, Conway, Cooper, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hatfield, Hudgins, Hunt, Hunter, Jarrett, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, Nixon, O'Brien, Ormsby, Pettigrew, Priest, Quall, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Tom, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 58.

Voting nay: Representatives Ahern, Alexander, Armstrong, Bailey, Benson, Boldt, Buck, Bush, Cairnes, Carrell, Chandler, Clements, Condotta, Cox, Crouse, DeBolt, Delvin, Ericksen, Hankins, Hinkle, Holmquist, Kristiansen, Mastin, McDonald, McMahan, McMorris, Mielke, Newhouse, Orcutt, Pearson, Roach, Rodne, Schindler, Schoesler, Sehlin, Shabro, Skinner, Sump, Talcott and Woods - 40.

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1869, having received the necessary constitutional majority, was declared passed.

There being no objection, the House reverted to the fourth order of business.

INTRODUCTION & FIRST READING

HB 3151 by Representatives O'Brien, Alexander, Morris, Campbell, Lovick, Benson, Pettigrew and Shabro

AN ACT Relating to drug purchasing cost controls; and amending RCW 70.14.050.

Referred to Committee on Health Care.

HB 3152 by Representatives O'Brien, McDonald, Cody, Morrell, Flannigan, Wallace, D. Simpson, Wood, Chase, Santos and Edwards

AN ACT Relating to housing for homeless veterans; adding a new section to chapter 71.24 RCW; and creating a new section.

Referred to Committee on Children & Family Services.

HB 3153 by Representatives Conway, Cody, Ruderman, G. Simpson, McDermott, Wood, Chase, Santos, Edwards and Kenney

AN ACT Relating to health care facilities that use public funds to encourage or discourage unionization; adding a new chapter to Title 49 RCW; prescribing penalties; and providing an effective date.

Referred to Committee on Commerce & Labor.

HB 3154 by Representatives Morrell, Bush, Sehlin, Hatfield, Edwards and Talcott

AN ACT Relating to eliminating the expiration dates on tax exemptions for water services supplied by certain water-sewer districts and irrigation districts; and amending RCW 82.04.312 and 82.16.042.

Referred to Committee on Finance.

HB 3155 by Representative Morris

AN ACT Relating to energy efficiency; and creating a new section.

Referred to Committee on Technology, Telecommunications & Energy.

HB 3156 by Representatives Campbell and Cody

AN ACT Relating to professional service corporations; and amending RCW 18.100.050.

Referred to Committee on Health Care.

HB 3157 by Representative McIntire

AN ACT Relating to penalties on assessments; amending RCW 82.32.090; and prescribing penalties.

Referred to Committee on Finance.

HB 3158 by Representatives McIntire, Kessler and Edwards

AN ACT Relating to exempting from sales and use tax computer equipment used primarily in printing or publishing; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; and creating a new section.

Referred to Committee on Finance.

HB 3159 by Representatives Morris and Wood

AN ACT Relating to operation of a motorcycle between traffic lanes; and amending RCW 46.61.608.

Referred to Committee on Transportation.

HB 3160 by Representatives Conway, Ruderman, G. Simpson, Chase and Santos

AN ACT Relating to allowing unemployment benefits to workers in a labor dispute; amending RCW 50.20.090; creating new sections; and declaring an emergency.

Referred to Committee on Commerce & Labor.

HB 3161 by Representative Anderson

AN ACT Relating to revising school funding by standardizing levy formulas and salary schedules; amending RCW 28A.400.205, 28A.500.020, 28A.500.030, and 84.52.0531; adding a new section to chapter 84.52 RCW; adding a new section to chapter 28A.500 RCW; providing an effective date; providing an expiration date; and declaring an emergency.

Referred to Committee on Appropriations.

HJM 4043 by Representatives Delvin, Hankins, Grant, Schoesler, Clements, Mastin, Cox, Skinner, Newhouse, Jarrett, Chandler, Clibborn and Kessler

Requesting the privatization of the department of energy's fast flux test facility complex.

Referred to Committee on Technology, Telecommunications & Energy.

There being no objection, the bills and memorial listed on the day's introduction sheet under the fourth order of business were referred to the committees so designated, except for HOUSE BILL NO. 3161.

MOTION

Representative Anderson moved that the rules be suspended, and that HOUSE BILL NO. 3161 be advanced to second reading.

Representative Anderson spoke in favor of the motion.

Representative Kessler spoke against the motion.

An electronic roll call vote was demanded and the demand was sustained.

The Speaker stated the question before the House to be adoption of the motion to suspended the rules and advance House Bill No. 3161 to second reading.

ROLL CALL

The Clerk called the roll on the adoption of the motion to suspend the rules and advance House Bill No. 3161 to second reading, and the motion was not adopted by the following vote: Yeas - 46, Nays - 52, Absent - 0, Excused - 0.

Voting nay: Representatives Blake, Chase, Clibborn, Cody, Conway, Cooper, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hatfield, Hudgins, Hunt, Hunter, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, O'Brien, Ormsby, Pettigrew, Quall, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 52.

There being no objection, HOUSE BILL NO. 3161 was referred to the Committee on Appropriations.

REPORTS OF STANDING COMMITTEES

January 28, 2004

HB 1594 Prime Sponsor, Representative Berkey: Clarifying the role of a chief financial officer in a charter county. Reported by Committee on Local Government

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Romero, Chairman; D. Simpson, Vice Chairman; Schindler, Ranking Minority Member; Jarrett, Assistant Ranking Minority Member; Ahern; Clibborn; Edwards; Ericksen; Mielke; Moeller and Upthegrove.

Passed to Committee on Rules for second reading.

January 28, 2004

EHB 1691 Prime Sponsor, Representative Grant: Authorizing advanced registered nurse practitioners to examine, diagnose, and treat injured workers covered by industrial insurance. Reported by Committee on Commerce & Labor

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Conway, Chairman; McMorris, Ranking Minority Member; Condotta, Assistant Ranking Minority Member; Crouse; Holmquist; Hudgins; Kenney and McCoy.

Passed to Committee on Rules for second reading.

January 28, 2004

HB 1982 Prime Sponsor, Representative Kenney: Revising standards for disclosure of information concerning sex offenders and kidnapping offenders. Reported by Committee on Criminal Justice & Corrections

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives O'Brien, Chairman; Darneille, Vice Chairman; Mielke, Ranking Minority Member; Ahern, Assistant Ranking Minority Member; Kagi; Pearson and Veloria.

Referred to Committee on Appropriations.

January 28, 2004

HB 1995 Prime Sponsor, Representative Quall: Changing the disposition of proceeds from the lease, rental, or sale of school district real property. Reported by Committee on Education

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Quall, Chairman; McDermott, Vice Chairman; Talcott, Ranking Minority Member; Tom, Assistant Ranking Minority Member; Anderson; Cox; Haigh; Hunter; McMahan and Rockefeller.

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2055 Prime Sponsor, Representative Morris: Modifying the taxation of bundled telecommunications services. Reported by Committee on Technology, Telecommunications & Energy

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Morris, Chairman; Ruderman, Vice Chairman; Crouse, Ranking Minority Member; Nixon, Assistant Ranking Minority Member; Anderson; Blake; Bush; Delvin; Hudgins; Kirby; McMahan; McMorris; Romero; Tom and Wallace.

Referred to Committee on Finance.

January 28, 2004

HB 2100 Prime Sponsor, Representative Romero: Adding an ex officio member to the building code council. Reported by Committee on Local Government

MAJORITY recommendation: Do pass. Signed by Representatives Romero, Chairman; D. Simpson, Vice Chairman; Schindler, Ranking Minority Member; Jarrett, Assistant Ranking Minority Member; Ahern; Clibborn; Edwards; Ericksen; Mielke; Moeller and Upthegrove.

Passed to Committee on Rules for second reading.

January 27, 2004

EHB 2140 Prime Sponsor, Representative Grant: Reaffirming the role of the state conservation commission. Reported by Committee on Agriculture & Natural Resources

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Linville, Chairman; Rockefeller, Vice Chairman; Schoesler, Ranking Minority Member; Holmquist, Assistant Ranking Minority Member; Eickmeyer; Grant; Hunt; Kristiansen; McDermott; Orcutt and Sump.

MINORITY recommendation: Do not pass. Signed by Representatives Chandler.

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2379 Prime Sponsor, Representative Armstrong: Providing for training peace officers to reduce deaths. Reported by Committee on Criminal Justice & Corrections

MAJORITY recommendation: Do pass. Signed by Representatives O'Brien, Chairman; Darneille, Vice Chairman; Mielke, Ranking Minority Member; Ahern, Assistant Ranking Minority Member; Kagi; Pearson and Veloria.

Referred to Committee on Appropriations.

January 28, 2004

HB 2452 Prime Sponsor, Representative Morris: Regulating sites for construction and operation of unstaffed public or private electric utility facilities. Reported by Committee on Technology, Telecommunications & Energy

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2462 Prime Sponsor, Representative Quall: Providing for disposition of funds from teachers' cottages. Reported by Committee on Education

Passed to Committee on Rules for second reading.

January 29, 2004

HB 2696 Prime Sponsor, Representative D. Simpson: Creating a state parks centennial committee. Reported by Committee on Fisheries, Ecology & Parks

MAJORITY recommendation: Do pass. Signed by Representatives Cooper, Chairman; Upthegrove, Vice Chairman; Sump, Ranking Minority Member; Hinkle, Assistant Ranking Minority Member; Buck; Hatfield; O'Brien; Pearson and D. Simpson.

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2703 Prime Sponsor, Representative Armstrong: Increasing the minimum for bid requirements for materials or work for joint operating agencies. Reported by Committee on State Government

MAJORITY recommendation: Do pass. Signed by Representatives Haigh, Chairman; Miloscia, Vice Chairman; Armstrong, Ranking Minority Member; Shabro, Assistant Ranking Minority Member; Hunt; McDermott; Nixon; Tom and Wallace.

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2704 Prime Sponsor, Representative Talcott: Providing standards for alternative learning experience programs. Reported by Committee on Education

Referred to Committee on Appropriations.

January 28, 2004

HB 2771 Prime Sponsor, Representative Sommers: Prohibiting cyberstalking. Reported by Committee on Criminal Justice & Corrections

Passed to Committee on Rules for second reading.

January 29, 2004

HB 2846 Prime Sponsor, Representative Sump: Creating the crime of unlawful use of a hook. Reported by Committee on Fisheries, Ecology & Parks

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Cooper, Chairman; Upthegrove, Vice Chairman; Sump, Ranking Minority Member; Hinkle, Assistant Ranking Minority Member; Buck; Hatfield; O'Brien; Pearson and D. Simpson.

Passed to Committee on Rules for second reading.

There being no objection, the bills listed on the day's committee reports sheet under the fifth order of business were referred to the committees so designated.

There being no objection, the House advanced to the eleventh order of business.

There being no objection, the House adjourned until 10:00 a.m., February 2, 2004, the 22nd Day of the Regular Session.

FRANK CHOPP, Speaker RICHARD NAFZIGER, Chief Clerk