TWENTY NINTH DAY

 


MORNING SESSION

 

Senate Chamber, Olympia, Monday, April 12, 2010

 

The Senate was called to order at 9:00 a.m. by the President Pro Tempore. The Secretary called the roll and announced to the President Pro Tempore that all Senators were present with the exception of Senators Delvin, Holmquist, McCaslin and Stevens.

The Sergeant at Arms Color Guard consisting of Senate employees Stephen Malmstrom and Gary Humboch, presented the Colors. Reverend Jim Erlandson, Community of Christ Church of Olympia offered the prayer.

 

MOTION

 

On motion of Senator Eide, the reading of the Journal of the previous day was dispensed with and it was approved.

 

MOTION

 

There being no objection, the Senate advanced to the first order of business.

 

REPORTS OF STANDING COMMITTEES

 

April 11, 2010

EHB 2561          Prime Sponsor, Representative Dunshee: Funding construction of energy cost saving improvements to public facilities.  Reported by Committee on Ways & Means

 

MAJORITY recommendation:  Do pass as amended.  Signed by Senators Prentice, Chair; Fraser, Vice Chair, Capital Budget Chair; Fairley; Hobbs; Keiser; Kline; Kohl-Welles; McDermott; Murray; Oemig; Pridemore; Regala and Rockefeller.

 

MINORITY recommendation:  Do not pass.  Signed by Senators Zarelli; Parlette; Pflug and Schoesler.

 

MINORITY recommendation:  That it be referred without recommendation.  Signed by Senator Brandland.

 

Passed to Committee on Rules for second reading.

 

April 11, 2010

2SHB 2576        Prime Sponsor, Committee on Ways & Means: Restructuring fees for the division of corporations and affirming authority to establish fees for the charities program of the office of the secretary of state.  Reported by Committee on Ways & Means

 

MAJORITY recommendation:  Do pass.  Signed by Senators Prentice, Chair; Fraser, Vice Chair, Capital Budget Chair; Fairley; Keiser; Kline; Kohl-Welles; McDermott; Murray; Oemig; Pridemore; Regala and Rockefeller.

 

MINORITY recommendation:  Do not pass.  Signed by Senators Zarelli; Parlette; Pflug and Schoesler.

 

MINORITY recommendation:  That it be referred without recommendation.  Signed by Senator Brandland.

 

Passed to Committee on Rules for second reading.

 

April 11, 2010

E2SHB 2630      Prime Sponsor, Committee on Education Appropriations: Creating the opportunity express program.  Reported by Committee on Ways & Means

 

MAJORITY recommendation:  Do pass as amended.  Signed by Senators Prentice, Chair; Fraser, Vice Chair, Capital Budget Chair; Fairley; Hobbs; Keiser; Kline; Kohl-Welles; McDermott; Murray; Oemig; Regala and Rockefeller.

 

MINORITY recommendation:  Do not pass.  Signed by Senator Pflug.

 

MINORITY recommendation:  That it be referred without recommendation.  Signed by Senators Zarelli; Brandland; Parlette and Schoesler.

 

Passed to Committee on Rules for second reading.

 

April 11, 2010

HB 2694            Prime Sponsor, Representative Sells: Regarding a bachelor of science in nursing program at the University Center.  Reported by Committee on Ways & Means

 

MAJORITY recommendation:  Do pass as amended.  Signed by Senators Prentice, Chair; Fraser, Vice Chair, Capital Budget Chair; Zarelli; Brandland; Fairley; Hobbs; Keiser; Kline; Kohl-Welles; McDermott; Murray; Oemig; Parlette; Regala and Rockefeller.

 

MINORITY recommendation:  That it be referred without recommendation.  Signed by Senators Pflug and Schoesler.

 

Passed to Committee on Rules for second reading.

 

MOTION

 

On motion of Senator Eide, all measures listed on the Standing Committee report were referred to the committees as designated.

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the fourth order of business.

 

MESSAGE FROM THE HOUSE

 

April 10, 2010

 

MR. PRESIDENT:

The House has passed:

ENGROSSED HOUSE BILL NO. 1690

and the same is herewith transmitted.

 

BARBARA BAKER, Chief Clerk

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the fifth order of business.

 

INTRODUCTION AND FIRST READING

 

EHB 1690          by Representatives Hasegawa, Hunt, Hudgins, Anderson and Kenney

 

AN ACT Relating to public works projects; amending RCW 39.10.200, 39.10.230, 35.82.200, and 43.131.408; and creating a new section.

 

MOTION

 

On motion of Senator Eide, the rules were suspended and Engrossed House Bill No. 1690 was placed on the second reading calendar.

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the eighth order of business.

 

MOTION

 

Senator McAuliffe moved adoption of the following resolution:

 

SENATE RESOLUTION

8725

 

By Senators McAuliffe, Murray, Kohl-Welles, Prentice, McDermott, Kline, Gordon, Eide, Keiser, Brandland, Morton, Becker, Jacobsen, and Fairley

      WHEREAS, Will Johnson, a University of Washington senior majoring in computer science and mathematics, has been named a Putnam Fellow for finishing among the top five students in this elite college-math competition among 4,036 competitors; and

      WHEREAS, Will Johnson is the first University of Washington student to win a Putnam Fellowship since the competition was initiated in 1938; and

      WHEREAS, Will Johnson, a Washington student, grew up in Kenmore and attended Inglemoor High School; and

      WHEREAS, Will Johnson's University of Washington math professor, Ioana Dumitriu, the first woman to win a Putnam in 1996, has described Will Johnson as a "once in a generation" student; and

      WHEREAS, Will Johnson also participated in last year's competition where he finished sixth;

      NOW, THEREFORE, BE IT RESOLVED, That the Washington State Senate recognize that the support of his teachers and his family have contributed to Will Johnson's ability to achieve this prestigious academic award; and

      BE IT FURTHER RESOLVED, That copies of this resolution be immediately transmitted by the Secretary of the Senate to Will Johnson.

      Senator McAuliffe spoke in favor of adoption of the resolution.

      The President Pro Tempore declared the question before the Senate to be the adoption of Senate Resolution No. 8725.

The motion by Senator McAuliffe carried and the resolution was adopted by voice vote.

 

MOTION

 

At 9:45 a.m., on motion of Senator Eide, the Senate was declared to be at ease subject to the call of the President.

 

The Senate was called to order at 10:58 a.m. by President Owen.

 

MOTION

 

      Senator Eide moved that Senate Rule 45.1 be suspended for the remainder of the day to allow for public hearings with less than five days notice.

 

MOTION

 

On motion of Senator Eide, the Senate reverted to the sixth order of business.

 

SECOND READING

 

SECOND SUBSTITUTE HOUSE BILL NO. 2576, by House Committee on Ways & Means (originally sponsored by Representatives Kenney, Liias, Moeller, Pedersen and Armstrong)

 

Restructuring fees for the division of corporations and affirming authority to establish fees for the charities program of the office of the secretary of state.

 

The measure was read the second time.

 

MOTION

 

On motion of Senator Prentice, the rules were suspended, Second Substitute House Bill No. 2576 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

      Senators Prentice and Brown spoke in favor of passage of the bill.

      Senators Schoesler, Benton, Pflug and Roach spoke against passage of the bill.

 

The President declared the question before the Senate to be the final passage of Second Substitute House Bill No. 2576.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of Second Substitute House Bill No. 2576 and the bill passed the Senate by the following vote:  Yeas, 26; Nays, 19; Absent, 4; Excused, 0.

      Voting yea: Senators Berkey, Brown, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Jacobsen, Kastama, Kauffman, Keiser, Kline, Kohl-Welles, McAuliffe, McDermott, Murray, Oemig, Prentice, Pridemore, Ranker, Regala, Rockefeller, Shin and Tom

      Voting nay: Senators Becker, Benton, Brandland, Carrell, Haugen, Hewitt, Hobbs, Honeyford, Kilmer, King, Marr, Morton, Parlette, Pflug, Roach, Schoesler, Sheldon, Swecker and Zarelli

      Absent: Senators Delvin, Holmquist, McCaslin and Stevens

SECOND SUBSTITUTE HOUSE BILL NO. 2576, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

MOTION

 

On motion of Senator Brandland, Senators Delvin, Holmquist, McCaslin and Stevens were excused.

 

SECOND READING

 

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2630, by House Committee on Education Appropriations (originally sponsored by Representatives Probst, Kenney, Conway, Maxwell, Jacks, White, Simpson, Seaquist, Sells, Goodman, Ormsby and Santos)

 

Creating the opportunity express program.

 

The measure was read the second time.

 

MOTION

 

Senator Prentice moved that the following committee striking amendment by the Committee on Ways & Means be adopted:

0)Strike everything after the enacting clause and insert the following:

"NEW SECTION.  Sec. 1.  (1) The legislature finds that in times of severe economic recession, the state has a special obligation to help unemployed and low-income citizens access the training and education necessary to help them find and keep living wage jobs.  The legislature also finds that during times of recession, when state revenues are at their lowest, demand for education and training are at their highest, making it especially important for the legislature to set clear goals and make the most efficient use of limited state resources.

      (2) The legislature therefore intends to expand training and education programs, which have proven to be successful, to help Washington citizens receive the training they need.  These programs include the worker retraining program, the opportunity grant program, and the opportunity internship program.  The legislature further intends to create more effective intake and outreach systems to reach the greatest number of citizens and connect them to the resources they need, including college, apprenticeship, and preapprenticeship.

Sec. 2.  RCW 28C.04.390 and 1999 c 121 s 1 are each amended to read as follows:

      (1) The college board worker retraining program funds shall be used for training programs and related support services, including financial aid, counseling, referral to training resources, job referral, and job development that:

      (a) Are consistent with the unified plan for workforce development;

      (b) Provide increased enrollments for dislocated workers;

      (c) Provide customized training opportunities for dislocated workers; and

      (d) Provide increased enrollments and support services, including financial aid for those students not receiving unemployment insurance benefits, that do not replace or supplant any existing enrollments, programs, support services, or funding sources.

      (2) The college board shall develop a plan for use of the worker retraining program funds in conjunction with the workforce training customer advisory committee established in subsection (3) of this section.  In developing the plan the college board shall:

      (a) Provide that applicants for worker retraining program funds shall solicit financial support for training programs and give priority in receipt of funds to those applicants which are most successful in matching public dollars with financial support;

      (b) Provide that applicants for worker retraining program funds shall develop training programs in partnership with local businesses, industry associations, labor, and other partners as appropriate and give priority in receipt of funds to those applicants who develop customized training programs in partnership with local businesses, industry associations, and labor organizations;

      (c) Give priority in receipt of funds to those applicants serving rural areas;

      (d) Ensure that applicants receiving worker retraining program funds gather information from local workforce development councils on employer workforce needs, including the needs of businesses with less than twenty-five employees; ((and))

      (e) Provide for specialized vocational training at a private career school or college at the request of a recipient eligible under subsection (1)(b) of this section.  Available tuition for the training is limited to the amount that would otherwise be payable per enrolled quarter to a public institution; and
      (f) Give priority in receipt of funds to those applicants working toward careers in the aerospace, health care, advanced manufacturing, construction, and renewable energy industries; high-demand occupations in strategic industry clusters identified in the state comprehensive plan and the workforce development councils' local comprehensive plans for workforce educational training as identified in RCW 28C.18.080 and 28C.18.150; and occupations and industries identified by community and technical colleges in collaboration with local workforce development councils.  For purposes of this section, health care includes long-term care.

      (3) The executive director of the college board shall appoint a workforce training customer advisory committee by July 1, 1999, to:

      (a) Assist in the development of the plan for the use of the college board worker retraining program funds and recommend guidelines to the college board for the operation of worker retraining programs;

      (b) Recommend selection criteria for worker retraining programs and grant applicants for receipt of worker retraining program grants;

      (c) Provide advice to the college board on other workforce development activities of the community and technical colleges;

      (d) Recommend selection criteria for job skills grants, consistent with criteria established in this chapter and chapter 121, Laws of 1999.  Such criteria shall include a prioritization of job skills applicants in rural areas;

      (e) Recommend guidelines to the college board for the operation of the job skills program; and

      (f) Recommend grant applicants for receipt of job skills program grants.

      (4) Members of the workforce training customer advisory committee shall consist of three college system representatives selected by the executive director of the college board, three representatives of business selected from nominations provided by statewide business organizations, and three representatives of labor selected from nominations provided by a statewide labor organization representing a cross-section of workers in the state.

NEW SECTION.  Sec. 3.  A new section is added to chapter 28B.50 RCW to read as follows:

      By July 1, 2010, and within existing resources, the college board may create a single web site for the purpose of advertising the availability of opportunity express funding to Washington citizens; explaining that opportunity express helps people who want to pursue college and apprenticeship for certain targeted industries; and explaining that opportunity express includes the following tracks:  Worker retraining for unemployed adults; training programs approved by the commissioner of the employment security department, training programs administered by labor and management partnerships, and training programs prioritized by industry, for unemployed adults and incumbent workers; opportunity internships for high school students; and opportunity grants for low- income adults.  The web site may also direct interested individuals to the appropriate local intake office.  The web site may also include a link to the Washington state department of labor and industries apprenticeship program.

Sec. 4.  RCW 28C.18.164 and 2009 c 238 s 4 are each amended to read as follows:

      (1) Opportunity internship consortia may apply to the board to offer an opportunity internship program.

      (a) The board, in consultation with the Washington state apprenticeship and training council, may select those consortia that demonstrate the strongest commitment and readiness to implement a high quality opportunity internship program for low-income high school students.  The board shall place a priority on consortia with demonstrated experience working with similar populations of students and demonstrated capacity to assist a large number of students through the progression of internship or preapprenticeship, high school graduation, postsecondary education, and retention in a high-demand occupation.  The board shall place a priority on programs that emphasize secondary career and technical education and nonbaccalaureate postsecondary education; however, programs that target four-year postsecondary degrees are eligible to participate.

      (b)(i) Except as provided in (b)(ii) of this subsection (1), the board shall enter into a contract with each consortium selected to participate in the program.  No more than ten consortia per year shall be selected to participate in the program, and to the extent possible, the board shall assure a geographic distribution of consortia in regions across the state emphasizing a variety of targeted industries.  Each consortium may select no more than one hundred low-income high school students per year to participate in the program.

(ii) For fiscal years 2011 through 2013, the board shall enter into a contract with each consortium selected to participate in the program.  No more than twelve consortia per year shall be selected to participate in the program, and to the extent possible, the board shall assure a geographic distribution of consortia in regions across the state emphasizing a variety of targeted industries.  No more than five thousand low-income high school students per year may be selected to participate in the program.

      (2) Under the terms of an opportunity internship program contract, an opportunity internship consortium shall commit to the following activities which shall be conducted using existing federal, state, local, or private funds available to the consortium:

      (a) Identify high-demand occupations in targeted industries for which opportunity internships or preapprenticeships shall be developed and provided;

      (b) Develop and implement the components of opportunity internships, including paid or unpaid internships or preapprenticeships of at least ninety hours in length in high-demand occupations with employers in the consortium, mentoring and guidance for students who participate in the program, assistance with applications for postsecondary programs and financial aid, and a guarantee of a job interview with a participating employer for all opportunity internship graduates who successfully complete a postsecondary program of study;

      (c) Once the internship or preapprenticeship components have been developed, conduct outreach efforts to inform low-income high school students about high-demand occupations, the opportunity internship program, options for postsecondary programs of study, and the incentives and opportunities provided to students who participate in the program;

      (d) Obtain appropriate documentation of the low-income status of students who participate in the program;

      (e) Maintain communication with opportunity internship graduates of the consortium who enroll in postsecondary programs of study; and

      (f) Submit an annual report to the board on the progress of and participation in the opportunity internship program of the consortium.

      (3) Opportunity internship consortia are encouraged to:

      (a) Provide paid opportunity internships or preapprenticeships, including during the summer months to encourage students to stay enrolled in high school;

      (b) Work with high schools to offer opportunity internships as approved worksite learning experiences where students can earn high school credit;

      (c) Designate the local workforce development council as fiscal agent for the opportunity internship program contract;

      (d) Work with area high schools to incorporate the opportunity internship program into comprehensive guidance and counseling programs such as the navigation 101 program; and

      (e) Coordinate the opportunity internship program with other workforce development and postsecondary education programs, including opportunity grants, the college bound scholarship program, federal workforce investment act initiatives, and college access challenge grants.

      (4) The board shall seek federal funds that may be used to support the opportunity internship program, including providing the incentive payments under RCW 28C.18.168.

NEW SECTION.  Sec. 5.  A new section is added to chapter 28B.50 RCW to read as follows:

      A separate and identifiable account, which shall be known as the opportunity express account, is established.  Moneys in the account may be spent only after appropriation.  Moneys in the account shall be used only for the worker retraining program, training programs approved by the commissioner of the employment security department, training programs administered by labor and management partnerships, industry- prioritized training programs, training programs that facilitate career progression in health care occupations, the opportunity internship program, and the opportunity grant program, and for administrative costs related to these programs.  Moneys in the account shall be used to supplement, not supplant, existing funding for the opportunity grant program.

NEW SECTION.  Sec. 6.  This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately."

      Senator Prentice spoke in favor of adoption of the committee striking amendment.

 

MOTION

 

Senator Hargrove moved that the following amendment by Senators Hargrove and Kilmer to the committee striking amendment be adopted:

0)On page 2, line 32, after "construction," insert "forest product,".

Senator Hargrove spoke in favor of adoption of the amendment to the committee striking amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senators Hargrove and Kilmer on page 2, line 32 to the committee striking amendment to Engrossed Second Substitute House Bill No. 2630.

The motion by Senator Hargrove carried and the amendment to the committee striking amendment was adopted by voice vote.

 

The President declared the question before the Senate to be the adoption of the committee striking amendment by the Committee on Ways & Means as amended to Engrossed Second Substitute House Bill No. 2630.

The motion by Senator Prentice carried and the committee striking amendment as amended was adopted by voice vote.

 

MOTION

 

There being no objection, the following title amendment was adopted:

      On page 1, line 1 of the title, after "program;" strike the remainder of the title and insert "amending RCW 28C.04.390 and 28C.18.164; adding new sections to chapter 28B.50 RCW; creating a new section; and declaring an emergency."

 

MOTION

 

On motion of Senator Prentice, the rules were suspended, Engrossed Second Substitute House Bill No. 2630 as amended by the Senate was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

      Senators Prentice and Sheldon spoke in favor of passage of the bill.

      Senator Pflug spoke against passage of the bill.

 

The President declared the question before the Senate to be the final passage of Engrossed Second Substitute House Bill No. 2630 as amended by the Senate.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of Engrossed Second Substitute House Bill No. 2630 as amended by the Senate and the bill passed the Senate by the following vote:  Yeas, 34; Nays, 11; Absent, 0; Excused, 4.

      Voting yea: Senators Benton, Berkey, Brown, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Hobbs, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, King, Kline, Kohl-Welles, Marr, McAuliffe, McDermott, Murray, Oemig, Prentice, Pridemore, Ranker, Regala, Roach, Rockefeller, Sheldon, Shin, Swecker and Tom

      Voting nay: Senators Becker, Brandland, Carrell, Haugen, Hewitt, Honeyford, Morton, Parlette, Pflug, Schoesler and Zarelli

      Excused: Senators Delvin, Holmquist, McCaslin and Stevens

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2630 as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

MOTION

 

On motion of Senator Eide, Engrossed Second Substitute House Bill No. 2630 was immediately transmitted to the House of Representatives.

 

SECOND READING

 

HOUSE BILL NO. 2694, by Representatives Sells, White, McCoy, Kenney, Ericks, O'Brien, Roberts and Chase

 

Regarding a bachelor of science in nursing program at the University Center.

 

The measure was read the second time.

 

MOTION

 

Senator Prentice moved that the following committee striking amendment by the Committee on Ways & Means be adopted.

0)Strike everything after the enacting clause and insert the following:

"NEW SECTION.  Sec. 1.  A new section is added to chapter 28B.50 RCW to read as follows:

      (1) RCW 28B.50.901 assigns responsibility for the north Snohomish, Island, and Skagit counties' higher education consortium to Everett Community College.  In April of 2009, Everett Community College opened Gray Wolf Hall, the new home of the University Center of North Puget Sound.  The University Center currently offers over twenty bachelor's and master's degrees from six partner universities.

      (2) Although Everett Community College offers an associate degree nursing program that graduates approximately seventy to ninety students per year, the University Center does not offer a bachelor of science in nursing.  Some graduates of the Everett Community College program are able to articulate to the bachelor of science in nursing program offered by the University of Washington-Bothell at its Bothell campus or in Mt. Vernon but current capacity is not sufficient for all of the graduates who are both interested and qualified.

      (3) Despite recent growth in nursing education capacity, shortages still persist for registered nurses.  According to a June 2007 study by the Washington, Wyoming, Alaska, Montana, and Idaho center for health workforce studies, the average age of Washington's registered nurses was forty-eight years.  More than a third were fifty-five years of age or older.  Consequently, the high rate of registered nurses retiring from nursing practice over the next two decades will significantly reduce the supply.  This reduction comes at the same time as the state's population grows and ages.  The registered nurse education capacity in Washington has a large impact on the supply of registered nurses in the state.  If the rate of graduation in registered nursing does not increase, projections show that supply in Washington will begin to decline by 2015.  In contrast, if graduation rates increased by four hundred per year, the supply of registered nurses would meet estimated demand by the year 2021.

      (4) Subject to specific funding to support up to fifty full-time equivalent students in a bachelor of nursing program, the University Center at Everett Community College, in partnership with the University of Washington-Bothell, shall offer a bachelor of science in nursing program with capacity for up to fifty full-time students.

NEW SECTION.  Sec. 2.  This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2010.

NEW SECTION.  Sec. 3.  If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2010, in the omnibus appropriations act, this act is null and void."

      Senator Prentice spoke in favor of adoption of the committee striking amendment.

 

The President declared the question before the Senate to be the adoption of the committee striking amendment by the Committee on Ways & Means to House Bill No. 2694.

The motion by Senator Prentice carried and the committee striking amendment was adopted by voice vote.

 

MOTION

 

There being no objection, the following title amendment was adopted:

      On page 1, line 2 of the title, after "Center;" strike the remainder of the title and insert "adding a new section to chapter 28B.50 RCW; creating a new section; providing an effective date; and declaring an emergency."

 

MOTION

 

On motion of Senator Prentice, the rules were suspended, House Bill No. 2694 as amended by the Senate was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

      Senator Prentice spoke in favor of passage of the bill.

      Senator Pflug spoke against passage of the bill.

 

The President declared the question before the Senate to be the final passage of House Bill No. 2694 as amended by the Senate.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of House Bill No. 2694 as amended by the Senate and the bill passed the Senate by the following vote:  Yeas, 43; Nays, 2; Absent, 0; Excused, 4.

      Voting yea: Senators Becker, Benton, Berkey, Brandland, Brown, Carrell, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Haugen, Hewitt, Hobbs, Honeyford, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, King, Kline, Kohl-Welles, Marr, McAuliffe, McDermott, Morton, Murray, Oemig, Parlette, Prentice, Pridemore, Ranker, Regala, Roach, Rockefeller, Sheldon, Shin, Swecker, Tom and Zarelli

      Voting nay: Senators Pflug and Schoesler

      Excused: Senators Delvin, Holmquist, McCaslin and Stevens

HOUSE BILL NO. 2694 as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

SECOND READING

 

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2493, by Representatives Cody, Williams, Pedersen, Kagi, Nelson, Orwall, McCoy, Dickerson, White, Hunt, Darneille, Moeller and Roberts

 

Concerning the taxation of cigarettes and other tobacco products.

 

The measure was read the second time.

 

MOTION

 

Senator Tom moved that the following amendment by Senator Tom be adopted:

0)On page 9, at the beginning of line 10, strike "April" and insert "May"

      On page 9, line 14, after "after" strike "April" and insert "May"

      On page 9, at the beginning of line 23, strike "April" and insert "May"

Senator Tom spoke in favor of adoption of the amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Tom on page 9, line 10 to Engrossed Substitute House Bill No. 2493.

The motion by Senator Tom carried and the amendment was adopted by voice vote.

 

MOTION

 

On motion of Senator Tom, the rules were suspended, Engrossed Substitute House Bill No. 2493 as amended by the Senate was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

      Senators Tom, Marr and Murray spoke in favor of passage of the bill.

      Senator Pflug spoke against passage of the bill.

      Senator Hewitt spoke on final passage of the bill.

 

The President declared the question before the Senate to be the final passage of Engrossed Substitute House Bill No. 2493 as amended by the Senate.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 2493 as amended by the Senate and the bill passed the Senate by the following vote:  Yeas, 28; Nays, 17; Absent, 0; Excused, 4.

      Voting yea: Senators Berkey, Brown, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Haugen, Hobbs, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, Kline, Kohl-Welles, Marr, McAuliffe, McDermott, Murray, Oemig, Prentice, Ranker, Regala, Rockefeller and Tom

      Voting nay: Senators Becker, Benton, Brandland, Carrell, Hewitt, Honeyford, King, Morton, Parlette, Pflug, Pridemore, Roach, Schoesler, Sheldon, Shin, Swecker and Zarelli

      Excused: Senators Delvin, Holmquist, McCaslin and Stevens

HOUSE BILL NO. 2493 as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

MOTION

 

At 11:41 a.m., on motion of Senator Eide, the Senate was declared to be at ease subject to the call of the President.

 

AFTERNOON SESSION

 

The Senate was called to order at 4:11 p.m. by President Owen.

 

MOTION

 

On motion of Senator Eide, the Senate reverted to the first order of business.

 

SUPPLEMENTAL REPORTS OF STANDING COMMITTEES

 

April 12, 2010

ESHB 2836        Prime Sponsor, Committee on Capital Budget: Concerning the capital budget.  Reported by Committee on Ways & Means

 

MAJORITY recommendation:  Do pass as amended.  Signed by Senators Prentice, Chair; Fraser, Vice Chair, Capital Budget Chair; Tom, Vice Chair, Operating Budget; Brandland; Fairley; Hobbs; Keiser; Kline; Kohl-Welles; McDermott; Murray; Oemig; Pridemore; Regala and Rockefeller.

 

MINORITY recommendation:  Do not pass.  Signed by Senators Zarelli; Hewitt; Honeyford; Parlette and Schoesler.

 

Passed to Committee on Rules for second reading.

 

MOTION

 

On motion of Senator Eide, the rules were suspended and Engrossed Substitute House Bill No. 2836 was placed on the second reading calendar.

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the fourth order of business.

 

MESSAGE FROM THE HOUSE

 

April 12, 2010

 

MR. PRESIDENT:

The House concurred in the Senate amendments to the following bills and passed the bills as amended by the Senate:

ENGROSSED SECOND SUBSTITUTE HOUSE BILL 2630,

HOUSE BILL 2694.

and the same are herewith transmitted.

 

BARBARA BAKER, Chief Clerk

 

MESSAGE FROM THE HOUSE

 

April 12, 2010

 

MR. PRESIDENT:

The House has passed:

HOUSE BILL NO. 3219.

and the same is herewith transmitted.

 

BARBARA BAKER, Chief Clerk

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the fifth order of business.

 

SUPPLEMENTAL INTRODUCTION AND FIRST READING OF HOUSE BILLS

 

HB 3219             by Representatives Goodman, Rodne, Pedersen, Hudgins, Chase and Upthegrove

 

AN ACT Relating to technical corrections to the Revised Code of Washington; amending RCW 6.17.160, 6.27.140, 24.55.075, 36.16.050, 36.70A.070, 41.45.150, 67.28.180, and 82.45.180; amending 2010 c 204 s 1105 (uncodified); amending 2010 1st sp.s. c 7 s 132 (uncodified); amending 2010 1st sp.s. c 7 s 150 (uncodified); reenacting RCW 28B.67.030; repealing 2010 1st sp.s. c 7 s 151 (uncodified); providing an effective date; and declaring an emergency.

 

MOTION

 

On motion of Senator Eide, the rules were suspended and House Bill No. 3219 was placed on the second reading calendar.

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the sixth order of business.

 

SIGNED BY THE PRESIDENT

 

The President signed:

ENGROSSED SUBSTITUTE SENATE BILL 6503,

SENATE JOINT RESOLUTION 8225.

 

SECOND READING

 

ENGROSSED HOUSE BILL NO. 1690, by Representatives Hasegawa, Hunt, Hudgins, Anderson and Kenney

 

Authorizing alternative public works contracting procedures.

 

The measure was read the second time.

 

MOTION

 

Senator Regala moved that the following striking amendment by Senator Regala be adopted:

0)Strike everything after the enacting clause and insert the following:

"NEW SECTION.  Sec. 1.  The establishment of alternative public works contracting procedures authorized for use by public bodies has been a complex, controversial, and challenging undertaking, but it has been successful.  The key to the successful adoption and consideration of these procedures has depended, in great part, on the review and oversight mechanisms put in place by the legislature in chapter 39.10 RCW, as well as the countless hours of dedicated work by numerous stakeholders over many years.  It is the intent of the legislature to clarify that, unless otherwise specifically provided for in law, public bodies that want to use an alternative public works contracting procedure may use only those procedures specifically authorized in chapter 39.10 RCW.

Sec. 2.  RCW 39.10.200 and 2007 c 494 s 1 are each amended to read as follows:

      The legislature finds that the traditional process of awarding public works contracts in lump sum to the lowest responsible bidder is a fair and objective method of selecting a contractor.  However, under certain circumstances, alternative public works contracting procedures may best serve the public interest if such procedures are implemented in an open and fair process based on objective and equitable criteria.  The purpose of this chapter is to authorize the use of certain supplemental alternative public works contracting procedures, to prescribe appropriate requirements to ensure that such contracting procedures serve the public interest, and to establish a process for evaluation of such contracting procedures.  It is the intent of the legislature to establish that, unless otherwise specifically provided for in law, public bodies may use only those alternative public works contracting procedures specifically authorized in this chapter, subject to the requirements of this chapter.

Sec. 3.  RCW 39.10.230 and 2009 c 75 s 1 are each amended to read as follows:

      The board has the following powers and duties:

      (1) Develop and recommend to the legislature policies to further enhance the quality, efficiency, and accountability of capital construction projects through the use of traditional and alternative delivery methods in Washington, and make recommendations regarding expansion, continuation, elimination, or modification of the alternative public works contracting methods;

      (2) Evaluate the use of existing contracting procedures and the potential future use of other alternative contracting procedures including competitive negotiation contracts;

      (3) ((Develop guidelines to be used by the committee for the review and approval of design-build demonstration projects that procure operations and maintenance services)) Submit recommendations to the appropriate committees of the legislature evaluating alternative contracting procedures that are not authorized under this chapter;

      (4) Appoint members of the committee; and

      (5) Develop and administer questionnaires designed to provide quantitative and qualitative data on alternative public works contracting procedures on which evaluations are based.

"Sec. 4.  RCW 35.82.200 and 1965 c 7 s 35.82.200 are each amended to read as follows:

(1) In addition to the powers conferred upon an authority by other provisions of this chapter, an authority is empowered to borrow money or accept contributions, grants or other financial assistance from the federal government for or in aid of any housing project within its area of operation, to take over or lease or manage any housing project or undertaking constructed or owned by the federal government, and to these ends, to comply with such conditions and enter into such mortgages, trust indentures, leases or agreements as may be necessary, convenient or desirable.  It is the purpose and intent of this chapter to authorize every authority to do any and all things necessary or desirable to secure the financial aid or cooperation of the federal government in the undertaking, construction, maintenance or operation of any housing project by such authority.

(2) All housing authorities shall be subject to the provisions of  chapter 39.10 RCW except where alternative requirements or procedures of federal law or federal regulation are authorized.
      (3) The requirements of chapter 39.12 RCW regarding prevailing wages shall apply to housing authority public works except where specifically preempted by federal law or federal regulation."

Sec. 5.  RCW 43.131.408 and 2007 c 494 s 507 are each amended to read as follows:

      The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 2014:

      (1) RCW 39.10.200 and section 2 of this act, 2007 c 494 s 1, & 1994 c 132 s 1;

      (2) RCW 39.10.210 and 2007 c 494 s 101 & 2005 c 469 s 3;

      (3) RCW 39.10.220 and 2007 c 494 s 102 & 2005 c 377 s 1;

      (4) RCW 39.10.230 and section 3 of this act, 2009 c 75 s 1, 2007 c 494 s 103, & 2005 c 377 s 2;

      (5) RCW 39.10.240 and 2007 c 494 s 104;

      (6) RCW 39.10.250 and 2007 c 494 s 105;

      (7) RCW 39.10.260 and 2007 c 494 s 106;

      (8) RCW 39.10.270 and 2007 c 494 s 107;

      (9) RCW 39.10.280 and 2007 c 494 s 108;

      (10) RCW 39.10.290 and 2007 c 494 s 109;

      (11) RCW 39.10.300 and 2007 c 494 s 201, 2003 c 352 s 2, 2003 c 300 s 4, 2002 c 46 s 1, & 2001 c 328 s 2;

      (12) ((RCW 39.10.310 and 2007 c 494 s 202 & 1994 c 132 s 8;
      (13))) RCW 39.10.320 and 2007 c 494 s 203 & 1994 c 132 s 7;

      (((14))) (13) RCW 39.10.330 and 2007 c 494 s 204;

      (((15))) (14) RCW 39.10.340 and 2007 c 494 s 301, 2003 c 352 s 3, 2003 c 300 s 5, 2002 c 46 s 2, & 2001 c 328 s 3;

      (((16))) (15) RCW 39.10.350 and 2007 c 494 s 302;

      (((17))) (16) RCW 39.10.360 and 2007 c 494 s 303;

      (((18))) (17) RCW 39.10.370 and 2007 c 494 s 304;

      (((19))) (18) RCW 39.10.380 and 2007 c 494 s 305;

      (((20))) (19) RCW 39.10.390 and 2007 c 494 s 306;

      (((21))) (20) RCW 39.10.400 and 2007 c 494 s 307;

      (((22))) (21) RCW 39.10.410 and 2007 c 494 s 308;

      (((23))) (22) RCW 39.10.420 and 2007 c 494 s 401 & 2003 c 301 s 1;

      (((24))) (23) RCW 39.10.430 and 2007 c 494 s 402;

      (((25))) (24) RCW 39.10.440 and 2007 c 494 s 403;

      (((26))) (25) RCW 39.10.450 and 2007 c 494 s 404;

      (((27))) (26) RCW 39.10.460 and 2007 c 494 s 405;

      (((28))) (27) RCW 39.10.470 and 2005 c 274 s 275 & 1994 c 132 s 10;

      (((29))) (28) RCW 39.10.480 and 1994 c 132 s 9;

      (((30))) (29) RCW 39.10.490 and 2007 c 494 s 501 & 2001 c 328 s 5;

      (((31))) (30) RCW 39.10.500 and 2007 c 494 s 502;

      (((32))) (31) RCW 39.10.510 and 2007 c 494 s 503;

      (((33))) (32) RCW 39.10.900 and 1994 c 132 s 13;

      (((34))) (33) RCW 39.10.901 and 1994 c 132 s 14; and

      (((35))) (34) RCW 39.10.903 and 2007 c 494 s 510."

      Renumber the sections consecutively and correct any internal references accordingly.

 

      Senator Regala spoke in favor of adoption of the striking amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Regala to Engrossed House Bill No. 1690.

The motion by Senator Regala carried and the striking amendment was adopted by voice vote.

 

MOTION

 

There being no objection, the following title amendment was adopted:

On page 1, line 1 of the title, strike the title, and insert "an act relating to public works projects; and amending RCW 35.82.070, 39.10.200, 39.10.230, and 43.131.408; and creating a new section."

Renumber the sections consecutively and correct any internal references accordingly.

 

MOTION

 

On motion of Senator Regala, the rules were suspended, Engrossed House Bill No. 1690 as amended by the Senate was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

      Senator Regala spoke in favor of passage of the bill.

 

The President declared the question before the Senate to be the final passage of Engrossed House Bill No. 1690 as amended by the Senate.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of Engrossed House Bill No. 1690 as amended by the Senate and the bill passed the Senate by the following vote:  Yeas, 40; Nays, 5; Absent, 1; Excused, 3.

      Voting yea: Senators Becker, Benton, Berkey, Brandland, Brown, Carrell, Eide, Fairley, Franklin, Gordon, Hargrove, Hatfield, Hewitt, Hobbs, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, King, Kline, Kohl-Welles, Marr, McAuliffe, McDermott, Morton, Murray, Oemig, Parlette, Pflug, Prentice, Pridemore, Ranker, Regala, Roach, Rockefeller, Schoesler, Sheldon, Shin and Swecker

      Voting nay: Senators Fraser, Haugen, Holmquist, Honeyford and Tom

      Absent: Senator Zarelli

      Excused: Senators Delvin, McCaslin and Stevens

ENGROSSED HOUSE BILL NO. 1690 as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

MOTION

 

On motion of Senator Brandland, Senator Zarelli was excused.

 

SECOND READING

 

HOUSE BILL NO. 3219, by Representatives Goodman, Rodne, Pedersen, Hudgins, Chase and Upthegrove

 

Making technical corrections to the Revised Code of Washington.

 

The measure was read the second time.

 

MOTION

 

On motion of Senator Fairley, the rules were suspended, House Bill No. 3219 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

      Senator Fairley spoke in favor of passage of the bill.

 

The President declared the question before the Senate to be the final passage of House Bill No. 3219.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of House Bill No. 3219 and the bill passed the Senate by the following vote:  Yeas, 42; Nays, 0; Absent, 3; Excused, 4.

      Voting yea: Senators Becker, Benton, Berkey, Brandland, Carrell, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Haugen, Hewitt, Hobbs, Holmquist, Honeyford, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, King, Kline, Kohl-Welles, McAuliffe, McDermott, Morton, Oemig, Parlette, Pflug, Prentice, Pridemore, Ranker, Regala, Roach, Rockefeller, Schoesler, Sheldon, Shin, Swecker and Tom

      Absent: Senators Brown, Marr and Murray

      Excused: Senators Delvin, McCaslin, Stevens and Zarelli

HOUSE BILL NO. 3219, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

MOTION

 

On motion of Senator Eide, the Senate reverted to the fourth order of business.

 

MESSAGE FROM THE HOUSE

 

April 12, 2010

 

MR. PRESIDENT:

The House passed ENGROSSED SENATE BILL NO. 6870 with the following amendment(s): 6870.E AMH HUDG PAME 117

0)On page 6, beginning on line 19, strike all of section 4

      Correct the title.

and the same are herewith transmitted.

 

BARBARA BAKER, Chief Clerk

 

MOTION

 

Senator Hargrove moved that the Senate concur in the House amendment(s) to Engrossed Senate Bill No. 6870.

Senators Hargrove and Carrell spoke in favor of passage of the motion.

 

MOTION

 

On motion of Senator Rockefeller, Senators Brown and Marr were excused.

 

The President declared the question before the Senate to be the motion by Senator Hargrove that the Senate concur in the House amendment(s) to Engrossed Senate Bill No. 6870.

The motion by Senator Hargrove carried and the Senate concurred in the House amendment(s) to Engrossed Senate Bill No. 6870 by voice vote.

The President declared the question before the Senate to be the final passage of Engrossed Senate Bill No. 6870, as amended by the House.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of Engrossed Senate Bill No. 6870, as amended by the House, and the bill passed the Senate by the following vote:  Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

      Voting yea: Senators Becker, Benton, Berkey, Brandland, Brown, Carrell, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Haugen, Hewitt, Hobbs, Holmquist, Honeyford, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, King, Kline, Kohl-Welles, Marr, McAuliffe, McDermott, Morton, Murray, Oemig, Parlette, Pflug, Prentice, Pridemore, Ranker, Regala, Roach, Rockefeller, Schoesler, Sheldon, Shin, Swecker and Tom

      Excused: Senators Delvin, McCaslin, Stevens and Zarelli

ENGROSSED SENATE BILL NO. 6870, as amended by the House, having received the constitutional majority, was declared passed.  There being no objection, the title of the bill was ordered to stand as the title of the act.

 

MOTION

 

On motion of Senator Brandland, Senators Benton, Carrell, Morton and Roach were excused.

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the sixth order of business.

 

SECOND READING

 

ENGROSSED HOUSE BILL NO. 2561, by Representatives Dunshee, Williams, White, Seaquist, Darneille, Eddy, Dickerson, Sells, Rolfes, Chase, Green, Appleton, Sullivan, Simpson, Nelson, Hudgins, Jacks, Hunt, Hasegawa, Ormsby, Moeller and Roberts

 

Funding construction of energy cost saving improvements to public facilities.

 

The measure was read the second time.

 

MOTION

 

Senator Pflug moved to defer further consideration of Engrossed House Bill No. 2561 and the bill hold its place on the second reading calendar.

Senator Eide spoke against the motion.

Senator Pflug spoke in favor of the motion.

 

The President declared the question before the Senate to be the motion by Senator Pflug to defer further consideration of Engrossed House Bill No. 2561 and the bill hold its place on the second reading calendar.

The motion by Senator Pflug failed by a voice vote.

 

MOTION

 

Senator Fraser moved that the following committee striking amendment by the Committee on Ways & Means be adopted:

0)Strike everything after the enacting clause and insert the following:

 

"PART I

SHORT TITLE AND INTENT

 

NEW SECTION.  Sec. 101.  This act may be known and cited as the jobs act.

NEW SECTION.  Sec. 102.  The legislature intends to create jobs in every corner of Washington state by issuing bonds, which will catalyze energy savings and repair work at public schools and state colleges and universities.

      It is the intent of the legislature that these investments will create jobs quickly and directly, at a time when the state's residents need jobs.  It is the further intent of the legislature that these investments both accelerate innovation in the energy efficiency sector and create locally developed technologies and companies to provide sustainable jobs.  The legislature intends to prioritize the use of innovative technologies and facilitate the development of a sustainable innovation cluster that creates and installs highly efficient building technologies and creates jobs.

      The legislature intends that these job-creating projects save taxpayers money, with an estimated one hundred twenty-six million dollars saved each year in public schools through reduced energy and operational costs, and improve the health and safety of those buildings.  The energy savings are equivalent to the use of an estimated ninety thousand houses.  It is also the intent of the legislature that these job-creating projects lead to reduced pollutants, as the weatherization and energy efficiency projects will reduce pollution emissions by an estimated amount equivalent to removing an estimated one hundred thirty thousand cars from the roads each year.

 

PART II

BOND AUTHORIZATION

 

NEW SECTION.  Sec. 201.  (1) For the purpose of creating jobs by constructing needed capital improvements to public facilities for energy, utility, and operational cost savings, the state finance committee is authorized to issue general obligation bonds of the state of Washington in the sum of five hundred five million dollars, or so much thereof as may be required, for this purpose and all costs incidental thereto.  The bonds issued under the authority of this section are known as jobs act bonds.

      (2) Bonds authorized in this section must be sold in the manner, at the time or times, in amounts, and at such prices as the state finance committee determines.

      (3) The authorization to issue bonds contained in this chapter does not expire until the full authorization has been issued.

      (4) No bonds authorized in this section may be offered for sale without prior legislative appropriation of the net proceeds of the sale of the bonds.

NEW SECTION.  Sec. 202.  (1) The nondebt-limit general fund bond retirement account must be used for the payment of the principal of and interest on the bonds authorized in section 201 of this act.

      (2) The state finance committee must, on or before June 30th of each year, certify to the state treasurer the amount needed in the ensuing twelve months to meet the bond retirement and interest requirements on the bonds authorized in section 201 of this act.

      (3) On each date on which any interest or principal and interest payment is due on bonds issued for the purposes of section 201 of this act, the state treasurer shall withdraw from any general state revenues received in the state treasury and deposit in the nondebt-limit general fund bond retirement account an amount equal to the amount certified by the state finance committee to be due on the payment date.

NEW SECTION.  Sec. 203.  (1) Bonds issued under this section and sections 201 and 202 of this act must state that they are a general obligation of the state of Washington, must pledge the full faith and credit of the state to the payment of the principal thereof and the interest thereon, and must contain an unconditional promise to pay the principal and interest as the same shall become due.

      (2) The owner and holder of each of the bonds or the trustee for the owner and holder of any of the bonds may by mandamus or other appropriate proceeding require the transfer and payment of funds as directed in this section.

 

PART III

PROGRAM REQUIREMENTS, APPROPRIATIONS, AND REVENUE PROVISIONS

 

NEW SECTION.  Sec. 301.  (1) The department of commerce, in consultation with the department of general administration and the  Washington State University energy program, shall administer the jobs act.

      (2) The department of general administration must develop guidelines that are consistent with national and international energy savings performance standards for the implementation of energy savings performance contracting projects by the energy savings performance contractors by December 31, 2010.

      (3) The definitions in this section apply throughout this chapter and section 302 of this act unless the context clearly requires otherwise.

      (a) "Cost-effectiveness" means that the present value to higher education institutions and school districts of the energy reasonably expected to be saved or produced by a facility, activity, measure, or piece of equipment over its useful life, including any compensation received from a utility or the Bonneville power administration, is greater than the net present value of the costs of implementing, maintaining, and operating such facility, activity, measure, or piece of equipment over its useful life, when discounted at the cost of public borrowing.

      (b) "Energy cost savings" means savings realized in expenses for energy use and expenses associated with water, wastewater, or solid waste systems.

      (c) "Energy equipment" means energy management systems and any equipment, materials, or supplies that are expected, upon installation, to reduce the energy use or energy cost of an existing building or facility, and the services associated with the equipment, materials, or supplies, including but not limited to design, engineering, financing, installation, project management, guarantees, operations, and maintenance.  Reduction in energy use or energy cost may also include reductions in the use or cost of water, wastewater, or solid waste.

      (d) "Energy savings performance contracting" means the process authorized by chapter 39.35C RCW by which a company contracts with a public agency to conduct energy audits and guarantee energy savings from energy efficiency.

      (e) "Innovative measures" means advanced or emerging technologies, systems, or approaches that may not yet be in common practice but improve energy efficiency, accelerate deployment, or reduce energy usage, and become widely commercially available in the future if proven successful in demonstration programs without compromising the guaranteed performance or measurable energy and operational cost savings anticipated.  Examples of innovative measures include, but are not limited to, advanced energy and systems operations monitoring, diagnostics, and controls systems for buildings; novel heating, cooling, ventilation, and water heating systems; advanced windows and insulation technologies, highly efficient lighting technologies, designs, and controls; and integration of renewable energy sources into buildings, and energy savings verification technologies and solutions.

      (f) "Operational cost savings" means savings realized from parts, service fees, capital renewal costs, and other measurable annual expenses to maintain and repair systems.  This definition does not mean labor savings related to existing facility staff.

      (g) "Public facilities" means buildings, building components, and major equipment or systems owned by public school districts and public higher education institutions.

NEW SECTION.  Sec. 302.  (1) Within appropriations specifically provided for the purposes of this chapter, the department of commerce, in consultation with the department of general administration, and the Washington State University energy program shall establish a competitive process to solicit and evaluate applications from public school districts, public higher education institutions, and other state agencies.  Final grant awards shall be determined by the department of commerce.

      (2) Grants must be awarded in competitive rounds, based on demand and capacity, with at least five percent of each grant round awarded to small public school districts with fewer than one thousand full-time equivalent students, based on demand and capacity.

      (3) Within each competitive round, projects must be weighted and prioritized based on the following criteria and in the following order:

      (a) Leverage ratio:  In each round, the higher the leverage ratio of nonstate funding sources to state jobs act grant, the higher the project ranking.

      (b) Energy savings:  In each round, the higher the energy savings, the higher the project ranking.  Applicants must submit documentation that demonstrates energy and operational cost savings resulting from the installation of the energy equipment and improvements.  The energy savings analysis must be performed by a licensed engineer and documentation must include but is not limited to the following:

      (i) A description of the energy equipment and improvements;

      (ii) A description of the energy and operational cost savings; and

      (iii) A description of the extent to which the project employs collaborative and innovative measures and encourages demonstration of new and emerging technologies with high energy savings or energy cost reductions.

      (c) Expediency of expenditure:  Project readiness to spend funds must be prioritized so that the legislative intent to expend funds quickly is met.

      (4) Projects that do not use energy savings performance contracting must:  (a) Verify energy and operational cost savings, as defined in section 301 of this act, for ten years or until the energy and operational costs savings pay for the project, whichever is shorter; (b) follow the department of general administration's energy savings performance contracting project guidelines developed pursuant to section 301 of this act; and (c) employ a licensed engineer for the energy audit and construction.  The department of commerce may require third-party verification of savings if a project is not implemented by an energy savings performance contractor selected by the department of general administration through the request of qualifications process.  Third-party verification must be conducted either by an energy savings performance contractor selected by the department of general administration through a request for qualifications, a licensed engineer specializing in energy conservation, or by a project resource conservation manager or educational service district resource conservation manager.

      (5) To intensify competition, the department of commerce may only award funds to the top eighty-five percent of projects applying in a round until the department of commerce determines a final round is appropriate.  Projects that do not receive a grant award in one round may reapply in subsequent rounds.

      (6) To match federal grants and programs that require state matching funds and produce significantly higher efficiencies in operations and utilities, the level of innovation criteria may be increased for the purposes of weighted scoring to capture those federal dollars for selected projects that require a higher level of innovation and regional collaboration.

      (7) Grant amounts awarded to each project must allow for the maximum number of projects funded with the greatest energy and cost benefit.

      (8)(a) The department of commerce must use bond proceeds to pay one- half of the preliminary audit, up to five cents per square foot, if the project does not meet the school district's and higher education institution's predetermined cost-effectiveness criteria.  School districts and higher education institutions must pay the other one-half of the cost of the preliminary audit if the project does not meet their predetermined cost-effectiveness criteria.

      (b) The energy savings performance contractor may not charge for an investment grade audit if the project does not meet the school district's and higher education institution's predetermined cost- effectiveness criteria.  School districts and higher education institutions must pay the full price of an investment grade audit if they do not proceed with a project that meets the school district's and higher education institution's predetermined cost-effectiveness criteria.

      (9) The department of commerce may charge projects administrative fees and may pay the department of general administration and the Washington State University energy program administration fees in an amount determined through a memorandum of understanding.

      (10) The department of commerce and the department of general administration must submit a joint report to the appropriate committees of the legislature and the office of financial management on the timing and use of the grant funds, program administrative function, compliance with apprenticeship utilization requirements in RCW 39.04.320, compliance with prevailing wage requirements, and administration fees by the end of each fiscal year, until the funds are fully expended and all savings verification requirements are fulfilled.

NEW SECTION.  Sec. 303.  FOR THE DEPARTMENT OF COMMERCE--JOBS ACT

      The appropriation in this section is subject to the following conditions and limitations:  The appropriation is for fiscal year 2011 and is provided solely for grants to public school districts and public higher education institutions for energy and operational cost savings improvements to public facilities and related projects that result in energy and operational cost savings under the provision and requirements of sections 301 and 302 of this act.  Related projects are those projects that must be completed in order for the energy efficiency improvements to be effective.

Appropriation:

      Washington Works Account—State…………………………………….$500,000,000

      Prior Biennia (Expenditures)…………………………………………..……..$0

      Future Biennia (Projected Costs)……………………………………………………….…$0

............ TOTAL $500,000,000

NEW SECTION.  Sec. 304.  The legislature intends to increase general state revenues to pay for a portion of the increased debt service costs for voter-approved bonds and for debt-limit bonds authorized by the legislature for projects awarded grants under sections 301 and 302 of this act for energy efficiency projects in public facilities.

Sec. 305.  RCW 82.08.0293 and 2010 1st sp.s. c ... (2ESSB 6143) s 902 are each amended to read as follows:

      (1) The tax levied by RCW 82.08.020 does not apply to sales of food and food ingredients.  "Food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.  "Food and food ingredients" does not include:

      (a) "Alcoholic beverages," which means beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume; and

      (b) "Tobacco," which means cigarettes, cigars, chewing or pipe tobacco, or any other item that contains tobacco.

      (2) ((Until July 1, 2013,)) The exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, bottled water, candy, or dietary supplements.  ((Beginning July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, candy, or dietary supplements.))  For purposes of this subsection, the following definitions apply:

      (a) "Dietary supplement" means any product, other than tobacco, intended to supplement the diet that:

      (i) Contains one or more of the following dietary ingredients:

      (A) A vitamin;

      (B) A mineral;

      (C) An herb or other botanical;

      (D) An amino acid;

      (E) A dietary substance for use by humans to supplement the diet by increasing the total dietary intake; or

      (F) A concentrate, metabolite, constituent, extract, or combination of any ingredient described in this subsection;

      (ii) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and

      (iii) Is required to be labeled as a dietary supplement, identifiable by the "supplement facts" box found on the label as required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered as of January 1, 2003.

      (b)(i) "Prepared food" means:

      (A) Food sold in a heated state or heated by the seller;

      (B) Food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws.  A plate does not include a container or packaging used to transport the food; or

      (C) Two or more food ingredients mixed or combined by the seller for sale as a single item, except:

      (I) Food that is only cut, repackaged, or pasteurized by the seller; or

      (II) Raw eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the federal food and drug administration in chapter 3, part 401.11 of The Food Code, published by the food and drug administration, as amended or renumbered as of January 1, 2003, so as to prevent foodborne illness.

      (ii) "Prepared food" does not include the following food or food ingredients, if the food or food ingredients are sold without eating utensils provided by the seller:

      (A) Food sold by a seller whose proper primary North American industry classification system (NAICS) classification is manufacturing in sector 311, except subsector 3118 (bakeries), as provided in the "North American industry classification system‑-United States, 2002";

      (B) Food sold in an unheated state by weight or volume as a single item; or

      (C) Bakery items.  The term "bakery items" includes bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, tortes, pies, tarts, muffins, bars, cookies, or tortillas.

      (c) "Soft drinks" means nonalcoholic beverages that contain natural or artificial sweeteners.  Soft drinks do not include beverages that contain:  Milk or milk products; soy, rice, or similar milk substitutes; or greater than fifty percent of vegetable or fruit juice by volume.

      (d) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces.  "Candy" does not include any preparation containing flour and does not require refrigeration.

      (e) "Bottled water" means water that is placed in a sealed container or package for human consumption.  Bottled water is calorie free and does not contain sweeteners or other additives except that it may contain:  (i) Antimicrobial agents; (ii) fluoride; (iii) carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen; (vi) preservatives; and (vii) only those flavors, extracts, or essences derived from a spice or fruit.  "Bottled water" includes water that is delivered to the buyer in a reusable container that is not sold with the water.

      (3) Notwithstanding anything in this section to the contrary, the exemption of "food and food ingredients" provided in this section applies to food and food ingredients that are furnished, prepared, or served as meals:

      (a) Under a state administered nutrition program for the aged as provided for in the older Americans act (P.L. 95-478 Title III) and RCW 74.38.040(6);

      (b) That are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or

      (c) That are provided to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility.  The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (3)(c) if at least one of the spouses or domestic partners is at least sixty-two years of age.  For purposes of this subsection, "qualified low-income senior housing facility" means a facility:

      (i) That meets the definition of a qualified low-income housing project under 26 U.S.C. Sec. 42 of the federal internal revenue code, as existing on August 1, 2009;

      (ii) That has been partially funded under 42 U.S.C. Sec. 1485; and

      (iii) For which the lessor or operator has at any time been entitled to claim a federal income tax credit under 26 U.S.C. Sec. 42 of the federal internal revenue code.

      (4)(a) Subsection (1) of this section notwithstanding, the retail sale of food and food ingredients is subject to sales tax under RCW 82.08.020 if the food and food ingredients are sold through a vending machine.  Except as provided in (b) of this subsection, the selling price of food and food ingredients sold through a vending machine for purposes of RCW 82.08.020 is fifty-seven percent of the gross receipts.

      (b) For soft drinks and hot prepared food and food ingredients, other than food and food ingredients which are heated after they have been dispensed from the vending machine, the selling price is the total gross receipts of such sales divided by the sum of one plus the sales tax rate expressed as a decimal.

      (c) For tax collected under this subsection (4), the requirements that the tax be collected from the buyer and that the amount of tax be stated as a separate item are waived.

Sec. 306.  RCW 82.12.0293 and 2010 1st sp.s. c ... (2ESSB 6143) s 903 are each amended to read as follows:

      (1) The provisions of this chapter do not apply in respect to the use of food and food ingredients for human consumption.  "Food and food ingredients" has the same meaning as in RCW 82.08.0293.

      (2) ((Until July 1, 2013,)) The exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, bottled water, candy, or dietary supplements.  ((Beginning July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, candy, or dietary supplements.))  "Prepared food," "soft drinks," "dietary supplements," "candy," and "bottled water" have the same meanings as in RCW 82.08.0293.

      (3) Notwithstanding anything in this section to the contrary, the exemption of "food and food ingredients" provided in this section ((apply)) applies to food and food ingredients which are furnished, prepared, or served as meals:

      (a) Under a state administered nutrition program for the aged as provided for in the older Americans act (P.L. 95-478 Title III) and RCW 74.38.040(6);

      (b) Which are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or

      (c) That are provided to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility.  The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (3)(c) if at least one of the spouses or domestic partners is at least sixty-two years of age.  For purposes of this subsection, "qualified low-income senior housing facility" has the same meaning as in RCW 82.08.0293.

 

PART IV

TECHNICAL PROVISIONS

 

NEW SECTION.  Sec. 401.  (1) The legislature may provide additional means for raising moneys for the payment of the principal of and interest on the bonds authorized in section 201 of this act, and section 202 of this act may not be deemed to provide an exclusive method for the payment.

      (2) The office of the state treasurer must determine a mechanism to allow individual Washington state residents to purchase jobs act bonds.

NEW SECTION.  Sec. 402.  The bonds authorized by this chapter constitute a legal investment for all state funds or for funds under state control and all funds of municipal corporations.

NEW SECTION.  Sec. 403.  The state finance committee is authorized to prescribe the form, terms, conditions, and covenants of the bonds provided for in this act, the time or times of sale of all or any portion of them, and the conditions and manner of their sale and issuance.

NEW SECTION.  Sec. 404.  The Washington works account is created in the state treasury.  All receipts from bonds authorized under section 201 of this act must be deposited in the account.  Moneys in the account may be spent only after appropriation.  The proceeds from the sale of the bonds authorized in section 201 of this act must be deposited in the account.  Moneys in the account must be used exclusively for:

      (1) The purposes of sections 301, 302, and 303 of this act, which includes energy and operational cost savings improvements and related projects that result in energy and operational cost savings for public school districts and public higher education institutions; and

      (2) The payment of the expenses incurred in connection with the sale and issuance of the bonds.

NEW SECTION.  Sec. 405.  If the state finance committee deems it necessary to issue any portion of the bonds authorized in this chapter as taxable bonds in order to comply with federal internal revenue service rules and regulations pertaining to the use of nontaxable bond proceeds, the proceeds of such taxable bonds must be transferred to the state taxable building construction account in lieu of any deposits otherwise provided by section 404 of this act.  The state treasurer must submit written notice to the director of financial management if it is determined that any such transfer to the state taxable building construction account is necessary.  Moneys in the account may be spent only after appropriation.  For purposes of this section, "nontaxable bond proceeds" includes proceeds from bonds issued as tax exempt bonds and proceeds from taxable bonds eligible for direct federal subsidy under federal internal revenue service rules.

Sec. 406.  RCW 39.94.040 and 2003 c 6 s 2 are each amended to read as follows:

      (1) Except as provided in RCW 28B.10.022, the state may not enter into any financing contract for itself if the aggregate principal amount payable thereunder is greater than an amount to be established from time to time by the state finance committee or participate in a program providing for the issuance of certificates of participation, including any contract for credit enhancement, without the prior approval of the state finance committee.  Except as provided in RCW 28B.10.022, the state finance committee shall approve the form of all financing contracts or a standard format for all financing contracts.  The state finance committee also may:

      (a) Consolidate existing or potential financing contracts into master financing contracts with respect to property acquired by one or more agencies, departments, instrumentalities of the state, the state board for community and technical colleges, or a state institution of higher learning; or to be acquired by an other agency;

      (b) Approve programs providing for the issuance of certificates of participation in master financing contracts for the state or for other agencies;

      (c) Enter into agreements with trustees relating to master financing contracts; and

      (d) Make appropriate rules for the performance of its duties under this chapter.

      (2) In the performance of its duties under this chapter, the state finance committee may consult with representatives from the department of general administration, the office of financial management, and the department of information services.

      (3) With the approval of the state finance committee, the state also may enter into agreements with trustees relating to financing contracts and the issuance of certificates of participation.

      (4) Except for financing contracts for real property used for the purposes described under chapter 28B.140 RCW, the state may not enter into any financing contract for real property of the state without prior approval of the legislature.

      (5) The state may not enter into any financing contract on behalf of an other agency without the approval of such a financing contract by the governing body of the other agency.  For the purposes of this requirement, a financing contract must be treated as used for real property if it is being entered into by the state for the acquisition of land; the acquisition of an existing building; the construction of a new building; or a major remodeling, renovation, rehabilitation, or rebuilding of an existing building.  Prior approval of the legislature is not required under this chapter for a financing contract entered into by the state under this chapter for energy conservation improvements to existing buildings where such improvements include (a) fixtures and equipment that are not part of a major remodeling, renovation, rehabilitation, or rebuilding of the building, or (b) other improvements to the building that are being performed for the primary purpose of energy conservation.  Such energy conservation improvements must be determined eligible for financing under this chapter by the office of financial management in accordance with financing guidelines established by the state treasurer, and are to be treated as personal property for the purposes of this chapter.

 

PART V

REFERENDUM PROVISIONS

 

NEW SECTION.  Sec. 501.  (1) The secretary of state shall submit sections 101 through 203 and 401 through 405 of this act to the people for their adoption and ratification, or rejection, at the next general election to be held in this state, in accordance with Article II, section 1 and Article VIII, section 3 of the state Constitution and the laws adopted to facilitate their operation.

      (2) If the people ratify this act as specified under subsection (1) of this section, revenues generated shall be spent as detailed in this act.

      (3) Pursuant to RCW 29A.72.050(6), the statement of subject and concise description for the ballot title shall read:  "The legislature has passed Engrossed House Bill No. 2561 (this act), concerning job creation through energy efficiency projects in school buildings.  This bill would promote job creation by authorizing bonds to construct energy efficiency savings improvements to schools, including higher education buildings."

NEW SECTION.  Sec. 502.  Sections 303 through 306 of this act are contingent upon approval by the voters of sections 101 through 203 and 401 through 405 of this act.  If sections 101 through 203 and 401 through 405 of this act are not approved by the voters by December 1, 2010, sections 303 through 306 of this act are null and void.

NEW SECTION.  Sec. 503.  Sections 201 through 203, 301, 302, and 401 through 405 of this act constitute a new chapter in Title 43 RCW.

 

PART VI

MISCELLANEOUS PROVISIONS

 

NEW SECTION.  Sec. 601.  This act takes effect if Second Engrossed Substitute Senate Bill No. 6143 is enacted by the legislature during the 2010 1st special session."

 

MOTION

 

Senator Schoesler moved that the following amendment by Senator Schoesler to the committee striking amendment be adopted:

0) On page 5, line 13, after "higher the" insert "percentage" 

Senators Schoesler and Pflug spoke in favor of adoption of the amendment to the committee striking amendment.

Senator Fraser spoke against adoption of the amendment to the committee striking amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Schoesler on page 5, line 13 to the committee striking amendment to Engrossed House Bill No. 2561.

The motion by Senator Schoesler failed and the amendment to the committee striking amendment was not adopted by voice vote.

 

MOTION

 

Senator Pflug moved that the following amendment by Senator Pflug to the committee striking amendment be adopted:

0) On page 6, line 18, after "must" insert "require ninety percent of the energy cost savings to be remitted back to the state"

Senator Pflug spoke in favor of adoption of the amendment to the committee striking amendment.

Senators Rockefeller and Fraser spoke against adoption of the amendment to the committee striking amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Pflug on page 6, line 18 to the committee striking amendment to Engrossed House Bill No. 2561.

The motion by Senator Pflug failed and the amendment to the committee striking amendment was not adopted by voice vote.

 

MOTION

 

Senator Schoesler moved that the following amendment by Senator Schoesler to the committee striking amendment be adopted:

0)On page 8, line 12, after "bottled water," strike "candy," and insert "((candy,))"

      On page 11, line 16, after "bottled water," strike "candy," and insert "((candy,))"

      Renumber the sections consecutively and correct any internal references accordingly.

 

POINT OF ORDER

 

Senator Rockefeller:  “The amendment is beyond not only the scope but the object of the underlying bill. The 2561 bill authorizes the issuance of certain bonds upon approval of the voters with the proceeds from the sale of those bonds used to create jobs, in the area of retrofitting schools and other educational institutions. The bill provides that the bonds would be paid by extending the tax on bottled water, again, only upon approval by the voters. That is the entire scope of the bill. This amendment would remove an entirely different tax, a tax on candy contained in a separate bill. The tax on candy has nothing to do with the bonds, the retrofitting process, job creation or bond repayment. It simply is an effort to alter an unrelated tax provision. Further, Mr. President, the amendment also is beyond the object of the bill. The entire purpose of the provisions related to the tax on bottled water is to provide a funding source for repayment of the bonds authorized in the bill and by contrast the provisions related to the tax on candy in this amendment would reduce revenue and have no relation to funding the bonds authorized within the bill. With this reason I ague it is beyond both scope and object and therefore should be ruled out of order. Thank you Mr. President.”

 

 

Senator Schoesler spoke against the point of order.

 

MOTION

 

On motion of Senator Eide, further consideration of the amendment number by Senator Schoesler on page 8, line 12 was deferred.

 

MOTION

 

Senator Schoesler moved that the following amendment by Senator Schoesler to the committee striking amendment be adopted:

0)On page 14, line 36, after "203" insert ", 303 through 306,"

      On page 15, beginning on line 15, strike section 502.

Senators Schoesler and Fraser spoke in favor of adoption of the amendment to the committee striking amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Schoesler on page 14, line 36 to the committee striking amendment to Engrossed House Bill No. 2561.

The motion by Senator Schoesler carried and the amendment to the committee striking amendment was adopted by voice vote.

 

MOTION

 

Senator Parlette moved that the following amendment by Senator Parlette to the committee striking amendment be adopted:

0)On page 15, line 11, after "This" strike all material through line 14 and insert "bill authorizes bonds in excess of the Article VIII, section 1 constitutional debt limit to construct school energy efficiency improvements, and makes permanent the sales tax on bottled water."

Senators Parlette, Zarelli, Roach and Pflug spoke in favor of adoption of the amendment to the committee striking amendment.

Senators Fraser and Brown spoke against adoption of the amendment to the committee striking amendment.

Senator Zarelli demanded a roll call.

The President declared that one-sixth of the members supported the demand and the demand was sustained.

The President declared the question before the Senate to be the adoption of the amendment by Senator Parlette on page 15, line 11 to the committee striking amendment to Engrossed House Bill No. 2561.

 

ROLL CALL

 

      The Secretary called the roll on the adoption of the amendment by Senator Parlette to the committee striking amendment and the amendment was not adopted by the following vote:  Yeas, 16; Nays, 30; Absent, 0; Excused, 3.

      Voting yea: Senators Becker, Benton, Brandland, Carrell, Hewitt, Holmquist, Honeyford, King, Morton, Parlette, Pflug, Roach, Schoesler, Sheldon, Swecker and Zarelli

      Voting nay: Senators Berkey, Brown, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Haugen, Hobbs, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, Kline, Kohl-Welles, Marr, McAuliffe, McDermott, Murray, Oemig, Prentice, Pridemore, Ranker, Regala, Rockefeller, Shin and Tom

      Excused: Senators Delvin, McCaslin and Stevens

 

MOTION

 

Senator Schoesler moved that the following amendment by Senator Schoesler to the committee striking amendment be adopted:

0)On page 15, after line 26, insert the following:

      "NEW SECTIONSec. 602.  If the national streamline sales tax agreement is not amended by June 1, 2010 to allow for the sales tax to apply to bottled water, this act is null and void." 

Senator Schoesler spoke in favor of adoption of the amendment to the committee striking amendment.

Senator Fraser spoke against adoption of the amendment to the committee striking amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Schoesler on page 15, after line 26 to the committee striking amendment to Engrossed House Bill No. 2561.

The motion by Senator Schoesler failed and the amendment to the committee striking amendment was not adopted by voice vote.

 

MOTION

 

On motion of Senator Eide, further consideration of Engrossed House Bill No. 2561 was deferred and the bill held its place on the second reading calendar.

 

MOTION

 

At 7:00 p.m., on motion of Senator Eide, the Senate was declared to be at ease subject to the call of the President.

 

EVENING SESSION

 

The Senate was called to order at 7:46 p.m. by President Owen.

 

MOTION TO LIMIT DEBATE

 

Senator Eide: “Mr. President, I move that the members of the Senate be allowed to speak but once on each question before the Senate, that such speech be limited to three minutes and that members be prohibited from yielding their time, however, the maker of a motion shall be allowed to open and close debate. This motion shall be in effect through April 12, 2010.”

The President declared the question before the Senate to be the motion by Senator Eide to limit debate.

The motion by Senator Eide carried and debate was limited through April 12, 2010 by voice vote.

 

RULING BY THE PRESIDENT

 

President Owen: “In ruling upon the point of order raised by Senator Rockefeller as to whether amendment 467 by Senator Shoesler to Engrossed House Bill No. 2561 expands the scope and object of the underlying bill. The President finds and rules as follows:

Engrossed House Bill No. 2561 authorizes the issuance of certain bonds upon approval of the voters with the proceeds from the sale of those bonds used to create jobs to retrofit schools and other educational institutions. Section 304 of the bill describes the legislature’s intent to increase state revenues to pay for a portion of the increased debt service cost. To accomplish this intending result the bill would extend the tax on bottled water as provided in a separate revenue bill. The proposed amendment by contrast would eliminate a tax on candy, a tax that is created in the same revenue bill. Although the two taxes are both found in the revenue bill the treatment in this bill are opposite to one another. The extension of the bottled water tax is consistent with the intent of the bill by raising taxes while the removal of the tax on candy is inconsistent with the state of purpose.

For these reasons the President finds that the proposed amendment is beyond the scope and object of the underlying bill and Senator Rockefellers point is well taken.”

 

MOTION FOR IMMEDIATE RECONSIDERATION

 

Senator Eide, having voted on the prevailing side moved to immediately reconsider the vote by which the by Senator Schoesler on page 14, line 36 to the committee striking amendment to Engrossed House Bill No. 2561 passed the Senate earlier in the day.

 

POINT OF ORDER

 

Senator Hewitt:  “So, Mr. President, if there’s an oral roll call, how can one prove that they actually voted on the that amendment?”

 

REPLY BY THE PRESIDENT

 

President Owen:  “How can I prove they didn’t. Senator Hewitt, to be honest and I mean to be more sincere, the President has to take the person’s word. I believe in a situation like that, unless there’s some evidence to the contrary. I have no way of showing otherwise. Matter of fact I think just about the whole body voted for that amendment.”

 

The President declared the question before the Senate to be the motion by Senator Eide to immediately reconsider the vote by which the amendment by Senator Schoesler to the committee striking amendment to Engrossed House Bill No. 2561.

The motion by Senator Eide carried by a voice vote.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Schoesler on page 14, line 36 to the committee striking amendment to Engrossed House Bill No. 2561 on reconsideration.

The motion by Senator Schoesler failed and the amendment to the committee striking amendment was not adopted by voice vote on reconsideration.

 

MOTION

 

On motion of Senator Eide, further consideration of Engrossed House Bill No. 2561 was deferred and the bill held its place on the second reading calendar.

 

MOTION

 

On motion of Senator Eide, the Senate reverted to the fourth order of business.

 

MESSAGE FROM THE HOUSE

 

April 10, 2010

 

MR. PRESIDENT:

      The House has adopted the report of the Conference Committee on SECOND ENGROSSED SUBSTITUTE SENATE BILL NO. 6143 and has passed the bill as recommended by the Conference Committee.

and the same are herewith transmitted.

 

BARBARA BAKER, Chief Clerk

 

REPORT OF THE CONFERENCE COMMITTEE

Second Engrossed Substitute Senate Bill No. 6143

April 10, 2010

 

MR. PRESIDENT:

MR. SPEAKER:

We of your conference committee, to whom was referred Second Engrossed Substitute Senate Bill No. 6143, have had the same under consideration and recommend that all previous amendments not be adopted and that the following striking amendment be adopted:

0)Strike everything after the enacting clause and insert the following:

"NEW SECTION.  Sec. 1.  In order to preserve funding for education, public safety, health care, environmental protection, and safety net services for children, elderly, disabled, and vulnerable people, it is the intent of the legislature to close obsolete tax preferences, clarify the legislature's intent regarding existing tax policy, and to ensure balanced tax policy while bolstering emerging industries.

 

PART I

Minimum Nexus Standards

 

NEW SECTION.  Sec. 101.  (1) The legislature finds that out-of-state businesses that do not have a physical presence in Washington earn significant income from Washington residents from providing services or collecting royalties on the use of intangible property in this state.  The legislature further finds that these businesses receive significant benefits and opportunities provided by the state, such as:  Laws providing protection of business interests or regulating consumer credit; access to courts and judicial process to enforce business rights, including debt collection and intellectual property rights; an orderly and regulated marketplace; and police and fire protection and a transportation system benefiting in-state agents and other representatives of out-of-state businesses.  Therefore, the legislature intends to extend the state's business and occupation tax to these companies to ensure that they pay their fair share of the cost of services that this state renders and the infrastructure it provides.

      (2)(a) The legislature also finds that the current cost apportionment method in RCW 82.04.460(1) for apportioning most service income has been difficult for both taxpayers and the department to apply due in large part (i) to the difficulty in assigning certain costs of doing business inside or outside of this state, and (ii) to its dissimilarity with the apportionment methods used in other states for their business activity taxes.

      (b) The legislature further finds that there is a trend among states to adopt a single factor apportionment formula based on sales.  The legislature recognizes that adoption of a sales factor only apportionment method has the advantages of simplifying apportionment and making Washington a more attractive place for businesses to expand their property and payroll.  For these reasons, the legislature adopts single factor sales apportionment for purposes of apportioning royalty income and certain service income for state business and occupation tax purposes.

      (c) Nothing in this act may be construed, however, to authorize apportionment of the gross income or value of products taxable under the following business and occupation tax classifications:  Retailing, wholesaling, manufacturing, processing for hire, extracting, extracting for hire, printing, government contracting, public road construction, the classifications in RCW 82.04.280 (2), (4), (6), and (7), and any other activity not specifically included in the definition of apportionable activities in RCW 82.04.460.

      (d) Nothing in this part is intended to modify the nexus and apportionment requirements for local gross receipts business and occupation taxes.

Sec. 102.  RCW 82.04.220 and 1961 c 15 s 82.04.220 are each amended to read as follows:

(1) There is levied and ((shall be)) collected from every person that has a substantial nexus with this state a tax for the act or privilege of engaging in business activities.  ((Such)) The tax ((shall be)) is measured by the application of rates against value of products, gross proceeds of sales, or gross income of the business, as the case may be.

(2) A person who has a substantial nexus with this state in any tax year will be deemed to have a substantial nexus with this state for the following tax year.

NEW SECTION.  Sec. 103.  A new section is added to chapter 82.04 RCW to read as follows:

      "Engaging within this state" and "engaging within the state," when used in connection with any apportionable activity as defined in RCW 82.04.460, means that a person generates gross income of the business from sources within this state, such as customers or intangible property located in this state, regardless of whether the person is physically present in this state.

NEW SECTION.  Sec. 104.  A new section is added to chapter 82.04 RCW to read as follows:

      (1) A person engaging in business is deemed to have substantial nexus with this state if the person is:

      (a) An individual and is a resident or domiciliary of this state;

      (b) A business entity and is organized or commercially domiciled in this state; or

      (c) A nonresident individual or a business entity that is organized or commercially domiciled outside this state, and in any tax year the person has:

      (i) More than fifty thousand dollars of property in this state;

      (ii) More than fifty thousand dollars of payroll in this state;

      (iii) More than two hundred fifty thousand dollars of receipts from this state; or

      (iv) At least twenty-five percent of the person's total property, total payroll, or total receipts in this state.

      (2)(a) Property counting toward the thresholds in subsection (1)(c)(i) and (iv) of this section is the average value of the taxpayer's property, including intangible property, owned or rented and used in this state during the tax year.

      (b)(i) Property owned by the taxpayer, other than loans and credit card receivables owned by the taxpayer, is valued at its original cost basis.  Loans and credit card receivables owned by the taxpayer are valued at their outstanding principal balance, without regard to any reserve for bad debts.  However, if a loan or credit card receivable is charged off in whole or in part for federal income tax purposes, the portion of the loan or credit card receivable charged off is deducted from the outstanding principal balance.

      (ii) Property rented by the taxpayer is valued at eight times the net annual rental rate.  For purposes of this subsection, "net annual rental rate" means the annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from subrentals.

      (c) The average value of property must be determined by averaging the values at the beginning and ending of the tax year; but the department may require the averaging of monthly values during the tax year if reasonably required to properly reflect the average value of the taxpayer's property.

      (d)(i) For purposes of this subsection (2), loans and credit card receivables are deemed owned and used in this state as follows:

      (A) Loans secured by real property, personal property, or both real and personal property, are deemed owned and used in the state if the real property or personal property securing the loan is located within this state.  If the property securing the loan is located both within this state and one or more other states, the loan is deemed owned and used in this state if more than fifty percent of the fair market value of the real or personal property is located within this state.  If more than fifty percent of the fair market value of the real or personal property is not located within any one state, then the loan is deemed owned and used in this state if the borrower is located in this state.  The determination of whether the real or personal property securing a loan is located within this state must be made, as of the time the original agreement was made, and any and all subsequent substitutions of collateral must be disregarded.

      (B) Loans not secured by real or personal property are deemed owned and used in this state if the borrower is located in this state.

      (C) Credit card receivables are deemed owned and used in this state if the billing address of the cardholder is in this state.

      (ii)(A) Except as otherwise provided in (d)(ii)(B) of this subsection (2), the definitions in the multistate tax commission's recommended formula for the apportionment and allocation of net income of financial institutions as existing on the effective date of this section or such subsequent date as may be provided by the department by rule, consistent with the purposes of this section, apply to this section.

      (B) "Credit card" means a card or device existing for the purpose of obtaining money, property, labor, or services on credit.

      (e) Notwithstanding anything else to the contrary in this subsection, property counting toward the thresholds in subsection (1)(c)(i) and (iv) of this section does not include a person's ownership of, or rights in, computer software as defined in RCW 82.04.215, including computer software used in providing a digital automated service; master copies of software; and digital goods and digital codes residing on servers located in this state.

      (3)(a) Payroll counting toward the thresholds in subsection (1)(c)(ii) and (iv) of this section is the total amount paid by the taxpayer for compensation in this state during the tax year plus nonemployee compensation paid to representative third parties in this state.  Nonemployee compensation paid to representative third parties includes the gross amount paid to nonemployees who represent the taxpayer in interactions with the taxpayer's clients and includes sales commissions.

      (b) Employee compensation is paid in this state if the compensation is properly reportable to this state for unemployment compensation tax purposes, regardless of whether the compensation was actually reported to this state.

      (c) Nonemployee compensation is paid in this state if the service performed by the representative third party occurs entirely or primarily within this state.

      (d) For purposes of this subsection, "compensation" means wages, salaries, commissions, and any other form of remuneration paid to employees or nonemployees and defined as gross income under 26 U.S.C. Sec. 61 of the federal internal revenue code of 1986, as existing on the effective date of this section.

      (4) Receipts counting toward the thresholds in subsection (1)(c)(iii) and (iv) of this section are those amounts included in the numerator of the receipts factor under section 105 of this act and, for financial institutions, those amounts included in the numerator of the receipts factor under the rule adopted by the department as authorized in RCW 82.04.460(2).

      (5)(a) Each December, the department must review the cumulative percentage change in the consumer price index.  The department must adjust the thresholds in subsection (1)(c)(i) through (iii) of this section if the consumer price index has changed by five percent or more since the later of the effective date of this section, or the date that the thresholds were last adjusted under this subsection.  For purposes of determining the cumulative percentage change in the consumer price index, the department must compare the consumer price index available as of December 1st of the current year with the consumer price index as of the later of the effective date of this section, or the date that the thresholds were last adjusted under this subsection.  The thresholds must be adjusted to reflect that cumulative percentage change in the consumer price index.  The adjusted thresholds must be rounded to the nearest one thousand dollars.  Any adjustment will apply to tax periods that begin after the adjustment is made.

      (b) As used in this subsection, "consumer price index" means the consumer price index for all urban consumers (CPI-U) available from the bureau of labor statistics of the United States department of labor.

      (6) Subsections (1) through (5) of this section only apply with respect to the taxes imposed under this chapter on apportionable activities as defined in RCW 82.04.460.  For purposes of the taxes imposed under this chapter on any activity not included in the definition of apportionable activities in RCW 82.04.460, a person is deemed to have a substantial nexus with this state if the person has a physical presence in this state, which need only be demonstrably more than a slightest presence.  For purposes of this subsection, a person is physically present in this state if the person has property or employees in this state.  A person is also physically present in this state if the person, either directly or through an agent or other representative, engages in activities in this state that are significantly associated with the person's ability to establish or maintain a market for its products in this state.

NEW SECTION.  Sec. 105.  A new section is added to chapter 82.04 RCW to read as follows:

      (1) The apportionable income of a person within the scope of RCW 82.04.460(1) is apportioned to Washington by multiplying its apportionable income by the receipts factor.  Persons who are subject to tax under more than one of the tax classifications enumerated in RCW 82.04.460(4)(a) (i) through (x) must calculate a separate receipts factor for each tax classification that the person is taxable under.

      (2) For purposes of subsection (1) of this section, the receipts factor is a fraction and is calculated as provided in subsections (3) and (4) of this section and, for financial institutions, as provided in the rule adopted by the department under the authority of RCW 82.04.460(2).

      (3)(a) The numerator of the receipts factor is the total gross income of the business of the taxpayer attributable to this state during the tax year from engaging in an apportionable activity.  The denominator of the receipts factor is the total gross income of the business of the taxpayer from engaging in an apportionable activity everywhere in the world during the tax year.

      (b) Except as otherwise provided in this section, for purposes of computing the receipts factor, gross income of the business generated from each apportionable activity is attributable to the state:

      (i) Where the customer received the benefit of the taxpayer's service or, in the case of gross income from royalties, where the customer used the taxpayer's intangible property.

      (ii) If the customer received the benefit of the service or used the intangible property in more than one state, gross income of the business must be attributed to the state in which the benefit of the service was primarily received or in which the intangible property was primarily used.

      (iii) If the taxpayer is unable to attribute gross income of the business under the provisions of (b)(i) or (ii) of this subsection (3), gross income of the business must be attributed to the state from which the customer ordered the service or, in the case of royalties, the office of the customer from which the royalty agreement with the taxpayer was negotiated.

      (iv) If the taxpayer is unable to attribute gross income of the business under the provisions of (b)(i), (ii), or (iii) of this subsection (3), gross income of the business must be attributed to the state to which the billing statements or invoices are sent to the customer by the taxpayer.

      (v) If the taxpayer is unable to attribute gross income of the business under the provisions of (b)(i), (ii), (iii), or (iv) of this subsection (3), gross income of the business must be attributed to the state from which the customer sends payment to the taxpayer.

      (vi) If the taxpayer is unable to attribute gross income of the business under the provisions of (b)(i), (ii), (iii), (iv), or (v) of this subsection (3), gross income of the business must be attributed to the state where the customer is located as indicated by the customer's address:  (A) Shown in the taxpayer's business records maintained in the regular course of business; or (B) obtained during consummation of the sale or the negotiation of the contract for services or for the use of the taxpayer's intangible property, including any address of a customer's payment instrument when readily available to the taxpayer and no other address is available.

      (vii) If the taxpayer is unable to attribute gross income of the business under the provisions of (b)(i), (ii), (iii), (iv), (v), or (vi) of this subsection (3), gross income of the business must be attributed to the commercial domicile of the taxpayer.

      (viii) For purposes of this subsection (3)(b), "customer" means a person or entity to whom the taxpayer makes a sale or renders services or from whom the taxpayer otherwise receives gross income of the business.  "Customer" includes anyone who pays royalties or charges in the nature of royalties for the use of the taxpayer's intangible property.

      (c) Gross income of the business from engaging in an apportionable activity must be excluded from the denominator of the receipts factor if, in respect to such activity, at least some of the activity is performed in this state, and the gross income is attributable under (b) of this subsection (3) to a state in which the taxpayer is not taxable.  For purposes of this subsection (3)(c), "not taxable" means that the taxpayer is not subject to a business activities tax by that state, except that a taxpayer is taxable in a state in which it would be deemed to have a substantial nexus with that state under the standards in section 104(1) of this act regardless of whether that state imposes such a tax.  "Business activities tax" means a tax measured by the amount of, or economic results of, business activity conducted in a state.  The term includes taxes measured in whole or in part on net income or gross income or receipts.  "Business activities tax" does not include a sales tax, use tax, or a similar transaction tax, imposed on the sale or acquisition of goods or services, whether or not denominated a gross receipts tax or a tax imposed on the privilege of doing business.

      (d) This subsection (3) does not apply to financial institutions with respect to apportionable income taxable under RCW 82.04.290.  Financial institutions must calculate the receipts factor as provided in subsection (4) of this section and the rule adopted by the department under the authority of RCW 82.04.460(2) with respect to apportionable income taxable under RCW 82.04.290.  Financial institutions that are subject to tax under any other tax classification enumerated in RCW 82.04.460(4)(a) (i) through (v) and (vii) through (x) must calculate a separate receipts factor, as provided in this section, for each of the other tax classifications that the financial institution is taxable under.

      (4) A taxpayer may calculate the receipts factor for the current tax year based on the most recent calendar year for which information is available for the full calendar year.  If a taxpayer does not calculate the receipts factor for the current tax year based on previous calendar year information as authorized in this subsection, the business must use current year information to calculate the receipts factor for the current tax year.  In either case, a taxpayer must correct the reporting for the current tax year when complete information is available to calculate the receipts factor for that year, but not later than October 31st of the following tax year.  Interest will apply to any additional tax due on a corrected tax return.  Interest must be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, retroactively to the date the original return was due, and will accrue until the additional taxes are paid.  Penalties as provided in RCW 82.32.090 will apply to any such additional tax due only if the current tax year reporting is not corrected and the additional tax is not paid by October 31st of the following tax year.  Interest as provided in RCW 82.32.060 will apply to any tax paid in excess of that properly due on a return as a result of a taxpayer using previous calendar year data or incomplete current-year data to calculate the receipts factor.

      (5) Unless the context clearly requires otherwise, the definitions in this subsection apply throughout this section.

      (a) "Apportionable activities" and "apportionable income" have the same meaning as in RCW 82.04.460.

      (b) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any foreign country or political subdivision of a foreign country.

Sec. 106.  RCW 82.04.2907 and 2009 c 535 s 407 are each amended to read as follows:

      (1) Upon every person engaging within this state in the business of receiving income from royalties ((or charges in the nature of royalties for the granting of intangible rights, such as copyrights, licenses, patents, or franchise fees)), the amount of tax with respect to ((such)) the business ((shall be)) is equal to the gross income from royalties ((or charges in the nature of royalties from the business)) multiplied by the rate of 0.484 percent.

      (2) For the purposes of this section, "gross income from royalties" means compensation for the use of intangible property, ((such as)) including charges in the nature of royalties, regardless of where the intangible property will be used.  For purposes of this subsection, "intangible property" includes copyrights, patents, licenses, franchises, trademarks, trade names, and similar items.  ((It)) "Gross income from royalties" does not include compensation for any natural resource, the licensing of prewritten computer software to the end user, or the licensing ((or use)) of digital goods, digital codes, or digital automated services to the end user as defined in RCW 82.04.190(11).

Sec. 107.  RCW 82.04.2907 and 2010 c 111 (SHB 2620) s 302 are each amended to read as follows:

      (1) Upon every person engaging within this state in the business of receiving income from royalties ((or charges in the nature of royalties for the granting of intangible rights, such as copyrights, licenses, patents, or franchise fees)), the amount of tax with respect to the business is equal to the gross income from royalties ((or charges in the nature of royalties from the business)) multiplied by the rate of 0.484 percent.

      (2) For the purposes of this section, "gross income from royalties" means compensation for the use of intangible property, ((such as)) including charges in the nature of royalties, regardless of where the intangible property will be used.  For purposes of this subsection, "intangible property" includes copyrights, patents, licenses, franchises, trademarks, trade names, and similar items.  ((It)) "Gross income from royalties" does not include compensation for any natural resource, the licensing of prewritten computer software to the end user, or the licensing of digital goods, digital codes, or digital automated services to the end user as defined in RCW 82.04.190(11).

Sec. 108.  RCW 82.04.460 and 2004 c 174 s 6 are each amended to read as follows:

      (1) Except as otherwise provided in this section, any person ((rendering services)) earning apportionable income taxable under ((RCW 82.04.290 or 82.04.2908)) this chapter and ((maintaining places of business both within and without this state which contribute to the rendition of such services shall)) also taxable in another state, must, for the purpose of computing tax liability under ((RCW 82.04.290 or 82.04.2908)) this chapter, apportion to this state, in accordance with section 105 of this act, that portion of the person's ((gross)) apportionable income ((which is)) derived from ((services rendered)) business activities performed within this state.  ((Where such apportionment cannot be accurately made by separate accounting methods, the taxpayer shall apportion to this state that proportion of the taxpayer's total income which the cost of doing business within the state bears to the total cost of doing business both within and without the state.))

      (2) ((Notwithstanding the provision of subsection (1) of this section, persons doing business both within and without the state who receive gross income from service charges, as defined in RCW 63.14.010 (relating to amounts charged for granting the right or privilege to make deferred or installment payments) or who receive gross income from engaging in business as financial institutions within the scope of chapter 82.14A RCW (relating to city taxes on financial institutions) shall apportion or allocate gross income taxable under RCW 82.04.290 to this state pursuant to rules promulgated by the department consistent with uniform rules for apportionment or allocation developed by the states.)) The department must by rule provide a method of apportioning the apportionable income of financial institutions, where such apportionable income is taxable under RCW 82.04.290.  The rule adopted by the department must, to the extent feasible, be consistent with the multistate tax commission's recommended formula for the apportionment and allocation of net income of financial institutions as existing on the effective date of this section or such subsequent date as may be provided by the department by rule, consistent with the purposes of this section, except that:
      (a) The department's rule must provide for a single factor apportionment method based on the receipts factor; and
      (b) The definition of "financial institution" contained in appendix A to the multistate tax commission's recommended formula for the apportionment and allocation of net income of financial institutions is advisory only.

      (3) The department ((shall)) may by rule provide a method or methods of apportioning or allocating gross income derived from sales of telecommunications service and competitive telephone service((s)) taxed under this chapter, if the gross proceeds of sales subject to tax under this chapter do not fairly represent the extent of the taxpayer's income attributable to this state.  ((The rules shall be, so far as feasible, consistent with the methods of apportionment contained in this section and shall require the consideration of those facts, circumstances, and apportionment factors as will result in an equitable and constitutionally permissible division of the services.)) The rule must provide for an equitable and constitutionally permissible division of the tax base.
      (4) For purposes of this section, the following definitions apply unless the context clearly requires otherwise:
      (a) "Apportionable income" means gross income of the business generated from engaging in apportionable activities, including income received from apportionable activities performed outside this state if the income would be taxable under this chapter if received from activities in this state, less the exemptions and deductions allowable under this chapter.  For purposes of this subsection, "apportionable activities" means only those activities taxed under:
      (i) RCW 82.04.255;
      (ii) RCW 82.04.260 (3), (4), (5), (6), (7), (8), (9), and (12);
      (iii) RCW 82.04.280(5);
      (iv) RCW 82.04.285;
      (v) RCW 82.04.286;
      (vi) RCW 82.04.290;
      (vii) RCW 82.04.2907;
      (viii) RCW 82.04.2908;
      (ix) RCW 82.04.263, but only to the extent of any activity that would be taxable under any of the provisions enumerated under (a)(i) through (viii) of this subsection (4) if the tax classification in RCW 82.04.263 did not exist; and
      (x) RCW 82.04.260(13) and 82.04.280(1), but only with respect to advertising.
      (b)(i) "Taxable in another state" means that the taxpayer is subject to a business activities tax by another state on its income received from engaging in apportionable activities; or the taxpayer is not subject to a business activities tax by another state on its income received from engaging in apportionable activities, but any other state has jurisdiction to subject the taxpayer to a business activities tax on such income under the substantial nexus standards in section 104(1) of this act.
      (ii) For purposes of this subsection (4)(b), "business activities tax" and "state" have the same meaning as in section 105 of this act.

Sec. 109.  RCW 82.04.080 and 1961 c 15 s 82.04.080 are each amended to read as follows:

(1) "Gross income of the business" means the value proceeding or accruing by reason of the transaction of the business engaged in and includes gross proceeds of sales, compensation for the rendition of services, gains realized from trading in stocks, bonds, or other evidences of indebtedness, interest, discount, rents, royalties, fees, commissions, dividends, and other emoluments however designated, all without any deduction on account of the cost of tangible property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses.

(2) Financial institutions must determine gains realized from trading in stocks, bonds, and other evidences of indebtedness on a net annualized basis.  For purposes of this subsection, a financial institution means a person within the scope of the rule adopted by the department under the authority of RCW 82.04.460(2).

NEW SECTION.  Sec. 110.  A new section is added to chapter 82.04 RCW to read as follows:

      (1) This chapter does not apply to amounts received by a financial institution from an affiliated person if the amounts are received from transactions that are required to be at arm's length under sections 23A or 23B of the federal reserve act as existing on the effective date of this section or such subsequent date as may be provided by the department by rule, consistent with the purposes of this section.  For purposes of this subsection, "financial institution" has the same meaning as in RCW 82.04.080.

      (2) As used in this section, "affiliated" means under common control.  "Common control" means the possession, directly or indirectly, of more than fifty percent of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise.

NEW SECTION.  Sec. 111.  A new section is added to chapter 82.04 RCW to read as follows:

      (1) This chapter does not apply to amounts received by investment conduits or securitization entities from cash and securities.

      (2) For purposes of this section, the following definitions apply:

      (a) "Investment conduit" means an entity formed by a financial institution as defined in RCW 82.04.080 for the express purpose of holding or owning cash or securities if the entity formed:

      (i) Has no employees;

      (ii) Has no direct profit-making motive;

      (iii) Owns no tangible assets, other than cash or securities;

      (iv) Holds or owns cash or securities solely as a conduit, allocating its income to holders of its ownership interests; and

      (v) Has, within twelve months of its organization or initial capitalization date, issued ownership interests to other than affiliated persons, equal to or greater than twenty-five percent of its total issued ownership interests.

      (b) "Securities" has the same meaning as in section 2 of the securities act of 1933 and includes eligible assets as defined by Rule 3a-7 of the investment company act, as the law and rule exist on the effective date of this section or such subsequent date as may be provided by the department by rule, consistent with the purposes of this section.

      (c) "Securitization entity" means an entity created by a bank holding company if the entity created:

      (i) Has no employees;

      (ii) Has no direct profit-making motive;

      (iii) Owns no tangible assets, other than cash, fixed or revolving discrete pools of credit or charge card receivables originated by a financial institution, or securities;

      (iv) Acts solely as a conduit, allocating its income to holders of its ownership interests; and

      (v) Has as its sole business activities the:

      (A) Acquisition of such discrete pools of credit or charge card receivables; and

      (B) Issuance or causing the issuance of securities primarily to persons not affiliated with the entity.

      (d) "Bank holding company" has the same meaning as provided in the bank holding company act of 1956, as existing on the effective date of this section or such subsequent date as may be provided by the department by rule, consistent with the purposes of this section.

      (e) "No direct profit-making motive" means that all of an entity's income, less a reasonable servicing fee, is paid to holders of its ownership interests.

      (f) "Ownership interest" means interests categorized as debt or equity for purposes of federal tax or generally accepted accounting principles.

      (g) "Affiliated" has the same meaning as in section 110 of this act.

NEW SECTION.  Sec. 112.  A new section is added to chapter 82.04 RCW to read as follows:

      (1) In computing tax there may be deducted from the measure of tax interest and fees on loans secured by commercial aircraft primarily used to provide routine air service and owned by:

      (a) An air carrier, as defined in RCW 82.42.030, which is primarily engaged in the business of providing passenger air service;

      (b) An affiliate of such air carrier; or

      (c) A parent entity for which such air carrier is an affiliate.

      (2) The deduction authorized under this section is not available to any person who is physically present in this state as determined under section 104(6) of this act.

      (3) For purposes of this section, the following definitions apply:

      (a) "Affiliate" means a person is "affiliated," as defined in section 110 of this act, with another person; and

      (b) "Commercial aircraft" means a commercial airplane as defined in RCW 82.32.550.

 

PART II

Tax Avoidance Transactions

 

NEW SECTION.  Sec. 201.  A new section is added to chapter 82.32 RCW to read as follows:

      (1) It is the legislature's intent to require all taxpayers to pay their fair share of taxes.  To accomplish this purpose, it is the legislature's intent to stop transactions or arrangements that are designed to unfairly avoid taxes.

      (2) The department must disregard, for tax purposes, the tax avoidance transactions or arrangements that are described in subsection (3) of this section.  The department must deny the tax benefit that would otherwise result from the tax avoidance transaction or arrangement.  In determining whether the department must disregard a transaction or arrangement described under subsection (3) of this section, the department may consider:

      (a) Whether an arrangement or transaction changes in a meaningful way, apart from its tax effects, the economic positions of the participants in the arrangement when considered as a whole;

      (b) Whether substantial nontax reasons exist for entering into an arrangement or transaction;

      (c) Whether an arrangement or transaction is a reasonable means of accomplishing a substantial nontax purpose;

      (d) An entities' relative contributions to the work that generates income;

      (e) The location where work is performed; and

      (f) Other relevant factors.

      (3) This section applies only to the following transactions or arrangements:

      (a) Arrangements that are, in form, a joint venture or similar arrangement between a construction contractor and the owner or developer of a construction project but that are, in substance, substantially guaranteed payments for the purchase of construction services characterized by a failure of the parties' agreement to provide for the contractor to share substantial profits and bear significant risk of loss in the venture;

      (b) Arrangements through which a taxpayer attempts to avoid tax under chapter 82.04 RCW by disguising income received, or otherwise avoiding tax on income, from a person that is not affiliated with the taxpayer from business activities that would be taxable in Washington by moving that income to another entity that would not be taxable in Washington; and

      (c) Arrangements through which a taxpayer attempts to avoid tax under chapter 82.08 or 82.12 RCW by engaging in a transaction to disguise its purchase or use of tangible personal property by vesting legal title or other ownership interest in another entity over which the taxpayer exercises control in such a manner as to effectively retain control of the tangible personal property.

      (4) In determining whether a transaction or arrangement comes within the scope of subsection (3) of this section, the department is not required to prove a taxpayer's subjective intent in engaging in the transaction or arrangement.

      (5) The department must adopt rules to assist in determining whether a transaction or arrangement is within the scope of subsection (3) of this section.  The adoption of a rule as required under this subsection is not a condition precedent for the department's exercise of the authority provided in this section.  Any rules adopted under this section must include examples of transactions that the department will disregard for tax purposes.

      (6) This section does not affect the department's authority to apply any other remedies available under statutory or common law.

      (7) For purposes of this section, "affiliated" means under common control.  "Control" means the possession, directly or indirectly, of more than fifty percent of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise.

NEW SECTION.  Sec. 202.  A new section is added to chapter 82.32 RCW to read as follows:

      (1)(a) The department may not use section 201 of this act to disregard any transaction or arrangement initiated before the effective date of this section, if, in respect to such transaction or arrangement, the taxpayer had reported its tax liability in conformance with either specific written instructions provided by the department to the taxpayer, a determination published under the authority of RCW 82.32.410, or other document made available by the department to the general public.

      (b) This section does not apply if the transaction or arrangement engaged in by the taxpayer differs materially from the transaction or arrangement that was addressed in the specific written instructions, published determination, or other document made available by the department to the general public.

      (2) Section 201 of this act does not apply to any tax periods ending before May 1, 2010, that were included in a completed field audit conducted by the department.

      (3) For purposes of this section, "specific written instructions" means tax reporting instructions provided to a taxpayer and which specifically identify the taxpayer to whom the instructions apply.  Specific written instructions may be provided as part of an audit, tax assessment, determination, closing agreement, or in response to a binding ruling request.

Sec. 203.  RCW 82.32.090 and 2006 c 256 s 6 are each amended to read as follows:

      (1) If payment of any tax due on a return to be filed by a taxpayer is not received by the department of revenue by the due date, there ((shall be)) is assessed a penalty of five percent of the amount of the tax; and if the tax is not received on or before the last day of the month following the due date, there ((shall be)) is assessed a total penalty of fifteen percent of the amount of the tax under this subsection; and if the tax is not received on or before the last day of the second month following the due date, there ((shall be)) is assessed a total penalty of twenty-five percent of the amount of the tax under this subsection.  No penalty so added shall be less than five dollars.

      (2) If the department of revenue determines that any tax has been substantially underpaid, there ((shall be)) is assessed a penalty of five percent of the amount of the tax determined by the department to be due.  If payment of any tax determined by the department to be due is not received by the department by the due date specified in the notice, or any extension thereof, there ((shall be)) is assessed a total penalty of fifteen percent of the amount of the tax under this subsection; and if payment of any tax determined by the department to be due is not received on or before the thirtieth day following the due date specified in the notice of tax due, or any extension thereof, there ((shall be)) is assessed a total penalty of twenty-five percent of the amount of the tax under this subsection.  No penalty so added ((shall)) may be less than five dollars.  As used in this section, "substantially underpaid" means that the taxpayer has paid less than eighty percent of the amount of tax determined by the department to be due for all of the types of taxes included in, and for the entire period of time covered by, the department's examination, and the amount of underpayment is at least one thousand dollars.

      (3) If a warrant ((be)) is issued by the department of revenue for the collection of taxes, increases, and penalties, there ((shall be)) is added thereto a penalty of ten percent of the amount of the tax, but not less than ten dollars.

      (4) If the department finds that a person has engaged in any business or performed any act upon which a tax is imposed under this title and that person has not obtained from the department a registration certificate as required by RCW 82.32.030, the department ((shall)) must impose a penalty of five percent of the amount of tax due from that person for the period that the person was not registered as required by RCW 82.32.030.  The department ((shall)) may not impose the penalty under this subsection (4) if a person who has engaged in business taxable under this title without first having registered as required by RCW 82.32.030, prior to any notification by the department of the need to register, obtains a registration certificate from the department.

      (5) If the department finds that all or any part of a deficiency resulted from the disregard of specific written instructions as to reporting or tax liabilities, the department ((shall)) must add a penalty of ten percent of the amount of the additional tax found due because of the failure to follow the instructions.  A taxpayer disregards specific written instructions when the department ((of revenue)) has informed the taxpayer in writing of the taxpayer's tax obligations and the taxpayer fails to act in accordance with those instructions unless the department has not issued final instructions because the matter is under appeal pursuant to this chapter or departmental regulations.  The department ((shall)) may not assess the penalty under this section upon any taxpayer who has made a good faith effort to comply with the specific written instructions provided by the department to that taxpayer.  Specific written instructions may be given as a part of a tax assessment, audit, determination, or closing agreement, provided that such specific written instructions ((shall)) apply only to the taxpayer addressed or referenced on such documents.  Any specific written instructions by the department ((of revenue shall)) must be clearly identified as such and ((shall)) must inform the taxpayer that failure to follow the instructions may subject the taxpayer to the penalties imposed by this subsection.

      (6) If the department finds that all or any part of a deficiency resulted from engaging in a disregarded transaction, as described in section 201(3) of this act, the department must assess a penalty of thirty-five percent of the additional tax found to be due as a result of engaging in a transaction disregarded by the department under section 201(2) of this act.  The penalty provided in this subsection may be assessed together with any other applicable penalties provided in this section on the same tax found to be due, except for the evasion penalty provided in subsection (7) of this section.  The department may not assess the penalty under this subsection if, before the department discovers the taxpayer's use of a transaction described under section 201(3) of this act, the taxpayer discloses its participation in the transaction to the department.
      (7) If the department finds that all or any part of the deficiency resulted from an intent to evade the tax payable hereunder, a further penalty of fifty percent of the additional tax found to be due ((shall)) must be added.

      (((7))) (8) The penalties imposed under subsections (1) through (4) of this section can each be imposed on the same tax found to be due.  This subsection does not prohibit or restrict the application of other penalties authorized by law.

      (((8))) (9) The department ((of revenue)) may not impose ((both)) the evasion penalty ((and)) in combination with the penalty for disregarding specific written instructions or the penalty provided in subsection (6) of this section on the same tax found to be due.

      (((9))) (10) For the purposes of this section, "return" means any document a person is required by the state of Washington to file to satisfy or establish a tax or fee obligation that is administered or collected by the department ((of revenue)), and that has a statutorily defined due date.

NEW SECTION.  Sec. 204.  A new section is added to chapter 82.32 RCW to read as follows:

      There is hereby created a joint tax avoidance review committee which is a bipartisan committee consisting of three members of the senate, two from the majority caucus and one from the minority caucus, and three members of the house of representatives, two from the majority caucus and one from the minority caucus.  The senate members of the committee must be appointed by the majority leader of the senate, and the house members of the committee must be appointed by the speaker of the house.  The appointing authorities must also appoint one alternate member from each of the two largest caucuses of each legislative chamber.

      (1)(a) Members and alternates must be appointed as soon as possible after the effective date of this section, and their terms continue until such persons no longer wish to serve on the committee or no longer serve in the legislature, whichever occurs first.

      (b) A vacancy must be filled by the appointment of a legislator from the same legislative chamber and caucus as the original appointment.  The appropriate appointing authority must make the appointment within thirty days of the vacancy occurring.  Former committee members and alternates may be reappointed to the committee.

      (2) The committee must choose its chair and vice-chair from among its membership.  The committee meets at the call of the chair.  The chair of the committee must cause all meeting notices and committee documents to be sent to the committee members and alternates.

      (3) Staff support for the committee must be provided by the senate committee services and the house of representatives office of program research.

      (4) The committee must:

      (a) Generally monitor the department's implementation of Part II of this act, providing timely advice to the department in any rule making undertaken pursuant to the authority granted under section 201 of this act;

      (b) Seek input from stakeholders and other legislators as the committee may determine is desirable and useful in the furtherance of its mission herein described;

      (c) Review other cases, identified by the department, of tax avoidance transactions not described in section 201 of this act that may represent examples of arrangements that circumvent the policies of this state and thus unfairly avoid taxes;

      (d) Consider the need for an explicit statutory construction standard to provide direction to the courts on the interpretation of Part II of this act; and

      (e) Provide a report to the fiscal committees of the house of representatives and senate by December 31, 2010, which must include:

      (i) Recommended legislation on any matters that the committee deems advisable, including amendments to sections 201, 202, and 203 of this act; and

      (ii) Recommendations for future legislative oversight of the department's implementation of sections 201, 202, and 203 of this act.

      (5) For the purposes of this section, the disclosure of otherwise confidential tax information to the members of the committee is deemed to fall within the exception provided by RCW 82.32.330(3)(d).

      (6) This section expires July 1, 2011.

NEW SECTION.  Sec. 205.  (1) The legislature finds that this state's tax policy with respect to the taxation of transactions between affiliated entities and the income derived from such transactions (intercompany transactions) has motivated some taxpayers to engage in transactions designed solely or primarily to minimize the tax effects of intercompany transactions.  The legislature further finds that some intercompany transactions result from taxpayers that are required to establish affiliated entities to comply with regulatory mandates and that transactions between such affiliates effectively increases the tax burden in this state on the affiliated group of entities.

      (2) Therefore, as existing resources allow, the department of revenue is directed to conduct a review of the state's tax policy with respect to the taxation of intercompany transactions.  The review must include the impacts of such transactions under the state's business and occupation tax and state and local sales and use taxes.  The department may include other taxes in the review as it deems appropriate.

      (3) In conducting the review, the department must examine how this state's tax policy compares to the tax policy of other states with respect to the taxation of intercompany transactions.  The department's review must include an analysis of potential alternatives to the current policy of taxing intercompany transactions, including their estimated revenue impacts if practicable.

      (4) In conducting this review, the department may seek input from members of the business community and others as it deems appropriate.

      (5) The department must report its findings to the fiscal committees of the house of representatives and senate by December 1, 2010.  However, if the department has not completed its review by December 1, 2010, the department must provide the fiscal committees of the legislature with a brief status report by December 1, 2010, and the final report by December 1, 2011.

Sec. 206.  RCW 82.12.020 and 2009 c 535 s 305 are each amended to read as follows:

      (1) There is ((hereby)) levied and ((there shall be)) collected from every person in this state a tax or excise for the privilege of using within this state as a consumer any:

      (a) Article of tangible personal property ((purchased at retail, or)) acquired by ((lease, gift, repossession, or bailment, or extracted or produced or manufactured by the person so using the same, or otherwise furnished to a person engaged in any business taxable under RCW 82.04.280 (2) or (7))) the user in any manner, including tangible personal property acquired at a casual or isolated sale, and including by-products used by the manufacturer thereof, except as otherwise provided in this chapter, irrespective of whether the article or similar articles are manufactured or are available for purchase within this state;

      (b) Prewritten computer software, regardless of the method of delivery, but excluding prewritten computer software that is either provided free of charge or is provided for temporary use in viewing information, or both;

      (c) Services defined as a retail sale in RCW 82.04.050 (2)(a) or (g), (3)(a), or (6)(b), excluding services defined as a retail sale in RCW 82.04.050(6)(b) that are provided free of charge;

      (d) Extended warranty; or

      (e)(i) Digital good, digital code, or digital automated service, including the use of any services provided by a seller exclusively in connection with digital goods, digital codes, or digital automated services, whether or not a separate charge is made for such services.

      (ii) With respect to the use of digital goods, digital automated services, and digital codes acquired by purchase, the tax imposed in this subsection (1)(e) applies in respect to:

      (A) Sales in which the seller has granted the purchaser the right of permanent use;

      (B) Sales in which the seller has granted the purchaser a right of use that is less than permanent;

      (C) Sales in which the purchaser is not obligated to make continued payment as a condition of the sale; and

      (D) Sales in which the purchaser is obligated to make continued payment as a condition of the sale.

      (iii) With respect to digital goods, digital automated services, and digital codes acquired other than by purchase, the tax imposed in this subsection (1)(e) applies regardless of whether or not the consumer has a right of permanent use or is obligated to make continued payment as a condition of use.

      (2) The provisions of this chapter do not apply in respect to the use of any article of tangible personal property, extended warranty, digital good, digital code, digital automated service, or service taxable under RCW 82.04.050 (2)(a) or (g), (3)(a), or (6)(b), if the sale to, or the use by, the present user or the present user's bailor or donor has already been subjected to the tax under chapter 82.08 RCW or this chapter and the tax has been paid by the present user or by the present user's bailor or donor.

      (3)(a) Except as provided in this section, payment of the tax imposed by this chapter or chapter 82.08 RCW by one purchaser or user of tangible personal property, extended warranty, digital good, digital code, digital automated service, or other service does not have the effect of exempting any other purchaser or user of the same property, extended warranty, digital good, digital code, digital automated service, or other service from the taxes imposed by such chapters.

      (b) The tax imposed by this chapter does not apply:

      (i) If the sale to, or the use by, the present user or his or her bailor or donor has already been subjected to the tax under chapter 82.08 RCW or this chapter and the tax has been paid by the present user or by his or her bailor or donor;

      (ii) In respect to the use of any article of tangible personal property acquired by bailment and the tax has once been paid based on reasonable rental as determined by RCW 82.12.060 measured by the value of the article at time of first use multiplied by the tax rate imposed by chapter 82.08 RCW or this chapter as of the time of first use;

      (iii) In respect to the use of any article of tangible personal property acquired by bailment, if the property was acquired by a previous bailee from the same bailor for use in the same general activity and the original bailment was prior to June 9, 1961; or

      (iv) To the use of digital goods or digital automated services, which were obtained through the use of a digital code, if the sale of the digital code to, or the use of the digital code by, the present user or the present user's bailor or donor has already been subjected to the tax under chapter 82.08 RCW or this chapter and the tax has been paid by the present user or by the present user's bailor or donor.

      (4)(a) Except as provided in (b) of this subsection (4), the tax is levied and must be collected in an amount equal to the value of the article used, value of the digital good or digital code used, value of the extended warranty used, or value of the service used by the taxpayer, multiplied by the applicable rates in effect for the retail sales tax under RCW 82.08.020.

      (b) In the case of a seller required to collect use tax from the purchaser, the tax must be collected in an amount equal to the purchase price multiplied by the applicable rate in effect for the retail sales tax under RCW 82.08.020.

(5) For purposes of the tax imposed in this section, "person" includes anyone within the definition of "buyer," "purchaser," and "consumer" in RCW 82.08.010.

Sec. 207.  RCW 82.45.010 and 2008 c 116 s 3 and 2008 c 6 s 701 are each reenacted and amended to read as follows:

      (1) As used in this chapter, the term "sale" ((shall have)) has its ordinary meaning and ((shall)) includes any conveyance, grant, assignment, quitclaim, or transfer of the ownership of or title to real property, including standing timber, or any estate or interest therein for a valuable consideration, and any contract for such conveyance, grant, assignment, quitclaim, or transfer, and any lease with an option to purchase real property, including standing timber, or any estate or interest therein or other contract under which possession of the property is given to the purchaser, or any other person at the purchaser's direction, and title to the property is retained by the vendor as security for the payment of the purchase price.  The term also includes the grant, assignment, quitclaim, sale, or transfer of improvements constructed upon leased land.

      (2)(a) The term "sale" also includes the transfer or acquisition within any twelve-month period of a controlling interest in any entity with an interest in real property located in this state for a valuable consideration.

(b) For the sole purpose of determining whether, pursuant to the exercise of an option, a controlling interest was transferred or acquired within a twelve-month period, the date that the option agreement was executed is the date on which the transfer or acquisition of the controlling interest is deemed to occur.  For all other purposes under this chapter, the date upon which the option is exercised is the date of the transfer or acquisition of the controlling interest.
      (c) For purposes of this subsection, all acquisitions of persons acting in concert ((shall)) must be aggregated for purposes of determining whether a transfer or acquisition of a controlling interest has taken place.  The department ((of revenue shall)) must adopt standards by rule to determine when persons are acting in concert.  In adopting a rule for this purpose, the department ((shall)) must consider the following:

      (((a))) (i) Persons ((shall)) must be treated as acting in concert when they have a relationship with each other such that one person influences or controls the actions of another through common ownership; and

      (((b))) (ii) When persons are not commonly owned or controlled, they ((shall)) must be treated as acting in concert only when the unity with which the purchasers have negotiated and will consummate the transfer of ownership interests supports a finding that they are acting as a single entity.  If the acquisitions are completely independent, with each purchaser buying without regard to the identity of the other purchasers, then the acquisitions ((shall be)) are considered separate acquisitions.

      (3) The term "sale" ((shall)) does not include:

      (a) A transfer by gift, devise, or inheritance.

      (b) A transfer of any leasehold interest other than of the type mentioned above.

      (c) A cancellation or forfeiture of a vendee's interest in a contract for the sale of real property, whether or not such contract contains a forfeiture clause, or deed in lieu of foreclosure of a mortgage.

      (d) The partition of property by tenants in common by agreement or as the result of a court decree.

      (e) The assignment of property or interest in property from one spouse or one domestic partner to the other spouse or other domestic partner in accordance with the terms of a decree of dissolution of marriage or state registered domestic partnership or in fulfillment of a property settlement agreement.

      (f) The assignment or other transfer of a vendor's interest in a contract for the sale of real property, even though accompanied by a conveyance of the vendor's interest in the real property involved.

      (g) Transfers by appropriation or decree in condemnation proceedings brought by the United States, the state or any political subdivision thereof, or a municipal corporation.

      (h) A mortgage or other transfer of an interest in real property merely to secure a debt, or the assignment thereof.

      (i) Any transfer or conveyance made pursuant to a deed of trust or an order of sale by the court in any mortgage, deed of trust, or lien foreclosure proceeding or upon execution of a judgment, or deed in lieu of foreclosure to satisfy a mortgage or deed of trust.

      (j) A conveyance to the federal housing administration or veterans administration by an authorized mortgagee made pursuant to a contract of insurance or guaranty with the federal housing administration or veterans administration.

      (k) A transfer in compliance with the terms of any lease or contract upon which the tax as imposed by this chapter has been paid or where the lease or contract was entered into prior to the date this tax was first imposed.

      (l) The sale of any grave or lot in an established cemetery.

      (m) A sale by the United States, this state or any political subdivision thereof, or a municipal corporation of this state.

      (n) A sale to a regional transit authority or public corporation under RCW 81.112.320 under a sale/leaseback agreement under RCW 81.112.300.

      (o) A transfer of real property, however effected, if it consists of a mere change in identity or form of ownership of an entity where there is no change in the beneficial ownership.  These include transfers to a corporation or partnership which is wholly owned by the transferor and/or the transferor's spouse or domestic partner or children of the transferor or the transferor's spouse or domestic partner((:  PROVIDED, That)).  However, if thereafter such transferee corporation or partnership voluntarily transfers such real property, or such transferor, spouse or domestic partner, or children of the transferor or the transferor's spouse or domestic partner voluntarily transfer stock in the transferee corporation or interest in the transferee partnership capital, as the case may be, to other than (((1))) (i) the transferor and/or the transferor's spouse or domestic partner or children of the transferor or the transferor's spouse or domestic partner, (((2))) (ii) a trust having the transferor and/or the transferor's spouse or domestic partner or children of the transferor or the transferor's spouse or domestic partner as the only beneficiaries at the time of the transfer to the trust, or (((3))) (iii) a corporation or partnership wholly owned by the original transferor and/or the transferor's spouse or domestic partner or children of the transferor or the transferor's spouse or domestic partner, within three years of the original transfer to which this exemption applies, and the tax on the subsequent transfer has not been paid within sixty days of becoming due, excise taxes ((shall)) become due and payable on the original transfer as otherwise provided by law.

      (p)(i) A transfer that for federal income tax purposes does not involve the recognition of gain or loss for entity formation, liquidation or dissolution, and reorganization, including but not limited to nonrecognition of gain or loss because of application of ((section)) 26 U.S.C. Sec. 332, 337, 351, 368(a)(1), 721, or 731 of the internal revenue code of 1986, as amended.

      (ii) However, the transfer described in (p)(i) of this subsection cannot be preceded or followed within a twelve-month period by another transfer or series of transfers, that, when combined with the otherwise exempt transfer or transfers described in (p)(i) of this subsection, results in the transfer of a controlling interest in the entity for valuable consideration, and in which one or more persons previously holding a controlling interest in the entity receive cash or property in exchange for any interest the person or persons acting in concert hold in the entity.  This subsection (3)(p)(ii) does not apply to that part of the transfer involving property received that is the real property interest that the person or persons originally contributed to the entity or when one or more persons who did not contribute real property or belong to the entity at a time when real property was purchased receive cash or personal property in exchange for that person or persons' interest in the entity.  The real estate excise tax under this subsection (3)(p)(ii) is imposed upon the person or persons who previously held a controlling interest in the entity.

      (q) A qualified sale of a manufactured/mobile home community, as defined in RCW 59.20.030, that takes place on or after June 12, 2008, but before December 31, 2018.

Sec. 208.  RCW 82.45.033 and 1993 sp.s. c 25 s 505 are each amended to read as follows:

(1) As used in this chapter, the term "controlling interest" has the following meaning:

      (((1))) (a) In the case of a corporation, either fifty percent or more of the total combined voting power of all classes of stock of the corporation entitled to vote, or fifty percent of the capital, profits, or beneficial interest in the voting stock of the corporation; and

      (((2))) (b) In the case of a partnership, association, trust, or other entity, fifty percent or more of the capital, profits, or beneficial interest in such partnership, association, trust, or other entity.

(2) The department may, at the department's option, enforce the obligation of the seller under this chapter as provided in this subsection (2):
      (a) In the transfer or acquisition of a controlling interest as defined in subsection (1)(a) of this section, either against the corporation in which a controlling interest is transferred or acquired, against the person or persons who acquired the controlling interest in the corporation or, when the corporation is not a publicly traded company, against the person or persons who transferred the controlling interest in the corporation; and
      (b) In the transfer or acquisition of a controlling interest as defined in subsection (1)(b) of this section, either against the entity in which a controlling interest is transferred or acquired or against the person or persons who transferred or acquired the controlling interest in the entity.

Sec. 209.  RCW 82.45.070 and 1969 ex.s. c 223 s 28A.45.070 are each amended to read as follows:

      The tax ((herein)) provided for in this chapter and any interest or penalties thereon ((shall be)) is a specific lien upon each ((piece)) parcel of real property located in this state that is either sold or that is owned by an entity in which a controlling interest has been transferred or acquired.  The lien attaches from the time of sale until the tax ((shall have been)) is paid, which lien may be enforced in the manner prescribed for the foreclosure of mortgages.

Sec. 210.  RCW 82.45.080 and 1980 c 154 s 3 are each amended to read as follows:

(1) The tax levied under this chapter ((shall be)) is the obligation of the seller and the department ((of revenue)) may, at the department's option, enforce the obligation through an action of debt against the seller or the department may proceed in the manner prescribed for the foreclosure of mortgages ((and resort to)).  The department's use of one course of enforcement ((shall)) is not ((be)) an election not to pursue the other.

(2) For purposes of this section and notwithstanding any other provisions of law, the seller is the parent corporation of a wholly owned subsidiary, when such subsidiary is the transferor to a third- party transferee and the subsidiary is dissolved before paying the tax imposed under this chapter.

Sec. 211.  RCW 82.45.100 and 2007 c 111 s 112 are each amended to read as follows:

      (1) Payment of the tax imposed under this chapter is due and payable immediately at the time of sale, and if not paid within one month thereafter ((shall)) will bear interest from the time of sale until the date of payment.

      (a) Interest imposed before January 1, 1999, ((shall be)) is computed at the rate of one percent per month.

      (b) Interest imposed after December 31, 1998, ((shall be)) is computed on a monthly basis at the rate as computed under RCW 82.32.050(2).  The rate so computed ((shall)) must be adjusted on the first day of January of each year for use in computing interest for that calendar year.  The department ((of revenue shall)) must provide written notification to the county treasurers of the variable rate on or before December 1st of the year preceding the calendar year in which the rate applies.

      (2) In addition to the interest described in subsection (1) of this section, if the payment of any tax is not received by the county treasurer or the department of revenue, as the case may be, within one month of the date due, there ((shall be)) is assessed a penalty of five percent of the amount of the tax; if the tax is not received within two months of the date due, there ((shall)) will be assessed a total penalty of ten percent of the amount of the tax; and if the tax is not received within three months of the date due, there ((shall)) will be assessed a total penalty of twenty percent of the amount of the tax.  The payment of the penalty described in this subsection ((shall be)) is collectible from the seller only, and RCW 82.45.070 does not apply to the penalties described in this subsection.

      (3) If the tax imposed under this chapter is not received by the due date, the transferee ((shall be)) is personally liable for the tax, along with any interest as provided in subsection (1) of this section, unless((:
      (a))) an instrument evidencing the sale is recorded in the official real property records of the county in which the property conveyed is located((; or
      (b) Either the transferor or transferee notifies the department of revenue in writing of the occurrence of the sale within thirty days following the date of the sale)).

      (4) If upon examination of any affidavits or from other information obtained by the department or its agents it appears that all or a portion of the tax is unpaid, the department ((shall)) must assess against the taxpayer the additional amount found to be due plus interest and penalties as provided in subsections (1) and (2) of this section.  The department ((shall)) must notify the taxpayer by mail, or electronically as provided in RCW 82.32.135, of the additional amount and the same ((shall)) becomes due and ((shall)) must be paid within thirty days from the date of the notice, or within such further time as the department may provide.

      (5) No assessment or refund may be made by the department more than four years after the date of sale except upon a showing of:

      (a) Fraud or misrepresentation of a material fact by the taxpayer;

      (b) A failure by the taxpayer to record documentation of a sale or otherwise report the sale to the county treasurer; or

      (c) A failure of the transferor or transferee to report the sale under RCW 82.45.090(2).

      (6) Penalties collected on taxes due under this chapter under subsection (2) of this section and RCW 82.32.090 (2) through (((7))) (8) ((shall)) must be deposited in the housing trust fund as described in chapter 43.185 RCW.

Sec. 212.  RCW 82.45.220 and 2005 c 326 s 3 are each amended to read as follows:

(1) An organization that fails to report a transfer of the controlling interest in the organization under RCW 43.07.390 to the secretary of state and is later determined to be subject to real estate excise taxes due to the transfer, ((shall be)) is subject to the provisions of RCW 82.45.100 as well as the evasion penalty in RCW 82.32.090(((6))) (7).

(2) Subsection (1) of this section also applies to the failure to report to the secretary of state the granting of an option to acquire an interest in the organization if the exercise of the option would result in a sale as defined in RCW 82.45.010(2).

Sec. 213.  RCW 43.07.390 and 2005 c 326 s 2 are each amended to read as follows:

      (1)(a) The secretary of state ((shall)) must adopt rules requiring any entity that is required to file an annual report with the secretary of state, including entities under Titles 23, 23B, 24, and 25 RCW, to disclose:  (i) Any transfer ((in)) of the controlling interest ((of)) in the entity ((and any interest in real property)); and (ii) the granting of any option to acquire an interest in the entity if the exercise of the option would result in a sale as defined in RCW 82.45.010(2).
      (b) The disclosure requirement in this subsection only applies to entities owning an interest in real property located in this state.

      (2) This information ((shall)) must be made available to the department of revenue upon request for the purposes of tracking the transfer of the controlling interest in entities owning real property and to determine when the real estate excise tax is applicable in such cases.

      (3) For the purposes of this section, "controlling interest" has the same meaning as provided in RCW 82.45.033.

 

PART III

Modifying the First Mortgage Deduction

 

Sec. 301.  RCW 82.04.4292 and 1980 c 37 s 12 are each amended to read as follows:

(1) In computing tax there may be deducted from the measure of tax by those engaged in banking, loan, security or other financial businesses, ((amounts derived from)) interest received on investments or loans primarily secured by first mortgages or trust deeds on nontransient residential properties.

(2) Interest deductible under this section includes the portion of fees charged to borrowers, including points and loan origination fees, that is recognized over the life of the loan as an adjustment to yield in the taxpayer's books and records according to generally accepted accounting principles.
      (3) Subsections (1) and (2) of this section notwithstanding, the following is a nonexclusive list of items that are not deductible under this section:
      (a) Fees for specific services such as:  Document preparation fees; finder fees; brokerage fees; title examination fees; fees for credit checks; notary fees; loan application fees; interest lock-in fees if the loan is not made; servicing fees; and similar fees or amounts;
      (b) Fees received in consideration for an agreement to make funds available for a specific period of time at specified terms, commonly referred to as commitment fees;
      (c) Any other fees, or portion of a fee, that is not recognized over the life of the loan as an adjustment to yield in the taxpayer's books and records according to generally accepted accounting principles;
      (d) Gains on the sale of valuable rights such as service release premiums, which are amounts received when servicing rights are sold; and
      (e) Gains on the sale of loans, except deferred loan origination fees and points deductible under subsection (2) of this section, are not to be considered part of the proceeds of sale of the loan.
      (4) Notwithstanding subsection (3) of this section, in computing tax there may be deducted from the measure of tax by those engaged in banking, loan, security, or other financial businesses, amounts received for servicing loans primarily secured by first mortgages or trust deeds on nontransient residential properties, including such loans that secure mortgage-backed or mortgage-related securities, but only if:
      (a)(i) The loans were originated by the person claiming a deduction under this subsection (4) and that person either sold the loans on the secondary market or securitized the loans and sold the securities on the secondary market; or
      (ii)(A) The person claiming a deduction under this subsection (4) acquired the loans from the person that originated the loans through a merger or acquisition of substantially all of the assets of the person who originated the loans, or the person claiming a deduction under this subsection (4) is affiliated with the person that originated the loans.  For purposes of this subsection, "affiliated" means under common control.  "Control" means the possession, directly or indirectly, of more than fifty percent of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise; and
      (B) Either the person who originated the loans or the person claiming a deduction under this subsection (4) sold the loans on the secondary market or securitized the loans and sold the securities on the secondary market; and

      (b) The amounts received for servicing the loans are determined by a percentage of the interest paid by the borrower and are only received if the borrower makes interest payments.

 

PART IV

Direct Seller Business and Occupation Tax Exemption

 

NEW SECTION.  Sec. 401.  (1) A business and occupation tax exemption is provided in RCW 82.04.423 for certain out-of-state sellers that sell consumer products exclusively to or through a direct seller's representative.  The intent of the legislature in enacting this exemption was to provide a narrow exemption for out-of-state businesses engaged in direct sales of consumer products, typically accomplished through in-home parties or door-to-door selling.

      (2) In Dot Foods, Inc. v. Dep't of Revenue, Docket No. 81022-2 (September 10, 2009), the Washington supreme court held that the exemption in RCW 82.04.423 applied to a taxpayer:  (a) That sold nonconsumer products through its representative in addition to consumer products; and (b) whose consumer products were ultimately sold at retail in permanent retail establishments.

      (3) The legislature finds that most out-of-state businesses selling consumer products in this state will either be eligible for the exemption under RCW 82.04.423 or could easily restructure their business operations to qualify for the exemption.  As a result, the legislature expects that the broadened interpretation of the direct sellers' exemption will lead to large and devastating revenue losses.  This comes at a time when the state's existing budget is facing a two billion six hundred million dollar shortfall, which could grow, while at the same time the demand for state and state-funded services is also growing.  Moreover, the legislature further finds that RCW 82.04.423 provides preferential tax treatment for out-of-state businesses over their in-state competitors and now creates a strong incentive for in-state businesses to move their operations outside Washington.

      (4) Therefore, the legislature finds that it is necessary to reaffirm the legislature's intent in establishing the direct sellers' exemption and prevent the loss of revenues resulting from the expanded interpretation of the exemption by amending RCW 82.04.423 retroactively to conform the exemption to the original intent of the legislature and by prospectively ending the direct sellers' exemption as of the effective date of this section.

Sec. 402.  RCW 82.04.423 and 1983 1st ex.s. c 66 s 5 are each amended to read as follows:

      (1) Prior to the effective date of this section, this chapter ((shall)) does not apply to any person in respect to gross income derived from the business of making sales at wholesale or retail if such person:

      (a) Does not own or lease real property within this state; and

      (b) Does not regularly maintain a stock of tangible personal property in this state for sale in the ordinary course of business; and

      (c) Is not a corporation incorporated under the laws of this state; and

      (d) Makes sales in this state exclusively to or through a direct seller's representative.

      (2) For purposes of this section, the term "direct seller's representative" means a person who buys only consumer products on a buy-sell basis or a deposit-commission basis for resale, by the buyer or any other person, in the home or otherwise than in a permanent retail establishment, or who sells at retail, or solicits the sale at retail of, only consumer products in the home or otherwise than in a permanent retail establishment; and

      (a) Substantially all of the remuneration paid to such person, whether or not paid in cash, for the performance of services described in this subsection is directly related to sales or other output, including the performance of services, rather than the number of hours worked; and

      (b) The services performed by the person are performed pursuant to a written contract between such person and the person for whom the services are performed and such contract provides that the person will not be treated as an employee with respect to such purposes for federal tax purposes.

      (3) Nothing in this section ((shall)) may be construed to imply that a person exempt from tax under this section was engaged in a business activity taxable under this chapter prior to ((the enactment of this section)) August 23, 1983.

 

PART V

Business and Occupation Tax Preferences for Manufacturers of Products Derived from Certain Agricultural Products

 

NEW SECTION.  Sec. 501.  (1)(a) In 1967, the legislature amended RCW 82.04.260 in chapter 149, Laws of 1967 ex. sess. to authorize a preferential business and occupation tax rate for slaughtering, breaking, and/or processing perishable meat products and/or selling the same at wholesale.  The legislature finds that RCW 82.04.260(4) was interpreted by the state supreme court on January 13, 2005, in Agrilink Foods, Inc. v. Department of Revenue, 153 Wn.2d 392 (2005).  The supreme court held that the preferential business and occupation tax rate on the slaughtering, breaking, and/or processing of perishable meat products applied to the processing of perishable meat products into nonperishable finished products, such as canned food.

      (b) The legislature intends to narrow the exemption provided for slaughtering, breaking, and/or processing perishable meat products and/or selling such products at wholesale by requiring that the end product be a perishable meat product; a nonperishable meat product that is comprised primarily of animal carcass by weight or volume, other than a canned meat product; or a meat by-product.

      (2)(a) A business and occupation tax exemption is provided for (i) manufacturing by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables, and (ii) selling such products at wholesale by the manufacturer to purchasers who transport the goods out of state in the ordinary course of business.  This exemption expires July 1, 2012, and is replaced by a preferential business and occupation tax rate.

      (b) The legislature finds that the rationale of the Agrilink decision, if applied to these tax preferences, could result in preferential tax treatment for any processed food product that contained any fresh fruit or vegetable as an ingredient, however small the amount.

      (c) The legislature intends to narrow the tax preference provided to fruit and vegetable manufacturers by requiring that the end product be comprised either (i) exclusively of fruits and/or vegetables, or (ii) of any combination of fruits, vegetables, and certain other substances that, cumulatively, may not exceed the amount of fruits and vegetables contained in the product measured by weight or volume.

NEW SECTION.  Sec. 502.  A new section is added to chapter 82.04 RCW to read as follows:

      (1) Upon every person engaging within this state in the business of manufacturing:

      (a) Perishable meat products, by slaughtering, breaking, or processing, if the finished product is a perishable meat product; as to such persons the tax imposed is equal to the value of the perishable meat products manufactured, or, in the case of a processor for hire, the gross income of the business, multiplied by the rate of 0.138 percent;

      (b) Meat products, by dehydration, curing, smoking, or any combination of these activities, if the finished meat products are not canned; as to such persons the tax imposed is equal to the value of the meat products manufactured, or, in the case of a processor for hire, the gross income of the business, multiplied by the rate of 0.138 percent;

      (c) Hides, tallow, meat meal, and other similar meat by-products, if such products are derived in part from animals and manufactured in a rendering plant licensed under chapter 16.68 RCW; as to such persons the tax imposed is equal to the value of the products manufactured, or, in the case of a processor for hire, the gross income of the business, multiplied by the rate of 0.138 percent.

      (2) Upon every person engaging within this state in the business of selling at wholesale:

      (a) Perishable meat products; as to such persons the tax imposed is equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent;

      (b) Meat products that have been manufactured by the seller by dehydration, curing, smoking, or any combination of such activities, if the finished meat products are not canned; as to such persons the tax imposed is equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent;

      (c) Hides, tallow, meat meal, and other similar meat by-products, if such products are derived in part from animals and manufactured by the seller in a rendering plant; as to such persons the tax imposed is equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.

      (3) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

      (a) "Animal" means all members of the animal kingdom except humans, fish, and insects.

      (b) "Carcass" means all or any parts, including viscera, of a slaughtered animal.

      (c) "Fish" means any water-breathing animal, including shellfish.

      (d) "Hide" means any unprocessed animal pelt or skin.

      (e)(i) "Meat products" means:

      (A) Products comprised exclusively of animal carcass; and

      (B) Products, such as jerky, sausage, and other cured meat products, that are comprised primarily of animal carcass by weight or volume and may also contain water; nitrates; nitrites; acids; binders and extenders; natural or synthetic casings; colorings; flavorings such as soy sauce, liquid smoke, seasonings, citric acid, sugar, molasses, corn syrup, and vinegar; and similar substances.

      (ii) Except as provided in (e)(i) of this subsection (3), "meat products" does not include products containing any cereal grains or cereal-grain products, dairy products, legumes and legume products, fruit or vegetable products as defined in RCW 82.04.260, and similar ingredients, unless the ingredient is used as a flavoring.  For purposes of this subsection, "flavoring" means a substance that contains the flavoring constituents derived from a spice, fruit or fruit juice, vegetable or vegetable juice, edible yeast, herb, bark, bud, root, leaf, or any other edible substance of plant origin, whose primary function in food is flavoring or seasoning rather than nutritional, and which may legally appear as "natural flavor," "flavor," or "flavorings" in the ingredient statement on the label of the meat product.

      (iii) "Meat products" includes only products that are intended for human consumption as food or animal consumption as feed.

      (f) "Perishable" means having a high risk of spoilage within thirty days of manufacture without any refrigeration or freezing.

      (g) "Rendering plant" means any place of business or location where dead animals or any part or portion thereof, or packing house refuse, are processed for the purpose of obtaining the hide, skin, grease residue, or any other by-product whatsoever.

Sec. 503.  RCW 82.04.4266 and 2006 c 354 s 3 are each amended to read as follows:

      (1) This chapter ((shall)) does not apply to the value of products or the gross proceeds of sales derived from:

      (a) Manufacturing fruit((s)) or vegetable((s)) products by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables; or

      (b) Selling at wholesale fruit((s)) or vegetable((s)) products manufactured by the seller by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables and sold to purchasers who transport in the ordinary course of business the goods out of this state.  A person taking an exemption under this subsection (1)(b) must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state.

      (2)(a) "Fruit or vegetable products" means:
      (i) Products comprised exclusively of fruits, vegetables, or both; and
      (ii) Products comprised of fruits, vegetables, or both, and which may also contain water, sugar, salt, seasonings, preservatives, binders, stabilizers, flavorings, yeast, and similar substances.  However, the amount of all ingredients contained in the product, other than fruits, vegetables, and water, may not exceed the amount of fruits and vegetables contained in the product measured by weight or volume.
      (b) "Fruit or vegetable products" includes only products that are intended for human consumption as food or animal consumption as feed.
      (3) This section expires July 1, 2012.

Sec. 504.  RCW 82.04.4266 and 2010 c 114 (SHB 3066) s 111 are each amended to read as follows:

      (1) This chapter does not apply to the value of products or the gross proceeds of sales derived from:

      (a) Manufacturing fruit((s)) or vegetable((s)) products by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables; or

      (b) Selling at wholesale fruit((s)) or vegetable((s)) products manufactured by the seller by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables and sold to purchasers who transport in the ordinary course of business the goods out of this state.  A person taking an exemption under this subsection (1)(b) must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state.

      (2)(a) "Fruit or vegetable products" means:
      (i) Products comprised exclusively of fruits, vegetables, or both; and
      (ii) Products comprised of fruits, vegetables, or both, and which may also contain water, sugar, salt, seasonings, preservatives, binders, stabilizers, flavorings, yeast, and similar substances.  However, the amount of all ingredients contained in the product, other than fruits, vegetables, and water, may not exceed the amount of fruits and vegetables contained in the product measured by weight or volume.
      (b) "Fruit or vegetable products" includes only products that are intended for human consumption as food or animal consumption as feed.
      (3) A person claiming the exemption provided in this section must file a complete annual survey with the department under RCW 82.32.--- (section 102, chapter 114 (SHB 3066), Laws of 2010).

      (((3))) (4) This section expires July 1, 2012.

Sec. 505.  RCW 82.04.260 and 2009 c 479 s 64, 2009 c 461 s 1, and 2009 c 162 s 34 are each reenacted and amended to read as follows:

      (1) Upon every person engaging within this state in the business of manufacturing:

      (a) Wheat into flour, barley into pearl barley, soybeans into soybean oil, canola into canola oil, canola meal, or canola by-products, or sunflower seeds into sunflower oil; as to such persons the amount of tax with respect to such business ((shall be)) is equal to the value of the flour, pearl barley, oil, canola meal, or canola by-product manufactured, multiplied by the rate of 0.138 percent;

      (b) Beginning July 1, 2012, seafood products that remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing by that person; or selling manufactured seafood products that remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing, to purchasers who transport in the ordinary course of business the goods out of this state; as to such persons the amount of tax with respect to such business ((shall be)) is equal to the value of the products manufactured or the gross proceeds derived from such sales, multiplied by the rate of 0.138 percent.  Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;

      (c) Beginning July 1, 2012, dairy products that as of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 131, 133, and 135, including by-products from the manufacturing of the dairy products such as whey and casein; or selling the same to purchasers who transport in the ordinary course of business the goods out of state; as to such persons the tax imposed ((shall be)) is equal to the value of the products manufactured or the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.  Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;

      (d)(i) Beginning July 1, 2012, fruit((s)) or vegetable((s)) products by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables, or selling at wholesale fruit((s)) or vegetable((s)) products manufactured by the seller by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables and sold to purchasers who transport in the ordinary course of business the goods out of this state; as to such persons the amount of tax with respect to such business ((shall be)) is equal to the value of the products manufactured or the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.  Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;

(ii) For purposes of this subsection, "fruit or vegetable products" means:
      (A) Products comprised exclusively of fruits, vegetables, or both; or
      (B) Products comprised of fruits, vegetables, or both, and which may also contain water, sugar, salt, seasonings, preservatives, binders, stabilizers, flavorings, yeast, and similar substances.  However, the amount of all ingredients contained in the product, other than fruits, vegetables, and water, may not exceed the amount of fruits and vegetables contained in the product measured by weight or volume;
      (iii) "Fruit and vegetable products" includes only products that are intended for human consumption as food or animal consumption as feed;

      (e) Until July 1, 2009, alcohol fuel, biodiesel fuel, or biodiesel feedstock, as those terms are defined in RCW 82.29A.135; as to such persons the amount of tax with respect to the business ((shall be)) is equal to the value of alcohol fuel, biodiesel fuel, or biodiesel feedstock manufactured, multiplied by the rate of 0.138 percent; and

      (f) Alcohol fuel or wood biomass fuel, as those terms are defined in RCW 82.29A.135; as to such persons the amount of tax with respect to the business ((shall be)) is equal to the value of alcohol fuel or wood biomass fuel manufactured, multiplied by the rate of 0.138 percent.

      (2) Upon every person engaging within this state in the business of splitting or processing dried peas; as to such persons the amount of tax with respect to such business ((shall be)) is equal to the value of the peas split or processed, multiplied by the rate of 0.138 percent.

      (3) Upon every nonprofit corporation and nonprofit association engaging within this state in research and development, as to such corporations and associations, the amount of tax with respect to such activities ((shall be)) is equal to the gross income derived from such activities multiplied by the rate of 0.484 percent.

      (4) ((Upon every person engaging within this state in the business of slaughtering, breaking and/or processing perishable meat products and/or selling the same at wholesale only and not at retail; as to such persons the tax imposed shall be equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.
      (5))) Upon every person engaging within this state in the business of acting as a travel agent or tour operator; as to such persons the amount of the tax with respect to such activities ((shall be)) is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.

      (((6))) (5) Upon every person engaging within this state in business as an international steamship agent, international customs house broker, international freight forwarder, vessel and/or cargo charter broker in foreign commerce, and/or international air cargo agent; as to such persons the amount of the tax with respect to only international activities ((shall be)) is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.

      (((7))) (6) Upon every person engaging within this state in the business of stevedoring and associated activities pertinent to the movement of goods and commodities in waterborne interstate or foreign commerce; as to such persons the amount of tax with respect to such business ((shall be)) is equal to the gross proceeds derived from such activities multiplied by the rate of 0.275 percent.  Persons subject to taxation under this subsection ((shall be)) are exempt from payment of taxes imposed by chapter 82.16 RCW for that portion of their business subject to taxation under this subsection.  Stevedoring and associated activities pertinent to the conduct of goods and commodities in waterborne interstate or foreign commerce are defined as all activities of a labor, service or transportation nature whereby cargo may be loaded or unloaded to or from vessels or barges, passing over, onto or under a wharf, pier, or similar structure; cargo may be moved to a warehouse or similar holding or storage yard or area to await further movement in import or export or may move to a consolidation freight station and be stuffed, unstuffed, containerized, separated or otherwise segregated or aggregated for delivery or loaded on any mode of transportation for delivery to its consignee.  Specific activities included in this definition are:  Wharfage, handling, loading, unloading, moving of cargo to a convenient place of delivery to the consignee or a convenient place for further movement to export mode; documentation services in connection with the receipt, delivery, checking, care, custody and control of cargo required in the transfer of cargo; imported automobile handling prior to delivery to consignee; terminal stevedoring and incidental vessel services, including but not limited to plugging and unplugging refrigerator service to containers, trailers, and other refrigerated cargo receptacles, and securing ship hatch covers.

      (((8))) (7)(a) Upon every person engaging within this state in the business of disposing of low-level waste, as defined in RCW 43.145.010; as to such persons the amount of the tax with respect to such business ((shall be)) is equal to the gross income of the business, excluding any fees imposed under chapter 43.200 RCW, multiplied by the rate of 3.3 percent.

(b) If the gross income of the taxpayer is attributable to activities both within and without this state, the gross income attributable to this state ((shall)) must be determined in accordance with the methods of apportionment required under RCW 82.04.460.

      (((9))) (8) Upon every person engaging within this state as an insurance producer or title insurance agent licensed under chapter 48.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; as to such persons, the amount of the tax with respect to such licensed activities ((shall be)) is equal to the gross income of such business multiplied by the rate of 0.484 percent.

      (((10))) (9) Upon every person engaging within this state in business as a hospital, as defined in chapter 70.41 RCW, that is operated as a nonprofit corporation or by the state or any of its political subdivisions, as to such persons, the amount of tax with respect to such activities ((shall be)) is equal to the gross income of the business multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 percent thereafter.

      (((11))) (10)(a) Beginning October 1, 2005, upon every person engaging within this state in the business of manufacturing commercial airplanes, or components of such airplanes, or making sales, at retail or wholesale, of commercial airplanes or components of such airplanes, manufactured by the seller, as to such persons the amount of tax with respect to such business ((shall)), in the case of manufacturers, ((be)) is equal to the value of the product manufactured and the gross proceeds of sales of the product manufactured, or in the case of processors for hire, ((be)) is equal to the gross income of the business, multiplied by the rate of:

      (i) 0.4235 percent from October 1, 2005, through ((the later of)) June 30, 2007; and

      (ii) 0.2904 percent beginning July 1, 2007.

      (b) Beginning July 1, 2008, upon every person who is not eligible to report under the provisions of (a) of this subsection (((11))) (10) and is engaging within this state in the business of manufacturing tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes, or making sales, at retail or wholesale, of such tooling manufactured by the seller, as to such persons the amount of tax with respect to such business ((shall)), in the case of manufacturers, ((be)) is equal to the value of the product manufactured and the gross proceeds of sales of the product manufactured, or in the case of processors for hire, ((be)) is equal to the gross income of the business, multiplied by the rate of 0.2904 percent.

      (c) For the purposes of this subsection (((11))) (10), "commercial airplane" and "component" have the same meanings as provided in RCW 82.32.550.

      (d) In addition to all other requirements under this title, a person eligible for the tax rate under this subsection (((11))) (10) must report as required under RCW 82.32.545.

      (e) This subsection (((11))) (10) does not apply on and after July 1, 2024.

      (((12))) (11)(a) Until July 1, 2024, upon every person engaging within this state in the business of extracting timber or extracting for hire timber; as to such persons the amount of tax with respect to the business ((shall)), in the case of extractors, ((be)) is equal to the value of products, including by-products, extracted, or in the case of extractors for hire, ((be)) is equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.

      (b) Until July 1, 2024, upon every person engaging within this state in the business of manufacturing or processing for hire:  (i) Timber into timber products or wood products; or (ii) timber products into other timber products or wood products; as to such persons the amount of the tax with respect to the business ((shall)), in the case of manufacturers, ((be)) is equal to the value of products, including by-products, manufactured, or in the case of processors for hire, ((be)) is equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.

      (c) Until July 1, 2024, upon every person engaging within this state in the business of selling at wholesale:  (i) Timber extracted by that person; (ii) timber products manufactured by that person from timber or other timber products; or (iii) wood products manufactured by that person from timber or timber products; as to such persons the amount of the tax with respect to the business ((shall be)) is equal to the gross proceeds of sales of the timber, timber products, or wood products multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.

      (d) Until July 1, 2024, upon every person engaging within this state in the business of selling standing timber; as to such persons the amount of the tax with respect to the business ((shall be)) is equal to the gross income of the business multiplied by the rate of 0.2904 percent.  For purposes of this subsection (((12))) (11)(d), "selling standing timber" means the sale of timber apart from the land, where the buyer is required to sever the timber within thirty months from the date of the original contract, regardless of the method of payment for the timber and whether title to the timber transfers before, upon, or after severance.

      (e) For purposes of this subsection, the following definitions apply:

      (i) "Biocomposite surface products" means surface material products containing, by weight or volume, more than fifty percent recycled paper and that also use nonpetroleum‑based phenolic resin as a bonding agent.

      (ii) "Paper and paper products" means products made of interwoven cellulosic fibers held together largely by hydrogen bonding.  "Paper and paper products" includes newsprint; office, printing, fine, and pressure-sensitive papers; paper napkins, towels, and toilet tissue; kraft bag, construction, and other kraft industrial papers; paperboard, liquid packaging containers, containerboard, corrugated, and solid-fiber containers including linerboard and corrugated medium; and related types of cellulosic products containing primarily, by weight or volume, cellulosic materials.  "Paper and paper products" does not include books, newspapers, magazines, periodicals, and other printed publications, advertising materials, calendars, and similar types of printed materials.

      (iii) "Recycled paper" means paper and paper products having fifty percent or more of their fiber content that comes from postconsumer waste.  For purposes of this subsection (((12))) (11)(e)(iii), "postconsumer waste" means a finished material that would normally be disposed of as solid waste, having completed its life cycle as a consumer item.

      (iv) "Timber" means forest trees, standing or down, on privately or publicly owned land.  "Timber" does not include Christmas trees that are cultivated by agricultural methods or short-rotation hardwoods as defined in RCW 84.33.035.

      (v) "Timber products" means:

      (A) Logs, wood chips, sawdust, wood waste, and similar products obtained wholly from the processing of timber, short-rotation hardwoods as defined in RCW 84.33.035, or both;

      (B) Pulp, including market pulp and pulp derived from recovered paper or paper products; and

      (C) Recycled paper, but only when used in the manufacture of biocomposite surface products.

      (vi) "Wood products" means paper and paper products; dimensional lumber; engineered wood products such as particleboard, oriented strand board, medium density fiberboard, and plywood; wood doors; wood windows; and biocomposite surface products.

      (((13))) (12) Upon every person engaging within this state in inspecting, testing, labeling, and storing canned salmon owned by another person, as to such persons, the amount of tax with respect to such activities ((shall be)) is equal to the gross income derived from such activities multiplied by the rate of 0.484 percent.

      (((14))) (13) Upon every person engaging within this state in the business of printing a newspaper, publishing a newspaper, or both, the amount of tax on such business is equal to the gross income of the business multiplied by the rate of 0.2904 percent.

Sec. 506.  RCW 82.04.260 and 2010 c 114 (SHB 3066) s 107 are each amended to read as follows:

      (1) Upon every person engaging within this state in the business of manufacturing:

      (a) Wheat into flour, barley into pearl barley, soybeans into soybean oil, canola into canola oil, canola meal, or canola by-products, or sunflower seeds into sunflower oil; as to such persons the amount of tax with respect to such business is equal to the value of the flour, pearl barley, oil, canola meal, or canola by-product manufactured, multiplied by the rate of 0.138 percent;

      (b) Beginning July 1, 2012, seafood products that remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing by that person; or selling manufactured seafood products that remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing, to purchasers who transport in the ordinary course of business the goods out of this state; as to such persons the amount of tax with respect to such business is equal to the value of the products manufactured or the gross proceeds derived from such sales, multiplied by the rate of 0.138 percent.  Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;

      (c) Beginning July 1, 2012, dairy products that as of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 131, 133, and 135, including by-products from the manufacturing of the dairy products such as whey and casein; or selling the same to purchasers who transport in the ordinary course of business the goods out of state; as to such persons the tax imposed is equal to the value of the products manufactured or the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.  Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;

      (d)(i) Beginning July 1, 2012, fruit((s)) or vegetable((s)) products by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables, or selling at wholesale fruit((s)) or vegetable((s)) products manufactured by the seller by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables and sold to purchasers who transport in the ordinary course of business the goods out of this state; as to such persons the amount of tax with respect to such business is equal to the value of the products manufactured or the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.  Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;

(ii) For purposes of this subsection, "fruit or vegetable products" means:
      (A) Products comprised exclusively of fruits, vegetables, or both; or
      (B) Products comprised of fruits, vegetables, or both, and which may also contain water, sugar, salt, seasonings, preservatives, binders, stabilizers, flavorings, yeast, and similar substances.  However, the amount of all ingredients contained in the product, other than fruits, vegetables, and water, may not exceed the amount of fruits and vegetables contained in the product measured by weight or volume;
      (iii) "Fruit and vegetable products" includes only products that are intended for human consumption as food or animal consumption as feed;

      (e) Until July 1, 2009, alcohol fuel, biodiesel fuel, or biodiesel feedstock, as those terms are defined in RCW 82.29A.135; as to such persons the amount of tax with respect to the business is equal to the value of alcohol fuel, biodiesel fuel, or biodiesel feedstock manufactured, multiplied by the rate of 0.138 percent; and

      (f) Wood biomass fuel as defined in RCW 82.29A.135; as to such persons the amount of tax with respect to the business is equal to the value of wood biomass fuel manufactured, multiplied by the rate of 0.138 percent.

      (2) Upon every person engaging within this state in the business of splitting or processing dried peas; as to such persons the amount of tax with respect to such business is equal to the value of the peas split or processed, multiplied by the rate of 0.138 percent.

      (3) Upon every nonprofit corporation and nonprofit association engaging within this state in research and development, as to such corporations and associations, the amount of tax with respect to such activities is equal to the gross income derived from such activities multiplied by the rate of 0.484 percent.

      (4) ((Upon every person engaging within this state in the business of slaughtering, breaking and/or processing perishable meat products and/or selling the same at wholesale only and not at retail; as to such persons the tax imposed is equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.
      (5))) Upon every person engaging within this state in the business of acting as a travel agent or tour operator; as to such persons the amount of the tax with respect to such activities is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.

      (((6))) (5) Upon every person engaging within this state in business as an international steamship agent, international customs house broker, international freight forwarder, vessel and/or cargo charter broker in foreign commerce, and/or international air cargo agent; as to such persons the amount of the tax with respect to only international activities is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.

      (((7))) (6) Upon every person engaging within this state in the business of stevedoring and associated activities pertinent to the movement of goods and commodities in waterborne interstate or foreign commerce; as to such persons the amount of tax with respect to such business is equal to the gross proceeds derived from such activities multiplied by the rate of 0.275 percent.  Persons subject to taxation under this subsection are exempt from payment of taxes imposed by chapter 82.16 RCW for that portion of their business subject to taxation under this subsection.  Stevedoring and associated activities pertinent to the conduct of goods and commodities in waterborne interstate or foreign commerce are defined as all activities of a labor, service or transportation nature whereby cargo may be loaded or unloaded to or from vessels or barges, passing over, onto or under a wharf, pier, or similar structure; cargo may be moved to a warehouse or similar holding or storage yard or area to await further movement in import or export or may move to a consolidation freight station and be stuffed, unstuffed, containerized, separated or otherwise segregated or aggregated for delivery or loaded on any mode of transportation for delivery to its consignee.  Specific activities included in this definition are:  Wharfage, handling, loading, unloading, moving of cargo to a convenient place of delivery to the consignee or a convenient place for further movement to export mode; documentation services in connection with the receipt, delivery, checking, care, custody and control of cargo required in the transfer of cargo; imported automobile handling prior to delivery to consignee; terminal stevedoring and incidental vessel services, including but not limited to plugging and unplugging refrigerator service to containers, trailers, and other refrigerated cargo receptacles, and securing ship hatch covers.

      (((8))) (7)(a) Upon every person engaging within this state in the business of disposing of low-level waste, as defined in RCW 43.145.010; as to such persons the amount of the tax with respect to such business is equal to the gross income of the business, excluding any fees imposed under chapter 43.200 RCW, multiplied by the rate of 3.3 percent.

(b) If the gross income of the taxpayer is attributable to activities both within and without this state, the gross income attributable to this state must be determined in accordance with the methods of apportionment required under RCW 82.04.460.

      (((9))) (8) Upon every person engaging within this state as an insurance producer or title insurance agent licensed under chapter 48.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; as to such persons, the amount of the tax with respect to such licensed activities is equal to the gross income of such business multiplied by the rate of 0.484 percent.

      (((10))) (9) Upon every person engaging within this state in business as a hospital, as defined in chapter 70.41 RCW, that is operated as a nonprofit corporation or by the state or any of its political subdivisions, as to such persons, the amount of tax with respect to such activities is equal to the gross income of the business multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 percent thereafter.

      (((11))) (10)(a) Beginning October 1, 2005, upon every person engaging within this state in the business of manufacturing commercial airplanes, or components of such airplanes, or making sales, at retail or wholesale, of commercial airplanes or components of such airplanes, manufactured by the seller, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured and the gross proceeds of sales of the product manufactured, or in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of:

      (i) 0.4235 percent from October 1, 2005, through June 30, 2007; and

      (ii) 0.2904 percent beginning July 1, 2007.

      (b) Beginning July 1, 2008, upon every person who is not eligible to report under the provisions of (a) of this subsection (((11))) (10) and is engaging within this state in the business of manufacturing tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes, or making sales, at retail or wholesale, of such tooling manufactured by the seller, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured and the gross proceeds of sales of the product manufactured, or in the case of processors for hire, be equal to the gross income of the business, multiplied by the rate of 0.2904 percent.

      (c) For the purposes of this subsection (((11))) (10), "commercial airplane" and "component" have the same meanings as provided in RCW 82.32.550.

      (d) In addition to all other requirements under this title, a person reporting under the tax rate provided in this subsection (((11))) (10) must file a complete annual report with the department under RCW 82.32.--- (section 103, chapter 114 (SHB 3066), Laws of 2010).

      (e) This subsection (((11))) (10) does not apply on and after July 1, 2024.

      (((12))) (11)(a) Until July 1, 2024, upon every person engaging within this state in the business of extracting timber or extracting for hire timber; as to such persons the amount of tax with respect to the business is, in the case of extractors, equal to the value of products, including by-products, extracted, or in the case of extractors for hire, equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.

      (b) Until July 1, 2024, upon every person engaging within this state in the business of manufacturing or processing for hire:  (i) Timber into timber products or wood products; or (ii) timber products into other timber products or wood products; as to such persons the amount of the tax with respect to the business is, in the case of manufacturers, equal to the value of products, including by-products, manufactured, or in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.

      (c) Until July 1, 2024, upon every person engaging within this state in the business of selling at wholesale:  (i) Timber extracted by that person; (ii) timber products manufactured by that person from timber or other timber products; or (iii) wood products manufactured by that person from timber or timber products; as to such persons the amount of the tax with respect to the business is equal to the gross proceeds of sales of the timber, timber products, or wood products multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.

      (d) Until July 1, 2024, upon every person engaging within this state in the business of selling standing timber; as to such persons the amount of the tax with respect to the business is equal to the gross income of the business multiplied by the rate of 0.2904 percent.  For purposes of this subsection (((12))) (11)(d), "selling standing timber" means the sale of timber apart from the land, where the buyer is required to sever the timber within thirty months from the date of the original contract, regardless of the method of payment for the timber and whether title to the timber transfers before, upon, or after severance.

      (e) For purposes of this subsection, the following definitions apply:

      (i) "Biocomposite surface products" means surface material products containing, by weight or volume, more than fifty percent recycled paper and that also use nonpetroleum‑based phenolic resin as a bonding agent.

      (ii) "Paper and paper products" means products made of interwoven cellulosic fibers held together largely by hydrogen bonding.  "Paper and paper products" includes newsprint; office, printing, fine, and pressure-sensitive papers; paper napkins, towels, and toilet tissue; kraft bag, construction, and other kraft industrial papers; paperboard, liquid packaging containers, containerboard, corrugated, and solid-fiber containers including linerboard and corrugated medium; and related types of cellulosic products containing primarily, by weight or volume, cellulosic materials.  "Paper and paper products" does not include books, newspapers, magazines, periodicals, and other printed publications, advertising materials, calendars, and similar types of printed materials.

      (iii) "Recycled paper" means paper and paper products having fifty percent or more of their fiber content that comes from postconsumer waste.  For purposes of this subsection (((12))) (11)(e)(iii), "postconsumer waste" means a finished material that would normally be disposed of as solid waste, having completed its life cycle as a consumer item.

      (iv) "Timber" means forest trees, standing or down, on privately or publicly owned land.  "Timber" does not include Christmas trees that are cultivated by agricultural methods or short-rotation hardwoods as defined in RCW 84.33.035.

      (v) "Timber products" means:

      (A) Logs, wood chips, sawdust, wood waste, and similar products obtained wholly from the processing of timber, short-rotation hardwoods as defined in RCW 84.33.035, or both;

      (B) Pulp, including market pulp and pulp derived from recovered paper or paper products; and

      (C) Recycled paper, but only when used in the manufacture of biocomposite surface products.

      (vi) "Wood products" means paper and paper products; dimensional lumber; engineered wood products such as particleboard, oriented strand board, medium density fiberboard, and plywood; wood doors; wood windows; and biocomposite surface products.

      (f) Except for small harvesters as defined in RCW 84.33.035, a person reporting under the tax rate provided in this subsection (((12))) (11) must file a complete annual survey with the department under RCW 82.32.--- (section 102, chapter 114 (SHB 3066), Laws of 2010).

      (((13))) (12) Upon every person engaging within this state in inspecting, testing, labeling, and storing canned salmon owned by another person, as to such persons, the amount of tax with respect to such activities is equal to the gross income derived from such activities multiplied by the rate of 0.484 percent.

      (((14))) (13)(a) Upon every person engaging within this state in the business of printing a newspaper, publishing a newspaper, or both, the amount of tax on such business is equal to the gross income of the business multiplied by the rate of 0.2904 percent.

      (b) A person reporting under the tax rate provided in this subsection (((14))) (13) must file a complete annual report with the department under RCW 82.32.--- (section 103, chapter 114 (SHB 3066), Laws of 2010).

Sec. 507.  RCW 82.04.250 and 2008 c 81 s 5 are each amended to read as follows:

      (1) Upon every person engaging within this state in the business of making sales at retail, except persons taxable as retailers under other provisions of this chapter, as to such persons, the amount of tax with respect to such business ((shall be)) is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.471 percent.

      (2) Upon every person engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, except persons taxable under RCW 82.04.260(((11))) (10) or subsection (3) of this section, as to such persons, the amount of tax with respect to such business ((shall be)) is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.484 percent.

      (3) Upon every person classified by the federal aviation administration as a federal aviation regulation part 145 certificated repair station and that is engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, as to such persons, the amount of tax with respect to such business ((shall be)) is equal to the gross proceeds of sales of the business, multiplied by the rate of .2904 percent.

Sec. 508.  RCW 82.04.250 and 2010 1st sp.s. c 11 (SSB 6712) s 1 are each amended to read as follows:

      (1) Upon every person engaging within this state in the business of making sales at retail, except persons taxable as retailers under other provisions of this chapter, as to such persons, the amount of tax with respect to such business is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.471 percent.

      (2) Upon every person engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, except persons taxable under RCW 82.04.260(((11))) (10) or subsection (3) of this section, as to such persons, the amount of tax with respect to such business is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.484 percent.

      (3) Until July 1, 2024, upon every person classified by the federal aviation administration as a federal aviation regulation part 145 certificated repair station and that is engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, as to such persons, the amount of tax with respect to such business is equal to the gross proceeds of sales of the business, multiplied by the rate of .2904 percent.

Sec. 509.  RCW 82.04.250 and 2007 c 54 s 5 are each amended to read as follows:

      (1) Upon every person engaging within this state in the business of making sales at retail, except persons taxable as retailers under other provisions of this chapter, as to such persons, the amount of tax with respect to such business ((shall be)) is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.471 percent.

      (2) Upon every person engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, except persons taxable under RCW 82.04.260(((11))) (10), as to such persons, the amount of tax with respect to such business ((shall be)) is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.484 percent.

Sec. 510.  RCW 82.04.261 and 2007 c 54 s 7 and 2007 c 48 s 4 are each reenacted and amended to read as follows:

      (1) In addition to the taxes imposed under RCW 82.04.260(((12))) (11), a surcharge is imposed on those persons who are subject to any of the taxes imposed under RCW 82.04.260(((12))) (11).  Except as otherwise provided in this section, the surcharge is equal to 0.052 percent.  The surcharge is added to the rates provided in RCW 82.04.260(((12))) (11) (a), (b), (c), and (d).  The surcharge and this section expire July 1, 2024.

      (2) All receipts from the surcharge imposed under this section ((shall)) must be deposited into the forest and fish support account created in RCW 76.09.405.

      (3)(a) The surcharge imposed under this section ((shall be)) is suspended if:

      (i) Receipts from the surcharge total at least eight million dollars during any fiscal biennium; or

      (ii) The office of financial management certifies to the department that the federal government has appropriated at least two million dollars for participation in forest and fish report‑related activities by federally recognized Indian tribes located within the geographical boundaries of the state of Washington for any federal fiscal year.

      (b)(i) The suspension of the surcharge under (a)(i) of this subsection (3) ((shall)) takes effect on the first day of the calendar month that is at least thirty days after the end of the month during which the department determines that receipts from the surcharge total at least eight million dollars during the fiscal biennium.  The surcharge ((shall be)) is imposed again at the beginning of the following fiscal biennium.

      (ii) The suspension of the surcharge under (a)(ii) of this subsection (3) ((shall)) takes effect on the later of the first day of October of any federal fiscal year for which the federal government appropriates at least two million dollars for participation in forest and fish report‑related activities by federally recognized Indian tribes located within the geographical boundaries of the state of Washington, or the first day of a calendar month that is at least thirty days following the date that the office of financial management makes a certification to the department under subsection (5) of this section.  The surcharge ((shall be)) is imposed again on the first day of the following July.

      (4)(a) If, by October 1st of any federal fiscal year, the office of financial management certifies to the department that the federal government has appropriated funds for participation in forest and fish report‑related activities by federally recognized Indian tribes located within the geographical boundaries of the state of Washington but the amount of the appropriation is less than two million dollars, the department ((shall)) must adjust the surcharge in accordance with this subsection.

      (b) The department ((shall)) must adjust the surcharge by an amount that the department estimates will cause the amount of funds deposited into the forest and fish support account for the state fiscal year that begins July 1st and that includes the beginning of the federal fiscal year for which the federal appropriation is made, to be reduced by twice the amount of the federal appropriation for participation in forest and fish report-related activities by federally recognized Indian tribes located within the geographical boundaries of the state of Washington.

      (c) Any adjustment in the surcharge ((shall)) takes effect at the beginning of a calendar month that is at least thirty days after the date that the office of financial management makes the certification under subsection (5) of this section.

      (d) The surcharge ((shall be)) is imposed again at the rate provided in subsection (1) of this section on the first day of the following state fiscal year unless the surcharge is suspended under subsection (3) of this section or adjusted for that fiscal year under this subsection.

      (e) Adjustments of the amount of the surcharge by the department are final and ((shall)) may not be used to challenge the validity of the surcharge imposed under this section.

      (f) The department ((shall)) must provide timely notice to affected taxpayers of the suspension of the surcharge or an adjustment of the surcharge.

      (5) The office of financial management ((shall)) must make the certification to the department as to the status of federal appropriations for tribal participation in forest and fish report-related activities.

Sec. 511.  RCW 82.04.298 and 2008 c 49 s 1 are each amended to read as follows:

      (1) The amount of tax with respect to a qualified grocery distribution cooperative's sales of groceries or related goods for resale, excluding items subject to tax under ((RCW 82.04.260(4))) section 502 of this act, to customer-owners of the grocery distribution cooperative is equal to the gross proceeds of sales of the grocery distribution cooperative multiplied by the rate of one and one‑half percent.

      (2) A qualified grocery distribution cooperative is allowed a deduction from the gross proceeds of sales of groceries or related goods for resale, excluding items subject to tax under ((RCW 82.04.260(4))) section 502 of this act, to customer-owners of the grocery distribution cooperative that is equal to the portion of the gross proceeds of sales for resale that represents the actual cost of the merchandise sold by the grocery distribution cooperative to customer-owners.

      (3) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

      (a) "Grocery distribution cooperative" means an entity that sells groceries and related items to customer-owners of the grocery distribution cooperative and has customer-owners, in the aggregate, who own a majority of the outstanding ownership interests of the grocery distribution cooperative or of the entity controlling the grocery distribution cooperative.  "Grocery distribution cooperative" includes an entity that controls a grocery distribution cooperative.

      (b) "Qualified grocery distribution cooperative" means:

      (i) A grocery distribution cooperative that has been determined by a court of record of the state of Washington to be not engaged in wholesaling or making sales at wholesale, within the meaning of RCW 82.04.270 or any similar provision of a municipal ordinance that imposes a tax on gross receipts, gross proceeds of sales, or gross income, with respect to purchases made by customer-owners, and subsequently changes its form of doing business to make sales at wholesale of groceries or related items to its customer-owners; or

      (ii) A grocery distribution cooperative that has acquired substantially all of the assets of a grocery distribution cooperative described in (b)(i) of this subsection.

      (c) "Customer-owner" means a person who has an ownership interest in a grocery distribution cooperative and purchases groceries and related items at wholesale from that grocery distribution cooperative.

      (d) "Controlling" means holding fifty percent or more of the voting interests of an entity and having at least equal power to direct or cause the direction of the management and policies of the entity, whether through the ownership of voting securities, by contract, or otherwise.

Sec. 512.  RCW 82.04.334 and 2007 c 48 s 3 are each amended to read as follows:

      This chapter does not apply to any sale of standing timber excluded from the definition of "sale" in RCW 82.45.010(3).  The definitions in RCW 82.04.260(((12))) (11) apply to this section.

Sec. 513.  RCW 82.04.440 and 2006 c 300 s 8 and 2006 c 84 s 6 are each reenacted and amended to read as follows:

      (1) Every person engaged in activities that are subject to tax under two or more provisions of RCW 82.04.230 through 82.04.298, inclusive, ((shall be)) is taxable under each provision applicable to those activities.

      (2) Persons taxable under RCW 82.04.2909(2), 82.04.250, 82.04.270, 82.04.294(2), or 82.04.260 (1)(b), (c), (((4),)) or (d), (10), or (11), or (((12))) section 502(2) of this act with respect to selling products in this state, including those persons who are also taxable under RCW 82.04.261, ((shall be)) are allowed a credit against those taxes for any (a) manufacturing taxes paid with respect to the manufacturing of products so sold in this state, and/or (b) extracting taxes paid with respect to the extracting of products so sold in this state or ingredients of products so sold in this state.  Extracting taxes taken as credit under subsection (3) of this section may also be taken under this subsection, if otherwise allowable under this subsection.  The amount of the credit ((shall)) may not exceed the tax liability arising under this chapter with respect to the sale of those products.

      (3) Persons taxable as manufacturers under RCW 82.04.240 or 82.04.260 (1)(b) or (((12))) (11), including those persons who are also taxable under RCW 82.04.261, ((shall be)) are allowed a credit against those taxes for any extracting taxes paid with respect to extracting the ingredients of the products so manufactured in this state.  The amount of the credit ((shall)) may not exceed the tax liability arising under this chapter with respect to the manufacturing of those products.

      (4) Persons taxable under RCW 82.04.230, 82.04.240, 82.04.2909(1), 82.04.294(1), 82.04.2404, or 82.04.260 (1), (2), (((4),)) (10), or (11), or (((12))) section 502(1) of this act, including those persons who are also taxable under RCW 82.04.261, with respect to extracting or manufacturing products in this state ((shall be)) are allowed a credit against those taxes for any (i) gross receipts taxes paid to another state with respect to the sales of the products so extracted or manufactured in this state, (ii) manufacturing taxes paid with respect to the manufacturing of products using ingredients so extracted in this state, or (iii) manufacturing taxes paid with respect to manufacturing activities completed in another state for products so manufactured in this state.  The amount of the credit ((shall)) may not exceed the tax liability arising under this chapter with respect to the extraction or manufacturing of those products.

      (5) For the purpose of this section:

      (a) "Gross receipts tax" means a tax:

      (i) Which is imposed on or measured by the gross volume of business, in terms of gross receipts or in other terms, and in the determination of which the deductions allowed would not constitute the tax an income tax or value added tax; and

      (ii) Which is also not, pursuant to law or custom, separately stated from the sales price.

      (b) "State" means (i) the state of Washington, (ii) a state of the United States other than Washington, or any political subdivision of such other state, (iii) the District of Columbia, and (iv) any foreign country or political subdivision thereof.

      (c) "Manufacturing tax" means a gross receipts tax imposed on the act or privilege of engaging in business as a manufacturer, and includes (i) the taxes imposed in RCW 82.04.240, 82.04.2404, 82.04.2909(1), 82.04.260 (1), (2), (((4),)) (10), and (11), ((and (12))) section 502(1) of this act, and 82.04.294(1); (ii) the tax imposed under RCW 82.04.261 on persons who are engaged in business as a manufacturer; and (iii) similar gross receipts taxes paid to other states.

      (d) "Extracting tax" means a gross receipts tax imposed on the act or privilege of engaging in business as an extractor, and includes (i) the tax imposed on extractors in RCW 82.04.230 and 82.04.260(((12))) (11); (ii) the tax imposed under RCW 82.04.261 on persons who are engaged in business as an extractor; and (iii) similar gross receipts taxes paid to other states.

      (e) "Business", "manufacturer", "extractor", and other terms used in this section have the meanings given in RCW 82.04.020 through 82.04.212, notwithstanding the use of those terms in the context of describing taxes imposed by other states.

Sec. 514.  RCW 82.04.4463 and 2008 c 81 s 8 are each amended to read as follows:

      (1) In computing the tax imposed under this chapter, a credit is allowed for property taxes and leasehold excise taxes paid during the calendar year.

      (2) The credit is equal to:

      (a)(i)(A) Property taxes paid on buildings, and land upon which the buildings are located, constructed after December 1, 2003, and used exclusively in manufacturing commercial airplanes or components of such airplanes; and

      (B) Leasehold excise taxes paid with respect to buildings constructed after January 1, 2006, the land upon which the buildings are located, or both, if the buildings are used exclusively in manufacturing commercial airplanes or components of such airplanes; and

      (C) Property taxes or leasehold excise taxes paid on, or with respect to, buildings constructed after June 30, 2008, the land upon which the buildings are located, or both, and used exclusively for aerospace product development or in providing aerospace services, by persons not within the scope of (a)(i)(A) and (B) of this subsection (2) and are:  (I) Engaged in manufacturing tooling specifically designed for use in manufacturing commercial airplanes or their components; or (II) taxable under RCW 82.04.290(3) or 82.04.250(3); or

      (ii) Property taxes attributable to an increase in assessed value due to the renovation or expansion, after:  (A) December 1, 2003, of a building used exclusively in manufacturing commercial airplanes or components of such airplanes; and (B) June 30, 2008, of buildings used exclusively for aerospace product development or in providing aerospace services, by persons not within the scope of (a)(ii)(A) of this subsection (2) and are:  (I) Engaged in manufacturing tooling specifically designed for use in manufacturing commercial airplanes or their components; or (II) taxable under RCW 82.04.290(3) or 82.04.250(3); and

      (b) An amount equal to:

      (i)(A) Property taxes paid, by persons taxable under RCW 82.04.260(((11))) (10)(a), on machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 and acquired after December 1, 2003;

      (B) Property taxes paid, by persons taxable under RCW 82.04.260(((11))) (10)(b), on machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 and acquired after June 30, 2008; or

      (C) Property taxes paid, by persons taxable under RCW ((82.04.0250(3) [82.04.250(3)])) 82.04.250(3) or 82.04.290(3), on computer hardware, computer peripherals, and software exempt under RCW 82.08.975 or 82.12.975 and acquired after June 30, 2008.

      (ii) For purposes of determining the amount eligible for credit under (i)(A) and (B) of this subsection (2)(b), the amount of property taxes paid is multiplied by a fraction.

      (((I))) (A) The numerator of the fraction is the total taxable amount subject to the tax imposed under RCW 82.04.260(((11))) (10) (a) or (b) on the applicable business activities of manufacturing commercial airplanes, components of such airplanes, or tooling specifically designed for use in the manufacturing of commercial airplanes or components of such airplanes.

      (((II))) (B) The denominator of the fraction is the total taxable amount subject to the tax imposed under all manufacturing classifications in chapter 82.04 RCW.

      (((III))) (C) For purposes of both the numerator and denominator of the fraction, the total taxable amount refers to the total taxable amount required to be reported on the person's returns for the calendar year before the calendar year in which the credit under this section is earned.  The department may provide for an alternative method for calculating the numerator in cases where the tax rate provided in RCW 82.04.260(((11))) (10) for manufacturing was not in effect during the full calendar year before the calendar year in which the credit under this section is earned.

      (((IV))) (D) No credit is available under (b)(i)(A) or (B) of this subsection (2) if either the numerator or the denominator of the fraction is zero.  If the fraction is greater than or equal to nine-tenths, then the fraction is rounded to one. 

      (((V))) (E) As used in (((III))) (b)(ii)(C) of this subsection (2)(((b)(ii)(C))), "returns" means the tax returns for which the tax imposed under this chapter is reported to the department.

      (3) The definitions in this subsection apply throughout this section, unless the context clearly indicates otherwise.

      (a) "Aerospace product development" has the same meaning as provided in RCW 82.04.4461.

      (b) "Aerospace services" has the same meaning given in RCW 82.08.975.

      (c) "Commercial airplane" and "component" have the same meanings as provided in RCW 82.32.550.

      (4) A credit earned during one calendar year may be carried over to be credited against taxes incurred in a subsequent calendar year, but may not be carried over a second year.  No refunds may be granted for credits under this section.

      (5) In addition to all other requirements under this title, a person taking the credit under this section must report as required under RCW 82.32.545.

      (6) This section expires July 1, 2024.

Sec. 515.  RCW 82.04.4463 and 2010 c 114 (SHB 3066) s 116 are each amended to read as follows:

      (1) In computing the tax imposed under this chapter, a credit is allowed for property taxes and leasehold excise taxes paid during the calendar year.

      (2) The credit is equal to:

      (a)(i)(A) Property taxes paid on buildings, and land upon which the buildings are located, constructed after December 1, 2003, and used exclusively in manufacturing commercial airplanes or components of such airplanes; and

      (B) Leasehold excise taxes paid with respect to buildings constructed after January 1, 2006, the land upon which the buildings are located, or both, if the buildings are used exclusively in manufacturing commercial airplanes or components of such airplanes; and

      (C) Property taxes or leasehold excise taxes paid on, or with respect to, buildings constructed after June 30, 2008, the land upon which the buildings are located, or both, and used exclusively for aerospace product development, manufacturing tooling specifically designed for use in manufacturing commercial airplanes or their components, or in providing aerospace services, by persons not within the scope of (a)(i)(A) and (B) of this subsection (2) and are taxable under RCW 82.04.290(3), 82.04.260(((11))) (10)(b), or 82.04.250(3); or

      (ii) Property taxes attributable to an increase in assessed value due to the renovation or expansion, after:  (A) December 1, 2003, of a building used exclusively in manufacturing commercial airplanes or components of such airplanes; and (B) June 30, 2008, of buildings used exclusively for aerospace product development, manufacturing tooling specifically designed for use in manufacturing commercial airplanes or their components, or in providing aerospace services, by persons not within the scope of (a)(ii)(A) of this subsection (2) and are taxable under RCW 82.04.290(3), 82.04.260(((11))) (10)(b), or 82.04.250(3); and

      (b) An amount equal to:

      (i)(A) Property taxes paid, by persons taxable under RCW 82.04.260(((11))) (10)(a), on machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 and acquired after December 1, 2003;

      (B) Property taxes paid, by persons taxable under RCW 82.04.260(((11))) (10)(b), on machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 and acquired after June 30, 2008; or

      (C) Property taxes paid, by persons taxable under RCW 82.04.250(3) or 82.04.290(3), on computer hardware, computer peripherals, and software exempt under RCW 82.08.975 or 82.12.975 and acquired after June 30, 2008.

      (ii) For purposes of determining the amount eligible for credit under (i)(A) and (B) of this subsection (2)(b), the amount of property taxes paid is multiplied by a fraction.

      (A) The numerator of the fraction is the total taxable amount subject to the tax imposed under RCW 82.04.260(((11))) (10) (a) or (b) on the applicable business activities of manufacturing commercial airplanes, components of such airplanes, or tooling specifically designed for use in the manufacturing of commercial airplanes or components of such airplanes.

      (B) The denominator of the fraction is the total taxable amount subject to the tax imposed under all manufacturing classifications in chapter 82.04 RCW.

      (C) For purposes of both the numerator and denominator of the fraction, the total taxable amount refers to the total taxable amount required to be reported on the person's returns for the calendar year before the calendar year in which the credit under this section is earned.  The department may provide for an alternative method for calculating the numerator in cases where the tax rate provided in RCW 82.04.260(((11))) (10) for manufacturing was not in effect during the full calendar year before the calendar year in which the credit under this section is earned.

      (D) No credit is available under (b)(i)(A) or (B) of this subsection (2) if either the numerator or the denominator of the fraction is zero.  If the fraction is greater than or equal to nine-tenths, then the fraction is rounded to one. 

      (E) As used in (b)(ii)(C) of this subsection (2)(((b)(ii))), "returns" means the tax returns for which the tax imposed under this chapter is reported to the department.

      (3) The definitions in this subsection apply throughout this section, unless the context clearly indicates otherwise.

      (a) "Aerospace product development" has the same meaning as provided in RCW 82.04.4461.

      (b) "Aerospace services" has the same meaning given in RCW 82.08.975.

      (c) "Commercial airplane" and "component" have the same meanings as provided in RCW 82.32.550.

      (4) A credit earned during one calendar year may be carried over to be credited against taxes incurred in a subsequent calendar year, but may not be carried over a second year.  No refunds may be granted for credits under this section.

      (5) In addition to all other requirements under this title, a person claiming the credit under this section must file a complete annual report with the department under RCW 82.32.--- (section 103, chapter 114 (SHB 3066), Laws of 2010).

      (6) This section expires July 1, 2024.

Sec. 516.  RCW 82.08.806 and 2009 c 461 s 5 are each amended to read as follows:

      (1) The tax levied by RCW 82.08.020 does not apply to sales, to a printer or publisher, of computer equipment, including repair parts and replacement parts for such equipment, when the computer equipment is used primarily in the printing or publishing of any printed material, or to sales of or charges made for labor and services rendered in respect to installing, repairing, cleaning, altering, or improving the computer equipment.  This exemption applies only to computer equipment not otherwise exempt under RCW 82.08.02565.

      (2) A person taking the exemption under this section must keep records necessary for the department to verify eligibility under this section.  This exemption is available only when the purchaser provides the seller with an exemption certificate in a form and manner prescribed by the department.  The seller ((shall)) must retain a copy of the certificate for the seller's files.

      (3) The definitions in this subsection (3) apply throughout this section, unless the context clearly requires otherwise.

      (a) "Computer" has the same meaning as in RCW 82.04.215.

      (b) "Computer equipment" means a computer and the associated physical components that constitute a computer system, including monitors, keyboards, printers, modems, scanners, pointing devices, and other computer peripheral equipment, cables, servers, and routers.  "Computer equipment" also includes digital cameras and computer software.

      (c) "Computer software" has the same meaning as in RCW 82.04.215.

      (d) "Primarily" means greater than fifty percent as measured by time.

      (e) "Printer or publisher" means a person, as defined in RCW 82.04.030, who is subject to tax under RCW 82.04.260(((14))) (13) or 82.04.280(1).

      (4) "Computer equipment" does not include computer equipment that is used primarily for administrative purposes including but not limited to payroll processing, accounting, customer service, telemarketing, and collection.  If computer equipment is used simultaneously for administrative and nonadministrative purposes, the administrative use ((shall)) must be disregarded during the period of simultaneous use for purposes of determining whether the computer equipment is used primarily for administrative purposes.

Sec. 517.  RCW 82.32.550 and 2008 c 81 s 12 are each amended to read as follows:

      (1)(((a) Chapter 1, Laws of 2003 2nd sp. sess. takes effect on the first day of the month in which the governor and a manufacturer of commercial airplanes sign a memorandum of agreement regarding an affirmative final decision to site a significant commercial airplane final assembly facility in Washington state.  The department shall provide notice of the effective date of chapter 1, Laws of 2003 2nd sp. sess. to affected taxpayers, the legislature, and others as deemed appropriate by the department.
      (b) Chapter 1, Laws of 2003 2nd sp. sess. is contingent upon the siting of a significant commercial airplane final assembly facility in the state of Washington.  If a memorandum of agreement under subsection (1) of this section is not signed by June 30, 2005, chapter 1, Laws of 2003 2nd sp. sess. is null and void.
      (c)(i) The rate in RCW 82.04.260(11)(a)(ii) takes effect July 1, 2007.
      (ii) If on December 31, 2007, final assembly of a superefficient airplane has not begun in Washington state, the department shall provide notice of such to affected taxpayers, the legislature, and others as deemed appropriate by the department.
      (2) The definitions in this subsection apply throughout this section.
      (a))) "Commercial airplane" has its ordinary meaning, which is an airplane certified by the federal aviation administration for transporting persons or property, and any military derivative of such an airplane.

      (((b))) (2) "Component" means a part or system certified by the federal aviation administration for installation or assembly into a commercial airplane.

      (((c) "Final assembly of a superefficient airplane" means the activity of assembling an airplane from components parts necessary for its mechanical operation such that the finished commercial airplane is ready to deliver to the ultimate consumer.
      (d) "Significant commercial airplane final assembly facility" means a location with the capacity to produce at least thirty-six superefficient airplanes a year.
      (e) "Siting" means a final decision by a manufacturer to locate a significant commercial airplane final assembly facility in Washington state.
      (f))) (3) "Superefficient airplane" means a twin aisle airplane that carries between two hundred and three hundred fifty passengers, with a range of more than seven thousand two hundred nautical miles, a cruising speed of approximately mach .85, and that uses fifteen to twenty percent less fuel than other similar airplanes on the market.

Sec. 518.  RCW 82.45.195 and 2007 c 48 s 7 are each amended to read as follows:

      A sale of standing timber is exempt from tax under this chapter if the gross income from such sale is taxable under RCW 82.04.260(((12))) (11)(d).

Sec. 519.  RCW 35.102.150 and 2009 c 461 s 4 are each amended to read as follows:

      Notwithstanding RCW 35.102.130, a city that imposes a business and occupation tax must allocate a person's gross income from the activities of printing, and of publishing newspapers, periodicals, or magazines, to the principal place in this state from which the taxpayer's business is directed or managed.  As used in this section, the activities of printing, and of publishing newspapers, periodicals, or magazines are those activities to which the tax rates in RCW 82.04.260(((14))) (13) and 82.04.280(1) apply.

Sec. 520.  RCW 48.14.080 and 2009 c 535 s 1102 are each amended to read as follows:

      (1) As to insurers, other than title insurers and taxpayers under RCW 48.14.0201, the taxes imposed by this title ((shall be)) are in lieu of all other taxes, except as otherwise provided in this section.

      (2) Subsection (1) of this section does not apply with respect to:

      (a) Taxes on real and tangible personal property;

      (b) Excise taxes on the sale, purchase, use, or possession of (i) real property; (ii) tangible personal property; (iii) extended warranties; (iv) services, including digital automated services as defined in RCW 82.04.192; and (v) digital goods and digital codes as those terms are defined in RCW 82.04.192; and

      (c) The tax imposed in RCW 82.04.260(((10))) (9), regarding public and nonprofit hospitals.

      (3) For the purposes of this section, the term "taxes" includes taxes imposed by the state or any county, city, town, municipal corporation, quasi‑municipal corporation, or other political subdivision.

 

PART VI

Suspending the Sales and Use Tax Exemption for Livestock Nutrient Equipment and Facilities

 

Sec. 601.  RCW 82.08.890 and 2009 c 469 s 601 are each amended to read as follows:

      (1) The tax levied by RCW 82.08.020 does not apply to sales to eligible persons of:

      (a) Qualifying livestock nutrient management equipment;

      (b) Labor and services rendered in respect to installing, repairing, cleaning, altering, or improving qualifying livestock nutrient management equipment; and

      (c)(i) Labor and services rendered in respect to repairing, cleaning, altering, or improving of qualifying livestock nutrient management facilities, or to tangible personal property that becomes an ingredient or component of qualifying livestock nutrient management facilities in the course of repairing, cleaning, altering, or improving of such facilities.

      (ii) The exemption provided in this subsection (1)(c) does not apply to the sale of or charge made for:  (A) Labor and services rendered in respect to the constructing of new, or replacing previously existing, qualifying livestock nutrient management facilities; or (B) tangible personal property that becomes an ingredient or component of qualifying livestock nutrient management facilities during the course of constructing new, or replacing previously existing, qualifying livestock nutrient management facilities.

      (2) The exemption provided in subsection (1) of this section applies to sales made after the livestock nutrient management plan is:  (a) Certified under chapter 90.64 RCW; (b) approved as part of the permit issued under chapter 90.48 RCW; or (c) approved as required under subsection (4)(c)(iii) of this section.

      (3)(a) The department of revenue must provide an exemption certificate to an eligible person upon application by that person.  The department of agriculture must provide a list of eligible persons, as defined in subsection (4)(c)(i) and (ii) of this section, to the department of revenue.  Conservation districts must maintain lists of eligible persons as defined in subsection (4)(c)(iii) of this section to allow the department of revenue to verify eligibility.  The application must be in a form and manner prescribed by the department and must contain information regarding the location of the dairy or animal feeding operation and other information the department may require.

      (b) A person claiming an exemption under this section must keep records necessary for the department to verify eligibility under this section.  The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department.  The seller must retain a copy of the certificate for the seller's files.

      (4) The definitions in this subsection apply to this section and RCW 82.12.890 unless the context clearly requires otherwise:

      (a) "Animal feeding operation" means a lot or facility, other than an aquatic animal production facility, where the following conditions are met:

      (i) Animals, other than aquatic animals, have been, are, or will be stabled or confined and fed or maintained for a total of forty-five days or more in any twelve-month period; and

      (ii) Crops, vegetation, forage growth, or postharvest residues are not sustained in the normal growing season over any portion of the lot or facility.

      (b) "Conservation district" means a subdivision of state government organized under chapter 89.08 RCW.

      (c) "Eligible person" means a person:  (i) Licensed to produce milk under chapter 15.36 RCW who has a certified dairy nutrient management plan, as required by chapter 90.64 RCW; (ii) who owns an animal feeding operation and has a permit issued under chapter 90.48 RCW; or (iii) who owns an animal feeding operation and has a nutrient management plan approved by a conservation district as meeting natural resource conservation service field office technical guide standards and who possesses an exemption certificate under RCW 82.08.855.

      (d) "Handling and treatment of livestock manure" means the activities of collecting, storing, moving, or transporting livestock manure, separating livestock manure solids from liquids, or applying livestock manure to the agricultural lands of an eligible person other than through the use of pivot or linear type traveling irrigation systems.

      (e) "Permit" means either a state waste discharge permit or a national pollutant discharge elimination system permit, or both.

      (f) "Qualifying livestock nutrient management equipment" means the following tangible personal property for exclusive use in the handling and treatment of livestock manure, including repair and replacement parts for such equipment:  (i) Aerators; (ii) agitators; (iii) augers; (iv) conveyers; (v) gutter cleaners; (vi) hard-hose reel traveler irrigation systems; (vii) lagoon and pond liners and floating covers; (viii) loaders; (ix) manure composting devices; (x) manure spreaders; (xi) manure tank wagons; (xii) manure vacuum tanks; (xiii) poultry house cleaners; (xiv) poultry house flame sterilizers; (xv) poultry house washers; (xvi) poultry litter saver machines; (xvii) pipes; (xviii) pumps; (xix) scrapers; (xx) separators; (xxi) slurry injectors and hoses; and (xxii) wheelbarrows, shovels, and pitchforks.

      (g) "Qualifying livestock nutrient management facilities" means the following structures and facilities for exclusive use in the handling and treatment of livestock manure:  (i) Flush systems; (ii) lagoons; (iii) liquid livestock manure storage structures, such as concrete tanks or glass-lined steel tanks; and (iv) structures used solely for the dry storage of manure, including roofed stacking facilities.

(5) The exemption under this section does not apply to sales made from the effective date of this section through June 30, 2013.

Sec. 602.  RCW 82.12.890 and 2009 c 469 s 602 are each amended to read as follows:

      (1) The provisions of this chapter do not apply with respect to the use by an eligible person of:

      (a) Qualifying livestock nutrient management equipment;

      (b) Labor and services rendered in respect to installing, repairing, cleaning, altering, or improving qualifying livestock nutrient management equipment; and

      (c)(i) Tangible personal property that becomes an ingredient or component of qualifying livestock nutrient management facilities in the course of repairing, cleaning, altering, or improving of such facilities.

      (ii) The exemption provided in this subsection (1)(c) does not apply to the use of tangible personal property that becomes an ingredient or component of qualifying livestock nutrient management facilities during the course of constructing new, or replacing previously existing, qualifying livestock nutrient management facilities.

      (2)(a) To be eligible, the equipment and facilities must be used exclusively for activities necessary to maintain a livestock nutrient management plan.

      (b) The exemption applies to the use of tangible personal property and labor and services made after the livestock nutrient management plan is:  (i) Certified under chapter 90.64 RCW; (ii) approved as part of the permit issued under chapter 90.48 RCW; or (iii) approved as required under RCW 82.08.890(4)(c)(iii).

      (3) The exemption certificate and recordkeeping requirements of RCW 82.08.890 apply to this section.  The definitions in RCW 82.08.890 apply to this section.

(4) The exemption under this section does not apply to the use of tangible personal property and services if first use of the property or services in this state occurs from the effective date of this section through June 30, 2013.

 

PART VII

Ending the Preferential Business and Occupation Tax Treatment Received by Directors of Corporations

 

NEW SECTION.  Sec. 701.  (1) In adopting the state's business and occupation tax, the legislature intended to tax virtually all business activities carried on within the state.  See Simpson Inv. Co. v. Dep't of Revenue, 141 Wn.2d 139, 149 (2000).  The legislature recognizes that the business and occupation tax applies to all activities engaged in with the object of gain, benefit, or advantage to the taxpayer or to another person or class, directly or indirectly, unless a specific exemption applies.

      (2) One of the major business and occupation tax exemptions is provided in RCW 82.04.360 for income earned as an employee or servant as distinguished from income earned as an independent contractor.  The legislature's intent in providing this exemption was to exempt employee wages from the business and occupation tax but not to exempt income earned as an independent contractor.

      (3) The legislature finds that corporate directors are not employees or servants of the corporation whose board they serve on and therefore are not entitled to a business and occupation tax exemption under RCW 82.04.360.  The legislature further finds that there are no business and occupation tax exemptions for compensation received for serving as a member of a corporation's board of directors.

      (4) The legislature also finds that there is a widespread misunderstanding among corporate directors that the business and occupation tax does not apply to the compensation they receive for serving as a director of a corporation.  It is the legislature's expectation that the department of revenue will take appropriate measures to ensure that corporate directors understand and comply with their business and occupation tax obligations with respect to their director compensation.  However, because of the widespread misunderstanding by corporate directors of their liability for business and occupation tax on director compensation, the legislature finds that it is appropriate in this unique situation to provide limited relief against the retroactive assessment of business and occupation taxes on corporate director compensation.

      (5) The legislature also reaffirms its intent that all income of all independent contractors is subject to business and occupation tax unless specifically exempt under the Constitution or laws of this state or the United States.

Sec. 702.  RCW 82.04.360 and 2010 c 106 (E2SHB 1597) s 207 are each amended to read as follows:

      (1) This chapter does not apply to any person in respect to his or her employment in the capacity of an employee or servant as distinguished from that of an independent contractor.  For the purposes of this section, the definition of employee ((shall)) includes those persons that are defined in section 3121(d)(3)(B) of the federal internal revenue code of 1986, as amended through January 1, 1991.

      (2) Until the effective date of this section, this chapter does not apply to amounts received by an individual from a corporation as compensation for serving as a member of that corporation's board of directors.  Beginning on the effective date of this section, such amounts are taxable under RCW 82.04.290(2).
      (3) A booth renter is an independent contractor for purposes of this chapter.  For purposes of this ((sub))section, "booth renter" means any person who:

      (a) Performs cosmetology, barbering, esthetics, or manicuring services for which a license is required under chapter 18.16 RCW; and

      (b) Pays a fee for the use of salon or shop facilities and receives no compensation or other consideration from the owner of the salon or shop for the services performed.

 

PART VIII

Tax Debts

 

Sec. 801.  RCW 82.32.145 and 1995 c 318 s 2 are each amended to read as follows:

      (1) ((Upon termination, dissolution, or abandonment of a corporate or limited liability company business, any officer, member, manager, or other person having control or supervision of retail sales tax funds collected and held in trust under RCW 82.08.050, or who is charged with the responsibility for the filing of returns or the payment of retail sales tax funds collected and held in trust under RCW 82.08.050, shall be personally liable for any unpaid taxes and interest and penalties on those taxes, if such officer or other person wilfully fails to pay or to cause to be paid any taxes due from the corporation pursuant to chapter 82.08 RCW.  For the purposes of this section, any retail sales taxes that have been paid but not collected shall be deductible from the retail sales taxes collected but not paid.
      For purposes of this subsection "wilfully fails to pay or to cause to be paid" means that the failure was the result of an intentional, conscious, and voluntary course of action.
      (2) The officer, member or manager, or other person shall be liable only for taxes collected which)) Whenever the department has issued a warrant under RCW 82.32.210 for the collection of unpaid retail sales tax funds collected and held in trust under RCW 82.08.050 from a limited liability business entity and that business entity has been terminated, dissolved, or abandoned, or is insolvent, the department may pursue collection of the entity's unpaid sales taxes, including penalties and interest on those taxes, against any or all of the responsible individuals.  For purposes of this subsection, "insolvent" means the condition that results when the sum of the entity's debts exceeds the fair market value of its assets.  The department may presume that an entity is insolvent if the entity refuses to disclose to the department the nature of its assets and liabilities.
      (2) Personal liability under this section may be imposed for state and local sales taxes.
      (3)(a) For a responsible individual who is the current or a former chief executive or chief financial officer, liability under this section applies regardless of fault or whether the individual was or should have been aware of the unpaid sales tax liability of the limited liability business entity.
      (b) For any other responsible individual, liability under this section applies only if he or she willfully fails to pay or to cause to be paid to the department the sales taxes due from the limited liability business entity.
      (4)(a) Except as provided in this subsection (4)(a), a responsible individual who is the current or a former chief executive or chief financial officer is liable under this section only for sales tax liability accrued during the period that he or she was the chief executive or chief financial officer.  However, if the responsible individual had the responsibility or duty to remit payment of the limited liability business entity's sales taxes to the department during any period of time that the person was not the chief executive or chief financial officer, that individual is also liable for sales tax liability that became due during the period that he or she had the duty to remit payment of the limited liability business entity's taxes to the department but was not the chief executive or chief financial officer.
      (b) All other responsible individuals are liable under this section only for sales tax liability that became due during the period he or she had the ((control, supervision,)) responsibility((,)) or duty to ((act for the corporation described in subsection (1) of this section, plus interest and penalties on those taxes.
      (3))) remit payment of the limited liability business entity's taxes to the department.
      (5) Persons ((liable under)) described in subsection (((1))) (3)(b) of this section are exempt from liability under this section in situations where nonpayment of the ((retail sales tax funds held in trust)) limited liability business entity's sales taxes is due to reasons beyond their control as determined by the department by rule.

      (((4))) (6) Any person having been issued a notice of assessment under this section is entitled to the appeal procedures under RCW 82.32.160, 82.32.170, 82.32.180, 82.32.190, and 82.32.200.

      (((5) This section applies only in situations where the department has determined that there is no reasonable means of collecting the retail sales tax funds held in trust directly from the corporation.
      (6))) (7) This section does not relieve the ((corporation or)) limited liability ((company)) business entity of ((other tax liabilities)) its sales tax liability or otherwise impair other tax collection remedies afforded by law.

      (((7))) (8) Collection authority and procedures prescribed in this chapter apply to collections under this section.

(9) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
      (a) "Chief executive" means:  The president of a corporation; or for other entities or organizations other than corporations or if the corporation does not have a president as one of its officers, the highest ranking executive manager or administrator in charge of the management of the company or organization.
      (b) "Chief financial officer" means:  The treasurer of a corporation; or for entities or organizations other than corporations or if a corporation does not have a treasurer as one of its officers, the highest senior manager who is responsible for overseeing the financial activities of the entire company or organization.
      (c) "Limited liability business entity" means a type of business entity that generally shields its owners from personal liability for the debts, obligations, and liabilities of the entity, or a business entity that is managed or owned in whole or in part by an entity that generally shields its owners from personal liability for the debts, obligations, and liabilities of the entity.  Limited liability business entities include corporations, limited liability companies, limited liability partnerships, trusts, general partnerships and joint ventures in which one or more of the partners or parties are also limited liability business entities, and limited partnerships in which one or more of the general partners are also limited liability business entities.
      (d) "Manager" has the same meaning as in RCW 25.15.005.
      (e) "Member" has the same meaning as in RCW 25.15.005, except that the term only includes members of member-managed limited liability companies.
      (f) "Officer" means any officer or assistant officer of a corporation, including the president, vice-president, secretary, and treasurer.
      (g)(i) "Responsible individual" includes any current or former officer, manager, member, partner, or trustee of a limited liability business entity with an unpaid tax warrant issued by the department.
      (ii) "Responsible individual" also includes any current or former employee or other individual, but only if the individual had the responsibility or duty to remit payment of the limited liability business entity's unpaid sales tax liability reflected in a tax warrant issued by the department.
      (iii) Whenever any taxpayer has one or more limited liability business entities as a member, manager, or partner, "responsible individual" also includes any current and former officers, members, or managers of the limited liability business entity or entities or of any other limited liability business entity involved directly in the management of the taxpayer.  For purposes of this subsection (9)(g)(iii), "taxpayer" means a limited liability business entity with an unpaid tax warrant issued against it by the department.
      (h) "Willfully fails to pay or to cause to be paid" means that the failure was the result of an intentional, conscious, and voluntary course of action.

 

PART IX

Repealing the Sales and Use Tax Exemptions

for Bottled Water and Candy

 

Sec. 901.  RCW 82.08.0293 and 2009 c 483 s 2 are each amended to read as follows:

      (1) The tax levied by RCW 82.08.020 ((shall)) does not apply to sales of food and food ingredients.  "Food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.  "Food and food ingredients" does not include:

      (a) "Alcoholic beverages," which means beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume; and

      (b) "Tobacco," which means cigarettes, cigars, chewing or pipe tobacco, or any other item that contains tobacco.

      (2) Until July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section ((shall)) does not apply to prepared food, soft drinks, bottled water, candy, or dietary supplements.  Beginning July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, candy, or dietary supplements.

      (a) "Prepared food" means:

      (i) Food sold in a heated state or heated by the seller;

      (ii) Food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws.  A plate does not include a container or packaging used to transport the food; or

      (iii) Two or more food ingredients mixed or combined by the seller for sale as a single item, except:

      (A) Food that is only cut, repackaged, or pasteurized by the seller; or

      (B) Raw eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the federal food and drug administration in chapter 3, part 401.11 of The Food Code, published by the food and drug administration, as amended or renumbered as of January 1, 2003, so as to prevent foodborne illness.

      (b) "Prepared food" does not include the following food or food ingredients, if the food or food ingredients are sold without eating utensils provided by the seller:

      (i) Food sold by a seller whose proper primary North American industry classification system (NAICS) classification is manufacturing in sector 311, except subsector 3118 (bakeries), as provided in the "North American industry classification system‑-United States, 2002";

      (ii) Food sold in an unheated state by weight or volume as a single item; or

      (iii) Bakery items.  The term "bakery items" includes bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, tortes, pies, tarts, muffins, bars, cookies, or tortillas.

      (c) "Soft drinks" means nonalcoholic beverages that contain natural or artificial sweeteners.  Soft drinks do not include beverages that contain:  Milk or milk products; soy, rice, or similar milk substitutes; or greater than fifty percent of vegetable or fruit juice by volume.

      (d) "Dietary supplement" means any product, other than tobacco, intended to supplement the diet that:

      (i) Contains one or more of the following dietary ingredients:

      (A) A vitamin;

      (B) A mineral;

      (C) An herb or other botanical;

      (D) An amino acid;

      (E) A dietary substance for use by humans to supplement the diet by increasing the total dietary intake; or

      (F) A concentrate, metabolite, constituent, extract, or combination of any ingredient described in this subsection;

      (ii) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and

      (iii) Is required to be labeled as a dietary supplement, identifiable by the "supplement facts" box found on the label as required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered as of January 1, 2003.

(e) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces.  "Candy" does not include any preparation containing flour and does not require refrigeration.
      (f) "Bottled water" means water that is placed in a sealed container or package for human consumption.  Bottled water is calorie free and does not contain sweeteners or other additives except that it may contain:  (i) Antimicrobial agents; (ii) fluoride; (iii) carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen; (vi) preservatives; and (vii) only those flavors, extracts, or essences derived from a spice or fruit.  "Bottled water" includes water that is delivered to the buyer in a reusable container that is not sold with the water.

      (3) Notwithstanding anything in this section to the contrary, the exemption of "food and food ingredients" provided in this section ((shall apply)) applies to food and food ingredients that are furnished, prepared, or served as meals:

      (a) Under a state administered nutrition program for the aged as provided for in the older Americans act (P.L. 95-478 Title III) and RCW 74.38.040(6);

      (b) That are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or

      (c) That are provided to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility.  The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (3)(c) if at least one of the spouses or domestic partners is at least sixty-two years of age.  For purposes of this subsection, "qualified low-income senior housing facility" means a facility:

      (i) That meets the definition of a qualified low-income housing project under ((Title)) 26 U.S.C. Sec. 42 of the federal internal revenue code, as existing on August 1, 2009;

      (ii) That has been partially funded under ((Title)) 42 U.S.C. Sec. 1485 ((of the federal internal revenue code)); and

      (iii) For which the lessor or operator has at any time been entitled to claim a federal income tax credit under ((Title)) 26 U.S.C. Sec. 42 of the federal internal revenue code.

      (4)(a) Subsection (1) of this section notwithstanding, the retail sale of food and food ingredients is subject to sales tax under RCW 82.08.020 if the food and food ingredients are sold through a vending machine, and in this case the selling price for purposes of RCW 82.08.020 is fifty-seven percent of the gross receipts.

      (b) This subsection (4) does not apply to hot prepared food and food ingredients, other than food and food ingredients which are heated after they have been dispensed from the vending machine.

      (c) For tax collected under this subsection (4), the requirements that the tax be collected from the buyer and that the amount of tax be stated as a separate item are waived.

Sec. 902.  RCW 82.08.0293 and 2010 c 106 (E2SHB 1597) s 216 are each amended to read as follows:

      (1) The tax levied by RCW 82.08.020 does not apply to sales of food and food ingredients.  "Food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.  "Food and food ingredients" does not include:

      (a) "Alcoholic beverages," which means beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume; and

      (b) "Tobacco," which means cigarettes, cigars, chewing or pipe tobacco, or any other item that contains tobacco.

      (2) Until July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, bottled water, candy, or dietary supplements.  Beginning July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, candy, or dietary supplements.  For purposes of this subsection, the following definitions apply:

      (a) "Dietary supplement" means any product, other than tobacco, intended to supplement the diet that:

      (i) Contains one or more of the following dietary ingredients:

      (A) A vitamin;

      (B) A mineral;

      (C) An herb or other botanical;

      (D) An amino acid;

      (E) A dietary substance for use by humans to supplement the diet by increasing the total dietary intake; or

      (F) A concentrate, metabolite, constituent, extract, or combination of any ingredient described in this subsection;

      (ii) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and

      (iii) Is required to be labeled as a dietary supplement, identifiable by the "supplement facts" box found on the label as required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered as of January 1, 2003.

      (b)(i) "Prepared food" means:

      (A) Food sold in a heated state or heated by the seller;

      (B) Food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws.  A plate does not include a container or packaging used to transport the food; or

      (C) Two or more food ingredients mixed or combined by the seller for sale as a single item, except:

      (I) Food that is only cut, repackaged, or pasteurized by the seller; or

      (II) Raw eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the federal food and drug administration in chapter 3, part 401.11 of The Food Code, published by the food and drug administration, as amended or renumbered as of January 1, 2003, so as to prevent foodborne illness.

      (ii) "Prepared food" does not include the following food or food ingredients, if the food or food ingredients are sold without eating utensils provided by the seller:

      (A) Food sold by a seller whose proper primary North American industry classification system (NAICS) classification is manufacturing in sector 311, except subsector 3118 (bakeries), as provided in the "North American industry classification system‑-United States, 2002";

      (B) Food sold in an unheated state by weight or volume as a single item; or

      (C) Bakery items.  The term "bakery items" includes bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, tortes, pies, tarts, muffins, bars, cookies, or tortillas.

      (c) "Soft drinks" means nonalcoholic beverages that contain natural or artificial sweeteners.  Soft drinks do not include beverages that contain:  Milk or milk products; soy, rice, or similar milk substitutes; or greater than fifty percent of vegetable or fruit juice by volume.

(d) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces.  "Candy" does not include any preparation containing flour and does not require refrigeration.
      (e) "Bottled water" means water that is placed in a sealed container or package for human consumption.  Bottled water is calorie free and does not contain sweeteners or other additives except that it may contain:  (i) Antimicrobial agents; (ii) fluoride; (iii) carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen; (vi) preservatives; and (vii) only those flavors, extracts, or essences derived from a spice or fruit.  "Bottled water" includes water that is delivered to the buyer in a reusable container that is not sold with the water.

      (3) Notwithstanding anything in this section to the contrary, the exemption of "food and food ingredients" provided in this section applies to food and food ingredients that are furnished, prepared, or served as meals:

      (a) Under a state administered nutrition program for the aged as provided for in the older Americans act (P.L. 95-478 Title III) and RCW 74.38.040(6);

      (b) That are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or

      (c) That are provided to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility.  The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (3)(c) if at least one of the spouses or domestic partners is at least sixty-two years of age.  For purposes of this subsection, "qualified low-income senior housing facility" means a facility:

      (i) That meets the definition of a qualified low-income housing project under 26 U.S.C. Sec. 42 of the federal internal revenue code, as existing on August 1, 2009;

      (ii) That has been partially funded under 42 U.S.C. Sec. 1485 ((of the federal internal revenue code)); and

      (iii) For which the lessor or operator has at any time been entitled to claim a federal income tax credit under 26 U.S.C. Sec. 42 of the federal internal revenue code.

      (4)(a) Subsection (1) of this section notwithstanding, the retail sale of food and food ingredients is subject to sales tax under RCW 82.08.020 if the food and food ingredients are sold through a vending machine.  Except as provided in (b) of this subsection, the selling price of food and food ingredients sold through a vending machine for purposes of RCW 82.08.020 is fifty-seven percent of the gross receipts.

      (b) For soft drinks and hot prepared food and food ingredients, other than food and food ingredients which are heated after they have been dispensed from the vending machine, the selling price is the total gross receipts of such sales divided by the sum of one plus the sales tax rate expressed as a decimal.

      (c) For tax collected under this subsection (4), the requirements that the tax be collected from the buyer and that the amount of tax be stated as a separate item are waived.

Sec. 903.  RCW 82.12.0293 and 2009 c 483 s 4 are each amended to read as follows:

      (1) The provisions of this chapter ((shall)) do not apply in respect to the use of food and food ingredients for human consumption.  "Food and food ingredients" has the same meaning as in RCW 82.08.0293.

      (2) Until July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section ((shall)) does not apply to prepared food, soft drinks, bottled water, candy, or dietary supplements.   Beginning July 1, 2013, the exemption of "food and food ingredients" provided for in subsection (1) of this section does not apply to prepared food, soft drinks, candy, or dietary supplements. "Prepared food," "soft drinks," ((and)) "dietary supplements," "candy," and "bottled water" have the same meanings as in RCW 82.08.0293.

      (3) Notwithstanding anything in this section to the contrary, the exemption of "food and food ingredients" provided in this section ((shall)) apply to food and food ingredients which are furnished, prepared, or served as meals:

      (a) Under a state administered nutrition program for the aged as provided for in the older Americans act (P.L. 95-478 Title III) and RCW 74.38.040(6);

      (b) Which are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or

      (c) That are provided to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility.  The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (3)(c) if at least one of the spouses or domestic partners is at least sixty-two years of age.  For purposes of this subsection, "qualified low-income senior housing facility" has the same meaning as in RCW 82.08.0293.

NEW SECTION.  Sec. 904.  A new section is added to chapter 82.08 RCW to read as follows:

      (1) Subject to the conditions in this section, the tax levied by RCW 82.08.020 does not apply to sales of bottled water for human use dispensed or to be dispensed to patients, pursuant to a prescription for use in the cure, mitigation, treatment, or prevention of disease or other medical condition.  For purposes of this section, "prescription" means an order, formula, or recipe issued in any form of oral, written, electronic, or other means of transmission by a duly licensed practitioner authorized by the laws of this state to prescribe.

      (2) Except for sales of bottled water delivered to the buyer in a reusable container that is not sold with the water, sellers must collect tax on sales subject to this exemption.  Any buyer that has paid at least twenty-five dollars in state and local sales taxes on purchases of bottled water subject to this exemption may apply for a refund of the taxes directly from the department in a form and manner prescribed by the department.  The department must deny any refund application if the amount of the refund requested is less than twenty-five dollars.  No refund may be made for taxes paid more than four years after the end of the calendar year in which the tax was paid to the seller.

      (3) The provisions of RCW 82.32.060 apply to refunds authorized under this section.

      (4) With respect to sales of bottled water delivered to the buyer in a reusable container that is not sold with the water, buyers claiming the exemption provided in this section must provide the seller with an exemption certificate in a form and manner prescribed by the department.  The seller must retain a copy of the certificate for the seller's files.

NEW SECTION.  Sec. 905.  A new section is added to chapter 82.12 RCW to read as follows:

      The provisions of this chapter do not apply in respect to the use of bottled water for human use dispensed or to be dispensed to patients, pursuant to a prescription for use in the cure, mitigation, treatment, or prevention of disease or medical condition.  "Prescription" has the same meaning as in section 904 of this act.

NEW SECTION.  Sec. 906.  A new section is added to chapter 82.08 RCW to read as follows:

      (1) Subject to the conditions in this section, the tax levied by RCW 82.08.020 does not apply to sales of bottled water for human use to persons who do not otherwise have a readily available source of potable water.

      (2) Except for sales of bottled water delivered to the buyer in a reusable container that is not sold with the water, sellers must collect tax on sales subject to this exemption.  Any buyer that has paid at least twenty-five dollars in state and local sales taxes on purchases of bottled water subject to this exemption may apply for a refund of the taxes directly from the department in a form and manner prescribed by the department.  The department must deny any refund application if the amount of the refund requested is less than twenty-five dollars.  No refund may be made for taxes paid more than four years after the end of the calendar year in which the tax was paid to the seller.

      (3) The provisions of RCW 82.32.060 apply to refunds authorized under this section.

      (4)(a) With respect to sales of bottled water delivered to the buyer in a reusable container that is not sold with the water, buyers claiming the exemption provided in this section must provide the seller with an exemption certificate in a form and manner prescribed by the department.  The seller must retain a copy of the certificate for the seller's files.

      (b) The department may waive the requirement for an exemption certificate in the event of disaster or similar circumstance.

NEW SECTION.  Sec. 907.  A new section is added to chapter 82.12 RCW to read as follows:

      The provisions of this chapter do not apply in respect to the use of bottled water for human use by persons who do not otherwise have a readily available source of potable water.

NEW SECTION.  Sec. 908.  A new section is added to chapter 82.04 RCW to read as follows:

      (1)(a) Subject to the requirements and limits in this section, candy manufacturers are entitled to a credit against the tax due under this chapter.  The credit equals one thousand dollars for:

      (i) Each full-time employment position that has been maintained in this state on a full-time basis for a continuous period of at least twelve consecutive months; or

      (ii) Each full-time equivalent seasonal employee hired by a seasonal employer.

      (b) Once a full-time employment position has been filled, the position does not cease to be maintained for a continuous period solely due to periods in which the position goes vacant, as long as:

      (i) The cumulative period of any vacancies in that position is not more than one hundred twenty days in the twelve consecutive month period for which the position must be filled to earn a credit under this section; and

      (ii) During any vacancy, the employer is training or actively recruiting a replacement permanent, full-time employee for the position.

      (c) For full-time employment positions initially filled before July 1, 2010:

      (i) The twelve consecutive month period for which the position must be filled to earn a credit under this section begins on the later of August 1, 2009, or the date that the employment position was initially filled; and

      (ii) A second credit may be earned if the employment position is maintained on a full-time basis for an additional twelve consecutive month period.

      (2)(a) The credit may only be claimed on a tax return filed electronically with the department using the department's online tax filing service, unless the department grants a waiver for good cause shown.  For purposes of this subsection, "good cause" has the same meaning as in RCW 82.32.080(8)(a) (i), (ii), (iii), and (vi) and (b).

      (b) Credit may be claimed only on tax returns originally due after July 31, 2010.

      (c) The department must disallow any credit claimed on tax returns filed with the department after July 31, 2012.

      (3)(a) Credits claimed may not exceed the tax otherwise due under this chapter on the manufacturing and retail or wholesale sale of candy manufactured by the taxpayer.

      (b) No refunds may be granted for credits under this section.

      (c) The credit provided in this section is in addition to any other credit that may be available to the candy manufacturer with respect to the same employment positions.

      (4) No application is necessary for the credit.  Candy manufacturers claiming the credit must keep records necessary for the department to verify eligibility under this section.

      (5) A candy manufacturer claiming credit under this section must report to the department as provided in RCW 82.32.--- (section 103, chapter 114 (SHB 3066), Laws of 2010).

      (6) The employment security department must provide to the department such information needed by the department to verify eligibility under this section.

      (7) Pursuant to chapter 43.136 RCW, the citizen commission for performance measurement of tax preferences must schedule the credit under this section for a tax preference review by the joint legislative audit and review committee in 2011.

      (8) For purposes of this section, the following definitions apply:

      (a) "Candy" has the same meaning as in RCW 82.08.0293.

      (b) "Candy manufacturer" means a person that manufactures candy.  For purposes of this subsection "manufactures" has the same meaning as "to manufacture" in RCW 82.04.120.

      (c) "Full-time" means a normal work week of at least thirty-five hours.

      (d) "Seasonal employee" means an employee of a seasonal employer who works on a seasonal basis.  "Seasonal basis" means a continuous employment period of less than twelve consecutive months.

      (e) "Seasonal employer" means a person who regularly hires more than ten percent of its employees to work on a seasonal basis.

NEW SECTION.  Sec. 909.  If any provision of section 908 of this act or its application to any person or circumstance is held unconstitutional:  (1) Section 908 of this act is considered invalid in its entirety; and (2) section 908 of this act and the application of any provision of that section to any person or circumstance is considered null and void and of no effect.

NEW SECTION.  Sec. 910.  A new section is added to chapter 82.32 RCW to read as follows:

      (1) The department must compile a list of products meeting the definition of candy in RCW 82.08.0293 and products that are similar to candy but do not meet that definition.  The list must identify each item as either subject to sales or use tax or not subject to sales or use tax.  The list will be made in a form and manner prescribed by the department and must be made available on the department's internet web site.  The list must also provide information about how to request a binding ruling from the department on the taxability of products not on the list.

      (2) In compiling the list described in subsection (1) of this section, the department may:

      (a) Evaluate the experiences of other member states of the streamlined sales and use tax agreement that impose retail sales tax on candy;

      (b) Accept technical assistance from persons that sell, market, or distribute candy; and

      (c) Consider any other resource the department finds useful in compiling the list.

      (3) The creation of a list under subsection (1) of this section and any modifications to the list are not subject to the rule-making provisions of chapter 34.05 RCW.

      (4) For products that are not identified on the list created by the department under subsection (1) of this section, taxpayers may request a binding written ruling from the department on the taxability of the product.

 

PART X

PUD Privilege Tax Clarification

 

Sec. 1001.  RCW 54.28.011 and 1957 c 278 s 12 are each amended to read as follows:

      "Gross revenue" ((shall)) means the amount received from the sale of electric energy, which also includes any regularly recurring charge billed to consumers as a condition of receiving electric energy, and excluding any tax levied by a municipal corporation upon the district pursuant to RCW 54.28.070.

 

PART XI

Temporarily Increasing the Business and Occupation Tax on Service Businesses while Increasing the Small Business Credit

for the Same Businesses

 

NEW SECTION.  Sec. 1101.  A new section is added to chapter 82.04 RCW to read as follows:

      (1) Beginning May 1, 2010, through June 30, 2013, an additional rate of tax of 0.30 percent is added to the rate provided for in RCW 82.04.255, 82.04.285, and 82.04.290(2)(a).

      (2)(a) The additional rate in subsection (1) of this section does not apply to persons engaging within this state in business as a hospital.  "Hospital" has the meaning provided in chapter 70.41 RCW but also includes any hospital that comes within the scope of chapter 71.12 RCW if the hospital is also licensed under chapter 70.41 RCW.

      (b) The additional rate in subsection (1) of this section does not apply to amounts received from performing scientific research and development services including but not limited to research and development in the physical, engineering, and life sciences (such as agriculture, bacteriological, biotechnology, chemical, life sciences, and physical science research and development laboratories or services).

Sec. 1102.  RCW 82.04.4451 and 1997 c 238 s 2 are each amended to read as follows:

      (1) In computing the tax imposed under this chapter, a credit is allowed against the amount of tax otherwise due under this chapter, as provided in this section.  ((The maximum credit for a taxpayer)) Except for taxpayers that report at least fifty percent of their taxable amount under RCW 82.04.255, 82.04.290(2)(a), and 82.04.285, the maximum credit for a taxpayer for a reporting period is thirty-five dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.  For a taxpayer that reports at least fifty percent of its taxable amount under RCW 82.04.255, 82.04.290(2)(a), and 82.04.285, the maximum credit for a reporting period is seventy dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.

      (2) When the amount of tax otherwise due under this chapter is equal to or less than the maximum credit, a credit is allowed equal to the amount of tax otherwise due under this chapter.

      (3) When the amount of tax otherwise due under this chapter exceeds the maximum credit, a reduced credit is allowed equal to twice the maximum credit, minus the tax otherwise due under this chapter, but not less than zero.

      (4) The department may prepare a tax credit table consisting of tax ranges using increments of no more than five dollars and a corresponding tax credit to be applied to those tax ranges.  The table shall be prepared in such a manner that no taxpayer will owe a greater amount of tax by using the table than would be owed by performing the calculation under subsections (1) through (3) of this section.  A table prepared by the department under this subsection ((shall)) must be used by all taxpayers in taking the credit provided in this section.

Sec. 1103.  RCW 82.32.045 and 2006 c 256 s 1 are each amended to read as follows:

      (1) Except as otherwise provided in this chapter, payments of the taxes imposed under chapters 82.04, 82.08, 82.12, 82.14, and 82.16 RCW, along with reports and returns on forms prescribed by the department, are due monthly within twenty-five days after the end of the month in which the taxable activities occur.

      (2) The department of revenue may relieve any taxpayer or class of taxpayers from the obligation of remitting monthly and may require the return to cover other longer reporting periods, but in no event may returns be filed for a period greater than one year.  For these taxpayers, tax payments are due on or before the last day of the month next succeeding the end of the period covered by the return.

      (3) The department of revenue may also require verified annual returns from any taxpayer, setting forth such additional information as it may deem necessary to correctly determine tax liability.

      (4) Notwithstanding subsections (1) and (2) of this section, the department may relieve any person of the requirement to file returns if the following conditions are met:

      (a) The person's value of products, gross proceeds of sales, or gross income of the business, from all business activities taxable under chapter 82.04 RCW, is less than:
      (i) Twenty-eight thousand dollars per year; or
      (ii) Forty-six thousand six hundred and sixty-seven dollars per year for persons generating at least fifty percent of their taxable amount from activities taxable under RCW 82.04.255, 82.04.290(2)(a), and 82.04.285;

      (b) The person's gross income of the business from all activities taxable under chapter 82.16 RCW is less than twenty-four thousand dollars per year; and

      (c) The person is not required to collect or pay to the department of revenue any other tax or fee which the department is authorized to collect.

 

PART XII

Property Management Salaries

 

Sec. 1201.  RCW 82.04.394 and 1998 c 338 s 2 are each amended to read as follows:

      (1) This chapter does not apply to:
      (a) Amounts received by a nonprofit property management company from the owner of a property for gross wages and benefits paid directly to or on behalf of on-site personnel from property management trust accounts that are required to be maintained under RCW ((18.85.310)) 18.85.285; or
      (b) Amounts received by a property management company from a housing authority for gross wages and benefits paid directly to or on behalf of on-site personnel from property management trust accounts that are required to be maintained under RCW 18.85.285.

      (2) ((As used in)) The definitions in this subsection apply to this section((,)).
      (a) "On-site personnel" means a person who meets all of the following conditions:  (((a))) (i) The person works primarily at the owner's property; (((b))) (ii) the person's duties include leasing property units, maintaining the property, collecting rents, or similar activities; and (((c))) (iii) under a written property management agreement:  (((i))) (A) The person's compensation is the ultimate obligation of the property owner and not the property manager; (((ii))) (B) the property manager is liable for payment only as agent of the owner; and (((iii))) (C) the property manager is the agent of the owner with respect to the on-site personnel and that all actions, including, but not limited to, hiring, firing, compensation, and conditions of employment, taken by the property manager with respect to the on-site personnel are subject to the approval of the property owner.

(b) "Nonprofit property management company" means a property management company that is exempt from tax under 26 U.S.C. Sec. 501(c) of the federal internal revenue code, as it exists on January 1, 2010.
      (c) "Housing authority" means a city or county housing authority created pursuant to chapter 35.82 RCW.

Sec. 1202.  RCW 82.04.394 and 2010 c 106 (E2SHB 1597) s 209 are each amended to read as follows:

      (1) This chapter does not apply to:
      (a) Amounts received by a nonprofit property management company from the owner of a property for gross wages and benefits paid directly to or on behalf of on-site personnel from property management trust accounts that are required to be maintained under RCW 18.85.285; or
      (b) Amounts received by a property management company from a housing authority for gross wages and benefits paid directly to or on behalf of on-site personnel from property management trust accounts that are required to be maintained under RCW 18.85.285.

      (2) ((As used in)) The definitions in this subsection apply to this section((,)).
      (a) "On-site personnel" means a person who meets all of the following conditions:  (((a))) (i) The person works primarily at the owner's property; (((b))) (ii) the person's duties include leasing property units, maintaining the property, collecting rents, or similar activities; and (((c))) (iii) under a written property management agreement:  (((i))) (A) The person's compensation is the ultimate obligation of the property owner and not the property manager; (((ii))) (B) the property manager is liable for payment only as agent of the owner; and (((iii))) (C) the property manager is the agent of the owner with respect to the on-site personnel and that all actions, including, but not limited to, hiring, firing, compensation, and conditions of employment, taken by the property manager with respect to the on-site personnel are subject to the approval of the property owner.

(b) "Nonprofit property management company" means a property management company that is exempt from tax under 26 U.S.C. Sec. 501(c) of the federal internal revenue code, as it exists on January 1, 2010.
      (c) "Housing authority" means a city or county housing authority created pursuant to chapter 35.82 RCW.

 

PART XIII

Temporarily Increasing Beer Taxes

 

Sec. 1301.  RCW 66.24.290 and 2009 c 479 s 43 are each amended to read as follows:

      (1) Any microbrewer or domestic brewery or beer distributor licensed under this title may sell and deliver beer and strong beer to holders of authorized licenses direct, but to no other person, other than the board.  Any certificate of approval holder authorized to act as a distributor under RCW 66.24.270 shall pay the taxes imposed by this section.

      (a) Every such brewery or beer distributor shall report all sales to the board monthly, pursuant to the regulations, and shall pay to the board as an added tax for the privilege of manufacturing and selling the beer and strong beer within the state a tax of one dollar and thirty cents per barrel of thirty-one gallons on sales to licensees within the state and on sales to licensees within the state of bottled and canned beer, including strong beer, shall pay a tax computed in gallons at the rate of one dollar and thirty cents per barrel of thirty-one gallons.

      (b) Any brewery or beer distributor whose applicable tax payment is not postmarked by the twentieth day following the month of sale will be assessed a penalty at the rate of two percent per month or fraction thereof.  Beer and strong beer shall be sold by breweries and distributors in sealed barrels or packages.

      (c) The moneys collected under this subsection shall be distributed as follows:  (i) Three-tenths of a percent shall be distributed to border areas under RCW 66.08.195; and (ii) of the remaining moneys:  (A) Twenty percent shall be distributed to counties in the same manner as under RCW 66.08.200; and (B) eighty percent shall be distributed to incorporated cities and towns in the same manner as under RCW 66.08.210.

      (d) Any licensed retailer authorized to purchase beer from a certificate of approval holder with a direct shipment endorsement or a brewery or microbrewery shall make monthly reports to the liquor control board on beer purchased during the preceding calendar month in the manner and upon such forms as may be prescribed by the board.

      (2) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section.  The additional tax is equal to two dollars per barrel of thirty-one gallons.  All revenues collected during any month from this additional tax shall be deposited in the state general fund by the twenty-fifth day of the following month.

      (3)(a) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section.  The additional tax is equal to ninety-six cents per barrel of thirty-one gallons through June 30, 1995, two dollars and thirty-nine cents per barrel of thirty-one gallons for the period July 1, 1995, through June 30, 1997, and four dollars and seventy-eight cents per barrel of thirty-one gallons thereafter.

      (b) The additional tax imposed under this subsection does not apply to the sale of the first sixty thousand barrels of beer each year by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of this exemption.

      (c) All revenues collected from the additional tax imposed under this subsection (3) shall be deposited in the state general fund.

      (4) An additional tax is imposed on all beer and strong beer that is subject to tax under subsection (1) of this section that is in the first sixty thousand barrels of beer and strong beer by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of the exemption under subsection (3)(b) of this section.  The additional tax is equal to one dollar and forty-eight and two-tenths cents per barrel of thirty-one gallons.  By the twenty-fifth day of the following month, three percent of the revenues collected from this additional tax shall be distributed to border areas under RCW 66.08.195 and the remaining moneys shall be transferred to the state general fund.

      (5)(a) From the effective date of this section through June 30, 2013, an additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section.  The additional tax is equal to fifteen dollars and fifty cents per barrel of thirty-one gallons.
      (b) The additional tax imposed under this subsection does not apply to the sale of the first sixty thousand barrels of beer each year by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051 of the federal internal revenue code, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of this exemption.
      (c) All revenues collected from the additional tax imposed under this subsection shall be deposited in the state general fund.
      (6) The board may make refunds for all taxes paid on beer and strong beer exported from the state for use outside the state.

      (((6))) (7) The board may require filing with the board of a bond to be approved by it, in such amount as the board may fix, securing the payment of the tax.  If any licensee fails to pay the tax when due, the board may forthwith suspend or cancel his or her license until all taxes are paid.

 

PART XIV

Temporarily Imposing Taxes on Carbonated Beverages

 

NEW SECTION.  Sec. 1401.  Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

      (1)(a) "Carbonated beverage" means any packaged nonalcoholic liquid intended for human consumption that contains carbonation by natural or artificial means and any of the following substances:  Caffeine, extracts, fruit juice or concentrated fruit juice, herbs, sweeteners, or syrup.  "Packaged" includes cans, bottles, and other similar sealed containers.  "Syrup" means a concentrated mixture in either liquid or powdered form that contains sugar or a sugar substitute and that is an ingredient used to make carbonated beverages.

      (b) "Carbonated beverage" does not include carbonated bottled water.  For the purpose of this subsection, "bottled water" has the same meaning as provided in section 901 of this act.

      (2) "Ounce" means United States fluid ounce.

      (3) "Previously taxed carbonated beverages" means carbonated beverages to which the tax under this chapter has been previously imposed.

      (4) Except for terms defined in this section, the definitions in chapters 82.04, 82.08, and 82.12 RCW apply to this chapter.

NEW SECTION.  Sec. 1402.  (1) From the effective date of this section through June 30, 2013, a tax is imposed on every person for the privilege of selling, at wholesale or retail, carbonated beverages in this state.  The rate of the tax is equal to two cents per twelve ounces of carbonated beverages sold in this state.

      (2)(a) In calculating the amount of tax due under this section, if the total amount of carbonated beverages sold in this state during the reporting period is not a whole number, the taxable quantity must be rounded as provided in (b) of this subsection.

      (b) For a fraction of an ounce that is equal to or greater than one-half ounce, the taxable quantity must be rounded up to the nearest ounce.  For a fraction of an ounce that is less than one-half ounce, the taxable quantity must be rounded down to the nearest ounce.

      (3) Chapter 82.32 RCW applies to the tax imposed in this section.  The tax reporting frequency for the tax imposed in this section must coincide with the taxpayer's reporting frequency for the tax imposed in chapter 82.04 RCW.

      (4) The department may require taxpayers to report the taxable quantity of carbonated beverages in units of measure other than ounces.

      (5) The tax imposed in this section is in addition to all other taxes imposed in this title on the same taxable event.

NEW SECTION.  Sec. 1403.  (1) The tax imposed in this chapter does not apply to any successive sale of previously taxed carbonated beverages.

      (2) Any person claiming the exemption provided in this section must maintain documentation establishing that the carbonated beverages were previously taxed under this chapter.  The documentation may be in the form of information on the invoice, or certification from the previous seller, stating:  (a) That all or a specific stated portion of the carbonated beverages were previously subject to the tax imposed in this chapter; and (b) the amount of tax remitted or to be remitted to the department in respect of the carbonated beverages.

NEW SECTION.  Sec. 1404.  (1) For each calendar year, the tax imposed in this chapter does not apply in respect to the first ten million dollars of carbonated beverages sold in this state by any bottler as measured by the gross proceeds of sales of carbonated beverages at retail and wholesale by the bottler.  If a bottler is affiliated with any other bottler or distributor, the ten million dollar threshold for the exemption in this subsection (1) is based on the combined gross proceeds of sales by all affiliated persons from all sales at wholesale and retail of carbonated beverages in this state during the calendar year.

      (2) Successive sales by any person of carbonated beverages exempt under subsection (1) of this section are also exempt from the tax imposed in this chapter.  Any person claiming the exemption provided in this subsection (2) must maintain documentation establishing that the carbonated beverages were previously sold in this state by a person exempt under subsection (1) of this section.  The documentation may be in the form of information on the invoice, or certification from the previous seller, stating that the carbonated beverages were previously exempt under subsection (1) of this section.

      (3) For purposes of this section, the following definitions apply:

      (a) "Affiliated" has the same meaning as provided in section 110 of this act.

      (b) "Bottler" means a person who bottles, cans, or otherwise packages carbonated beverages in beverage containers.

      (c) "Distributor" means a person, other than a bottler, that makes sales at wholesale of carbonated beverages.

NEW SECTION.  Sec. 1405.  The tax imposed in this chapter does not apply to any activity or person that the state is prohibited from taxing under the Constitution of this state or the Constitution or laws of the United States.

NEW SECTION.  Sec. 1406.  This part constitutes a new chapter in Title 82 RCW.

 

PART XV

Limiting the Bad Debt Deduction

 

NEW SECTION.  Sec. 1501.  The legislature intends with sections 1502 and 1503 of this act to supersede the holding of the supreme court of the state of Washington in Puget Sound National Bank v. Department of Revenue, 123 Wn.2d 284 (1994).

Sec. 1502.  RCW 82.08.037 and 2007 c 6 s 102 are each amended to read as follows:

      (1) A seller is entitled to a credit or refund for sales taxes previously paid on bad debts, as that term is used in 26 U.S.C. Sec. 166, as amended or renumbered as of January 1, 2003.

      (2) For purposes of this section, "bad debts" does not include:

      (a) Amounts due on property that remains in the possession of the seller until the full purchase price is paid;

      (b) Expenses incurred in attempting to collect debt; ((and))

      (c) Debts sold or assigned by the seller to third parties, where the third party is without recourse against the seller; and
      (d) Repossessed property.

      (3) If a credit or refund of sales tax is taken for a bad debt and the debt is subsequently collected in whole or in part, the tax on the amount collected must be paid and reported on the return filed for the period in which the collection is made.

      (4) Payments on a previously claimed bad debt are applied first proportionally to the taxable price of the property or service and the sales or use tax thereon, and secondly to interest, service charges, and any other charges.

      (5) If the seller uses a certified service provider as defined in RCW 82.32.020 to administer its sales tax responsibilities, the certified service provider may claim, on behalf of the seller, the credit or refund allowed by this section.  The certified service provider must credit or refund the full amount received to the seller.

      (6) The department ((shall)) must allow an allocation of bad debts among member states to the streamlined sales tax agreement, as defined in RCW 82.58.010(1), if the books and records of the person claiming bad debts support the allocation.

(7) A person's right to claim a credit or refund under this section is not assignable.  No person other than the original seller in the transaction that generated the bad debt or, as provided in subsection (5) of this section, a certified service provider, is entitled to claim a credit or refund under this section.  If the original seller in the transaction that generated the bad debt has sold or assigned the debt instrument to a third party with recourse, the original seller may claim a credit or refund under this section only after the debt instrument is reassigned by the third party to the original seller.

Sec. 1503.  RCW 82.12.037 and 2007 c 6 s 103 are each amended to read as follows:

      (1) A seller is entitled to a credit or refund for use taxes previously paid on bad debts, as that term is used in 26 U.S.C. Sec. 166, as amended or renumbered as of January 1, 2003.

      (2) For purposes of this section, "bad debts" does not include:

      (a) Amounts due on property that remains in the possession of the seller until the full purchase price is paid;

      (b) Expenses incurred in attempting to collect debt; ((and))

      (c) Debts sold or assigned by the seller to third parties, where the third party is without recourse against the seller; and
      (d) Repossessed property.

      (3) If a credit or refund of use tax is taken for a bad debt and the debt is subsequently collected in whole or in part, the tax on the amount collected must be paid and reported on the return filed for the period in which the collection is made.

      (4) Payments on a previously claimed bad debt are applied first proportionally to the taxable price of the property or service and the sales or use tax thereon, and secondly to interest, service charges, and any other charges.

      (5) If the seller uses a certified service provider as defined in RCW 82.32.020 to administer its use tax responsibilities, the certified service provider may claim, on behalf of the seller, the credit or refund allowed by this section.  The certified service provider must credit or refund the full amount received to the seller.

      (6) The department ((shall)) must allow an allocation of bad debts among member states to the streamlined sales and use tax agreement, as defined in RCW 82.58.010(1), if the books and records of the person claiming bad debts support the allocation.

(7) A person's right to claim a credit or refund under this section is not assignable.  No person other than the original seller in the transaction that generated the bad debt or, as provided in subsection (5) of this section, a certified service provider, is entitled to claim a credit or refund under this section.  If the original seller in the transaction that generated the bad debt has sold or assigned the debt instrument to a third party with recourse, the original seller may claim a credit or refund under this section only after the debt instrument is reassigned by the third party to the original seller.

 

PART XVI

Data Centers

 

Sec. 1601.  RCW 82.08.--- and 2010 1st sp.s. c 1 (ESSB 6789) s 2 are each amended to read as follows:

      (1) An exemption from the tax imposed by RCW 82.08.020 is provided for sales to qualifying businesses of eligible server equipment to be installed, without intervening use, in an eligible computer data center, and to charges made for labor and services rendered in respect to installing eligible server equipment.  The exemption also applies to sales to qualifying businesses of eligible power infrastructure, including labor and services rendered in respect to constructing, installing, repairing, altering, or improving eligible power infrastructure.

      (2)(a) In order to claim the exemption under this section, a qualifying business must submit an application to the department for an exemption certificate.  The application must include the information necessary, as required by the department, to determine that a business qualifies for the exemption under this section.  The department must issue exemption certificates to qualifying businesses.  The department may assign a unique identification number to each exemption certificate issued under this section.

      (b) A qualifying business claiming the exemption under this section must present the seller with an exemption certificate in a form and manner prescribed by the department.  The seller must retain a copy of the certificate for the seller's files.

      (3)(a) ((A qualifying business must establish)) Within six years of the ((first day of the calendar quarter in which the business first receives an exemption under this section or section 3 of this act that it has)) date that the department issued an exemption certificate under this section to a qualifying business with respect to an eligible computer data center, the qualifying business must establish that net employment at the eligible computer data center has increased ((employment in a computer data center)) by a minimum of:
      (i) Thirty-five family wage ((jobs from the date the eligible computer data center first became operational)) employment positions; or
      (ii) Three family wage employment positions for each twenty thousand square feet of space or less that is newly dedicated to housing working servers at the eligible computer data center.  For qualifying businesses that lease space at an eligible computer data center, the number of family wage employment positions that must be increased under this subsection (3)(a)(ii) is based only on the space occupied by the lessee in the eligible computer data center.
      (b) In calculating the net increase in family wage employment positions:
      (i) The owner of an eligible computer data center, in addition to its own net increase in family wage employment positions, may include:
      (A) The net increase in family wage employment positions employed by qualifying businesses leasing space within the eligible computer data center from the owner; and
      (B) The net increase in family wage employment positions described in (c)(ii)(B) of this subsection (3).
      (ii)(A) Lessees of the owner of an eligible computer data center, in addition to their own net increase in family wage employment positions, may include:
      (I) A portion of the net increase in family wage employment positions employed by the owner; and
      (II) A portion of the net increase in family wage employment positions described in (c)(ii)(B) of this subsection (3).
      (B) The portion of the net increase in family wage employment positions to be counted under this subsection (3)(b)(ii) by each lessee must be in proportion to the amount of space in the eligible computer data center occupied by the lessee compared to the total amount of space in the eligible computer data center occupied by all lessees that are qualifying businesses.

(c)(i) For purposes of this subsection, family wage ((jobs)) employment positions are new permanent employment positions requiring forty hours of weekly work, or their equivalent, on a full-time basis at the eligible computer data center and ((paying)) receiving a wage equivalent to or greater than one hundred fifty percent of the per capita personal income of the county in which the qualified project is located.  ((The qualifying business must provide)) An employment position may not be counted as a family wage employment position unless the employment position is entitled to health insurance coverage ((for employees)) provided by the employer of the employment position.  For purposes of this subsection (3)(c), "new permanent employment position" means an employment position that did not exist or that had not previously been filled as of the date that the department issued an exemption certificate to the owner or lessee of an eligible computer data center, as the case may be.
      (ii)(A) Family wage employment positions include positions filled by employees of the owner of the eligible computer data center and by employees of qualifying businesses leasing space from the owner of the eligible computer data center.
      (B) Family wage employment positions also include individuals performing work at an eligible computer data center as an independent contractor hired by the owner of the eligible computer data center or as an employee of an independent contractor hired by the owner of the eligible computer data center, if the work is necessary for the operation of the computer data center, such as security and building maintenance, and provided that all of the requirements in (c)(i) of this subsection (3) are met.

      (((b))) (d) All previously exempted sales and use taxes are immediately due and payable for a qualifying business that does not meet the requirements of this subsection.

      (4) A qualifying business claiming an exemption under this section or RCW 82.12.--- (section 3, chapter 1 (ESSB 6789), Laws of 2010 1st sp. sess.) must complete an annual report with the department as required under section 103, chapter 114 (SHB 3066), Laws of 2010.

      (5)(a) The exemption provided in this section does not apply to:

      (i) Any person who has received the benefit of the deferral program under chapter 82.60 RCW on:  (A) The construction, renovation, or expansion of a structure or structures used as a computer data center; or (B) machinery or equipment used in a computer data center; and

      (ii) Any person affiliated with a person within the scope of (a)(i) of this subsection (5).  For purposes of this subsection, "affiliated" means that one person has a direct or indirect ownership interest of at least twenty percent in another person.

      (b) If a person claims an exemption under this section and subsequently receives the benefit of the deferral program under chapter 82.60 RCW on either the construction, renovation, or expansion of a structure or structures used as a computer data center or machinery or equipment used in a computer data center, the person must repay the amount of taxes exempted under this section.  Interest as provided in chapter 82.32 RCW applies to amounts due under this section until paid in full.

      (6) For purposes of this section the following definitions apply unless the context clearly requires otherwise:

      (a)(i) "Computer data center" means a facility comprised of one or more buildings, which may be comprised of multiple businesses, constructed or refurbished specifically, and used primarily, to house working servers, where the facility has the following characteristics: (A) Uninterruptible power supplies, generator backup power, or both; (B) sophisticated fire suppression and prevention systems; and (C) enhanced physical security, such as:  Restricted access to the facility to selected personnel; permanent security guards; video camera surveillance; an electronic system requiring passcodes, keycards, or biometric scans, such as hand scans and retinal or fingerprint recognition; or similar security features.

      (ii) For a computer data center comprised of multiple buildings, each separate building constructed or refurbished specifically, and used primarily, to house working servers is considered a computer data center if it has all of the characteristics listed in (a)(i)(A) through (C) of this subsection (6).

      (iii) A facility comprised of one building or more than one building must have a combined square footage of at least one hundred thousand square feet.

      (b) "Electronic data storage and data management services" include, but are not limited to:  Providing data storage and backup services, providing computer processing power, hosting enterprise software applications, and hosting web sites.  The term also includes providing services such as e-mail, web browsing and searching, media applications, and other online services, regardless of whether a charge is made for such services.

      (c)(i) "Eligible computer data center" means a computer data center:

      (A) Located in a rural county as defined in RCW 82.14.370;

      (B) Having at least twenty thousand square feet dedicated to housing working servers, where the server space has not previously been dedicated to housing working servers; and

      (C) For which the commencement of construction occurs after March 31, 2010, and before July 1, 2011.  For purposes of this section, "commencement of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031 for construction of the computer data center.  The construction of a computer data center includes the expansion, renovation, or other improvements made to existing facilities, including leased or rented space.  "Commencement 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 a computer data center.

      (ii) With respect to facilities in existence on April 1, 2010 that are expanded, renovated, or otherwise improved after March 31, 2010, an eligible computer data center includes only the portion of the computer data center meeting the requirements in (c)(i)(B) of this subsection (6).

      (d) "Eligible power infrastructure" means all fixtures and equipment necessary for the transformation, distribution, or management of electricity that is required to operate eligible server equipment within an eligible computer data center.  The term includes electrical substations, generators, wiring, and cogeneration equipment.

      (e) "Eligible server equipment" means the original server equipment installed in an eligible computer data center on or after April 1, 2010, and replacement server equipment.  For purposes of this subsection (6)(e), "replacement server equipment" means server equipment that: (i) Replaces existing server equipment, if the sale or use of the server equipment to be replaced qualified for an exemption under this section or RCW 82.12.--- (section 3, chapter 1 (ESSB 6789), Laws of 2010 1st sp. sess.); and (ii) is installed and put into regular use before April 1, 2018.

      (f) "Qualifying business" means a business entity that exists for the primary purpose of engaging in commercial activity for profit and that is the owner ((or lessee)) of an eligible computer data center or the lessee of at least twenty thousand square feet within an eligible computer data center dedicated to housing working servers, where the server space has not previously been dedicated to housing working servers.  The term does not include the state or federal government or any of their departments, agencies, and institutions; tribal governments; political subdivisions of this state; or any municipal, quasi-municipal, public, or other corporation created by the state or federal government, tribal government, municipality, or political subdivision of the state.

      (g) "Server" means blade or rack-mount server computers used in a computer data center exclusively to provide electronic data storage and data management services for internal use by the owner or lessee of the computer data center, for clients of the owner or lessee of the computer data center, or both.  "Server" does not include personal computers.

      (h) "Server equipment" means the server chassis and all computer hardware contained within the server chassis.  "Server equipment" also includes computer software necessary to operate the server.  "Server equipment" does not include the racks upon which the server chassis is installed, and computer peripherals such as keyboards, monitors, printers, mice, and other devices that work outside of the computer.

      (7) This section expires April 1, 2018.

Sec. 1602.  RCW 82.12.--- and 2010 1st sp.s. c 1 (ESSB 6789) s 3 are each amended to read as follows:

      (1) An exemption from the tax imposed by RCW 82.12.020 is provided for the use by qualifying businesses of eligible server equipment to be installed, without intervening use, in an eligible computer data center, and to the use of labor and services rendered in respect to installing such server equipment.  The exemption also applies to the use of power infrastructure, including labor and services rendered in respect to installing, repairing, altering, or improving such infrastructure.

      (2) A qualifying business is not eligible for the exemption under this section unless the department issued an exemption certificate to the qualifying business for the exemption provided in RCW 82.08.---(section 2, chapter 1 (ESSB 6789), Laws of 2010 1st sp. sess.).

      (3)(a) The exemption provided in this section does not apply to:

      (i) Any person who has received the benefit of the deferral program under chapter 82.60 RCW on:  (A) The construction, renovation, or expansion of a structure or structures used as a computer data center; or (B) machinery or equipment used in a computer data center; and

      (ii) Any person affiliated with a person within the scope of (a)(i) of this subsection (3).  For purposes of this subsection, "affiliated" means that one person has a direct or indirect ownership interest of at least twenty percent in another person.

      (b) If a person has received the benefit of the exemption under this section and subsequently receives the benefit of the deferral program under chapter 82.60 RCW on either the construction, renovation, or expansion of a structure or structures used as a computer data center or machinery or equipment used in a computer data center, the person must repay the amount of taxes exempted under this section.  Interest as provided in chapter 82.32 RCW applies to amounts due under this subsection (3)(b) until paid in full.  A person is not required to repay taxes under this subsection with respect to property and services for which the person is required to repay taxes under RCW 82.08.---(section 2, chapter 1 (ESSB 6789), Laws of 2010 1st sp. sess.).

      (4) The definitions and requirements in RCW 82.08.--- (section 2, chapter 1 (ESSB 6789), Laws of 2010 1st sp. sess.) apply to this section.

      (5) This section expires April 1, 2018.

 

PART XVII

Miscellaneous Provisions

 

NEW SECTION.  Sec. 1701.  If a court of competent jurisdiction, in a final judgment not subject to appeal, adjudges any provision of section 104(1)(c) of this act unconstitutional or otherwise invalid, Part I of this act is null and void in its entirety.

NEW SECTION.  Sec. 1702.  Part I of this act applies with respect to gross income of the business, as defined in RCW 82.04.080, including gross income from royalties as defined in RCW 82.04.2907, generated on and after June 1, 2010.  For purposes of calculating the thresholds in section 104(1)(c) of this act for the 2010 tax year, property, payroll, and receipts are based on the entire 2010 tax year.

NEW SECTION.  Sec. 1703.  Except as provided in section 202 of this act, section 201 of this act applies to tax periods beginning January 1, 2006.

NEW SECTION.  Sec. 1704.  Sections 402 and 702 of this act apply both retroactively and prospectively.

NEW SECTION.  Sec. 1705.  In accordance with Article VIII, section 5 of the state Constitution, sections 702 and 1704 of this act do not authorize refunds of business and occupation tax validly collected before July 1, 2010, on amounts received by an individual from a corporation as compensation for serving as a member of that corporation's board of directors.

NEW SECTION.  Sec. 1706.  Section 402 of this act does not affect any final judgments, not subject to appeal, entered by a court of competent jurisdiction before the effective date of this section.

NEW SECTION.  Sec. 1707.  Except as provided in section 1701 of this act, if any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 1708.  Except as otherwise provided in this act, this act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect May 1, 2010.

NEW SECTION.  Sec. 1709.  Parts III and XIII and sections 101 through 106, 108 through 112, 501 through 503, 505, 507, 510 through 514, 516 through 519, 901, 903 through 911, and 1201 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect June 1, 2010.

NEW SECTION.  Sec. 1710.  Sections 106, 901, and 1201 of this act expire July 1, 2010.

NEW SECTION.  Sec. 1711.  Sections 503, 505, and 514 of this act expire June 10, 2010.

NEW SECTION.  Sec. 1712.  Sections 504, 506, and 515 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect June 10, 2010.

NEW SECTION.  Sec. 1713.  Parts VI, VII, and XIV and sections 107, 702, 902, and 1202 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect July 1, 2010.

NEW SECTION.  Sec. 1714.  Section 507 of this act expires July 13, 2010.

NEW SECTION.  Sec. 1715.  Section 508 of this act takes effect July 13, 2010.

NEW SECTION.  Sec. 1716.  Section 508 of this act expires July 1, 2011.

NEW SECTION.  Sec. 1717.  Section 509 of this act takes effect July 1, 2011.

NEW SECTION.  Sec. 1718.  Section 1001 of this act applies prospectively only.

NEW SECTION.  Sec. 1719.  Sections 1502 and 1503 of this act apply to claims for credit or refund filed with the department of revenue after June 30, 2010."

Correct the title.

And the bill do pass as recommended by the conference committee.

Signed by Senators Prentice and Murray; Representatives Hasegawa and Hunter.

 

MOTION

 

Senator Prentice moved that the Report of the Conference Committee on Second Engrossed Substitute Senate Bill No. 6143 be adopted.

Senator Zarelli spoke against the motion.

 

Senator Schoesler demanded a roll call on the motion to adopt the conference committee report on Second Engrossed Substitute Senate Bill No. 6143.

The President declared that one-sixth of the members supported the demand and the demand was sustained.

 

The President declared the question before the Senate to be the motion by Senator Prentice that the Report of the Conference Committee on Second Engrossed Substitute Senate Bill No. 6143 be adopted.

 

ROLL CALL

 

      The Secretary called the roll on the motion by Senator Prentice and the report of the conference committee was adopted by the following vote: Yeas, 25; Nays, 21; Absent, 0; Excused, 3.

      Voting yea: Senators Berkey, Brown, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Haugen, Jacobsen, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McDermott, Murray, Oemig, Prentice, Pridemore, Ranker, Regala, Rockefeller and Shin

      Voting nay: Senators Becker, Benton, Brandland, Carrell, Hewitt, Hobbs, Holmquist, Honeyford, Kauffman, Kilmer, King, Marr, Morton, Parlette, Pflug, Roach, Schoesler, Sheldon, Swecker, Tom and Zarelli

      Excused: Senators Delvin, McCaslin and Stevens

 

The Report of the Conference Committee was adopted by a roll call.

The President declared the question before the Senate to be the final passage of Second Engrossed Substitute Senate Bill No. 6143, as recommended by the Conference Committee.

Senators Schoesler, Sheldon, Morton, Carrell, Zarelli, Benton and Pflug spoke against final passage of the bill.

Senators Hargrove, Jacobsen, Franklin, Brown, and Murray spoke in favor of final passage of the bill.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of Second Engrossed Substitute Senate Bill No. 6143, as recommended by the Conference Committee, and the bill passed the Senate by the following vote:  Yeas, 25; Nays, 21; Absent, 0; Excused, 3.

      Voting yea: Senators Berkey, Brown, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Haugen, Jacobsen, Kastama, Keiser, Kline, Kohl-Welles, McAuliffe, McDermott, Murray, Oemig, Prentice, Pridemore, Ranker, Regala, Rockefeller and Shin

      Voting nay: Senators Becker, Benton, Brandland, Carrell, Hewitt, Hobbs, Holmquist, Honeyford, Kauffman, Kilmer, King, Marr, Morton, Parlette, Pflug, Roach, Schoesler, Sheldon, Swecker, Tom and Zarelli

      Excused: Senators Delvin, McCaslin and Stevens

 SECOND ENGROSSED SUBSTITUTE SENATE BILL NO. 6143, as recommended by the Conference Committee, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

SIGNED BY THE PRESIDENT

 

The President signed:

ENGROSSED SENATE BILL 6870.

 

MOTION

 

On motion of Senator Eide, the Senate advanced to the sixth order of business.

 

The Senate resumed consideration of Engrossed House Bill No. 2561 which had been deferred earlier in the day.

 

MOTION

 

Senator Honeyford moved that the following amendment by Senator Honeyford to the committee striking amendment be adopted:

0)On page 3, line 34, after "(b)" insert the following:

""Cost effective" has the same meaning as provided in RCW 80.52.030.

      (c)"

      On page 5, line 15, after "demonstrates" insert "cost effective"

      Renumber the sections consecutively and correct any internal references accordingly.

Senator Honeyford spoke in favor of adoption of the amendment to the committee striking amendment.

Senator Fraser spoke against adoption of the amendment to the committee striking amendment.

 

The President declared the question before the Senate to be the adoption of the amendment by Senator Honeyford on page 3, line 34 to the committee striking amendment to Engrossed House Bill No. 2561.

The motion by Senator Honeyford failed and the amendment to the committee striking amendment was not adopted by a rising vote.

 

The President declared the question before the Senate to be the adoption of the committee striking amendment by the Committee on Ways & Means to Engrossed House Bill No. 2561.

 

POINT OF ORDER

 

Senator Carrell:  “I believe that this bill contains two subjects in violation of Senate Rule 25 and I have arguments thereon. This bill authorized the issuance of bonds for the purpose of creating energy efficient schools. In addition the bill removes the expiration date on the new tax on bottled water. The tax on bottled water is not dedicated to the payment of the bonds issued under the bill. It is an entirely separate stand alone provision to extend the tax where the revenue is directed to the state’s general fund and revenue may be spent on a variety of programs. Mr. President, I believe that the bill contains two distinct subjects, the issuance of bonds and the extension of a tax in violation of Rule 25.”

 

REPLY BY THE PRESIDENT

 

President Owen:  “Senator Carrell, the President needs a clarification. You raised your point of order on the bill or raised your point of order on the committee amendment? Senator Carrell, the President is going to allow little latitude here because he believes that you made your point of order to the bill but in effect the striking amendment is the bill. Therefore he will allow the consideration of the two the question of violating the two issue rule on the striking amendment itself and we’ll take under consideration.”

 

Senator Eide spoke against the point of order.

 

RULING BY THE PRESIDENT

 

President Owen: “In ruling on the Point of Order raised by Senator Carrell as to whether the Senate committee amendment to Engrossed House Bill 2561 would violate the single subject limitation found in Senate Rule 25, the President finds and rules as follows:

The Senate has developed a body of parliamentary precedent on this issue, precedent which is based in large part upon Supreme Court rulings on this same topic.  While the President does not make legal rulings, the Supreme Court’s guidance is appropriate, because Senate Rule 25 contains the same single subject language found in our Constitution in Article II, Section 19. 

Very generally, this precedent requires that the various sections and effects of a measure be rationally related to that measure’s overarching common purpose or subject.  It is true that this measure contains multiple provisions, but these are all harmonized under one common policy choice—or subject—of the bill, which is to issue bonds for a particular purpose and include revenue which might fund those bonds and facilitate that purpose. The varied and detailed sections of the bill in this case are simply policy choices made by the drafters to implement that purpose.  Others may prefer different choices or different purposes altogether, but those are policy choices to be made by this body, not a violation of Senate Rule 25.

For these reasons, the President finds that the proposed committee amendment does not violate the provisions of Senate Rule 25, and Senator Carrell’s point is not well-taken.”

 

The motion by Senator Fraser carried and the committee striking amendment was adopted by voice vote.

 

MOTION

 

There being no objection, the following title amendment was adopted:

      On page 1, line 2 of the title, after "facilities" strike the remainder of the title and insert "and raising revenue therefor; amending RCW 82.08.0293, 82.12.0293, and 39.94.040; adding a new chapter to Title 43 RCW; creating new sections; making an appropriation; providing a contingent effective date; providing for submission of certain sections of this act to a vote of the people; and declaring an emergency."

 

MOTION

 

On motion of Senator Fraser, the rules were suspended, Engrossed House Bill No. 2561 as amended b the Senate was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

      Senators Fraser, Franklin and Rockefeller spoke in favor of passage of the bill.

      Senators Zarelli, King, Benton and Carrell spoke against passage of the bill.

 

The President declared the question before the Senate to be the final passage of Engrossed House Bill No. 2561 as amended by the Senate.

 

ROLL CALL

 

      The Secretary called the roll on the final passage of Engrossed House Bill No. 2561 as amended b the Senate and the bill passed the Senate by the following vote:  Yeas, 28; Nays, 18; Absent, 0; Excused, 3.

      Voting yea: Senators Berkey, Brown, Eide, Fairley, Franklin, Fraser, Gordon, Hargrove, Hatfield, Hobbs, Jacobsen, Kastama, Kauffman, Keiser, Kilmer, Kline, Kohl-Welles, Marr, McAuliffe, McDermott, Murray, Oemig, Prentice, Pridemore, Ranker, Regala, Rockefeller and Shin

      Voting nay: Senators Becker, Benton, Brandland, Carrell, Haugen, Hewitt, Holmquist, Honeyford, King, Morton, Parlette, Pflug, Roach, Schoesler, Sheldon, Swecker, Tom and Zarelli

      Excused: Senators Delvin, McCaslin and Stevens

ENGROSSED HOUSE BILL NO. 2561 as amended b the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill was ordered to stand as the title of the act.

 

MOTION

 

On motion of Senator Eide, the Senate reverted to the fourth order of business.

 

MESSAGE FROM THE HOUSE

 

April 12, 2010

 

MR. PRESIDENT:

The House passed ENGROSSED SUBSTITUTE SENATE BILL NO. 6444 with the following amendment(s): 6444-S.E AMH ENGR H5863.E

  0)Strike everything after the enacting clause and insert the following:

 

"PART I

GENERAL GOVERNMENT

 

Sec. 101.  2009 c 564 s 101 (uncodified) is amended to read as follows:

FOR THE HOUSE OF REPRESENTATIVES

General Fund‑-State Appropriation (FY 2010)……(($33,500,000))

$33,505,000

General Fund‑-State Appropriation (FY 2011)…….(($33,379,000))

$32,146,000

             TOTAL APPROPRIATION……………..(($66,879,000))

      $65,651,000

Sec. 102.  2009 c 564 s 102 (uncodified) is amended to read as follows:

FOR THE SENATE

General Fund‑-State Appropriation (FY 2010)…….(($24,957,000))

$24,960,000

General Fund‑-State Appropriation (FY 2011)……(($27,182,000))

$25,631,000

             TOTAL APPROPRIATION……………..(($52,139,000))

$50,591,000

Sec. 103.  2009 c 564 s 103 (uncodified) is amended to read as follows:

FOR THE JOINT LEGISLATIVE AUDIT AND REVIEW COMMITTEE

General Fund--State Appropriation (FY 2010)………...$2,874,000

General Fund--State Appropriation (FY 2011)……..(($2,884,000))

$3,152,000

      TOTAL APPROPRIATION…………………...(($5,758,000))

$6,026,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) Notwithstanding the provisions of this section, the joint legislative audit and review committee may adjust the due dates for projects included on the committee's 2009-11 work plan as necessary to efficiently manage workload.

      (2) Within the amounts appropriated in this section, the committee shall conduct a review of the effect of risk management practices on tort payouts.  This review shall include an analysis of the state's laws, policies, procedures, and practices as they relate to the conduct of post-incident reviews and the impact of such reviews on the state's conduct and liability.

      (3) Within the amounts appropriated in this section, the committee shall conduct a review of the state's workplace safety and health program.  The review shall examine workplace safety inspection, enforcement, training, and outreach efforts compared to other states and federal programs; analyze workplace injury and illness rates and trends in Washington; identify factors that may influence workplace safety and health; and identify practices that may improve workplace safety and health and/or impact insurance costs.

      (4) Within the amounts appropriated in this section, the committee shall prepare an evaluation of the implementation of legislation designed to improve communication, collaboration, and expedited medicaid attainment with regard to persons released from confinement who have mental health or chemical dependency disorders.  The review shall evaluate the implementation of:  (a) Chapter 166, Laws of 2004 (E2SSB 6358); (b) sections 507 and 508 of chapter 504, Laws of 2005 (E2SSB 5763); (c) sections 12 and 13 of chapter 503, Laws of 2005 (E2SHB 1290); and (d) section 8 of chapter 359, Laws of 2007 (2SHB 1088).  The departments of corrections and social and health services, the administrative office of the courts, institutions for mental disease, city and county jails, city and county courts, county clerks, and mental health and chemical dependency treatment providers shall provide the committee with information necessary for the study.

      (5) Within the amount appropriated in this section, the joint legislative audit and review committee shall conduct a review of the state's recreational boating programs.  This review shall include examination of the following:

      (a) Revenue sources for state recreational boating programs;

      (b) Expenditures for state boating programs;

      (c) Methods of administrating state recreational boating programs, including the roles of both state and local government entities; and

      (d) Approaches other states have taken to funding and administering their recreational boating programs.

      The committee shall complete the review by October 31, 2010.

      (((7))) (6) Within the amount appropriated in this section, the joint legislative audit and review committee shall examine the operations of employment and day services as provided by the department of social and health services, division of developmental disabilities and administered by the counties.  The examination shall include a thorough review of the contracts for all services including, but not limited to, employment services, day services, child development services and other uses of state dollars for county administration of services to the developmentally disabled.  In its final report, due to the legislature by September 1, 2010, the joint legislative audit and review committee shall provide:  A description of how funds are used and the rates paid to vendors, and a recommendation on best practices the agency may use for the development of a consistent, outcome-based contract for services provided under contract with the counties.

      (((8))) (7) Within the amount appropriated in this section, the joint legislative audit and review committee shall conduct a study of the relationship between the cost of school districts and their enrollment size.  The study shall be completed by June 2010 and shall include:

      (a) An analysis of how categories of costs vary related to size, including but not limited to facility costs, transportation costs, educational costs, and administrative costs;

      (b) A review of other factors that may impact costs, such as revenues available from local levies and other sources, geographic dispersion, demographics, level of services received from educational service districts, and whether districts operate a high school;

      (c) Case studies on the change in cost patterns occurring after school district consolidations and for school districts operating under state oversight condition specified in RCW 28A.505.110; and

      (d) A review of available research on nonfinancial benefits and impacts associated with school and school district size.

(8) $200,000 of the general fund--state appropriation for fiscal year 2011 is provided for the committee to contract with a consultant specializing in medicaid programs nationwide to review Washington state's medicaid program and report on cost containment strategies for the 2011-13 biennial budget.  The report is due to the fiscal committees of the legislature by June 1, 2011.
      (9) $50,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the joint legislative audit and review committee to complete a report that includes the following:  (a) An analysis of the availability within eastern Washington of helicopters that are privately owned or owned by nonstate governmental entities that are sufficiently outfitted to participate in wildfire suppression efforts of the department of natural resources; (b) a comparison of the costs to the department of natural resources for maintaining the existing helicopter fleet versus entering into exclusive use contracts with the helicopters noted in (a) of this subsection; and (c) an analysis that compares the use and funding of helicopters utilized for wildfire suppression in the states of California, Oregon, Idaho, and Montana.  The committee shall submit the report to the appropriate fiscal committees of the legislature and the office of financial management no later than December 1, 2010.
      (10)(a) The task force for reform of executive and legislative procedures dealing with tax preferences is hereby established.  The task force must:
      (i) Review current executive and legislative budget and policy practices and procedures associated with the recommendation, development, and consideration of tax preferences, assess the effectiveness of budgeting requirements and practices, the general rigor of justifications and evaluations typically provided during legislative consideration of tax preferences, and the role and value of methodologies currently used to measure the public benefits and costs, including opportunity costs, of tax preferences, as defined in RCW 43.136.021.
      (ii) Consider but not be limited to, the factors listed in RCW 43.136.055.
      (b) The task force may make recommendations to improve the effectiveness of the review process conducted by the citizen commission on performance measurement of tax preferences process as described in chapter 43.136 RCW.  The task force may also recommend changes or improvements in the manner in which both the executive branch and legislative branch of state government address tax preferences generally, including those in effect as well as those that may be hereafter proposed, in order to protect the public interest and assure transparency, fairness, and equity in the state tax code.
      (c) The task force may recommend structural or procedural changes that it feels will enhance both executive and legislative procedures and ensure consistent and rigorous examination of such preferences.
      (d) The task force must report its recommendations to the governor and legislative fiscal committees by November 15, 2010.
      (e) The task force has eleven voting members as follows:
      (i) One member is the state treasurer;
      (ii) One member is the chair of the joint legislative audit and review committee;
      (iii) One member is the director of financial management;
      (iv) A member, four in all, of each of the two largest caucuses of the senate and the two largest caucuses of the house of representatives, appointed by the chair of each caucus; and
      (v) An appointee who is not a legislator, four in all, of each of the two largest caucuses of the senate and the two largest caucuses of the house of representatives, appointed by the chair of each caucus.
      (f) Persons appointed by the caucus chairs under (e)(v) of this subsection should be individuals who have a basic understanding of state tax policy, government operations, and public services.
      (g) The task force must elect a chair from among its members.  Decisions of the task force must be made using the sufficient consensus model.  For the purposes of this subsection, "sufficient consensus" means the point at which the substantial majority of the commission favors taking a particular action.  The chair may determine when a vote must be taken.  The task force must allow a minority report to be included with a decision of the task force if requested by a member of the task force.
      (h) The joint legislative audit and review committee must provide clerical, technical, and management personnel to the task force to serve as the task force's staff.  The staff of the legislative fiscal committees, legislative counsel, and the office of financial management must also provide technical assistance to the task force.  The department of revenue must provide necessary support and information to the joint task force.
      (i) The task force must meet at least once a quarter and may hold additional meetings at the call of the chair or by a majority vote of the members of the task force.  The members of the task force must be compensated in accordance with RCW 43.03.220 and reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060.

Sec. 104.  2009 c 564 s 104 (uncodified) is amended to read as follows:

FOR THE LEGISLATIVE EVALUATION AND ACCOUNTABILITY PROGRAM COMMITTEE

General Fund--State Appropriation (FY 2010)…………$1,748,000

General Fund--State Appropriation (FY 2011)……..(($1,927,000))

$1,916,000

      TOTAL APPROPRIATION…………………...(($3,675,000))

      $3,664,000

Sec. 105.  2009 c 564 s 105 (uncodified) is amended to read as follows:

FOR THE OFFICE OF THE STATE ACTUARY

General Fund‑-State Appropriation (FY 2010)…….….…$200,000

General Fund‑-State Appropriation (FY 2011)…….…..(($25,000))

$20,000

((Health Care Authority Administrative Account--State
      Appropriation……………………………………...$735,000))

Department of Retirement Systems Expense

      Account‑-State Appropriation………………….(($3,309,000))

$3,305,000

             TOTAL APPROPRIATION………………(($4,269,000))

$3,525,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $25,000 of the department of retirement systems--state appropriation is provided solely for the continued study of local government liabilities for postretirement medical benefits for members of plan 1 of the law enforcement officers' and firefighters' retirement system.

      (2) $51,000 of the department of retirement systems expense account--state appropriation is provided solely for the state actuary to contract with the Washington state institute for public policy for a study of the disability benefits provided to the plan 2 and plan 3 members of the public employees' retirement system, the teachers' retirement system, and the school employees' retirement system.  Among the options the institute shall examine include statutory changes to the retirement systems and insurance products.  The institute shall report its findings and recommendations to the select committee on pension policy by November 1, 2009.

(3) $30,000 of the department of retirement systems expense account--state appropriation is provided solely for the state actuary to contract with the Washington state institute for public policy to continue the study of long-term disability benefits for public employees as authorized by subsection (2) of this section during the 2010 legislative interim.  The purpose of the study is to develop the options identified in the 2009 legislative interim disability benefit study, including options related to the public employees' benefits board programs, other long-term disability insurance programs, and public employee retirement system benefits.  The institute shall report no later than November 17, 2010, new findings and any additional recommendations on the options to the select committee on pension policy, the senate committee on ways and means, and the house committee on ways and means.  The Washington state institute for public policy shall work with the health care authority to coordinate analysis and recommendations with its contracted disability vendor and appropriate stakeholders.

      (4) $175,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for the office of the state actuary to conduct an independent assessment of alternatives for assuring the long-term financial solvency of the guaranteed education tuition program including suspension of the program.  In conducting this review, the office may contract for assistance, and shall consult with the higher education coordinating board, the operating budget committees of the legislature, the office of financial management, and the state's public colleges and universities.  The office shall report findings, an assessment of the major alternatives, and suggested actions to the governor and to the relevant legislative committees by November 15, 2009.

Sec. 106.  2009 c 564 s 106 (uncodified) is amended to read as follows:

FOR THE JOINT LEGISLATIVE SYSTEMS COMMITTEE

General Fund‑-State Appropriation (FY 2010)……...(($8,651,000))

$8,652,000

General Fund‑-State Appropriation (FY 2011)……...(($8,519,000))

$8,506,000

             TOTAL APPROPRIATION……………..(($17,170,000))

$17,158,000

Sec. 107.  2009 c 564 s 107 (uncodified) is amended to read as follows:

FOR THE STATUTE LAW COMMITTEE

General Fund‑-State Appropriation (FY 2010)……...(($4,610,000))

$4,611,000

General Fund‑-State Appropriation (FY 2011)……..(($5,029,000))

$4,864,000

             TOTAL APPROPRIATION………………(($9,639,000))

$9,475,000

Sec. 108.  2009 c 564 s 108 (uncodified) is amended to read as follows:

FOR THE REDISTRICTING COMMISSION

General Fund‑-State Appropriation (FY 2011)………..(($610,000))

$1,115,000

The appropriations in this section are subject to the following conditions and limitations:  $505,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the support of legislative redistricting efforts.  Prior to the appointment of the redistricting commission, the secretary of the senate and chief clerk of the house of representatives may jointly authorize the expenditure of these funds to facilitate preparations for the 2012 redistricting effort.  Following the appointment of the commission, the house of representatives and senate shall enter into an interagency agreement with the commission authorizing the continued expenditure of these funds for legislative redistricting support.

Sec. 109.  2009 c 564 s 110 (uncodified) is amended to read as follows:

FOR THE SUPREME COURT

General Fund‑-State Appropriation (FY 2010)……...(($6,912,000))

$6,891,000

General Fund‑-State Appropriation (FY 2011)……..(($6,948,000))

$6,795,000

             TOTAL APPROPRIATION……………..(($13,860,000))

$13,686,000

      The appropriations in this section are subject to the following conditions and limitations:  It is the intent of the legislature that the reductions in appropriations in this section shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing its mission.

Sec. 110.  2009 c 564 s 111 (uncodified) is amended to read as follows:

FOR THE LAW LIBRARY

General Fund‑-State Appropriation (FY 2010)……...(($1,924,000))

$1,925,000

General Fund‑-State Appropriation (FY 2011)……..(($1,922,000))

$1,659,000

             TOTAL APPROPRIATION………………(($3,846,000))

$3,584,000

      The appropriations in this section are subject to the following conditions and limitations:  It is the intent of the legislature that the reductions in appropriations in this section shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing its mission.

Sec. 111.  2009 c 564 s 112 (uncodified) is amended to read as follows:

FOR THE COURT OF APPEALS

General Fund‑-State Appropriation (FY 2010)….....(($15,793,000))

$15,632,000

General Fund‑-State Appropriation (FY 2011)……(($15,895,000))

$15,969,000

             TOTAL APPROPRIATION……………..(($31,688,000))

$31,601,000

      The appropriations in this section are subject to the following conditions and limitations:  It is the intent of the legislature that the reductions in appropriations in this section shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing its mission.

Sec. 112.  2009 c 564 s 113 (uncodified) is amended to read as follows:

FOR THE COMMISSION ON JUDICIAL CONDUCT

General Fund‑-State Appropriation (FY 2010)……...(($1,032,000))

$1,043,000

General Fund‑-State Appropriation (FY 2011)……..(($1,082,000))

$1,064,000

             TOTAL APPROPRIATION……………….(($2,114,000))

$2,107,000

      The appropriations in this section are subject to the following conditions and limitations:  It is the intent of the legislature that the reductions in appropriations in this section shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing its mission.

Sec. 113.  2009 c 564 s 114 (uncodified) is amended to read as follows:

FOR THE ADMINISTRATOR FOR THE COURTS

General Fund‑-State Appropriation (FY 2010)…….(($53,607,000))

$52,644,000

General Fund‑-State Appropriation (FY 2011)……(($51,812,000))

$52,562,000

General Fund--Federal Appropriation……………………$979,000

Judicial Information Systems Account‑-State

      Appropriation…………………………………(($29,676,000))

$33,406,000

Judicial Stabilization Trust Account--State

      Appropriation……………………………………...$6,598,000

             TOTAL APPROPRIATION……………(($141,693,000))

$146,189,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $1,800,000 of the general fund--state appropriation for fiscal year 2010 and $1,800,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for school districts for petitions to juvenile court for truant students as provided in RCW 28A.225.030 and 28A.225.035.  The office of the administrator for the courts shall develop an interagency agreement with the superintendent of public instruction to allocate the funding provided in this subsection.  Allocation of this money to school districts shall be based on the number of petitions filed.  This funding includes amounts school districts may expend on the cost of serving petitions filed under RCW 28A.225.030 by certified mail or by personal service or for the performance of service of process for any hearing associated with RCW 28A.225.030.

      (2)(a) $8,252,000 of the general fund--state appropriation for fiscal year 2010 and $8,253,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for distribution to county juvenile court administrators to fund the costs of processing truancy, children in need of services, and at-risk youth petitions.  The administrator for the courts, in conjunction with the juvenile court administrators, shall develop an equitable funding distribution formula.  The formula shall neither reward counties with higher than average per-petition processing costs nor shall it penalize counties with lower than average per-petition processing costs.

      (b) Each fiscal year during the 2009-11 fiscal biennium, each county shall report the number of petitions processed and the total actual costs of processing truancy, children in need of services, and at-risk youth petitions.  Counties shall submit the reports to the administrator for the courts no later than 45 days after the end of the fiscal year.  The administrator for the courts shall electronically transmit this information to the chairs and ranking minority members of the house of representatives appropriations committee and the senate ways and means committee no later than 60 days after a fiscal year ends.  These reports are deemed informational in nature and are not for the purpose of distributing funds.

      (3) The distributions made under this subsection and distributions from the county criminal justice assistance account made pursuant to section 801 of this act constitute appropriate reimbursement for costs for any new programs or increased level of service for purposes of RCW 43.135.060.

      (4) $5,700,000 of the judicial information systems account--state appropriation is provided solely for modernization and integration of the judicial information system.

      (a) Of this amount, $1,700,000 is for the development of a comprehensive enterprise-level information technology strategy and detailed business and operational plans in support of that strategy, and $4,000,000 is to continue to modernize and integrate current systems and enhance case management functionality on an incremental basis.

      (b) The amount provided in this subsection may not be expended without prior approval by the judicial information system committee ((in consultation with the information services board)).  The administrator shall regularly submit project plan updates for approval to the judicial information system committee ((and the information services board)).

      (c) The judicial information system committee ((and the information services board)) shall review project progress on a regular basis and may require quality assurance plans.  The judicial information systems committee ((and the information services board)) shall provide a report to the appropriate committees of the legislature no later than November 1, 2011, on the status of the judicial information system modernization and integration, and the consistency of the project with the state's architecture, infrastructure and statewide enterprise view of service delivery.

(d) $100,000 of the judicial information systems account--state appropriation is provided solely for the administrative office of the courts, in coordination with the judicial information system committee, to conduct an independent third-party executive-level review of the judicial information system.  This review shall examine, at a minimum, the scope of the current project plan, governance structure, and organizational change management procedures.  The review will also benchmark the system plans against similarly sized projects in other states or localities, review the large scale program risks, and estimate life cycle costs, including capital and on-going operational expenditures.

      (5) $3,000,000 of the judicial information systems account--state appropriation is provided solely for replacing computer equipment at state courts, and at state judicial agencies.  The administrator for the courts shall prioritize equipment replacement purchasing and shall fund those items that are most essential or critical.  By October 1, 2010, the administrative office of the courts shall report to the appropriate legislative fiscal committees on expenditures for equipment under this subsection.

      (6) $12,000 of the judicial information systems account--state appropriation is provided solely to implement Engrossed Substitute House Bill No. 1954 (sealing juvenile records).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (7) $106,000 of the general fund--state appropriation for fiscal year 2010 and $106,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the twenty-third superior court judge position in Pierce county.  The funds appropriated in this subsection shall be expended only if the judge is appointed and serving on the bench.

      (8) It is the intent of the legislature that the reductions in appropriations in this section shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing its mission.

(9) $44,000 of the judicial information systems account--state appropriation is provided solely to implement chapter 272, Laws of 2010 (SHB 2680; guardianship).

      (10) $274,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the office of public guardianship to provide guardianship services for low-income incapacitated persons.
      (11) $3,797,000 of the judicial information systems account--state appropriation is provided solely for continued planning and implementation of improvements to the court case management system.

Sec. 114.  2009 c 564 s 115 (uncodified) is amended to read as follows:

FOR THE OFFICE OF PUBLIC DEFENSE

General Fund‑-State Appropriation (FY 2010)…….…$25,385,000

General Fund‑-State Appropriation (FY 2011)…….(($24,592,000))

$24,591,000

Judicial Stabilization Trust Account--State

      Appropriation…………………………….………..$2,923,000

             TOTAL APPROPRIATION……………..(($52,900,000))

$52,899,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) It is the intent of the legislature that the reductions in appropriations in this section shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing its mission.

      (2) The amounts provided include funding for expert and investigative services in death penalty personal restraint petitions.

Sec. 115.  2009 c 564 s 116 (uncodified) is amended to read as follows:

FOR THE OFFICE OF CIVIL LEGAL AID

General Fund‑-State Appropriation (FY 2010)…….…$11,175,000

General Fund‑-State Appropriation (FY 2011)……(($11,105,000))

$10,984,000

Judicial Stabilization Trust Account--State

      Appropriation…………………………………..(($1,160,000))

$1,155,000

             TOTAL APPROPRIATION……………..(($23,440,000))

$23,314,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) An amount not to exceed $40,000 of the general fund--state appropriation for fiscal year 2010 and an amount not to exceed $40,000 of the general fund--state appropriation for fiscal year 2011 may be used to provide telephonic legal advice and assistance to otherwise eligible persons who are sixty years of age or older on matters authorized by RCW 2.53.030(2) (a) through (k) regardless of household income or asset level.

      (2) It is the intent of the legislature that the reductions in appropriations in this section shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing its mission.

Sec. 116.  2009 c 564 s 117 (uncodified) is amended to read as follows:

FOR THE OFFICE OF THE GOVERNOR

General Fund‑-State Appropriation (FY 2010)……...(($5,880,000))

$5,836,000

General Fund‑-State Appropriation (FY 2011)……...(($5,876,000))

$5,705,000

Economic Development Strategic Reserve Account--State

      Appropriation………………………………….…..$1,500,000

             TOTAL APPROPRIATION……………..(($13,256,000))

$13,041,000

      The appropriations in this section are subject to the following conditions and limitations:  (((1))) $1,500,000 of the economic development strategic reserve account appropriation is provided solely for efforts to assist with currently active industrial recruitment efforts that will bring new jobs to the state or will retain headquarter locations of major companies currently housed in the state.

Sec. 117.  2009 c 564 s 118 (uncodified) is amended to read as follows:

FOR THE LIEUTENANT GOVERNOR

General Fund‑-State Appropriation (FY 2010)……….(($770,000))

$752,000

General Fund‑-State Appropriation (FY 2011)……….(($788,000))

$765,000

General Fund‑-Private/Local Appropriation……………(($90,000))

$88,000

             TOTAL APPROPRIATION………………(($1,648,000))

$1,605,000

Sec. 118.  2009 c 564 s 119 (uncodified) is amended to read as follows:

FOR THE PUBLIC DISCLOSURE COMMISSION

General Fund‑-State Appropriation (FY 2010)……...(($2,267,000))

$2,249,000

General Fund‑-State Appropriation (FY 2011)……..(($2,264,000))

$2,212,000

             TOTAL APPROPRIATION……………….(($4,531,000))

$4,461,000

Sec. 119.  2010 c 3 s 101 (uncodified) is amended to read as follows:

FOR THE SECRETARY OF STATE

General Fund‑-State Appropriation (FY 2010)……(($20,649,000))

$21,105,000

General Fund‑-State Appropriation (FY 2011)……(($17,733,000))

$14,869,000

General Fund‑-Federal Appropriation………………(($8,121,000))

$8,082,000

Archives and Records Management Account‑-State

      Appropriation………………………………….(($8,863,000))

$8,990,000

Charitable Organization Education Account--State
      Appropriation…………………………………………$76,000

Department of Personnel Service Account‑-State

      Appropriation…………………………………….(($760,000))

$757,000

Election Account--State Appropriation……………………$77,000

Local Government Archives Account‑-State

      Appropriation…………………………………(($11,777,000))

$11,515,000

Election Account‑-Federal Appropriation…………(($29,715,000))

$31,163,000

             TOTAL APPROPRIATION……………..(($97,618,000))

$96,634,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $4,101,000 of the general fund‑-state appropriation for fiscal year 2010 is provided solely to reimburse counties for the state's share of primary and general election costs and the costs of conducting mandatory recounts on state measures.  Counties shall be reimbursed only for those odd-year election costs that the secretary of state validates as eligible for reimbursement.

      (2)(a) $1,897,000 of the general fund‑-state appropriation for fiscal year 2010 and $2,076,000 of the general fund‑-state appropriation for fiscal year 2011 are provided solely for contracting with a nonprofit organization to produce gavel-to-gavel television coverage of state government deliberations and other events of statewide significance during the 2009-2011 biennium.  The funding level for each year of the contract shall be based on the amount provided in this subsection.  The nonprofit organization shall be required to raise contributions or commitments to make contributions, in cash or in kind, in an amount equal to forty percent of the state contribution.  The office of the secretary of state may make full or partial payment once all criteria in this subsection have been satisfactorily documented.

      (b) The legislature finds that the commitment of on-going funding is necessary to ensure continuous, autonomous, and independent coverage of public affairs.  For that purpose, the secretary of state shall enter into a contract with the nonprofit organization to provide public affairs coverage.

      (c) The nonprofit organization shall prepare an annual independent audit, an annual financial statement, and an annual report, including benchmarks that measure the success of the nonprofit organization in meeting the intent of the program.

      (d) No portion of any amounts disbursed pursuant to this subsection may be used, directly or indirectly, for any of the following purposes:

      (i) Attempting to influence the passage or defeat of any legislation by the legislature of the state of Washington, by any county, city, town, or other political subdivision of the state of Washington, or by the congress, or the adoption or rejection of any rule, standard, rate, or other legislative enactment of any state agency;

      (ii) Making contributions reportable under chapter 42.17 RCW; or

      (iii) Providing any: (A) Gift; (B) honoraria; or (C) travel, lodging, meals, or entertainment to a public officer or employee.

      (3) The appropriations in this section are based upon savings assumed from the implementation of Senate Bill No. 6122 (election costs).

      (4) ((The secretary of state shall not reduce the services provided by the talking book and Braille library below the service level provided in fiscal year 2008.
      (5))) In implementing budget reductions, the office of the secretary of state must make its first priority to maintain funding for the elections division.

(5) $76,000 of the charitable organization education account--state appropriation for fiscal year 2011 is provided solely to implement Second Substitute House Bill No. 2576 (corporation and charity fees).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (6) $77,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for deposit to the election account.

Sec. 120.  2009 c 564 s 121 (uncodified) is amended to read as follows:

FOR THE GOVERNOR'S OFFICE OF INDIAN AFFAIRS

General Fund‑-State Appropriation (FY 2010)………..(($266,000))

$275,000

General Fund‑-State Appropriation (FY 2011)………..(($276,000))

$262,000

             TOTAL APPROPRIATION………………...(($542,000))

$537,000

      The appropriations in this section are subject to the following conditions and limitations:  The office shall assist the department of personnel on providing the government-to-government training sessions for federal, state, local, and tribal government employees.  The training sessions shall cover tribal historical perspectives, legal issues, tribal sovereignty, and tribal governments.  Costs of the training sessions shall be recouped through a fee charged to the participants of each session.  The department of personnel shall be responsible for all of the administrative aspects of the training, including the billing and collection of the fees for the training.

Sec. 121.  2009 c 564 s 122 (uncodified) is amended to read as follows:

FOR THE COMMISSION ON ASIAN PACIFIC AMERICAN AFFAIRS

General Fund‑-State Appropriation (FY 2010)………..(($236,000))

$216,000

General Fund‑-State Appropriation (FY 2011)………..(($224,000))

$236,000

             TOTAL APPROPRIATION………………...(($460,000))

$452,000

Sec. 122.  2009 c 564 s 123 (uncodified) is amended to read as follows:

FOR THE STATE TREASURER

State Treasurer's Service Account‑-State

      Appropriation…………………………………(($14,802,000))

$14,686,000

Sec. 123.  2009 c 564 s 124 (uncodified) is amended to read as follows:

FOR THE STATE AUDITOR

General Fund‑-State Appropriation (FY 2010)……….….$722,000

General Fund‑-State Appropriation (FY 2011)……….(($729,000))

$717,000

State Auditing Services Revolving

      Account‑-State Appropriation………………...(($12,061,000))

$10,749,000

             TOTAL APPROPRIATION……………..(($13,512,000))

$12,188,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) Audits of school districts by the division of municipal corporations shall include findings regarding the accuracy of:  (a) Student enrollment data; and (b) the experience and education of the district's certified instructional staff, as reported to the superintendent of public instruction for allocation of state funding.

      (2) $722,000 of the general fund--state appropriation for fiscal year 2010 and (($729,000)) $717,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for staff and related costs to verify the accuracy of reported school district data submitted for state funding purposes; conduct school district program audits of state funded public school programs; establish the specific amount of state funding adjustments whenever audit exceptions occur and the amount is not firmly established in the course of regular public school audits; and to assist the state special education safety net committee when requested.

(3) Within the amounts appropriated in this section, the state auditor shall continue to complete the annual audit of the state's comprehensive annual financial report and the annual federal single audit consistent with the auditing standards generally accepted in the United States and the standards applicable to financial audits contained in government auditing standards, issued by the comptroller general of the United States, and OMB circular A-133, audits of states, local governments, and nonprofit organizations.
      (4) The legislature finds that the major changes in personnel funding in this budget and the long term effects of the ongoing economic recession combine with structural changes in the nature of work and employment in many state agencies to require a continuing review of the workforce examination begun under chapter 534, Laws of 2009 (exempt employment practices).  The legislature notes the ongoing management reforms of the Washington management service being undertaken by the department of personnel, and anticipates a continuing legislative committee examination of the architecture and cost of the state's career and executive workforce.  To that end, the office of state auditor is invited to provide by September 1, 2010, a general survey of new and best practices for executive and career workforce management now in use by other states and relevant industries.

Sec. 124.  2010 c 3 s 102 (uncodified) is amended to read as follows:

FOR THE CITIZENS' COMMISSION ON SALARIES FOR ELECTED OFFICIALS

General Fund‑-State Appropriation (FY 2010)………..…$168,000

General Fund‑-State Appropriation (FY 2011)………..(($209,000))

$206,000

             TOTAL APPROPRIATION…………….…...(($377,000))

$374,000

Sec. 125.  2010 c 3 s 103 (uncodified) is amended to read as follows:

FOR THE ATTORNEY GENERAL

General Fund‑-State Appropriation (FY 2010)….…..(($5,285,000))

$5,732,000

General Fund‑-State Appropriation (FY 2011)….…..(($5,614,000))

$5,848,000

General Fund‑-Federal Appropriation……………….…$4,026,000

New Motor Vehicle Arbitration Account‑-State

      Appropriation……………………………….….(($1,346,000))

$1,350,000

Legal Services Revolving Account‑-State

      Appropriation………………………………..(($221,515,000))

$220,909,000

Tobacco Prevention and Control Account‑-State

      Appropriation……………………………….……….$270,000

             TOTAL APPROPRIATION……………(($238,056,000))

$238,135,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) The attorney general shall report each fiscal year on actual legal services expenditures and actual attorney staffing levels for each agency receiving legal services.  The report shall be submitted to the office of financial management and the fiscal committees of the senate and house of representatives no later than ninety days after the end of each fiscal year.  As part of its by agency report to the legislative fiscal committees and the office of financial management, the office of the attorney general shall include information detailing the agency's expenditures for its agency-wide overhead and a breakdown by division of division administration expenses.

      (2) Prior to entering into any negotiated settlement of a claim against the state that exceeds five million dollars, the attorney general shall notify the director of financial management and the chairs of the senate committee on ways and means and the house of representatives committee on ways and means.

      (3) The office of the attorney general is authorized to expend $2,100,000 from the Zyprexa and other cy pres awards towards consumer protection costs in accordance with uses authorized in the court orders.

      (4) The attorney general shall annually report to the fiscal committees of the legislature all new cy pres awards and settlements and all new accounts, disclosing their intended uses, balances, the nature of the claim or account, proposals, and intended timeframes for the expenditure of each amount.  The report shall be distributed electronically and posted on the attorney general's web site.  The report shall not be printed on paper or distributed physically.

(5) The executive ethics board must produce a report by the end of the calendar year for the legislature regarding performance measures on the efficiency and effectiveness of the board, as well as on performance measures to measure and monitor the ethics and integrity of all state agencies.
      (6) $53,000 of the legal services revolving account--state appropriation is provided solely to implement Engrossed Second Substitute House Bill No. 3026 (school district compliance with state and federal civil rights laws).

Sec. 126.  2010 c 3 s 104 (uncodified) is amended to read as follows:

FOR THE CASELOAD FORECAST COUNCIL

General Fund‑-State Appropriation (FY 2010)…………...$766,000

General Fund‑-State Appropriation (FY 2011)………..(($759,000))

$742,000

             TOTAL APPROPRIATION……………….(($1,525,000))

$1,508,000

      The appropriations in this section are subject to the following conditions and limitations:  $13,000 of the general fund--state appropriation for fiscal year 2010 and $7,000 of the general fund--state appropriation for fiscal year 2011 are for the implementation of Second Substitute House Bill No. 2106 (improving child welfare outcomes through the phased implementation of strategic and proven reforms).  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

Sec. 127.  2010 c 3 s 105 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF COMMERCE

General Fund‑-State Appropriation (FY 2010)…….(($51,015,000))

$49,670,000

General Fund‑-State Appropriation (FY 2011)…….(($51,813,000))

$40,577,000

General Fund‑-Federal Appropriation……………(($384,540,000))

$381,918,000

General Fund‑-Private/Local Appropriation……….(($16,266,000))

$10,622,000

Public Works Assistance Account‑-State

      Appropriation………………………………….(($2,990,000))

$2,974,000

Tourism Development and Promotion Account‑-State

      Appropriation……………………………………...$1,003,000

Drinking Water Assistance Administrative

      Account‑-State Appropriation……………………(($439,000))

$433,000

Lead Paint Account‑-State Appropriation……………...(($18,000))

$35,000

Building Code Council Account‑-State Appropriation

……………………………………………………..(($1,286,000))

$688,000

Home Security Fund Account‑-State Appropriation(($23,498,000))

$25,486,000

Affordable Housing for All Account‑-State

      Appropriation…………………………………(($11,900,000))

$11,896,000

Washington Auto Theft Prevention Authority

      Account--State Appropriation………………………..$300,000

Independent Youth Housing Account‑-State

      Appropriation……………………………………...(($80,000))

$220,000

County Research Services Account--State Appropriation..$469,000

Community Preservation and Development Authority

      Account--State Appropriation…………………….…$350,000

Financial Fraud and Identity Theft Crimes Investigation

      and Prosecution Account‑-State Appropriation…....$1,166,000

Low-Income Weatherization Assistance Account‑-State

      Appropriation………………………………….(($8,382,000))

$6,882,000

City and Town Research Services Account—State

      Appropriation…………………………………..….$2,246,000

Manufacturing Innovation and Modernization

      Account‑-State Appropriation……………………(($246,000))

$230,000

Community and Economic Development Fee

      Account‑-State Appropriation………………….(($1,833,000))

$6,922,000

Washington Housing Trust Account‑-State

      Appropriation…………………………………(($15,372,000))

$15,348,000

Prostitution Prevention and Intervention Account—

      State Appropriation………………………………….$125,000

Public Facility Construction Loan Revolving

      Account‑-State Appropriation……………………(($755,000))

$754,000

             TOTAL APPROPRIATION…………….(($573,252,000))

$560,314,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) (($2,520,000)) $2,378,000 of the general fund‑-state appropriation for fiscal year 2010 and (($2,521,000)) $2,379,000 of the general fund‑-state appropriation for fiscal year 2011 are provided solely for a contract with the Washington technology center for work essential to the mission of the Washington technology center and conducted in partnership with universities.

      (2) Repayments of outstanding loans granted under RCW 43.63A.600, the mortgage and rental assistance program, shall be remitted to the department, including any current revolving account balances.  The department shall collect payments on outstanding loans, and deposit them into the state general fund.  Repayments of funds owed under the program shall be remitted to the department according to the terms included in the original loan agreements.

      (3) $100,000 of the general fund--state appropriation for fiscal year 2010 and $100,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to implement section 2(7) of Engrossed Substitute House Bill No. 1959 (land use and transportation planning for marine container ports).

      (4) $102,000 of the building code council account--state appropriation is provided solely for the implementation of sections 3 and 7 of Engrossed Second Substitute Senate Bill No. 5854 (built environment pollution).  If sections 3 and 7 of the bill are not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (5)(a) $10,500,000 of the general fund--federal appropriation is provided for training and technical assistance associated with low income weatherization programs.  Subject to federal requirements, the department shall provide:  (i) Up to $4,000,000 to the state board for community and technical colleges to provide workforce training related to weatherization and energy efficiency; (ii) up to $3,000,000 to the Bellingham opportunity council to provide workforce training related to energy efficiency and weatherization; and (iii) up to $3,500,000 to community-based organizations and to community action agencies consistent with the provisions of Engrossed Second Substitute House Bill No. 2227 (evergreen jobs act).  Any funding remaining shall be expended in project 91000013, weatherization, in the omnibus capital appropriations act, Substitute House Bill No. 1216 (capital budget).

      (b) $6,787,000 of the general fund--federal appropriation is provided solely for the state energy program, including not less than $5,000,000 to provide credit enhancements consistent with the provisions of Engrossed Second Substitute Senate Bill No. 5649 (energy efficiency in buildings).

      (c) Of the general fund--federal appropriation the department shall provide:  $14,500,000 to the Washington State University for the purpose of making grants for pilot projects providing community-wide urban, residential, and commercial energy efficiency upgrades consistent with the provisions of Engrossed Second Substitute Senate Bill No. 5649 (energy efficiency in buildings); $500,000 to Washington State University to conduct farm energy assessments.   In contracting with the Washington State University for the provision of these services, the total administration of Washington State University and the department shall not exceed 3 percent of the amounts provided.

      (d) $38,500,000 of the general fund--federal appropriation is provided for deposit in the energy recovery act account to establish a revolving loan program, consistent with the provisions of Engrossed Substitute House Bill No. 2289 (expanding energy freedom program).

      (e) $10,646,000 of the general fund--federal appropriation is provided pursuant to the energy efficiency and conservation block grant under the American reinvestment and recovery act.  The department may use up to $3,000,000 of the amount provided in this subsection to provide technical assistance for energy programs administered by the agency under the American reinvestment and recovery act.

      (6) $14,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for the implementation of Engrossed Second Substitute Senate Bill No. 5560 (state agency climate leadership).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (7) $22,400,000 of the general fund--federal appropriation is provided solely for the justice assistance grant program and is contingent upon the department transferring:  $1,200,000 to the department of corrections for security threat mitigation, $2,336,000 to the department of corrections for offender reentry, $1,960,000 to the Washington state patrol for law enforcement activities, $2,087,000 to the department of social and health services, division of alcohol and substance abuse for drug courts, and $428,000 to the department of social and health services for sex abuse recognition training.  The remaining funds shall be distributed by the department to local jurisdictions.

      (8) $20,000 of the general fund--state appropriation for fiscal year 2010 and $20,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for a grant to KCTS public television to support Spanish language programming and the V-me Spanish language channel.

      (9) $500,000 of the general fund--state appropriation for fiscal year 2010 and $500,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for a grant to resolution Washington to building statewide capacity for alternative dispute resolution centers and dispute resolution programs that guarantee that citizens have access to low-cost resolution as an alternative to litigation.

      (10) $30,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for implementation of Engrossed Second Substitute Senate Bill No. 6015 (commercialization of technology).  If the bill is not enacted by June 30, 2009, the amount provided in this  subsection shall lapse.

      (11) By June 30, 2011, the department shall request information that describes what jurisdictions have adopted, or are in the process of adopting, plans that address RCW 36.70A.020 and helps achieve the greenhouse gas emission reductions established in RCW 70.235.020.  This information request in this subsection applies to jurisdictions that are required to review and if necessary revise their comprehensive plans ((by December 1, 2011,)) in accordance with RCW 36.70A.130.

      (12) During the 2009-11 fiscal biennium, the department shall allot all of its appropriations subject to allotment by object, account, and expenditure authority code to conform with the office of financial management's definition of an option 2 allotment.  For those funds subject to allotment but not appropriation, the agency shall submit option 2 allotments to the office of financial management.

      (13) $50,000 of the general fund--state appropriation for fiscal year 2010 and $50,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for a grant for the state's participation in the Pacific Northwest economic region.

      (14) $712,000 of the general fund--state appropriation for fiscal year 2010 and $712,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to the office of crime victims advocacy.  These funds shall be contracted with the 39 county prosecuting attorneys' offices to support victim-witness services.  The funds must be prioritized to ensure a full-time victim-witness coordinator in each county.  The office may retain only the amount currently allocated for this activity for administrative costs.

      (15) $306,000 of the general fund--state appropriation for fiscal year 2010 and $306,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for a grant to the retired senior volunteer program.

      (16) $65,000 of the general fund--state appropriation for fiscal year 2010 ((and $65,000 of the general fund--state appropriation for fiscal year 2011 are)) is provided solely for a contract with a food distribution program for communities in the southwestern portion of the state and for workers impacted by timber and salmon fishing closures and reductions.  The department may not charge administrative overhead or expenses to the funds provided in this subsection.

      (17) $371,000 of the general fund--state appropriation for fiscal year 2010 and $371,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to the northwest agriculture business center.

      (18) The department shall administer its growth management act technical assistance so that smaller cities receive proportionately more assistance than larger cities or counties.  ((Pass-through grants shall continue to be funded under 2007-09 policy.))

      (19) $212,000 of the general fund--federal appropriation is provided solely for implementation of Second Substitute House Bill No. 1172 (development rights transfer).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (20) $69,000 of the general fund--state appropriation for fiscal year 2010 and $66,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for implementation of Engrossed Second Substitute House Bill No. 2227 (evergreen jobs act).  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (21) $350,000 of the community development and preservation authority account--state appropriation is provided solely for a grant to a community development authority established under chapter 43.167 RCW.  The community preservation and development's board of directors may contract with nonprofit community organizations to aid in mitigating the effects of increased public impact on urban neighborhoods due to events in stadia that have a capacity of over 50,000 spectators.

      (22) $300,000 of the Washington auto theft prevention authority account--state appropriation is provided solely for a contract with a community group to build local community capacity and economic development within the state by strengthening political relationships between economically distressed communities and governmental institutions.  The community group shall identify opportunities for collaboration and initiate activities and events that bring community organizations, local governments, and state agencies together to address the impacts of poverty, political disenfranchisement, and economic inequality on communities of color.  These funds must be matched by other nonstate sources on an equal basis.

      (23) $1,800,000 of the home security fund--state appropriation is provided for transitional housing assistance or partial payments for rental assistance under the independent youth housing program.

      (24) $5,000,000 of the home security fund--state appropriation is provided solely for the operation, repair, and staffing of shelters in the homeless family shelter program.

(25) $253,000 of the general fund--state appropriation for fiscal year 2010 and $283,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the Washington new Americans program.
      (26) $438,000 of the general fund--state appropriation for fiscal year 2010 and $438,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the Washington asset building coalitions.
      (27) Funding provided to microenterprise development organizations for fiscal year 2011 shall not be reduced by more than ten percent from funding levels in the 2009-11 operating budget.
      (28) Within existing resources, the department of commerce shall convene a work group that includes a representative designated by each of the following:  The department, the economic development commission, the Washington technology center, the Spokane intercollegiate research and technology institute, the University of Washington center for commercialization and Washington State University's office of economic development and global engagement.  To better align the missions of state supported entities conducting commercialization, the work group shall prepare and submit a report to the legislature no later than December 1, 2010, that identifies gaps and overlaps in programs, evaluates strategies to reduce administrative overhead expenses, and recommends changes which would amplify and accelerate innovation-driver job creation in the state.
      (29) $3,231,000 of the general fund--state appropriation for fiscal year 2010 and $3,231,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for associate development organizations.
      (30) $5,400,000 of the community and economic development fee account is provided as follows:  $1,000,000 is provided solely for the department of commerce for services for homeless families through the Washington families fund; $2,600,000 is provided solely for housing trust fund operations and maintenance; $800,000 is provided solely for housing trust fund portfolio management; $500,000 is provided solely for foreclosure counseling and support; and $500,000 is provided solely for use as a reserve in the account.
      (31)(a) The economic development commission must develop a biennial budget request for approval by the office of financial management.  The commission must adopt an annual budget and work plan in accordance with the omnibus appropriations bill approved by the legislature.
      (b) Of state appropriated funds for the operation of the commission, the state agency serving as the commission's fiscal agent may use no more than ten percent of funds appropriated for commission personnel costs and no more than three percent of funds in the Washington state economic development commission account to cover administrative expenses.
      (c) The commission may accept gifts, grants, donations, sponsorships, or contributions from any federal, state, or local governmental agency or program, or any private source, and expend the same for any purpose consistent with this chapter.
      (d) The Washington state economic development commission account is created in the custody of the state treasurer.  All receipts from gifts, grants, donations, sponsorships, or contributions must be deposited into the account.  State appropriated funds may not be deposited into the account.  The account is subject to the allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.  Expenditures from the account may be used only for purposes related to carrying out the mission, roles, and responsibilities of the commission.  Only the commission, or the commission's designee, may authorize expenditures from the account.
      (32) $250,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the department to administer a competitive grant program to fund economic development activities designed to further regional cluster growth and to integrate its sector-based and cluster-based strategies with its support for the development of innovation partnership zones.  Grant recipients must provide matching funds equal to the size of the grant.  Grants may be awarded to support the formation of sector associations or cluster associations, the identification of the technology and commercialization needs of a sector or cluster, facilitating working relationships between a sector association or cluster association and an innovation partnership zone, expanding the operations of an innovation partnership zone, and developing and implementing plans to meet the technology development and commercialization needs of industry sectors, industry clusters, and innovation partnership zones.  The projects receiving grants must not duplicate the purpose or efforts of industry skill panels but priority must be given to applicants that complement industry skill panels and will use the grant funds to build linkages and joint projects.
      (33) $100,000 of the general fund--state appropriation for fiscal year 2011 is provided solely to:
      (a) Develop a rural manufacturer export outreach program in conjunction with impact Washington.  The program must provide outreach services to rural manufacturers in Washington to inform them of the importance of and opportunities in international trade, and to inform them of the export assistance programs available to assist these businesses to become exporters; and
      (b) Develop export loan or loan guarantee programs in conjunction with the Washington economic development finance authority and the appropriate federal and private entities.
      (34) $1,000,000 of the general fund--state appropriation for fiscal year 2011 is provided solely to implement the provisions of chapter 13, Laws of 2010 (global health program).
      (35) $50,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the creation of the Washington entrepreneurial development and small business reference service in the department of commerce.
      (a) The department must:
      (i) In conjunction with and drawing on information compiled by the work force training and education coordinating board and the Washington economic development commission:
      (A) Establish and maintain an inventory of the public and private entrepreneurial training and technical assistance services, programs, and resources available in the state;
      (B) Disseminate information about available entrepreneurial development and small business assistance services, programs, and resources via in-person presentations and electronic and printed materials and undertake other activities to raise awareness of entrepreneurial training and small business assistance offerings; and
      (C) Evaluate the extent to which existing entrepreneurial training and technical assistance programs in the state are effective and represent a consistent, integrated approach to meeting the needs of start-up and existing entrepreneurs;
      (ii) Assist providers of entrepreneurial development and small business assistance services in applying for federal and private funding to support the entrepreneurial development and small business assistance activities in the state;
      (iii) Distribute awards for excellence in entrepreneurial training and small business assistance; and
      (iv) Report to the governor, the economic development commission, the work force training and education coordinating board, and the appropriate legislative committees its recommendations for statutory changes necessary to enhance operational efficiencies or enhance coordination related to entrepreneurial development and small business assistance.
      (b) In carrying out the duties under this section, the department must seek the advice of small business owners and advocates, the Washington economic development commission, the work force training and education coordinating board, the state board for community and technical colleges, the employment security department, the Washington state microenterprise association, associate development organizations, impact Washington, the Washington quality award council, the Washington technology center, the small business export finance assistance center, the Spokane intercollegiate research and technology institute, representatives of the University of Washington business school and the Washington State University college of business and economics, the office of minority and women's business enterprises, the Washington economic development finance authority, and staff from small business development centers.
      (c) The director may appoint an advisory board or convene such other individuals or groups as he or she deems appropriate to assist in carrying out the department's duties under this section.
      (36) The investing in innovation account is created in the custody of the state treasurer.  Funds may be directed to the account from federal, state, and private sources.  Expenditures from the account may be used only to carry out the investing in innovation grants program established under RCW 70.210.030, and other innovation and commercialization purposes consistent with the federal, state, or private and other funding guidelines that apply to the funds deposited in the account.  Only the executive director of the Washington technology center or the executive director's designee may authorize expenditures from the account.  The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.
      (37) $50,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for a grant to HistoryLink.
      (38) $50,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the Washington quality award council created in RCW 43.06.335 to provide training to small manufacturers and other businesses as well as to technical assistance providers from the department of commerce, impact Washington, small business development centers, associate development organizations, and other organizations.  The training shall be in continuous quality improvement, performance measurement, strategic planning, and other approaches designed to reduce operating costs, improve effectiveness, and increase productivity in businesses receiving assistance.
      (39) $50,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the manufacturing innovation and modernization account created in RCW 43.338.030.

Sec. 128.  2010 c 3 s 106 (uncodified) is amended to read as follows:

FOR THE ECONOMIC AND REVENUE FORECAST COUNCIL

General Fund‑-State Appropriation (FY 2010)…………...$711,000

General Fund‑-State Appropriation (FY 2011)……….(($785,000))

$772,000

             TOTAL APPROPRIATION………………(($1,496,000))

$1,483,000

      The appropriations in this section are subject to the following conditions and limitations:  The economic and revenue forecast council, in its quarterly revenue forecasts, shall forecast the total revenue for the state lottery.

Sec. 129.  2010 c 3 s 107 (uncodified) is amended to read as follows:

FOR THE OFFICE OF FINANCIAL MANAGEMENT

General Fund‑-State Appropriation (FY 2010)…….(($21,599,000))

$21,189,000

General Fund‑-State Appropriation (FY 2011)…….(($20,670,000))

$20,152,000

General Fund‑-Federal Appropriation…………….(($23,597,000))

$27,103,000

General Fund‑-Private/Local Appropriation……………$1,270,000

State Auditing Services Revolving

      Account‑-State Appropriation………………………..$25,000

Economic Development Strategic Reserve Account--

      State Appropriation……………………………..(($280,000))

$278,000

             TOTAL APPROPRIATION……………(($67,441,000))

$70,017,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $188,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for the implementation of Second Substitute Senate Bill No. 5945 (Washington health partnership plan).   If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (2) The office of financial management shall conduct a study on alternatives for consolidating or transferring activities and responsibilities of the state lottery commission, state horse racing commission, state liquor control board, and the state gambling commission to achieve cost savings and regulatory efficiencies.  In conducting the study, the office of financial management shall consult with the legislative fiscal committees.  Further, the office of financial management shall establish an advisory group to include, but not be limited to, representatives of affected businesses, state agencies or entities, local governments, and stakeholder groups.  The office of financial management shall submit a final report to the governor and the legislative fiscal committees by November 15, 2009.

      (3) (($500,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for a study of the feasibility of closing state institutional facilities and a plan on eliminating beds in the state institutional facility inventory.  The office of financial management shall contract with consultants with expertise related to the subject matters included in this study.  The office of financial management and the consultants shall consult with the department of social and health services, the department of corrections, stakeholder groups that represent the people served in these institutions, labor organizations that represent employees who work in these institutions and other persons or entities with expertise in the areas being studied.
      (a) For the purposes of this study, "state institutional facilities" means facilities operated by the department of corrections to house persons convicted of a criminal offense, Green Hill school and Maple Lane school operated by the department of social and health services juvenile rehabilitation administration, and residential habilitation centers operated by the department of social and health services.
      (b) In conducting this study, the consultants shall consider the following factors as appropriate:
      (i) The availability of alternate facilities including alternatives and opportunities for consolidation with other facilities, impacts on those alternate facilities, and any related capital costs;
      (ii) The cost of operating the facility, including the cost of providing services and the cost of maintaining or improving the physical plant of the facility;
      (iii) The geographic factors associated with the facility, including the impact of the facility on the local economy and the economic impact of its closure, and alternative uses for a facility recommended for closure;
      (iv) The costs associated with closing the facility, including the continuing costs following the closure of the facility;
      (v) Number and type of staff and the impact on the facility staff including other employment opportunities if the facility is closed;
      (vi) The savings that will accrue to the state from closure or consolidation of a facility and the impact any closure would have on funding the associated services; and
      (vii) For the residential habilitation centers, the impact on clients in the facility being recommended for closure and their families, including ability to get alternate services and impact on being moved to another facility.
      (c) The office of financial management shall submit a final report to the governor and the ways and means committees of the house of representatives and senate by November 1, 2009.  The report shall provide a recommendation and a plan to eliminate 1,580 beds in the department of corrections facilities, 235 beds from juvenile rehabilitation facilities, and 250 funded beds in the residential habilitation centers through closure or consolidation of facilities.  The report shall include an assessment of each facility studied, where and how the services should be provided, and any costs or savings associated with each recommendation.  In considering the recommendations of the report, the governor and the legislature shall not consider closure of any state institutional facility unless the report recommended the facility for closure.)) $25,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the office to contract with the Washington state quality award program to provide training for state managers and employees.
      (4) $110,000 of the general fund--state appropriation for fiscal year 2011 is provided solely to implement Second Substitute Senate Bill No. 6578 (multiagency permitting teams).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (5) The office of financial management shall, with the assistance of the natural resources cabinet as created in executive order 09-07, reduce the number of facilities being leased by the state by consolidating, wherever possible, regional offices and storage facilities of the natural resource agencies.  The office of financial management and the natural resources cabinet shall submit a report on the progress of this effort and the associated savings to the appropriate fiscal committees of the legislature no later than December 1, 2010.
      (6) $100,000 of the general fund--state appropriation for fiscal year 2010 and $100,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the office of financial management to hire an independent consultant to conduct an assessment.  The consultant shall be agreed upon by a wide range of interested stakeholders including organization leaders representing residents of residential habilitation centers.  The assessment shall include interviews with all residential habilitation center residents or guardians of residents to determine the optimum setting for these individuals and shall include the option and choice to remain in a residential habilitation center.  The assessment shall note when the recommendation of the consultant differs from the choice of the individual.  The assessment shall also determine service and placements that are underfunded or underserved in community settings and determine resources and options for funding sources necessary to adequately fund community-based services for people with developmental disabilities.  The resulting report will be due to the legislature on December 1, 2010.
      (7)(a) $50,000 of the general fund--state appropriation for fiscal year 2010 and $150,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the purposes of the office of financial management:
      (i) Conducting a technical and financial analysis of the state's plan for the consolidated state data center and office building; and
      (ii) Developing a strategic business plan outlining the various options for use of the site that maximize taxpayer value consistent with the terms of the finance lease and related agreements.
      (b) The analysis required in (a)(i) of this subsection must consist of, at a minimum, an assessment of the following issues:
      (i) The total capital and operational costs for the proposed data center and office building;
      (ii) The occupancy rate for the consolidated state data center, as compared to total capacity, that will result in revenue exceeding total capital and operating expenses;
      (iii) The potential reallocation of resources that could result from the consolidation of state data centers and office space; and
      (iv) The potential return on investment for the consolidated state data center and office building that may be realized without impairing any existing contractual rights under the terms of the financing lease and related agreements.
      (c) This review must build upon the analysis and migration strategy for the consolidated state data center being prepared for the department of information services.
      (d) The strategic plan must be submitted to the governor and the legislature by December 1, 2010.
      (8) Appropriations in this section include amounts sufficient to implement Engrossed Substitute House Bill No. 3178 (technology efficiencies).

Sec.130.  2009 c 564 s 131 (uncodified) is amended to read as follows:

FOR THE OFFICE OF ADMINISTRATIVE HEARINGS

Administrative Hearings Revolving

      Account‑-State Appropriation………………....(($33,473,000))

$33,978,000

      The appropriation in this section is subject to the following conditions and limitations:  $725,000 of the administrative hearings revolving account--state appropriation is provided solely to implement Engrossed Second Substitute House Bill No. 2782 (security lifeline act).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.

Sec. 131.  2009 c 564 s 132 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF PERSONNEL

Department of Personnel Service Account‑-State

      Appropriation…………………………………(($22,025,000))

$20,057,000

Higher Education Personnel Services Account‑-State

      Appropriation…………………………………..(($1,716,000))

$1,578,000

             TOTAL APPROPRIATION……………...(($23,741,000))

$21,635,000

      The appropriations in this section are subject to the following conditions and limitations:

(1) The department shall coordinate with the governor's office of Indian affairs on providing the government-to-government training sessions for federal, state, local, and tribal government employees.  The training sessions shall cover tribal historical perspectives, legal issues, tribal sovereignty, and tribal governments.  Costs of the training sessions shall be recouped through a fee charged to the participants of each session.  The department shall be responsible for all of the administrative aspects of the training, including the billing and collection of the fees for the training.

(2) In coordination with efforts under section 119(4) of this act, the department of personnel shall provide, by September 1, 2010, a synopsis of current and recent survey data regarding employee satisfaction and the department's overall assessment of career and executive workforce management concerns.

Sec. 132.  2009 c 564 s 133 (uncodified) is amended to read as follows:

FOR THE WASHINGTON STATE LOTTERY

Lottery Administrative Account‑-State

      Appropriation…………………………………(($27,776,000))

$26,777,000

Sec. 133.  2009 c 564 s 134 (uncodified) is amended to read as follows:

FOR THE COMMISSION ON HISPANIC AFFAIRS

General Fund‑-State Appropriation (FY 2010)………..(($253,000))

$250,000

General Fund‑-State Appropriation (FY 2011)…….….(($260,000))

$255,000

             TOTAL APPROPRIATION………………...(($513,000))

$505,000

Sec. 134.  2009 c 564 s 135 (uncodified) is amended to read as follows:

FOR THE COMMISSION ON AFRICAN-AMERICAN AFFAIRS

General Fund‑-State Appropriation (FY 2010)…………...$243,000

General Fund‑-State Appropriation (FY 2011)……….(($244,000))

$236,000

             TOTAL APPROPRIATION………………...(($487,000))

$479,000

Sec. 135.  2009 c 564 s 136 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF RETIREMENT SYSTEMS--OPERATIONS

Department of Retirement Systems Expense

      Account‑-State Appropriation………………..(($49,504,000))

$48,332,000

      The appropriation in this section is subject to the following conditions and limitations:

      (1) $148,000 of the department of retirement systems--state appropriation is provided solely for the administrative costs associated with implementation of Senate Bill No. 5303 (transferring members of retirement systems).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (2) $66,000 of the department of retirement systems expense account--state appropriation is provided for the department of retirement systems to make revisions to various administrative processes as necessary to implement Engrossed Second Substitute Senate Bill No. 5688 (registered domestic partners).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (3) $12,000 of the department of retirement systems--state appropriation is provided solely for the administrative costs associated with implementation of Senate Bill No. 5542 or House Bill No. 1678 (minimum disability benefits).  If neither bill is enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (4) $45,000 of the department of retirement systems expense account--state appropriation is provided solely to implement Engrossed Substitute House Bill No. 1445 (Washington state patrol retirement system domestic partners).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (5) $45,000 of the department of retirement systems expense account--state appropriation is provided solely to implement Engrossed House Bill No. 1616 (law enforcement officers' and firefighters' retirement system plan 2 domestic partners).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (6) $56,000 of the department of retirement systems expense account--state appropriation is provided solely to implement House Bill No. 1548 (military service credit purchases).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (7) $35,000 of the department of retirement systems expense account--state appropriation is provided solely to implement Substitute House Bill No. 1953 (department of fish and wildlife enforcement officers' past service credit).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

(8) $58,000 of the department of retirement systems expense account--state appropriation is provided solely to implement House Bill No. 1541 (plan 2/3 half-time educational employee service credit).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (9) $31,000 of the department of retirement systems expense account--state appropriation is provided solely to implement Engrossed House Bill No. 2519 (public safety death benefits).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.

Sec. 136.  2010 c 3 s 108 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF REVENUE

General Fund‑-State Appropriation (FY 2010).......(($108,215,000))

$109,472,000

General Fund‑-State Appropriation (FY 2011)…..(($106,995,000))

$112,319,000

Timber Tax Distribution Account‑-State

      Appropriation…………………………………..(($5,904,000))

$5,933,000

Waste Reduction/Recycling/Litter

      Control‑-State Appropriation…………………….…..$130,000

Waste Tire Removal Account‑-State Appropriation………..$2,000

Real Estate Excise Tax Grant Account‑-State

      Appropriation…………………………………..(($1,050,000))

$3,429,000

State Toxics Control Account‑-State Appropriation…….....$87,000

Oil Spill Prevention Account‑-State Appropriation……….$19,000

             TOTAL APPROPRIATION…………….(($222,402,000))

$231,391,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $469,000 of the general fund--state appropriation for fiscal year 2010 and $374,000 of the general fund--state appropriation for fiscal year 2011 are for the implementation of Substitute Senate Bill No. 5368 (annual property revaluation).  If the bill is not enacted by June 30, 2009, the amounts in this subsection shall lapse.

      (2) $4,653,000 of the general fund--state appropriation for fiscal year 2010 and (($4,424,000)) $4,242,000 of the general fund--state appropriation for fiscal year 2011 are for the implementation of revenue enhancement strategies.  The strategies must include increased out-of-state auditing and compliance, the purchase of third party data sources for enhanced audit selection, and increased traditional auditing and compliance efforts.

      (3) $3,127,000 of the general fund--state appropriation for fiscal year 2010 and $1,737,000 of the general fund--state appropriation for fiscal year 2011 are for the implementation of Senate Bill No. 6173 (sales tax compliance).  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

(4) $1,294,000 of the general fund--state appropriation for fiscal year 2010 and $3,085,000 of the general fund--state appropriation for fiscal year 2011 are for the implementation of Second Engrossed Substitute Senate Bill No. 6143 (excise tax law modifications).  If the bill is not enacted by June 30, 2010, the amounts provided in this subsection shall lapse.
      (5) $163,000 of the general fund--state appropriation for fiscal year 2011 is provided solely to implement Substitute Senate Bill No. 6846 (enhanced 911 services).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (6) $1,200,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for making the necessary preparations for implementation of the working families tax exemption pursuant to RCW 82.08.0206 in 2012.

Sec. 137.  2009 c 564 s 138 (uncodified) is amended to read as follows:

FOR THE STATE INVESTMENT BOARD

State Investment Board Expense Account‑-State

      Appropriation…………………………………(($29,581,000))

$29,352,000

      The appropriation in this section is subject to the following conditions and limitations:

      (1) $2,471,000 of the state investment board expense account--state appropriation is provided solely for development of a risk management information system, with the intent that further expenditures for this project be made only by appropriation.

      (2) The state investment board shall include funding for any future salary increases authorized under RCW 43.33A.100 in the agency's budget request submitted in accordance with chapter 43.88 RCW in advance of granting related salary increases.  The biennial salary survey required under RCW 43.33A.100 shall also be provided to the office of financial management and to the fiscal committees of the legislature as part of the state investment board's biennial budget submittal, and shall include the total amount of compensation increases proposed, as well as recommended salary ranges.

Sec. 138.  2010 c 3 s 109 (uncodified) is amended to read as follows:

FOR THE BOARD OF TAX APPEALS

General Fund‑-State Appropriation (FY 2010)……...(($1,342,000))

$1,346,000

General Fund‑-State Appropriation (FY 2011)….…..(($1,346,000))

$1,318,000

             TOTAL APPROPRIATION…………….…(($2,688,000))

$2,664,000

Sec. 139.  2009 c 564 s 140 (uncodified) is amended to read as follows:

FOR THE MUNICIPAL RESEARCH COUNCIL

County Research Services Account‑-State Appropriation………………………………………...(($940,000))

$471,000

City and Town Research Services‑-State

      Appropriation…………………………………..(($4,515,000))

$2,258,000

             TOTAL APPROPRIATION……………….(($5,455,000))

$2,729,000

Sec. 140.  2009 c 564 s 141 (uncodified) is amended to read as follows:

FOR THE OFFICE OF MINORITY AND WOMEN'S BUSINESS ENTERPRISES

OMWBE Enterprises Account‑-State Appropriation..(($3,622,000))

      $3,674,000

Sec. 141.  2009 c 564 s 142 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF GENERAL ADMINISTRATION

General Fund‑-State Appropriation (FY 2010)……….….$815,000

General Fund‑-State Appropriation (FY 2011)…….…(($811,000))

$3,963,000

General Fund‑-Federal Appropriation………………(($5,738,000))

$2,956,000

Building Code Council Account--State
      Appropriation…………………………………..……$593,000

General Fund--Private/Local Appropriation………………$84,000

 General Administration Service Account‑-State

      Appropriation…………………………………(($35,044,000))

$31,748,000

             TOTAL APPROPRIATION……………..(($42,408,000))

$40,159,000

      The appropriations in this section are subject to the following conditions and limitations:

(1) $28,000 of the general fund--state appropriation for fiscal year 2010 and $28,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the purposes of section 8 of Engrossed Second Substitute Senate Bill No. 5854 (built environment pollution).  If section 8 of the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

(2) $3,545,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the payment of facilities and services charges, utilities and contracts charges, public and historic facilities charges, and capital projects surcharges allocable to the senate, house of representatives, statute law committee, and joint legislative systems committee.  The department shall allocate charges attributable to these agencies among the affected revolving funds.  The department shall enter into an interagency agreement with these agencies by July 1, 2010, to establish performance standards, prioritization of preservation and capital improvement projects, and quality assurance provisions for the delivery of services under this subsection.  The agencies named in this subsection shall continue to enjoy all of the same rights of occupancy, support, and space use on the capitol campus as historically established.
      (3) $84,000 of the general fund--private/local appropriation and $593,000 of the building code council account--state appropriation are provided solely to implement Engrossed Second Substitute House Bill No. 2658 (refocusing the department of commerce, including transferring programs).  If the bill is not enacted by June 30, 2010, the amounts provided in this subsection shall lapse.

Sec. 142.  2010 c 3 s 110 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF INFORMATION SERVICES

General Fund--State Appropriation (FY 2010)…………$1,086,000

 General Fund--State Appropriation (FY 2011)…….(($1,086,000))

$1,080,000

General Fund‑-Federal Appropriation……………………$701,000

General Fund--Private/Local Appropriation……………...$178,000

Data Processing Revolving Account‑-State

      Appropriation…………………………………..(($7,824,000))

$7,601,000

             TOTAL APPROPRIATION……………...(($10,697,000))

$10,646,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $100,000 of the general fund--state appropriation for fiscal year 2010 and $100,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the purposes of Engrossed Second Substitute House Bill No. 1701 (high-speed internet), including expenditure for deposit to the community technology opportunity account.  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (2) The department shall implement some or all of the following strategies to achieve savings on information technology expenditures through:  (a) Holistic virtualization strategies; (b) wide-area network optimization strategies; (c) replacement of traditional telephone communications systems with alternatives; and (d) migration of external voice mail systems to internal voice mail systems coordinated by the department.  The department shall report to the office of financial management and the fiscal committees of the legislature semiannually on progress made towards the implementation of savings strategies and the savings realized to date.  No later than June 30, 2011, the department shall submit a final report on its findings and savings realized to the office of financial management and the fiscal committees of the legislature.

(3) $178,000 of the general fund--private/local appropriation is provided solely for the implementation of the opportunity portal under Second Substitute House Bill No. 2782 (security lifeline act).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (4) Appropriations in this section include amounts sufficient to implement Engrossed Substitute House Bill No. 3178 (technology efficiencies).

Sec. 143.  2009 c 564 s 144 (uncodified) is amended to read as follows:

FOR THE INSURANCE COMMISSIONER

General Fund‑-Federal Appropriation………………(($1,943,000))

$1,939,000

Insurance Commissioners Regulatory Account‑-State

      Appropriation…………………………………(($47,978,000))

$48,452,000

             TOTAL APPROPRIATION……………...(($49,921,000))

$50,391,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $410,000 of the insurance commissioner's regulatory account appropriation is provided solely to implement Substitute Senate Bill No. 5480 (discount health plans).   If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (2) $598,000 of the insurance commissioner's regulatory account appropriation is provided solely to implement Substitute Senate Bill No. 5195 (life settlements model act).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (3) $551,000 of the insurance commissioner's regulatory account appropriation is provided solely to implement Second Substitute Senate Bill No. 5346 (health care administration simplification).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

(4) $40,000 of the insurance commissioner's regulatory account appropriation is to implement Engrossed Substitute House Bill No. 2560 (joint underwriting associations).
      (5) $227,000 of the insurance commissioner's regulatory account appropriation is provided solely to implement Engrossed Substitute House Bill No. 1714 (association health plans).

Sec. 144.  2009 c 564 s 145 (uncodified) is amended to read as follows:

FOR THE BOARD OF ACCOUNTANCY

Certified Public Accountants' Account‑-State

      Appropriation…………………………………..(($3,016,000))

$3,649,000

      The appropriation in this section is subject to the following conditions and limitations:  $150,000 of the certified public accountants' account appropriation is provided solely for the board to contract with a consultant or consultants to conduct an independent investigation.  Each consultant must be a governmental entity or an independent firm of legal consultants.  Each consultant must be familiar with the administrative procedure act, chapter 34.05 RCW.  The consultant or consultants shall produce a report that includes, but is not limited to, an evaluation of the efficiency and effectiveness of the board's practices, policies, and procedures, and an evaluation of the efficacy, economy, and accountability of merging the board into the department of licensing.  The consultant or consultants shall deliver a report to the appropriate committees of the legislature on or before December 1, 2010.

Sec. 145.  2009 c 564 s 147 (uncodified) is amended to read as follows:

FOR THE HORSE RACING COMMISSION

Horse Racing Commission Operating Account‑-State

      Appropriation…………………………………..(($5,123,000))

$4,830,000

      The appropriation in this section is subject to the following conditions and limitations:  Pursuant to RCW 43.135.055, the commission is authorized to increase licensing fees during the 2009-2011 fiscal biennium as necessary to support the appropriation in this section.

Sec. 146.  2009 c 564 s 148 (uncodified) is amended to read as follows:

FOR THE LIQUOR CONTROL BOARD

Liquor Control Board Construction and Maintenance

      Account‑-State Appropriation……………………...$8,817,000

Liquor Revolving Account‑-State Appropriation...(($200,506,000))

$156,580,000

             TOTAL APPROPRIATION…………….(($209,323,000))

$165,397,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $1,306,000 of the liquor revolving account--state appropriation is provided solely for the liquor control board to open five new state stores.

      (2) $40,000 of the liquor revolving account--state appropriation is provided solely for the liquor control board to open ten new contract stores.

      (3) $3,059,000 of the liquor revolving account--state appropriation is provided solely for the liquor control board to increase state and local revenues from new retail strategies including opening nine state stores on Sunday, opening state liquor stores on seven holidays, opening six mall locations during the holiday season, and increasing lottery sales.

      (4) $173,000 of the liquor revolving account--state appropriation is provided solely for the Engrossed House Bill No. 2040 (beer and wine regulation commission).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

(5) $130,000 of the liquor revolving account appropriation is provided to implement chapter 141, Laws of 2010 (SSB 6329).
      (6) Within the amounts appropriated in this section, the liquor control board shall monitor the tasting endorsement authorized by chapter 141, Laws of 2010 (SSB 6329) and report to the appropriate committees of the legislature by June 30, 2011, on the enforcement of the endorsement.  The report must include the number of compliance checks conducted by the liquor board during tasting activities, whether the checks were conducted with the knowledge of the licensee, the number of compliance checks passed, the number and type of notices of violation issued, the penalties imposed for the violations, the number of complaints received about tasting activities, and other information related to the enforcement of the endorsement.  If the bill is not enacted by June 30, 2010, the requirements of this subsection shall be null and void.
      (7) The board shall prepare a plan to transition selected state liquor stores to contract stores.  The plan must identify stores for transition that the board determines will result in the greatest efficiency and cost-effectiveness for the state.  The plan must provide for the conversion of at least twenty state liquor stores to contract liquor stores and for that conversion to occur between July 1, 2011, and July 1, 2013.  The plan must also include an analysis of the revenue generating capacity and costs for the stores before and after the conversion as well as an analysis of access to liquor by intoxicated and underage persons.  The board shall submit the plan to the appropriate policy and fiscal committees of the legislature by November 1, 2010.

Sec. 147.  2009 c 564 s 150 (uncodified) is amended to read as follows:

FOR THE UTILITIES AND TRANSPORTATION COMMISSION

General Fund--Federal Appropriation………………...….$267,000

General Fund--Private/Local Appropriation……………$5,547,000

Public Service Revolving Account‑-State

      Appropriation…………………………………(($31,306,000))

$31,200,000

Pipeline Safety Account‑-State Appropriation………(($3,194,000))

$3,187,000

Pipeline Safety Account‑-Federal Appropriation……(($1,536,000))

$1,518,000

             TOTAL APPROPRIATION……………..(($36,036,000))

$41,719,000

The appropriations in this section are subject to the following conditions and limitations:  Pursuant to RCW 43.135.055, the commission is authorized to increase solid waste regulatory fees to the extent necessary to raise $100,000 in fiscal year 2011 for enforcement activities under RCW 81.77.080.

Sec. 148.  2010 c 3 s 111 (uncodified) is amended to read as follows:

FOR THE MILITARY DEPARTMENT

General Fund‑-State Appropriation (FY 2010)…….(($10,084,000))

$9,350,000

General Fund‑-State Appropriation (FY 2011)…….(($10,190,000))

$8,874,000

General Fund‑-Federal Appropriation……………(($149,101,000))

$168,599,000

 Enhanced 911 Account‑-State Appropriation…….(($39,598,000))

$44,508,000

Disaster Response Account‑-State Appropriation….(($28,194,000))

$28,350,000

Disaster Response Account‑-Federal Appropriation.(($91,263,000))

$114,496,000

Military Department Rent and Lease Account‑-State

      Appropriation…………………………………….(($615,000))

$612,000

Military Department Active State Service Account‑-Federal

      Appropriation…………………………………….(($200,000))

$592,000

Worker and Community Right-to-Know Account‑-State

      Appropriation………………………………………..$341,000

Nisqually Earthquake Account‑-State Appropriation…(($144,000))

$307,000

Nisqually Earthquake Account‑-Federal Appropriation(($856,000))

$1,067,000

             TOTAL APPROPRIATION…………….(($330,586,000))

$377,096,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) (($28,194,000)) $28,326,000 of the disaster response account‑-state appropriation and (($91,263,000)) $114,496,000 of the disaster response account‑-federal appropriation may be spent only on disasters declared by the governor and with the approval of the office of financial management.  The military department shall submit a report ((quarterly)) to the office of financial management and the legislative fiscal committees on October 1st and February 1st of each year detailing information on the disaster response account, including:  (a) The amount and type of deposits into the account; (b) the current available fund balance as of the reporting date; and (c) the projected fund balance at the end of the 2009-2011 biennium based on current revenue and expenditure patterns.

      (2) (($144,000)) $307,000 of the Nisqually earthquake account‑-state appropriation and (($856,000)) $1,067,000 of the Nisqually earthquake account‑-federal appropriation are provided solely for response and recovery costs associated with the February 28, 2001, earthquake.  The military department shall submit a report ((quarterly)) to the office of financial management and the legislative fiscal committees on October 1st and February 1st of each year detailing earthquake recovery costs, including:  (a) Estimates of total costs; (b) incremental changes from the previous estimate; (c) actual expenditures; (d) estimates of total remaining costs to be paid; and (e) estimates of future payments by biennium.  This information shall be displayed by fund, by type of assistance, and by amount paid on behalf of state agencies or local organizations.  The military department shall also submit a report quarterly to the office of financial management and the legislative fiscal committees detailing information on the Nisqually earthquake account, including:  (a) The amount and type of deposits into the account; (b) the current available fund balance as of the reporting date; and (c) the projected fund balance at the end of the 2009-2011 biennium based on current revenue and expenditure patterns.

      (3) $85,000,000 of the general fund‑-federal appropriation is provided solely for homeland security, subject to the following conditions:

      (a) Any communications equipment purchased by local jurisdictions or state agencies shall be consistent with standards set by the Washington state interoperability executive committee; and

      (b) The department shall submit ((a quarterly)) an annual report to the office of financial management and the legislative fiscal committees detailing the governor's domestic security advisory group recommendations; homeland security revenues and expenditures, including estimates of total federal funding for the state; and incremental changes from the previous estimate((, planned and actual homeland security expenditures by the state and local governments with this federal funding; and matching or accompanying state or local expenditures; and
      (c) The department shall submit a report by December 1st of each year to the office of financial management and the legislative fiscal committees detailing homeland security revenues and expenditures for the previous fiscal year by county and legislative district)).

      (4) $500,000 of the general fund--state appropriation for fiscal year 2010 ((and $500,000 of the general fund--state appropriation for fiscal year 2011 are)) is provided solely for the military department to contract with the Washington information network 2-1-1 to operate a statewide 2-1-1 system.  The department shall provide the entire amount for 2-1-1 and ((shall)) may not use any of the funds for administrative purposes.

Sec. 149.  2009 c 564 s 149 (uncodified) is amended to read as follows:

FOR THE BOARD FOR VOLUNTEER FIREFIGHTERS

Volunteer Firefighters' and Reserve Officers'

      Administrative Account‑-State Appropriation…...(($1,044,000))

$1,052,000

Sec. 150.  2009 c 564 s 152 (uncodified) is amended to read as follows:

FOR THE PUBLIC EMPLOYMENT RELATIONS COMMISSION

General Fund‑-State Appropriation (FY 2010)….….(($3,128,000))

$2,667,000

General Fund‑-State Appropriation (FY 2011)……...(($3,130,000))

$2,635,000

Higher Education Personnel Services Account—State

      Appropriation………………………………………..$250,000

Department of Personnel Service Account‑-State

      Appropriation………………………………….(($3,290,000))

$3,263,000

             TOTAL APPROPRIATION……………….(($9,548,000))

$8,815,000

The appropriations in this section are subject to the following conditions and limitations:  $50,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for implementation of Engrossed Substitute Senate Bill No. 6726 (language access provider bargaining).

Sec. 151.  2010 c 3 s 112 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF ARCHAEOLOGY AND HISTORIC PRESERVATION

General Fund‑-State Appropriation (FY 2010)…………$1,371,000

General Fund‑-State Appropriation (FY 2011)……..(($1,349,000))

$1,382,000

 General Fund‑-Federal Appropriation……….…….(($1,653,000))

      $2,293,000

General Fund‑-Private/Local Appropriation……………….$14,000

             TOTAL APPROPRIATION………………(($4,387,000))

$5,060,000

The appropriations in this section are subject to the following conditions and limitations:  $44,000 of the general fund--state appropriation for fiscal year 2011 is provided for implementation of Substitute House Bill No. 2704 (Washington main street program).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.

Sec. 152.  2010 c 3 s 113 (uncodified) is amended to read as follows:

FOR THE GROWTH MANAGEMENT HEARINGS BOARD

General Fund‑-State Appropriation (FY 2010)……...(($1,623,000))

$1,642,000

General Fund‑-State Appropriation (FY 2011)….….(($1,549,000))

$1,424,000

             TOTAL APPROPRIATION………………(($3,172,000))

$3,066,000

The appropriations in this section are subject to the following conditions and limitations:  $13,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for Substitute House Bill No. 2935 (hearings boards/environment and land use).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.

Sec. 153.  2009 c 564 s 155 (uncodified) is amended to read as follows:

FOR THE STATE CONVENTION AND TRADE CENTER

State Convention and Trade Center Account‑-State

      Appropriation…………………………………….$60,127,000

State Convention and Trade Center Operating

      Account‑-State Appropriation………………...(($56,995,000))

$56,694,000

             TOTAL APPROPRIATION…………….(($117,122,000))

$116,821,000

 

(End of part)

 

PART II

HUMAN SERVICES

 

Sec. 201.  2009 c 564 s 201 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES.  (1) Appropriations made in this act to the department of social and health services shall initially be allotted as required by this act.  Subsequent allotment modifications shall not include transfers of moneys between sections of this act except as expressly provided in this act, nor shall allotment modifications permit moneys that are provided solely for a specified purpose to be used for other than that purpose.

      (2) The department of social and health services shall not initiate any services that require expenditure of state general fund moneys unless expressly authorized in this act or other law.  The department may seek, receive, and spend, under RCW 43.79.260 through 43.79.282, federal moneys not anticipated in this act as long as the federal funding does not require expenditure of state moneys for the program in excess of amounts anticipated in this act.  If the department receives unanticipated unrestricted federal moneys, those moneys shall be spent for services authorized in this act or in any other legislation providing appropriation authority, and an equal amount of appropriated state general fund moneys shall lapse.  Upon the lapsing of any moneys under this subsection, the office of financial management shall notify the legislative fiscal committees.  As used in this subsection, "unrestricted federal moneys" includes block grants and other funds that federal law does not require to be spent on specifically defined projects or matched on a formula basis by state funds.

      (3) The appropriations to the department of social and health services in this act shall be expended for the programs and in the amounts specified in this act.

      (4) The department is authorized to develop an integrated health care program designed to slow the progression of illness and disability and better manage medicaid expenditures for the aged and disabled population.  Under this Washington medicaid integration partnership (WMIP), the department may combine and transfer such medicaid funds appropriated under sections 204, 206, 208, and 209 of this act as may be necessary to finance a unified health care plan for the WMIP program enrollment.  The WMIP pilot projects shall not exceed a daily enrollment of 6,000 persons, nor expand beyond one county, during the 2009-2011 biennium.  The amount of funding assigned to the pilot projects from each program may not exceed the average per capita cost assumed in this act for individuals covered by that program, actuarially adjusted for the health condition of persons enrolled in the pilot project, times the number of clients enrolled in the pilot project.  In implementing the WMIP pilot projects, the department may:  (a) Withhold from calculations of "available resources" as set forth in RCW 71.24.025 a sum equal to the capitated rate for individuals enrolled in the pilots; and (b) employ capitation financing and risk-sharing arrangements in collaboration with health care service contractors licensed by the office of the insurance commissioner and qualified to participate in both the medicaid and medicare programs.  The department shall conduct an evaluation of the WMIP, measuring changes in participant health outcomes, changes in patterns of service utilization, participant satisfaction, participant access to services, and the state fiscal impact.

      (5)(a) The appropriations to the department of social and health services in this act shall be expended for the programs and in the amounts specified in this act.  However, after May 1, 2010, unless specifically prohibited by this act, the department may transfer general fund--state appropriations for fiscal year 2010 among programs after approval by the director of financial management.  However, the department shall not transfer state moneys that are provided solely for a specified purpose except as expressly provided in (b) of this subsection.
      (b) To the extent that transfers under (a) of this subsection are insufficient to fund actual expenditures in excess of fiscal year 2010 caseload forecasts and utilization assumptions in the medical assistance, long-term care, foster care, adoptions support, and child support programs, the department may transfer state moneys that are provided solely for a specified purpose.  The department shall not transfer funds, and the director of financial management shall not approve the transfer, unless the transfer is consistent with the objective of conserving, to the maximum extent possible, the expenditure of state funds.  The director of financial management shall notify the appropriate fiscal committees of the senate and house of representatives in writing seven days prior to approving any allotment modifications or transfers under this subsection.  The written notification shall include a narrative explanation and justification of the changes, along with expenditures and allotments by budget unit and appropriation, both before and after any allotment modifications or transfers.

      (6) The legislature finds that medicaid payment rates, as calculated by the department pursuant to the appropriations in this act, bear a reasonable relationship to the costs incurred by efficiently and economically operated facilities for providing quality services and will be sufficient to enlist enough providers so that care and services are available to the extent that such care and services are available to the general population in the geographic area.  The legislature finds that cost reports, payment data from the federal government, historical utilization, economic data, and clinical input constitute reliable data upon which to determine the payment rates.

(7) With the objective of improving and enhancing the efficiency and effectiveness of the audit and oversight program, the department shall identify streamlining opportunities in the areas described in (a) through (d) of this subsection.  The goals of these activities are to leverage department resources to better fulfill the obligations of all aspects of audit and oversight programs in an era of resource constraints and to assure that the burden of audits and other oversight activities on the state's businesses, organizations, and individuals is as minimal as practical.
      (a) The department shall complete an assessment of expanding the use of technology and automated data matches for identification and recovery of third party resources, including data matches with pharmacy benefit managers (PBM).  The department shall submit a report to the governor and the relevant fiscal and policy committees of the legislature by September 1, 2010, that identifies resources needed to implement the enhanced data matching capability and the actions and timelines necessary for implementation of automated production data matching capability.
      (b) The department shall complete a comprehensive review of multiple licensing and certification reviews, onsite surveys, and contract oversight obligations that require provider site visits or require provider response.  The department shall identify all related oversight and review activities and identify opportunities for consolidation of multiple clinical and business management review activities as appropriate with a view to minimizing the cost of both conducting and receiving the audits or other review or oversight activities.
      (c) The department shall expand its provider audit capacity through its provider one payment system.  The department shall identify medicaid payment system enhancements that will maximize new technical capabilities.  The department shall explore new technical capabilities of its fraud and abuse detection system to identify more efficient ways to correlate audit efforts to the levels of risk and materiality.  Results of focused audits must be used to enhance educational materials.  The department shall report to the governor and legislature by December 1, 2010, on the status of developing this audit capacity.
      (d) The department shall conduct a review and assessment of audit processes and timeframes.  The department shall review audit outcomes from the past three fiscal years and will concentrate on identifying opportunities to shorten timeframes between the various stages of an audit, including the letter of intent to audit, records collection to issuance of the draft audit, dispute resolution activities, issuance of the final audit, and administrative hearings.  The department shall initiate a provider outreach and education program to include communication materials that clearly identify expectations of the department and the provider being audited.  The department must develop and publish an orientation to medicaid audits publication by October 1, 2010, that includes audit requirements, expectations of providers and the department, and associated timelines.  The department shall report to the governor and relevant policy and fiscal committees of the legislature by December 1, 2010, on the status of these activities.

Sec. 202.  2010 c 3 s 201 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-CHILDREN AND FAMILY SERVICES PROGRAM

General Fund‑-State Appropriation (FY 2010)…...(($314,698,000))

$315,002,000

General Fund‑-State Appropriation (FY 2011)…..(($316,181,000))

$306,947,000

General Fund‑-Federal Appropriation……………(($494,889,000))

$506,248,000

General Fund‑-Private/Local Appropriation…………..(($828,000))

$3,320,000

Home Security Fund Appropriation………………...(($8,389,000))

$10,183,000

Domestic Violence Prevention Account--State

      Appropriation……………………………………...$1,154,000

Education Legacy Trust Account--State Appropriation….$725,000

             TOTAL APPROPRIATION………….(($1,136,864,000))

$1,143,579,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) (($5,563,000 of the general fund--state appropriation for fiscal year 2010 and $5,563,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for intensive family preservation services as defined in RCW 74.14C.010 and for evidence-based services that prevent out-of-home placement and reduce length of stay in the child welfare system.
      (2) $993,000)) $937,000 of the general fund--state appropriation for fiscal year 2010 and (($993,000)) $742,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to contract for the operation of one pediatric interim care facility.  The facility shall provide residential care for up to ((seventeen)) thirteen children through two years of age.  Seventy-five percent of the children served by the facility must be in need of special care as a result of substance abuse by their mothers.  The facility shall also provide on-site training to biological, adoptive, or foster parents.  The facility shall provide at least three months of consultation and support to parents accepting placement of children from the facility.  The facility may recruit new and current foster and adoptive parents for infants served by the facility.  The department shall not require case management as a condition of the contract.

      (((3) $375,000)) (2) $369,000 of the general fund--state appropriation for fiscal year 2010, (($375,000)) $366,000 of the general fund--state appropriation for fiscal year 2011, and (($322,000)) $316,000 of the general fund--federal appropriation are provided solely for up to three nonfacility-based programs for the training, consultation, support, and recruitment of biological, foster, and adoptive parents of children through age three in need of special care as a result of substance abuse by their mothers, except that each program may serve up to three medically fragile nonsubstance-abuse-affected children.  In selecting nonfacility-based programs, preference shall be given to programs whose federal or private funding sources have expired or that have successfully performed under the existing pediatric interim care program.

      (((4))) (3) $2,500,000 of the general fund--state appropriation for fiscal year 2010 and (($2,500,000)) $93,000 of the general fund--state appropriation for fiscal year 2011, and $2,407,000 of the home security fund--state appropriation are provided solely for secure crisis residential centers.  Within appropriated amounts, the department shall collaborate with providers to maintain no less than forty-five beds that are geographically representative of the state.  The department shall examine current secure crisis residential staffing requirements, flexible payment options, center specific waivers, and other appropriate methods to accomplish this outcome.

      (((5))) (4) A maximum of (($76,831,000)) $73,209,000 of the general fund--state appropriations and (($56,901,000)) $54,596,000 of the general fund--federal appropriations for the 2009-11 biennium shall be expended for behavioral rehabilitative services and these amounts are provided solely for this purpose.  The department shall work with behavioral rehabilitative service providers to safely keep youth with emotional, behavioral, or medical needs at home, with relatives, or with other permanent placement resources and decrease the length of ((stay)) service through improved emotional, behavioral, or medical outcomes for children in behavioral rehabilitative services in order to achieve the appropriated levels.

      (a) Contracted providers shall act in good faith and accept the hardest to ((place)) serve children, to the greatest extent possible, in order to improve their emotional, behavioral, or medical conditions.

      (b) The department and the contracted provider shall mutually agree and establish an exit date for when the child is to exit the behavioral rehabilitative service provider.  The department and the contracted provider should mutually agree, to the greatest extent possible, on a viable placement for the child to go to once the child's treatment process has been completed.  The child shall exit only when the emotional, behavioral, or medical condition has improved or if the provider has not shown progress toward the outcomes specified in the signed contract at the time of exit.  This subsection (b) does not prevent or eliminate the department's responsibility for removing the child from the provider if the child's emotional, behavioral, or medical condition worsens or is threatened.

      (c) The department is encouraged to use performance-based contracts with incentives directly tied to outcomes described in this section.  The contracts should incentivize contracted providers to accept the hardest to ((place)) serve children and incentivize improvement in children's emotional, mental, and medical well-being within the established exit date.  The department is further encouraged to increase the use of behavioral rehabilitative service group homes, wrap around services to facilitate and support placement of youth at home with relatives, or other permanent resources, and other means to control expenditures.

      (d) The total foster care per capita amount shall not increase more than four percent in the 2009-11 biennium and shall not include behavioral rehabilitative service.

      (((6))) (5) Within amounts provided for the foster care and adoption support programs, the department shall control reimbursement decisions for foster care and adoption support cases such that the aggregate average cost per case for foster care and for adoption support does not exceed the amounts assumed in the projected caseload expenditures.

      (((7) Within amounts appropriated in this section,)) (6) $14,460,000 of the general fund--state appropriation for fiscal year 2011 and $6,231,000 of the general fund--federal appropriation are provided solely for the department to provide contracted prevention and early intervention services.  The legislature recognizes the need for flexibility as the department transitions to performance-based contracts.  The following services are included in the prevention and early intervention block grant:  Crisis family intervention services, family preservation services, intensive family preservation services, evidence-based programs, public health nurses, and early family support services.  The legislature intends for the department to maintain and build on existing evidence-based and research-based programs with the goal of utilizing contracted prevention and intervention services to keep children safe at home and to safely reunify families.  Priority shall be given to proven intervention models, including evidence-based prevention and early intervention programs identified by the Washington state institute for public policy and the department.  The department shall include information on the number, type, and outcomes of the evidence-based programs being implemented in its reports on child welfare reform efforts and shall provide the legislature and governor a report regarding the allocation of resources in this subsection by September 30, 2010.  The department shall expend federal funds under this subsection in compliance with federal regulations.

      (((8) $37,000)) (7) $36,000 of the general fund--state appropriation for fiscal year 2010, (($37,000))  $36,000 of the general fund--state appropriation for fiscal year 2011, and (($32,000)) $31,000 of the general fund--federal appropriation are provided solely for the implementation of chapter 465, Laws of 2007 (child welfare).

      (((9))) (8) $125,000 of the general fund--state appropriation for fiscal year 2010 and $125,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for continuum of care services.  $100,000 of this amount is for Casey family partners and $25,000 of this amount is for volunteers of America crosswalk in fiscal year 2010.  $100,000 of this amount is for Casey family partners and $25,000 of this amount is for volunteers of America crosswalk in fiscal year 2011.

      (((10) $616,000)) (9) $1,904,000 of the general fund--state appropriation for fiscal year 2010, (($616,000)) $1,832,000 of the general fund--state appropriation for fiscal year 2011, and (($368,000)) $357,000 of the general fund--federal appropriation are provided solely to contract with medical professionals for comprehensive safety assessments of high-risk families and for foster care assessments.  The safety assessments will use validated assessment tools to guide intervention decisions through the identification of additional safety and risk factors.  (($800,000 of this amount is for)) The department will maintain the availability of comprehensive foster care assessments and follow up services for children in out-of-home care who do not have permanent plans, comprehensive safety assessments for families receiving in-home child protective services or family voluntary services((.  $800,000 of this amount is for)), and comprehensive safety assessments ((of)) for families with an infant age birth to fifteen days where the infant was, at birth, diagnosed as substance exposed and the department received an intake referral related to the infant due to the substance exposure.  The department must consolidate contracts, streamline administration, and explore efficiencies to achieve savings.

      (((11) $7,970,000)) (10) $7,679,000 of the general fund--state appropriation for fiscal year 2010, (($7,711,000)) $6,643,000 of the general fund--state appropriation for fiscal year 2011, and (($5,177,000)) $4,971,000 of the general fund--federal appropriation are provided solely for court-ordered supervised visits between parents and dependent children and for sibling visits.  The department shall work collaboratively with the juvenile dependency courts and revise the supervised visit reimbursement procedures to stay within appropriations without impeding reunification outcomes between parents and dependent children.  The department shall report to the legislative fiscal committees ((quarterly)) on September 30, 2010, and December 30, 2010, the number of children in foster care who receive supervised visits, their frequency, length of time of each visit, and whether reunification is attained.

      (((12) $1,789,000)) (11) $145,000 of the general fund--state appropriation for fiscal year 2010, $871,000 of the general fund--state appropriation for fiscal year 2011, and $773,000 of the home security fund--state appropriation is provided solely for street youth program services.

      (((13) $1,584,000)) (12) $1,522,000 of the general fund--state appropriation for fiscal year 2010, (($1,584,000)) $1,340,000 of the general fund--state appropriation for fiscal year 2011, and (($1,586,000)) $1,464,000 of the general fund--federal appropriation are provided solely for the department to recruit foster parents.  The recruitment efforts shall include collaborating with community-based organizations and current or former foster parents to recruit foster parents.

      (((14))) (13) $493,000 of the general fund--state appropriation for fiscal year 2010, $303,000 of the general fund--state appropriation for fiscal year 2011, $466,000 of the general fund--private/local appropriation, and $725,000 of the education legacy trust account--state appropriation ((is)) are provided solely for children's administration to contract with an educational advocacy provider with expertise in foster care educational outreach.  Funding is provided solely for contracted education coordinators to assist foster children in succeeding in K-12 and higher education systems.  Funding shall be prioritized to regions with high numbers of foster care youth and/or regions where backlogs of youth that have formerly requested educational outreach services exist.  The department shall utilize private matching funds to maintain educational advocacy services.

      (((15) $1,300,000)) (14) $1,677,000 of the home security fund account--state appropriation is provided solely for HOPE beds.

      (((16) $5,300,000)) (15) $5,193,000 of the home security fund account--state appropriation is provided solely for the crisis residential centers.

      (((17))) (16) The appropriations in this section reflect reductions in the appropriations for the children's administration administrative expenses.  It is the intent of the legislature that these reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

      (((18))) (17) Within the amounts appropriated in this section, the department shall contract for a pilot project with family and community networks in Whatcom county and up to four additional counties to provide services.  The pilot project shall be designed to provide a continuum of services that reduce out-of-home placements and the lengths of stay for children in out-of-home placement.  The department and the community networks shall collaboratively select the additional counties for the pilot project and shall collaboratively design the contract.  Within the framework of the pilot project, the contract shall seek to maximize federal funds.  The pilot project in each county shall include the creation of advisory and management teams which include members from neighborhood-based family advisory committees, residents, parents, youth, providers, and local and regional department staff.  The Whatcom county team shall facilitate the development of outcome-based protocols and policies for the pilot project and develop a structure to oversee, monitor, and evaluate the results of the pilot projects.  The department shall report the costs and savings of the pilot project to the appropriate committees of the legislature by November 1 of each year.

      (((19))) (18) $157,000 of the general fund--state appropriation for fiscal year 2010 and $157,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the department to contract with a nonprofit entity for a reunification pilot project in Whatcom  and Skagit counties.  The contract for the reunification pilot project shall include a rate of $46.16 per hour for evidence-based interventions, in combination with supervised visits, to provide 3,564 hours of services to reduce the length of stay for children in the child welfare system.  The contract shall also include evidence-based intensive parenting skills building services and family support case management services for 38 families participating in the reunification pilot project.  The contract shall include the flexibility for the nonprofit entity to subcontract with trained providers.

      (((20))) (19) $303,000 of the general fund--state appropriation for fiscal year 2010, $418,000 of the general fund--state appropriation for fiscal year 2011, and $257,000 of the general fund--federal appropriation are provided solely to implement Engrossed Substitute House Bill No. 1961 (increasing adoptions act).  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (((21) $100,000)) (20) $98,000 of the general fund--state appropriation for fiscal year 2010 and (($100,000)) $98,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the department to contract with an agency that is working in partnership with, and has been evaluated by, the University of Washington school of social work to implement promising practice constellation hub models of foster care support.

      (((22))) (21) The legislature intends for the department to reduce the time a child remains in the child welfare system.  The department shall establish a measurable goal and report progress toward meeting that goal to the legislature by January 15 of each fiscal year of the 2009- 11 fiscal biennium.  To the extent that actual caseloads exceed those assumed in this section, it is the intent of the legislature to address those issues in a manner similar to all other caseload programs.

(22) $715,000 of the general fund--state appropriation for fiscal year 2010 and $715,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for services provided through children's advocacy centers.
      (23) $11,000 of the general fund--state appropriation for fiscal year 2011 and $3,000 of the general fund--federal appropriation are provided solely for implementation of chapter 224, Laws of 2010 (confinement alternatives).  If the bill is not enacted by June 30, 2010, the amounts provided in this subsection shall lapse.
      (24) $1,867,000 of the general fund--state appropriation for fiscal year 2010, $1,790,000 of the general fund--state appropriation for fiscal year 2011, and $4,673,000 of the general fund--federal appropriation are provided solely for the department to contract for medicaid treatment child care (MTCC) services.  Children's administration case workers, local public health nurses and case workers from the temporary assistance for needy families program shall refer children to MTCC services, as long as the children meet the eligibility requirements as outlined in the Washington state plan for the MTCC services.
      (25) The department shall contract for at least one pilot project with adolescent services providers to deliver a continuum of short-term crisis stabilization services.  The pilot project shall include adolescent services provided through secure crisis residential centers, crisis residential centers, and hope beds.  The department shall work with adolescent service providers to maintain availability of adolescent services and maintain the delivery of services in a geographically representative manner.  The department shall examine current staffing requirements, flexible payment options, center-specific licensing waivers, and other appropriate methods to achieve savings and streamline the delivery of services.  The legislature intends for the pilot project to provide flexibility to the department to improve outcomes and to achieve more efficient utilization of existing resources, while meeting the statutory goals of the adolescent services programs.  The department shall provide an update to the appropriate legislative committees and governor on the status of the pilot project implementation by December 1, 2010.
      (26) To ensure expenditures remain within available funds appropriated in this section as required by RCW 74.13A.005 and 74.13A.020, the secretary shall not set the amount of any adoption assistance payment or payments, made pursuant to RCW 26.33.320 and 74.13A.005 through 74.13A.080, to more than ninety percent of the foster care maintenance payment for that child had he or she remained in a foster family home during the same period.  This subsection does not apply to adoption assistance agreements in existence on the effective date of this section.
      (27) Receipts from fees per chapter 289, Laws of 2010, as deposited into the prostitution prevention and intervention account for services provided to sexually exploited children as defined in RCW 13.32A.030 in secure and semi-secure crisis residential centers with access to staff trained to meet their specific needs shall be used to expand capacity for secure crisis residential centers and not supplant existing funding.

Sec. 203.  2010 c 3 s 202 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-JUVENILE REHABILITATION PROGRAM

General Fund‑-State Appropriation (FY 2010)…...(($104,185,000))

$103,437,000

General Fund‑-State Appropriation (FY 2011)…….(($92,392,000))

$97,761,000

General Fund‑-Federal Appropriation………………(($6,565,000))

$1,715,000

General Fund‑-Private/Local Appropriation………..(($1,900,000))

$1,899,000

Washington Auto Theft Prevention Authority Account--

      State Appropriation………………………………...$3,896,000

Juvenile Accountability Incentive Account‑-Federal

      Appropriation…………………………………..(($2,801,000))

$2,805,000

State Efficiency and Restructuring Account—State

      Appropriation……………………………...………$4,958,000

             TOTAL APPROPRIATION……………(($211,739,000))

$216,471,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) $353,000 of the general fund--state appropriation for fiscal year 2010 and $353,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for deposit in the county criminal justice assistance account for costs to the criminal justice system associated with the implementation of chapter 338, Laws of 1997 (juvenile code revisions).  The amounts provided in this subsection are intended to provide funding for county adult court costs associated with the implementation of chapter 338, Laws of 1997 and shall be distributed in accordance with RCW 82.14.310.

      (2) (($3,578,000)) $3,408,000 of the general fund--state appropriation for fiscal year 2010 and (($3,578,000)) $2,898,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the implementation of chapter 338, Laws of 1997 (juvenile code revisions).  The amounts provided in this subsection are intended to provide funding for county impacts associated with the implementation of chapter 338, Laws of 1997 and shall be distributed to counties as prescribed in the current consolidated juvenile services (CJS) formula.

      (3) $3,716,000 of the general fund--state appropriation for fiscal year 2010 and $3,716,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to implement community juvenile accountability grants pursuant to chapter 338, Laws of 1997 (juvenile code revisions).  Funds provided in this subsection may be used solely for community juvenile accountability grants, administration of the grants, and evaluations of programs funded by the grants.

      (4) (($1,506,000)) $1,427,000 of the general fund--state appropriation for fiscal year 2010 and (($1,506,000)) $1,206,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to implement alcohol and substance abuse treatment programs for locally committed offenders.  The juvenile rehabilitation administration shall award these moneys on a competitive basis to counties that submitted a plan for the provision of services approved by the division of alcohol and substance abuse.  The juvenile rehabilitation administration shall develop criteria for evaluation of plans submitted and a timeline for awarding funding and shall assist counties in creating and submitting plans for evaluation.

      (5) $3,066,000 of the general fund--state appropriation for fiscal year 2010 and $3,066,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for grants to county juvenile courts for the following programs identified by the Washington state institute for public policy (institute) in its October 2006 report:  "Evidence-Based Public Policy Options to Reduce Future Prison Construction, Criminal Justice Costs and Crime Rates":  Functional family therapy, multi-systemic therapy, aggression replacement training and interagency coordination programs, or other programs with a positive benefit-cost finding in the institute's report.  County juvenile courts shall apply to the juvenile rehabilitation administration for funding for program-specific participation and the administration shall provide grants to the courts consistent with the per-participant treatment costs identified by the institute.

      (6) $1,287,000 of the general fund--state appropriation for fiscal year 2010 and $1,287,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for expansion of the following treatments and therapies in juvenile rehabilitation administration programs identified by the Washington state institute for public policy in its October 2006 report:  "Evidence-Based Public Policy Options to Reduce Future Prison Construction, Criminal Justice Costs and Crime Rates":  Multidimensional treatment foster care, family integrated transitions, and aggression replacement training.  The administration may concentrate delivery of these treatments and therapies at a limited number of programs to deliver the treatments in a cost-effective manner.

      (7)(a) ((For the fiscal year ending June 30, 2010, the juvenile rehabilitation administration shall administer a block grant, rather than categorical funding, of consolidated juvenile service funds, community juvenile accountability act grants, the chemical dependency disposition alternative funds, the special sex offender disposition alternative funds, the mental health disposition alternative, sentencing disposition alternative, and evidence-based program expansion grants to juvenile courts for the purpose of serving youth adjudicated in the juvenile justice system.  Evidence-based programs, based on the criteria established by the Washington state institute for public policy, and disposition alternatives will be funding priorities.  Funds may be used for promising practices when approved by juvenile rehabilitation administration, based on criteria established in consultation with Washington state institute for public policy and the juvenile courts.
      By September 1, 2009, a committee with four members, in consultation with Washington state institute for public policy, shall develop a funding formula that takes into account the juvenile courts average daily population of program eligible youth in conjunction with the number of youth served in each approved evidence-based program or disposition alternative.  The committee shall have one representative from the juvenile rehabilitation administration, one representative from the office of financial management, one representative from the office of the administrator of the courts, and one representative from the juvenile courts.  Decision making will be by majority rule.
      By September 1, 2010, the Washington state institute for public policy shall provide a report to the office of financial management and the legislature on the administration of the block grant authorized in this subsection.  The report shall include the criteria used for allocating the funding as a block grant and the participation targets and actual participation in the programs subject to the block grant.
      (b) By December 1, 2009, the committee established in (a) of this subsection, in consultation with Washington state institute for public policy, shall propose to the office of financial management and the legislature changes in the process of funding and managing, including accountability and information collection and dissemination, grants to juvenile courts for serving youth adjudicated in the juvenile court system use in the fiscal year ending June 30, 2011.  The proposal shall include, but is not limited to:  A process of making a block grant of funds consistent with (a) of this subsection; a program of data collection and measurement criteria for receiving the funds which will include targets of the number of youth served in identified evidence-based programs and disposition alternatives in which the juvenile courts and office of the administrator of the courts will have responsibility for collecting and distributing information and providing access to the data systems to the juvenile rehabilitation administration and the Washington state institute for public policy related to program and outcome data; and necessary changes to the Washington administrative code.
      (c) Within the funds provided for criminal justice analysis in section 610(4) of this act, the Washington state institute for public policy shall conduct an analysis of the costs per participant of evidence-based programs by the juvenile courts and by December 1, 2009, shall report the results of this analysis to the juvenile rehabilitation administration, the juvenile courts, office of the administrator of the courts, the office of financial management, and the fiscal committees of the legislature)) For the fiscal year ending June 30, 2011, the juvenile rehabilitation administration shall administer a block grant, rather than categorical funding, of consolidated juvenile service funds, community juvenile accountability act grants, the chemical dependency disposition alternative funds, the mental health disposition alternative, and the sentencing disposition alternative for the purpose of serving youth adjudicated in the juvenile justice system.  In making the block grant, the juvenile rehabilitation administration shall follow the following formula and will prioritize evidence-based programs and disposition alternatives and take into account juvenile courts program-eligible youth in conjunction with the number of youth served in each approved evidence-based program or disposition alternative:  (i) Thirty-seven and one-half percent for the at-risk population of youth ten to seventeen years old; (ii) fifteen percent for moderate and high-risk youth; (iii) twenty-five percent for evidence-based program participation; (iv) seventeen and one-half percent for minority populations; (v) three percent for the chemical dependency disposition alternative; and (vi) two percent for the mental health and sentencing dispositional alternatives.  Funding for the special sex offender disposition alternative (SSODA) shall not be included in the block grant, but allocated on the average daily population in juvenile courts.  Funding for the evidence-based expansion grants shall be excluded from the block grant formula.  Funds may be used for promising practices when approved by the juvenile rehabilitation administration and juvenile courts, through the community juvenile accountability act committee, based on the criteria established in consultation with Washington state institute for public policy and the juvenile courts.
      (b) It is the intent of the legislature that the juvenile rehabilitation administration phase the implementation of the formula provided in subsection (1) of this section by including a stop-loss formula of three percent in fiscal year 2011, five percent in fiscal year 2012, and five percent in fiscal year 2013.  It is further the intent of the legislature that the evidence-based expansion grants be incorporated into the block grant formula by fiscal year 2013 and SSODA remain separate unless changes would result in increasing the cost benefit savings to the state as identified in (c) of this subsection.
      (c) The juvenile rehabilitation administration and the juvenile courts shall establish a block grant funding formula oversight committee with equal representation from the juvenile rehabilitation administration and the juvenile courts.  The purpose of this committee is to assess the ongoing implementation of the block grant funding formula, utilizing data-driven decision making and the most current available information.  The committee will be cochaired by the juvenile rehabilitation administration and the juvenile courts, who will also have the ability to change members of the committee as needed to achieve its purpose.  Initial members will include one juvenile court representative from the finance committee, the community juvenile accountability act committee, the risk assessment quality assurance committee, the executive board of the Washington association of juvenile court administrators, the Washington state center for court research, and a representative of the superior court judges association; two representatives from the juvenile rehabilitation administration headquarters program oversight staff, two representatives of the juvenile rehabilitation administration regional office staff, one representative of the juvenile rehabilitation administration fiscal staff and a juvenile rehabilitation administration division director.  The committee may make changes to the formula categories other than the evidence-based program and disposition alternative categories if it is determined the changes will increase statewide service delivery or effectiveness of evidence-based program or disposition alternative resulting in increased cost benefit savings to the state.  Long-term cost benefit must be considered.  Percentage changes may occur in the evidence-based program or disposition alternative categories of the formula should it be determined the changes will increase evidence-based program or disposition alternative delivery and increase the cost benefit to the state.  These outcomes will also be considered in determining when evidence-based expansion or special sex offender disposition alternative funds should be included in the block grant or left separate.
      (d) The juvenile courts and administrative office of the courts shall be responsible for collecting and distributing information and providing access to the data systems to the juvenile rehabilitation administration and the Washington state institute for public policy related to program and outcome data.  The juvenile rehabilitation administration and the juvenile courts will work collaboratively to develop program outcomes that reinforce the greatest cost benefit to the state in the implementation of evidence-based practices and disposition alternatives.
      (e) By December 1, 2010, the Washington state institute for public policy shall report to the office of financial management and appropriate committees of the legislature on the administration of the block grant authorized in this subsection.  The report shall include the criteria used for allocating the funding as a block grant and the participation targets and actual participation in the programs subject to the block grant.

      (8) $3,700,000 of the Washington auto theft prevention authority account--state appropriation is provided solely for competitive grants to community-based organizations to provide at-risk youth intervention services, including but not limited to, case management, employment services, educational services, and street outreach intervention programs.  Projects funded should focus on preventing, intervening, and suppressing behavioral problems and violence while linking at-risk youth to pro-social activities.  The department may not expend more than $1,850,000 per fiscal year.  The costs of administration must not exceed four percent of appropriated funding for each grant recipient.  Each entity receiving funds must report to the juvenile rehabilitation administration on the number and types of youth served, the services provided, and the impact of those services upon the youth and the community.

(9) The appropriations in this section assume savings associated with the transfer of youthful offenders age eighteen or older whose sentences extend beyond age twenty-one to the department of corrections to complete their sentences.  Prior to transferring an offender to the department of corrections, the juvenile rehabilitation administration shall evaluate the offender to determine the offender's physical and emotional suitability for transfer.

Sec. 204.  2010 c 3 s 203 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-MENTAL HEALTH PROGRAM

      (1) COMMUNITY SERVICES/REGIONAL SUPPORT NETWORKS

General Fund‑-State Appropriation (FY 2010)…...(($266,677,000))

$273,648,000

General Fund‑-State Appropriation (FY 2011)…..(($296,619,000))

$278,530,000

General Fund‑-Federal Appropriation……………(($463,180,000))

$519,456,000

General Fund‑-Private/Local Appropriation………(($14,868,000))

$16,674,000

Hospital Safety Net Assessment Fund—State

      Appropriation……………………………………...$3,476,000

             TOTAL APPROPRIATION………….(($1,041,344,000))

$1,091,784,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) $113,689,000 of the general fund--state appropriation for fiscal year 2010 and $113,689,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for persons and services not covered by the medicaid program.  This is a reduction of $11,606,000 each fiscal year from the nonmedicaid funding that was allocated for expenditure by regional support networks during fiscal year 2009 prior to supplemental budget reductions.  This $11,606,000 reduction shall be distributed among regional support networks proportional to each network's share of the total state population.  To the extent possible, levels of regional support network spending shall be maintained in the following priority order:  (i) Crisis and commitment services; (ii) community inpatient services; and (iii) residential care services, including personal care and emergency housing assistance.

      (b) (($16,900,000)) $10,400,000 of the general fund--state appropriation for fiscal year 2010 ((and $16,900,000)), $9,100,000 of the general fund--state appropriation for fiscal year 2011, and $1,300,000 of the general fund--federal appropriation are provided solely for the department and regional support networks to contract for implementation of high-intensity program for active community treatment (PACT) teams((, and other proven program approaches that the department concurs will enable the regional support network to achieve significant reductions in the number of beds the regional support network would otherwise need to use at the state hospitals)).  The department shall work with regional support networks and the center for medicare and medicaid services to integrate eligible components of the PACT service delivery model into medicaid capitation rates no later than January 2011, while maintaining consistency with all essential elements of the PACT evidence-based practice model.

      (c) $6,500,000 of the general fund--state appropriation for fiscal year 2010 and $6,500,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the western Washington regional support networks to provide either community- or hospital campus-based services for persons who require the level of care provided by the program for adaptive living skills (PALS) at western state hospital.
      (d) The number of nonforensic beds allocated for use by regional support networks at eastern state hospital shall be 192 per day.  The number of nonforensic beds allocated for use by regional support networks at western state hospital shall be 617 per day during the first quarter of fiscal year 2010, and 587 per day thereafter.  Beds in the program for adaptive living skills (PALS) are not included in the preceding bed allocations.  The department shall separately charge regional support networks for persons served in the PALS program.

      (((d))) (e) From the general fund--state appropriations in this subsection, the secretary of social and health services shall assure that regional support networks reimburse the aging and disability services administration for the general fund--state cost of medicaid personal care services that enrolled regional support network consumers use because of their psychiatric disability.

      (((e))) (f) $4,582,000 of the general fund--state appropriation for fiscal year 2010 and $4,582,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for mental health services for mentally ill offenders while confined in a county or city jail and for facilitating access to programs that offer mental health services upon release from confinement.

      (((f))) (g) The department is authorized to continue to contract directly, rather than through contracts with regional support networks, for children's long-term inpatient facility services.

      (((g))) (h) $750,000 of the general fund--state appropriation for fiscal year 2010 and $750,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to continue performance-based incentive contracts to provide appropriate community support services for individuals with severe mental illness who were discharged from the state hospitals as part of the expanding community services initiative.  These funds will be used to enhance community residential and support services provided by regional support networks through other state and federal funding.

      (((h))) (i) $1,500,000 of the general fund--state appropriation for fiscal year 2010 and $1,500,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the Spokane regional support network to implement services to reduce utilization and the census at eastern state hospital.  Such services shall include:

      (i) High intensity treatment team for persons who are high utilizers of psychiatric inpatient services, including those with co-occurring disorders and other special needs;

      (ii) Crisis outreach and diversion services to stabilize in the community individuals in crisis who are at risk of requiring inpatient care or jail services;

      (iii) Mental health services provided in nursing facilities to individuals with dementia, and consultation to facility staff treating those individuals; and

      (iv) Services at the sixteen-bed evaluation and treatment facility.

      At least annually, the Spokane regional support network shall assess the effectiveness of these services in reducing utilization at eastern state hospital, identify services that are not optimally effective, and modify those services to improve their effectiveness.

      (((i))) (j) The department shall return to the Spokane regional support network fifty percent of the amounts assessed against the network during the last six months of calendar year 2009 for state hospital utilization in excess of its contractual limit.  The regional support network shall use these funds for operation during its initial months of a new sixteen-bed evaluation and treatment facility that will enable the network to reduce its use of the state hospital, and for diversion and community support services for persons with dementia who would likely otherwise require care at the state hospital.

      (((j))) (k) The department is directed to identify and implement program efficiencies and benefit changes in its delivery of medicaid managed-care services that are sufficient to operate within the state and federal appropriations in this section.  Such actions may include but are not limited to methods such as adjusting the care access standards; improved utilization management of ongoing, recurring, and high-intensity services; and increased uniformity in provider payment rates.  The department shall ensure that the capitation rate adjustments necessary to accomplish these efficiencies and changes are distributed uniformly and equitably across all regional support networks statewide.  The department is directed to report to the relevant legislative fiscal and policy committees at least thirty days prior to implementing rate adjustments reflecting these changes.

      (((k))) (l) In developing the new medicaid managed care rates under which the public mental health managed care system will operate during the five years beginning in fiscal year 2011, the department should seek to estimate the reasonable and necessary cost of efficiently and effectively providing a comparable set of medically necessary mental health benefits to persons of different acuity levels regardless of where in the state they live.   Actual prior period spending in a regional administrative area shall not be a key determinant of future payment rates.  The department shall report to the office of financial management and to the relevant fiscal and policy committees of the legislature on its proposed new waiver and mental health managed care rate-setting approach by October 1, 2009, and again at least sixty days prior to implementation of new capitation rates.

(m) In implementing the new public mental health managed care payment rates for fiscal year 2011, the department shall to the maximum extent possible within each regional support network's allowable rate range establish rates so that there is no increase or decrease in the total state and federal funding that the regional support network would receive if it were to continue to be paid at its October 2009 through June 2010 rates.  The department shall additionally revise the draft rates issued January 28, 2010, to more accurately reflect the lower practitioner productivity inherent in the delivery of services in extremely rural regions in which a majority of the population reside in frontier counties, as defined and designated by the national center for frontier communities.

      (((l))) (n) $1,529,000 of the general fund--state appropriation for fiscal year 2010 and $1,529,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to reimburse Pierce and Spokane counties for the cost of conducting 180-day commitment hearings at the state psychiatric hospitals.

      (((m))) (o) The legislature intends and expects that regional support networks and contracted community mental health agencies shall make all possible efforts to, at a minimum, maintain current compensation levels of direct care staff.  Such efforts shall include, but not be limited to, identifying local funding that can preserve client services and staff compensation, achieving administrative reductions at the regional support network level, and engaging stakeholders on cost-savings ideas that maintain client services and staff compensation.  For purposes of this section, "direct care staff" means persons employed by community mental health agencies whose primary responsibility is providing direct treatment and support to people with mental illness, or whose primary responsibility is providing direct support to such staff in areas such as client scheduling, client intake, client reception, client records-keeping, and facilities maintenance.

(p) Regional support networks may use local funds to earn additional federal medicaid match, provided the locally matched rate does not exceed the upper-bound of their federally allowable rate range, and provided that the enhanced funding is used only to provide medicaid state plan or waiver services to medicaid clients.  Additionally, regional support networks may use a portion of the state funds allocated in accordance with (a) of this subsection to earn additional medicaid match, but only to the extent that the application of such funds to medicaid services does not diminish the level of crisis and commitment, community inpatient, residential care, and outpatient services presently available to persons not eligible for medicaid.

      (2) INSTITUTIONAL SERVICES

General Fund‑-State Appropriation (FY 2010)…...(($120,637,000))

$119,423,000

General Fund‑-State Appropriation (FY 2011)…..(($124,995,000))

$123,012,000

General Fund‑-Federal Appropriation……………(($151,160,000))

$153,425,000

General Fund‑-Private/Local Appropriation……….(($65,868,000))

$64,614,000

             TOTAL APPROPRIATION……………(($462,660,000))

$460,474,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) The state psychiatric hospitals may use funds appropriated in this subsection to purchase goods and supplies through hospital group purchasing organizations when it is cost-effective to do so.

      (b) $231,000 of the general fund--state appropriation for fiscal year 2008 and $231,000 of the general fund--state appropriation for fiscal year 2009 are provided solely for a community partnership between western state hospital and the city of Lakewood to support community policing efforts in the Lakewood community surrounding western state hospital.  The amounts provided in this subsection (2)(b) are for the salaries, benefits, supplies, and equipment for one full-time investigator, one full-time police officer, and one full-time community service officer at the city of Lakewood.

      (c) $45,000 of the general fund--state appropriation for fiscal year 2010 and $45,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for payment to the city of Lakewood for police services provided by the city at western state hospital and adjacent areas.

(d) $200,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for support of the psychiatric security review panel established pursuant to Senate Bill No. 6610.  If Senate Bill No. 6610 is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.

      (3) SPECIAL PROJECTS

General Fund‑-State Appropriation (FY 2010)…………$1,819,000

General Fund‑-State Appropriation (FY 2011)……..(($1,812,000))

$2,092,000

General Fund‑-Federal Appropriation………………….$2,142,000

             TOTAL APPROPRIATION………………(($5,773,000))

$6,053,000

      The appropriations in this subsection are subject to the following conditions and limitations:

(a) $1,511,000 of the general fund--state appropriation for fiscal year 2010 and $1,511,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for children's evidence based mental health services.  Funding is sufficient to continue serving children at the same levels as fiscal year 2009.

(b) $100,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for consultation, training, and technical assistance to regional support networks on strategies for effective service delivery in very sparsely populated counties.
      (c) $60,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the department to contract with the Washington state institute for public policy for completion of the research reviews to be conducted in accordance with chapter 263, Laws of 2010.
      (d) $60,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the department to contract with the Washington state institute for public policy for completion of the research reviews to be conducted in accordance with section 1, chapter 280, Laws of 2010.
      (e) $60,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for implementation of sections 2 and 3, chapter 280, Laws of 2010.  The department shall use these funds to contract with the Washington state institute for public policy for completion of an assessment of (i) the extent to which the number of persons involuntarily committed for 3, 14, and 90 days is likely to increase as a result of the revised commitment standards; (ii) the availability of community treatment capacity to accommodate that increase; (iii) strategies for cost-effectively leveraging state, local, and private resources to increase community involuntary treatment capacity; and (iv) the extent to which increases in involuntary commitments are likely to be offset by reduced utilization of correctional facilities, publicly-funded medical care, and state psychiatric hospitalizations.
      (f) By October 1, 2010, the department shall report to the governor and appropriate committees of the legislature with (i) a report on improving services for children who are at greatest risk of requiring long-term inpatient and residential care due to the severity of their emotional impairments; and (ii) an inventory of current publicly funded efforts in Washington to identify children at risk of emotional impairments and to provide intervention before a mental disorder manifests itself.  The report on improving services for children at risk of long-term care shall be developed by the division of behavioral health and recovery services in consultation with treatment specialists, regional support networks, behavioral health provider organizations, and consumer and family representatives.  It shall include potential alternatives for services to children at risk of long-term, intensive mental health care and recommend specific proposals regarding program components, delivery system organization, and cost estimates.  The proposals may include short and long-term alternatives to reach statewide equity in access to high-intensity services with a primary focus on children who are at risk of out-of-home placement or who are high system utilizers.  Evidence-based and research-based practices shall be included as options to the extent that they provide appropriate services for children at risk of long-term, intensive mental health care.  The inventory shall include, but is not limited to, activities that focus on prevention rather than solely on clinical or medical treatment and that rely on strategies such as those identified by the national academies' institute of medicine as effective in preventing childhood emotional impairments.  The inventory shall be developed by the family policy council in consultation with public health departments, special education experts, managed health care plans, regional support networks, the University of Washington's children's mental health evidence-based practice institute, and behavioral health provider organizations.

      (4) PROGRAM SUPPORT

General Fund‑-State Appropriation (FY 2010)……...(($4,077,000))

$4,078,000

General Fund‑-State Appropriation (FY 2011)……...(($4,094,000))

$4,070,000

General Fund‑-Federal Appropriation………………(($7,227,000))

$7,219,000

             TOTAL APPROPRIATION……………...(($15,398,000))

$15,367,000

      The department is authorized and encouraged to continue its contract with the Washington state institute for public policy to provide a longitudinal analysis of long-term mental health outcomes as directed in chapter 334, Laws of 2001 (mental health performance audit); to build upon the evaluation of the impacts of chapter 214, Laws of 1999 (mentally ill offenders); and to assess program outcomes and cost effectiveness of the children's mental health pilot projects as required by chapter 372, Laws of 2006.

Sec. 205.  2010 c 3 s 204 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-DEVELOPMENTAL DISABILITIES PROGRAM

      (1) COMMUNITY SERVICES

General Fund‑-State Appropriation (FY 2010)…...(($311,589,000))

$307,348,000

General Fund‑-State Appropriation (FY 2011)…...(($366,489,000))

$338,299,000

General Fund‑-Federal Appropriation………........(($849,263,000))

$902,900,000

TOTAL APPROPRIATION…………………..(($1,527,341,000))

$1,548,547,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) Individuals receiving services as supplemental security income (SSI) state supplemental payments shall not become eligible for medical assistance under RCW 74.09.510 due solely to the receipt of SSI state supplemental payments.

      (b)(i) Amounts appropriated in this section reflect a reduction to funds appropriated for in-home care.  The department shall reduce the number of in-home hours authorized.  The reduction shall be scaled based on the acuity level of care recipients.  The largest hour reductions shall be to lower acuity patients and the smallest hour reductions shall be to higher acuity patients.  In doing so, the department shall comply with all maintenance of effort requirements contained in the American reinvestment and recovery act.

(ii) $508,000 of the general fund--state appropriation for fiscal year 2011 and $822,000 of the general fund--federal appropriation are provided solely for the department to partially restore the reductions to in-home care that are taken in (b)(i) of this subsection.  The department will use the same formula to restore personal care hours that it used to reduce personal care hours.

      (c) Amounts appropriated in this section are sufficient to develop and implement the use of a consistent, statewide outcome-based vendor contract for employment and day services by April 1, 2011.  The rates paid to vendors under this contract shall also be made consistent.  In its description of activities the agency shall include activity listings and dollars appropriated for:  Employment services, day services, child development services and county administration of services to the developmentally disabled.  The department shall begin reporting to the office of financial management on these activities beginning in fiscal year 2010.

      (d) (($5,593,000 of the general fund--state appropriation for fiscal year 2010, $4,002,000 of the general fund--state appropriation for fiscal year 2011, and $14,701,000 of the general fund--federal appropriation are provided solely for community residential and support services.  Funding in this subsection shall be prioritized for (i) residents of residential habilitation centers who are able to be adequately cared for in community settings and who choose to live in those community settings; (ii) clients without residential services who are at immediate risk of institutionalization or in crisis; (iii) children who are at risk of institutionalization or who are aging out of other state services; and (iv) current home and community-based waiver program clients who have been assessed as having an immediate need for increased services.  First priority shall be given to children who are at risk of institutionalization.  The department shall ensure that the average cost per day for all program services other than start-up costs shall not exceed $300.  In order to maximize the number of clients served and ensure the cost-effectiveness of the waiver programs, the department will strive to limit new client placement expenditures to 90 percent of the budgeted daily rate.  If this can be accomplished, additional clients may be served with excess funds, provided the total projected carry-forward expenditures do not exceed the amounts estimated.  The department shall electronically report to the appropriate committees of the legislature, within 45 days following each fiscal year quarter, the number of persons served with these additional community services, where they were residing, what kinds of services they were receiving prior to placement, and the actual expenditures for all community services to support these clients.
      (e)(i) $493,000 of the general fund--state appropriation for fiscal year 2010, $1,463,000 of the general fund--state appropriation for fiscal year 2011, and $2,741,000 of the general fund--federal appropriation are provided solely for community services for persons with developmental disabilities who also have community protection issues.  Funding in this subsection shall be prioritized for (A) clients being diverted or discharged from the state psychiatric hospitals; (B) clients participating in the dangerous mentally ill offender program; (C) clients participating in the community protection program; and (D) mental health crisis diversion outplacements.  The department shall ensure that the average cost per day for all program services other than start-up costs shall not exceed $349 per day in fiscal year 2010 and $356 per day in fiscal year 2011.  In order to maximize the number of clients served and ensure the cost-effectiveness of the waiver programs, the department will strive to limit new client placement expenditures to 90 percent of the budgeted daily rate.  If this can be accomplished, additional clients may be served with excess funds if the total projected carry-forward expenditures do not exceed the amounts estimated.
      (ii) The department shall electronically report to the appropriate committees of the legislature, within 45 days following each fiscal year quarter, the number of persons served with these additional community services, where they were residing, what kinds of services they were receiving prior to placement, and the actual expenditures for all community services to support these clients.
      (f))) $302,000 of the general fund--state appropriation for fiscal year 2010, $831,000 of the general fund--state appropriation for fiscal year 2011, and $1,592,000 of the general fund--federal appropriation are provided solely for health care benefits pursuant to a collective bargaining agreement negotiated with the exclusive bargaining representative of individual providers established under RCW 74.39A.270.

      (((g))) (e)(i) $682,000 of the general fund--state appropriation for fiscal year 2010, $1,651,000 of the general fund--state appropriation for fiscal year 2011, and $1,678,000 of the general fund--federal appropriation are provided solely for the state's contribution to the training partnership, as provided in RCW 74.39A.360, pursuant to a collective bargaining agreement negotiated with the exclusive bargaining representative of individual providers established under RCW 74.39A.270.

      (ii) The federal portion of the amounts in this subsection (g) is contingent upon federal approval of participation in contributions to the trust and shall remain unallotted and placed in reserve status until the office of financial management and the department of social and health services receive federal approval.

      (iii) Expenditures for the purposes specified in this subsection (g) shall not exceed the amounts provided in this subsection.

      (((h))) (f) Within the amounts appropriated in this subsection (1), the department shall implement all necessary rules to facilitate the transfer to a department home and community-based services (HCBS) waiver of all eligible individuals who (i) currently receive services under the existing state-only employment and day program or the existing state-only residential program, and (ii) otherwise meet the waiver eligibility requirements.  The amounts appropriated are sufficient to ensure that all individuals currently receiving services under the state-only employment and day and state-only residential programs who are not transferred to a department HCBS waiver will continue to receive services.

      (((i) Adult day health services shall only be authorized for in-home clients.
      (j))) (g) In addition to other reductions, the appropriations in this subsection reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

      (((k))) (h) The department shall not pay a home care agency licensed under chapter 70.127 RCW for personal care services provided by a family member, pursuant to Substitute House Bill No. 2361 (modifying state payments for in-home care).

      (((l))) (i) Within the appropriations of this section, the department shall reduce all seventeen payment levels of the seventeen-level payment system from the fiscal year 2009 levels for boarding homes, boarding homes contracted as assisted living, and adult family homes.  Excluded from the reductions are exceptional care rate add-ons.  The long-term care program may develop add-ons to pay exceptional care rates to adult family homes and boarding homes with specialty contracts to provide support for the following specifically eligible clients:

      (i) Persons with AIDS or HIV-related diseases who might otherwise require nursing home or hospital care;

      (ii) Persons with Alzheimer's disease and related dementia who might otherwise require nursing home care; and

      (iii) Persons with co-occurring mental illness and long-term care needs who are eligible for expanded community services and who might otherwise require state and local psychiatric hospital care.

      Within amounts appropriated, exceptional add-on rates for AIDS/HIV, dementia specialty care, and expanded community services may be standardized within each program.

      (((m))) (j) The amounts appropriated in this subsection reflect a reduction in funds available for employment and day services.  In administering this reduction the department shall negotiate with counties and their vendors so that this reduction, to the greatest extent possible, is achieved by reducing vendor rates and allowable contract administrative charges (overhead) and not through reductions to direct client services or direct service delivery or programs.

      (((n) Within the amounts allotted for employment and day services in this section, the department shall prioritize the funding of employment services for students graduating from high school during fiscal years 2010 and 2011.  However, nothing in this subsection is intended to displace services for other recipients of employment services.
      (o))) (k) As part of the needs assessment instrument, the department may collect data on family income for minor children with developmental disabilities and all individuals who are receiving state-only funded services.  The department may ensure that this information is collected as part of the client assessment process.

(l) $116,000 of the general fund--state appropriation for fiscal year 2010, $2,689,000 of the general fund--state appropriation for fiscal year 2011, and $1,772,000 of the general fund--federal appropriation are provided solely for employment services and required waiver services.  Priority consideration for this new funding shall be young adults with developmental disabilities living with their family who need employment opportunities and assistance after high school graduation.  Services shall be provided for both waiver and nonwaiver clients.  Fifty percent of the general fund appropriation shall be utilized for graduates served on a home and community-based services waiver and fifty percent of the general fund appropriation shall be used for nonwaiver clients.
      (m) The division of developmental disabilities shall not reduce funding for county employment contracts.  Funding for this purpose shall be maintained at the amount appropriated for this purpose in chapter 564, Laws of 2009.
      (n) The department shall, by September 30, 2010, provide a report to the legislature on the implementation of chapter 571, Laws of 2009 (Substitute House Bill No. 2361).  The report shall provide an analysis of the savings and/or costs to the agency associated with the implementation of the bill.  Additionally, the report shall provide a full accounting of the relative hourly costs of agency providers and individual providers.
      (o) The department shall establish a working group with representatives of the home care industry to identify and eliminate or mitigate administrative burdens. The make-up of this working group shall be limited to:
      (i) The state unit on aging chief of the aging and disabilities service administration (ADSA);
      (ii) Other ADSA representatives as the state unit on aging chief deems necessary;
      (iii) A representative from the department of health facility services licensing;
      (iv) No more than seven representatives of the home care industry, to include:
      (A) A representative of each of the three home care associations;
      (B) A for-profit agency with at least seven area agency on aging contracts;
      (C) A nonprofit with at least seven area agency on aging contracts;
      (D) An agency that serves persons with developmental disabilities; and
      (E) An agency that is a community action program;
      (v) No more than two area agency on aging directors; and
      (vi) Representatives from each of the two labor unions which represent home care workers.
      The department is authorized to assign work group members consistent with this subsection (1)(s).  The working group shall hold its first meeting no later than May 1, 2010, and shall meet at least monthly or as needed until the group has accomplished its goals.  The work group shall provide a report on its findings to the legislative fiscal committees by January 1, 2011.
      (p) The department shall electronically report to the appropriate committees of the legislature, within 45 days following each fiscal year quarter, the number of persons served in each of the following categories:  (i) Residents of residential habilitation centers who are able to be adequately cared for in community settings and who choose to live in those community settings; (ii) clients without residential services who are at immediate risk of institutionalization or in crisis; (iii) children who are at risk of institutionalization or who are aging out of other state services; (iv) current home and community-based waiver program clients who have been assessed as having an immediate need for increased services; (v) clients being diverted or discharged from the state psychiatric hospitals; (vi) clients participating in the dangerous mentally ill offender program; (vii) clients participating in the community protection program; or (viii) mental health crisis diversion outplacements.  The department shall strive to serve these clients in the most cost-effective manner.
      (q) $81,000 of the general fund--state appropriation for fiscal year 2010, $599,000 of the general fund--state appropriation for fiscal year 2011, and $1,111,000 of the general fund--federal appropriation are provided solely for the department to provide employment and day services for eligible students who are currently on a waiver and will graduate from high school during fiscal years 2010 and 2011.
      (r) $100,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for direct support to families of individuals with developmental disabilities to provide instruction in self-advocacy.
      (s) $100,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for direct support of local organizations that utilize parent-to-parent networks and communication to promote access and quality of care for individuals with developmental disabilities and their families.
      (t) The automatic award of additional hours of personal care for people with special meal preparation or incontinence needs is eliminated.  Authorization of service hours will be based upon the individual's assessed needs.

      (2) INSTITUTIONAL SERVICES

General Fund‑-State Appropriation (FY 2010)…….(($61,612,000))

$61,422,000

General Fund‑-State Appropriation (FY 2011)…….(($74,185,000))

$65,685,000

General Fund‑-Federal Appropriation……………(($202,160,000))

$210,473,000

General Fund‑-Private/Local Appropriation………….$22,441,000

             TOTAL APPROPRIATION……………(($360,398,000))

$360,021,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) Individuals receiving services as supplemental security income (SSI) state supplemental payments shall not become eligible for medical assistance under RCW 74.09.510 due solely to the receipt of SSI state supplemental payments.

      (b) The developmental disabilities program is authorized to use funds appropriated in this subsection to purchase goods and supplies through direct contracting with vendors when the program determines it is cost-effective to do so.

      (c) $721,000 of the general fund--state appropriation for fiscal year 2010 and $721,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the department to fulfill its contracts with the school districts under chapter 28A.190 RCW to provide transportation, building space, and other support services as are reasonably necessary to support the educational programs of students living in residential habilitation centers.

      (d) In addition to other reductions, the appropriations in this subsection reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

      (3) PROGRAM SUPPORT

General Fund‑-State Appropriation (FY 2010)….….(($1,420,000))

$1,407,000

General Fund‑-State Appropriation (FY 2011)……...(($1,372,000))

$1,379,000

General Fund‑-Federal Appropriation………………(($1,360,000))

$1,319,000

             TOTAL APPROPRIATION……………….(($4,152,000))

$4,105,000

      The appropriations in this subsection are subject to the following conditions and limitations:  In addition to other reductions, the appropriations in this subsection reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

      (4) SPECIAL PROJECTS

((General Fund-State Appropriation (FY 2010)…………..$15,000

General Fund-State Appropriation (FY 2011)…………..$15,000))

General Fund‑-Federal Appropriation……………..(($21,066,000))

$9,631,000

             TOTAL APPROPRIATION……………..(($21,096,000))

$9,631,000

      The appropriations in this subsection are subject to the following conditions and limitations:  The appropriations in this subsection are available solely for the infant toddler early intervention program.

Sec. 206.  2010 c 3 s 205 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-AGING AND ADULT SERVICES PROGRAM

General Fund‑-State Appropriation (FY 2010)…...(($584,741,000))

$616,837,000

General Fund‑-State Appropriation (FY 2011)…...(($693,325,000))

$638,535,000

General Fund‑-Federal Appropriation………….(($1,805,958,000))

$1,953,289,000

General Fund‑-Private/Local Appropriation………(($19,973,000))

$18,013,000

Traumatic Brain Injury Account‑-State Appropriation………………………………………(($1,816,000))

$4,136,000

             TOTAL APPROPRIATION………….(($3,105,813,000))

$3,230,810,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) For purposes of implementing chapter 74.46 RCW, the weighted average nursing facility payment rate shall not exceed (($156.37)) $169.85 for fiscal year 2010 and shall not exceed (($158.74)) $166.24 for fiscal year 2011, including the rate add-on described in subsection (12) of this section.  There will be no adjustments for economic trends and conditions in fiscal years 2010 and 2011.  The economic trends and conditions factor or factors defined in the biennial appropriations act shall not be compounded with the economic trends and conditions factor or factors defined in any other biennial appropriations acts before applying it to the component rate allocations established in accordance with chapter 74.46 RCW.  When no economic trends and conditions factor for either fiscal year is defined in a biennial appropriations act,  no  economic trends and conditions factor or factors defined in any earlier biennial appropriations act shall be applied solely or compounded to the component rate allocations established in accordance with chapter 74.46 RCW.

      (2) After examining actual nursing facility cost information, the legislature finds that the medicaid nursing facility rates calculated pursuant to Substitute House Bill No. 3202 or Substitute Senate Bill No. 6872 (nursing facility medicaid payments) provide sufficient reimbursement to efficient and economically operating nursing facilities and bears a reasonable relationship to costs.
      (3) In accordance with chapter 74.46 RCW, the department shall issue no additional certificates of capital authorization for fiscal year 2010 and no new certificates of capital authorization for fiscal year 2011 and shall grant no rate add-ons to payment rates for capital improvements not requiring a certificate of need and a certificate of capital authorization for fiscal year 2011.

      (((3))) (4) The long-term care program may develop and pay enhanced rates for exceptional care to nursing homes for persons with traumatic brain injuries who are transitioning from hospital care.  The cost per patient day for caring for these clients in a nursing home setting may be equal to or less than the cost of caring for these clients in a hospital setting.

      (((4))) (5) Within the appropriations of this section, the department shall reduce all seventeen payment levels of the seventeen-level payment system from the fiscal year 2009 levels for boarding homes, boarding homes contracted as assisted living, and adult family homes.  Excluded from the reductions are exceptional care rate add-ons.  The long-term care program may develop add-ons to pay exceptional care rates to adult family homes and boarding homes with specialty contracts to provide support for the following specifically eligible clients:

      (a) Persons with AIDS or HIV-related diseases who might otherwise require nursing home or hospital care;

      (b) Persons with Alzheimer's disease and related dementia who might otherwise require nursing home care; and

      (c) Persons with co-occurring mental illness and long-term care needs who are eligible for expanded community services and who might otherwise require state and local psychiatric hospital care.

      Within amounts appropriated, exceptional add-on rates for AIDS/HIV, dementia specialty care, and expanded community services may be standardized within each program.

      (((5))) (6)(a) Amounts appropriated in this section reflect a reduction to funds appropriated for in-home care.  The department shall reduce the number of in-home hours authorized.  The reduction shall be scaled based on the acuity level of care recipients.  The largest hour reductions shall be to lower acuity patients and the smallest hour reductions shall be to higher acuity patients.  In doing so, the department shall comply with all maintenance of effort requirements contained in the American reinvestment and recovery act.

(b) $3,070,000 of the general fund--state appropriation for fiscal year 2011 and $4,980,000 of the general fund--federal appropriation are provided solely for the department to partially restore the reduction to in-home care that are taken in (a) of this subsection.  The department will use the same formula to restore personal care hours that it used to reduce personal care hours.

      (((6))) (7) $536,000 of the general fund--state appropriation for fiscal year 2010, $1,477,000 of the general fund--state appropriation for fiscal year 2011, and $2,830,000 of the general fund--federal appropriation are provided solely for health care benefits pursuant to a collective bargaining agreement negotiated with the exclusive bargaining representative of individual providers established under RCW 74.39A.270.

      (((7))) (8)(a) $1,212,000 of the general fund--state appropriation for fiscal year 2010, $2,934,000 of the general fund--state appropriation for fiscal year 2011, and $2,982,000 of the general fund--federal appropriation are provided solely for the state's contribution to the training partnership, as provided in RCW 74.39A.360, pursuant to a collective bargaining agreement negotiated with the exclusive bargaining representative of individual providers established under RCW 74.39A.270.

      (b) $330,000 of the general fund--state appropriation for fiscal year 2010, $660,000 of the general fund-state appropriation for fiscal year 2011, and $810,000 of the general fund--federal appropriation are provided solely for transfer from the department to the training partnership, as provided in RCW 74.39A.360, for infrastructure and instructional costs associated with training of individual providers, pursuant to a collective bargaining agreement negotiated with the exclusive bargaining representative of individual providers established under RCW 74.39A.270.

      (c) The federal portion of the amounts in this subsection is contingent upon federal approval of participation in contributions to the trust and shall remain unallotted and placed in reserve status until the office of financial management and the department of social and health services receive federal approval.

      (d) Expenditures for the purposes specified in this subsection shall not exceed the amounts provided in this subsection.

      (((8))) (9) Within the amounts appropriated in this section, the department may expand the new freedom waiver program to accommodate new waiver recipients throughout the state.  As possible, and in compliance with current state and federal laws, the department shall allow current waiver recipients to transfer to the new freedom waiver.

      (((9))) (10) Individuals receiving services as supplemental security income (SSI) state supplemental payments shall not become eligible for medical assistance under RCW 74.09.510 due solely to the receipt of SSI state supplemental payments.

      (((10) Adult day health services shall only be authorized for in-home clients.))

      (11) $3,955,000 of the general fund--state appropriation for fiscal year 2010, $4,239,000 of the general fund--state appropriation for fiscal year 2011, and $10,190,000 of the general fund--federal appropriation are provided solely for the continued operation of community residential and support services for persons who are older adults or who have co-occurring medical and behavioral disorders and who have been discharged or diverted from a state psychiatric hospital.  These funds shall be used to serve individuals whose treatment needs constitute substantial barriers to community placement, who no longer require active psychiatric treatment at an inpatient hospital level of care, and who no longer meet the criteria for inpatient involuntary commitment.  Coordination of these services will be done in partnership between the mental health program and the aging and disability services administration.

      (12) Within the funds provided, the department shall continue to provide an add-on per medicaid resident day per facility not to exceed $1.57.  The add-on shall be used to increase wages, benefits, and/or staffing levels for certified nurse aides; or to increase wages and/or benefits for dietary aides, housekeepers, laundry aides, or any other category of worker whose statewide average dollars-per-hour wage was less than $15 in calendar year 2008, according to cost report data.  The add-on may also be used to address resulting wage compression for related job classes immediately affected by wage increases to low-wage workers.  The department shall continue reporting requirements and a settlement process to ensure that the funds are spent according to this subsection.  The department shall adopt rules to implement the terms of this subsection.

      (13) $1,840,000 of the general fund--state appropriation for fiscal year 2010 and $1,877,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for operation of the volunteer ((chore)) services program.  Funding shall be prioritized towards serving populations traditionally served by long-term care services to include senior citizens and persons with disabilities.

      (14) In accordance with chapter 74.39 RCW, the department may implement two medicaid waiver programs for persons who do not qualify for such services as categorically needy, subject to federal approval and the following conditions and limitations:

      (a) One waiver program shall include coverage of care in community residential facilities.  Enrollment in the waiver shall not exceed 600 persons at any time.

      (b) The second waiver program shall include coverage of in-home care.  Enrollment in this second waiver shall not exceed 200 persons at any time.

      (c) The department shall identify the number of medically needy nursing home residents, and enrollment and expenditures on each of the two medically needy waivers, on monthly management reports.

      (d) If it is necessary to establish a waiting list for either waiver because the budgeted number of enrollment opportunities has been reached, the department shall track how the long-term care needs of applicants assigned to the waiting list are met.

      (15) The department shall establish waiting lists to the extent necessary to assure that annual expenditures on the community options program entry systems (COPES) program do not exceed appropriated levels.  In establishing and managing any such waiting list, the department shall assure priority access to persons with the greatest unmet needs, as determined by department assessment processes.

      (16) The department shall contract for housing with service models, such as cluster care, to create efficiencies in service delivery and responsiveness to unscheduled personal care needs by clustering hours for clients that live in close proximity to each other.

      (17) The department shall not pay a home care agency licensed under chapter 70.127 RCW for personal care services provided by a family member, pursuant to Substitute House Bill No. 2361 (modifying state payments for in-home care).

      (18) (($204,000)) $209,000 of the general fund--state appropriation for fiscal year 2010, (($1,099,000)) $781,000 of the general fund--state appropriation for fiscal year 2011, and (($1,697,000)) $1,293,000 of the general fund--federal appropriation are provided solely to implement Engrossed House Bill No. 2194 (extraordinary medical placement for offenders).  The department shall work in partnership with the department of corrections to identify services and find placements for offenders who are released through the extraordinary medical placement program.  The department shall collaborate with the department of corrections to identify and track cost savings to the department of corrections, including medical cost savings and to identify and track expenditures incurred by the aging and disability services program for community services and by the medical assistance program for medical expenses.  A joint report regarding the identified savings and expenditures shall be provided to the office of financial management and the appropriate fiscal committees of the legislature by November 30, 2010.  If this bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (19) ((Sufficient funding is provided in this section for the department to implement Engrossed Second Substitute House Bill No. 1935 (adult family homes).  During the 2009-11 biennium, the initial licensing fee for an adult family home shall be set at $900.00.  During the 2009-11 biennium, the annual licensing renewal fee shall be set at $100.00.)) In accordance with RCW 18.51.050, 18.20.050, and 43.135.055, the department is authorized to increase nursing facility and boarding home fees in fiscal year 2011 as necessary to meet the actual costs of conducting the licensure, inspection, and regulatory programs.
      (a) $1,035,000 of the general fund--private/local appropriation assumes that the current annual renewal license fee for nursing facilities shall be increased to $327 per bed beginning in fiscal year 2011.
      (b) $1,806,000 of the general fund--local appropriation assumes that the current annual renewal license fee for boarding homes shall be increased to $106 per bed beginning in fiscal year 2011.
      (20) The department shall, by September 30, 2010, provide a report to the legislature on the implementation of chapter 571, Laws of 2009 (Substitute House Bill No. 2361).  The report shall provide an analysis of the savings and/or costs to the agency associated with the implementation of the bill.  Additionally, the report shall provide a full accounting of the relative hourly costs of agency providers and individual providers.
      (21) The department shall establish a working group with representatives of the home care industry to identify and eliminate or mitigate administrative burdens.  The make-up of this working group shall be limited to:
      (a) The state unit on aging chief of the aging and disabilities service administration (ADSA);
      (b) Other ADSA representatives as the state unit on aging chief deems necessary;
      (c) A representative from the department of health facility services licensing;
      (d) No more than seven representatives of the home care industry, to include:
      (i) A representative of each of the three home care associations;
      (ii) A for-profit agency with at least seven area agency on aging contracts;
      (iii) A nonprofit with at least seven area agency on aging contracts;
      (iv) An agency that serves persons with developmental disabilities; and
      (v) An agency that is a community action program;
      (e) No more than two area agency on aging directors; and
      (f) Representatives from each of the two labor unions which represent home care workers.
      The department is authorized to assign work group members consistent with this subsection.  The working group shall hold its first meeting no later than May 1, 2010, and shall meet at least monthly or as needed until the group has accomplished its goals.  The work group shall provide a report on its findings to the legislative fiscal committees by January 1, 2011.
      (22) $2,566,000 of the traumatic brain injury account--state appropriation is provided solely to continue services for persons with traumatic brain injury (TBI) as defined in RCW 74.31.020 through 74.31.050.  The TBI advisory council shall provide a report to the legislature by December 1, 2010, on the effectiveness of the functions overseen by the council and shall provide recommendations on the development of critical services for individuals with traumatic brain injury.
      (23) The automatic award of additional hours of personal care for people with special meal preparation or incontinence needs is eliminated.  Authorization of service hours will be based upon the individual's assessed needs.
      (24) For calendar year 2009, the department shall calculate split settlements covering two periods January 1, 2009, through June 30, 2009, and July 1, 2009, through December 31, 2009.  For the second period beginning July 1, 2009, the department may partially or totally waive settlements only in specific cases where a nursing home can demonstrate significant decreases in costs from the first period.
      (25) $72,000 of the traumatic brain injury account appropriation and $116,000 of the general fund--federal appropriation are provided solely for a direct care rate add-on to any nursing facility specializing in the care of residents with traumatic brain injuries where more than 50 percent of residents are classified with this condition based upon the federal minimum data set assessment.
      (26) $69,000 of the general fund--state appropriation for fiscal year 2010, $1,289,000 of the general fund--state appropriation for fiscal year 2011, and $2,050,000 of the general fund--federal appropriation are provided solely for the department to maintain enrollment in the adult day health services program.  New enrollments are authorized for up to 1,575 clients or to the extent that appropriated funds are available to cover additional clients.
      (27) $1,000,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the department to contract for the provision of an individual provider referral registry.
      (28) $100,000 of the general fund--state appropriation for fiscal year 2011 and $100,000 of the general fund--federal appropriation are provided solely for the department to contract with a consultant to evaluate and make recommendations on a pay-for-performance payment subsidy system.  The department shall organize one workgroup meeting with the consultant where nursing home stakeholders may provide input on pay-for-performance ideas.  The consultant shall review pay-for-performance strategies used in other states to sustain and enhance quality-improvement efforts in nursing facilities.  The evaluation shall include a review of the centers for medicare and medicaid services demonstration project to explore the feasibility of pay-for-performance systems in medicare certified nursing facilities.  The consultant shall develop a report to include:
      (a) Best practices used in other states for pay-for-performance strategies incorporated into medicaid nursing home payment systems;
      (b) The relevance of existing research to Washington state;
      (c) A summary and review of suggestions for pay-for-performance strategies provided by nursing home stakeholders in Washington state; and
      (d) An evaluation of the effectiveness on a variety of performance measures.
      (29) $4,100,000 of the general fund--state appropriation for fiscal year 2010, $4,174,000 of the general fund--state appropriation for fiscal year 2011, and $8,124,000 of the general fund--federal appropriation are provided for the operation of the management services division of the aging and disability services administration.  This includes but is not limited to the budget, contracts, accounting, decision support, information technology, and rate development activities for programs administered by the aging and disability services administration.  Nothing in this subsection is intended to exempt the management services division of the aging and disability services administration from reductions directed by the secretary.  However, funds provided in this subsection shall not be transferred elsewhere within the department nor used for any other purpose.

Sec. 207.  2010 c 3 s 206 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-ECONOMIC SERVICES PROGRAM

General Fund‑-State Appropriation (FY 2010)…...(($557,452,000))

$564,492,000

General Fund‑-State Appropriation (FY 2011)…...(($587,973,000))

$581,459,000

General Fund‑-Federal Appropriation………….(($1,139,899,000))

$1,223,832,000

General Fund‑-Private/Local Appropriation……….(($27,920,000))

$31,816,000

Administrative Contingency Account--State

      Appropriation…………………………………(($29,136,000))

$24,336,000

             TOTAL APPROPRIATION………….(($2,342,380,000))

$2,425,935,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) (($303,196,000)) $303,393,000 of the general fund--state appropriation for fiscal year 2010, (($309,755,000)) $285,913,000 of the general fund--state appropriation for fiscal year 2011, (($29,136,000)) $24,336,000 of the administrative contingency account--state appropriation, and $778,606,000 of the general fund--federal appropriation are provided solely for all components of the WorkFirst program.  The department shall use moneys from the administrative contingency account for WorkFirst job placement services provided by the employment security department.  Within the amounts provided for the WorkFirst program, the department may provide assistance using state-only funds for families eligible for temporary assistance for needy families.  In addition, within the amounts provided for WorkFirst the department shall:

      (a) Establish a career services work transition program;

      (b) Continue to implement WorkFirst program improvements that are designed to achieve progress against outcome measures specified in RCW 74.08A.410.  Outcome data regarding job retention and wage progression shall be reported quarterly to appropriate fiscal and policy committees of the legislature for families who leave assistance, measured after 12 months, 24 months, and 36 months.  The department shall also report the percentage of families who have returned to temporary assistance for needy families after 12 months, 24 months, and 36 months;

      (c) Submit a report electronically by October 1, 2009, to the fiscal committees of the legislature containing a spending plan for the WorkFirst program.  The plan shall identify how spending levels in the 2009-2011 biennium will be adjusted to stay within available federal grant levels and the appropriated state-fund levels;

      (d) Provide quarterly fiscal reports to the office of financial management and the legislative fiscal committees detailing information on the amount expended from general fund--state and general fund--federal by activity;

      (e) Maintain the fiscal year 2009 grant standard for the temporary assistance for needy families grant.

      (2) The WorkFirst subcabinet, in partnership with the department of social and health services, shall review and prepare a report on services provided and accessed by both general population clients and limited English proficiency clients.  The review shall include information on efficiencies and outcomes related to client services for each client population.  The report should identify services and expenditures related to client outcomes in fiscal year 2010.  The report on these programs and client outcomes shall be reported to the appropriate committees of the legislature no later than December 15, 2010.
      (3) The department and the office of financial management shall electronically report quarterly the expenditures, maintenance of effort allotments, expenditure amounts, and caseloads for the WorkFirst program to the legislative fiscal committees.

      (((3))) (4) $16,783,000 of the general fund--state appropriation for fiscal year 2011 and $62,000,000 of the general fund--federal appropriation are provided solely for all components of the WorkFirst program in order to maintain services to January 2011.  The legislature intends to work with the governor to design and implement fiscal and programmatic modifications to provide for the sustainability of the program.  The funding in this subsection assumes that no other expenditure reductions will be made prior to January 2011 other than those assumed in the appropriation levels in this act.
      (5) (($84,856,000)) $94,322,000 of the general fund--state appropriation for fiscal year 2010 and (($95,173,000)) $97,168,000 of the general fund--state appropriation for fiscal year 2011, net of recoveries, are provided solely for cash assistance and other services to recipients in the ((general assistance--unemployable program)) cash program pursuant to chapter 8, Laws of 2010 1st sp. sess. (security lifeline act), including persons in the unemployable, expedited, and aged, blind, and disabled components of the program.  It is the intent of the legislature that the lifeline incapacity determination and progressive evaluation process regulations be carefully designed to accurately identify those persons who have been or will be incapacitated for at least ninety days.  The incapacity determination and progressive evaluation process regulations in effect on January 1, 2010, cannot be amended until at least September 30, 2010; except that provisions related to the use of administrative review teams may be amended, and obsolete terminology and functional assessment language may be updated on or after July 1, 2010, in a manner that only minimally impacts the outcome of incapacity evaluations.  After September 30, 2010, the incapacity determination and progressive evaluation process regulations may be amended only if the reports under (a) and (b) of this subsection have been submitted, and find that expenditures will exceed the appropriated level by three percent or more.
      (a) The department and the caseload forecast council shall, by September 21, 2010, submit a report to the legislature based upon the most recent caseload forecast and actual expenditure data available, as to whether expenditures for the lifeline-unemployable grants in fiscal year 2011 will exceed $69,648,000 for fiscal year 2011 in the 2010 supplemental operating budget by three percent or more.  If expenditures will exceed the appropriated amount for lifeline-unemployable grants by three percent or more, the department may adopt regulations modifying incapacity determination and progressive evaluation process regulations after September 30, 2010.
      (b) On or before September 21, 2010, the department shall submit a report to the relevant policy and fiscal committees of the legislature that includes the following information regarding any regulations proposed for adoption that would modify the lifeline incapacity determination and progressive evaluation process:
      (i) A copy of the proposed changes and a concise description of the changes;
      (ii) A description of the persons who would likely be affected by adoption of the regulations, including their impairments, age, education, and work history;
      (iii) An estimate of the number of persons who, on a monthly basis through June 2013, would be denied lifeline benefits if the regulations were adopted, expressed as a number, as a percentage of total applicants, and as a percentage of the number of persons granted lifeline benefits in each month;
      (iv) An estimate of the number of persons who, on a monthly basis through June 2013, would have their lifeline benefits terminated following an eligibility review if the regulations were adopted, expressed as a number, as a percentage of the number of persons who have had an eligibility review in each month, and as a percentage of the total number of persons currently receiving lifeline-unemployable benefits in each month; and
      (v) Intended improvements in employment or treatment outcomes among persons receiving lifeline benefits that could be attributable to the changes in the regulations.

(c) Within these amounts:

      (((a))) (i) The department shall aggressively pursue opportunities to transfer ((general assistance unemployable)) lifeline clients to general assistance expedited coverage and to facilitate client applications for federal supplemental security income when the client's incapacities indicate that he or she would be likely to meet the federal disability criteria for supplemental security income.  The department shall initiate and file the federal supplemental security income interim agreement as quickly as possible in order to maximize the recovery of federal funds;

      (((b))) (ii) The department shall review the ((general assistance)) lifeline caseload to identify recipients that would benefit from assistance in becoming naturalized citizens, and thus be eligible to receive federal supplemental security income benefits.  Those cases shall be given high priority for naturalization funding through the department;

      (((c))) (iii) The department shall actively coordinate with local workforce development councils to expedite access to worker retraining programs for ((general assistance unemployable)) lifeline clients in those regions of the state with the greatest number of such clients;

      (((d))) (iv) By July 1, 2009, the department shall enter into an interagency agreement with the department of veterans' affairs to establish a process for referral of veterans who may be eligible for veteran's services.  This agreement must include outstationing department of veterans' affairs staff in selected community service office locations in King and Pierce counties to facilitate applications for veterans' services; and

      (((e))) (v) In addition to any earlier evaluation that may have been conducted, the department shall intensively evaluate those clients who have been receiving ((general assistance unemployable)) lifeline benefits for twelve months or more as of July 1, 2009, or thereafter, if the available medical and incapacity related evidence indicates that the client is unlikely to meet the disability standard for federal supplemental security income benefits.  The evaluation shall identify services necessary to eliminate or minimize barriers to employment, including mental health treatment, substance abuse treatment and vocational rehabilitation services.  The department shall expedite referrals to chemical dependency treatment, mental health and vocational rehabilitation services for these clients.

      (((f))) (vi) The appropriations in this subsection reflect a change in the earned income disregard policy for ((general assistance unemployable)) lifeline clients.  It is the intent of the legislature that the department shall adopt the temporary assistance for needy families earned income policy for ((general assistance unemployable)) the lifeline program.

      (((4))) (6) $750,000 of the general fund--state appropriation for fiscal year 2010 and $750,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for naturalization services.

      (((5))) (7)(a) $3,550,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for refugee employment services, of which $2,650,000  is provided solely for the department to pass through to statewide refugee assistance organizations for limited English proficiency pathway services; and $3,550,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for refugee employment services, of which $2,650,000 is provided solely for the department to pass through to statewide refugee assistance organizations for limited English proficiency pathway services.

      (b) The legislature intends that the appropriation in this subsection for the 2009-11 fiscal biennium will maintain funding for refugee programs at a level at least equal to expenditures on these programs in the 2007-09 fiscal biennium.

      (((6))) (8) The appropriations in this section reflect reductions in the appropriations for the economic services administration's administrative expenses.  It is the intent of the legislature that these reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or program.

(9) $855,000 of the general fund--state appropriation for fiscal year 2011, $719,000 of the general fund--federal appropriation, and $2,907,000 of the general fund--private/local appropriation are provided solely for the implementation of the opportunity portal, the food stamp employment and training program, and the disability lifeline program under Second Substitute House Bill No. 2782 (security lifeline act).  If the bill is not enacted by June 30, 2010, the amounts provided in this subsection shall lapse.
      (10) $200,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the department to award grants to small mutual assistance or small community-based organizations that contract with the department for immigrant and refugee assistance services.  The funds shall be awarded to provide funding for community groups to provide transitional assistance, language skills, and other resources to improve refugees' economic self-sufficiency through the effective use of social services, financial services, and medical assistance.
      (11) $250,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for increased funding for limited English proficiency pathway programs.

Sec. 208.  2010 c 3 s 207 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-ALCOHOL AND SUBSTANCE ABUSE PROGRAM

General Fund‑-State Appropriation (FY 2010)…….(($82,028,000))

$81,982,000

General Fund‑-State Appropriation (FY 2011)……(($84,682,000))

$82,393,000

General Fund‑-Federal Appropriation……………(($145,604,000))

$148,034,000

General Fund‑-Private/Local Appropriation…….….(($2,719,000))

$2,718,000

Criminal Justice Treatment Account‑-State

      Appropriation…………………………………(($17,747,000))

$17,743,000

Problem Gambling Account‑-State Appropriation….(($1,459,000))

$1,456,000

             TOTAL APPROPRIATION…………….(($334,239,000))

$334,326,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) Within the amounts appropriated in this section, the department may contract with the University of Washington and community-based providers for the provision of the parent-child assistance program.  For all contractors, indirect charges for administering the program shall not exceed ten percent of the total contract amount.

      (2) Within the amounts appropriated in this section, the department shall continue to provide for chemical dependency treatment services for adult medicaid eligible and general assistance-unemployable patients.

      (3) In addition to other reductions, the appropriations in this section reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

(4) $2,247,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the implementation of the lifeline program under Second Substitute House Bill No. 2782 (security lifeline act).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (5) $3,500,000 of the general fund--federal appropriation (from the substance abuse prevention and treatment federal block grant) is provided solely for the continued funding of existing county drug and alcohol use prevention programs.

Sec. 209.  2010 c 3 s 208 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-MEDICAL ASSISTANCE PROGRAM

General Fund‑-State Appropriation (FY 2010….(($1,598,043,000))

$1,697,203,000

General Fund‑-State Appropriation (FY 2011)…(($1,985,797,000))

$1,789,973,000

General Fund‑-Federal Appropriation…………(($5,212,855,000))

$6,086,632,000

General Fund‑-Private/Local Appropriation……….(($12,903,000))

$37,249,000

Emergency Medical Services and Trauma Care Systems

      Trust Account‑-State Appropriation…………..(($15,076,000))

$15,075,000

Tobacco Prevention and Control Account‑-

      State Appropriation…………………………….(($3,766,000))

$4,464,000

Hospital Safety Net Assessment Fund—State

      Appropriation……………………………….…..$260,036,000

             TOTAL APPROPRIATION…………..(($8,828,440,000))

$9,890,632,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) Based on quarterly expenditure reports and caseload forecasts, if the department estimates that expenditures for the medical assistance program will exceed the appropriations, the department shall take steps including but not limited to reduction of rates or elimination of optional services to reduce expenditures so that total program costs do not exceed the annual appropriation authority.

      (2) In determining financial eligibility for medicaid-funded services, the department is authorized to disregard recoveries by Holocaust survivors of insurance proceeds or other assets, as defined in RCW 48.104.030.

      (3) The legislature affirms that it is in the state's interest for Harborview medical center to remain an economically viable component of the state's health care system.

      (4) When a person is ineligible for medicaid solely by reason of residence in an institution for mental diseases, the department shall provide the person with the same benefits as he or she would receive if eligible for medicaid, using state-only funds to the extent necessary.

      (5) In accordance with RCW 74.46.625, $6,000,000 of the general fund‑-federal appropriation is provided solely for supplemental payments to nursing homes operated by public hospital districts.  The public hospital district shall be responsible for providing the required nonfederal match for the supplemental payment, and the payments shall not exceed the maximum allowable under federal rules.  It is the legislature's intent that the payments shall be supplemental to and shall not in any way offset or reduce the payments calculated and provided in accordance with part E of chapter 74.46 RCW.  It is the legislature's further intent that costs otherwise allowable for rate-setting and settlement against payments under chapter 74.46 RCW shall not be disallowed solely because such costs have been paid by revenues retained by the nursing home from these supplemental payments.  The supplemental payments are subject to retrospective interim and final cost settlements based on the nursing homes' as-filed and final medicare cost reports.  The timing of the interim and final cost settlements shall be at the department's discretion.  During either the interim cost settlement or the final cost settlement, the department shall recoup from the public hospital districts the supplemental payments that exceed the medicaid cost limit and/or the medicare upper payment limit.  The department shall apply federal rules for identifying the eligible incurred medicaid costs and the medicare upper payment limit.

      (6) $1,110,000 of the general fund‑-federal appropriation and $1,105,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for grants to rural hospitals.  The department shall distribute the funds under a formula that provides a relatively larger share of the available funding to hospitals that (a) serve a disproportionate share of low-income and medically indigent patients, and (b) have relatively smaller net financial margins, to the extent allowed by the federal medicaid program.

      (7) $9,818,000 of the general fund--state appropriation for fiscal year 2011, and $9,865,000 of the general fund‑-federal appropriation are provided solely for grants to nonrural hospitals.  The department shall distribute the funds under a formula that provides a relatively larger share of the available funding to hospitals that (a) serve a disproportionate share of low-income and medically indigent patients, and (b) have relatively smaller net financial margins, to the extent allowed by the federal medicaid program.

      (8) The department shall continue the inpatient hospital certified public expenditures program for the 2009-11 biennium.  The program shall apply to all public hospitals, including those owned or operated by the state, except those classified as critical access hospitals or state psychiatric institutions.  The department shall submit reports to the governor and legislature by November 1, 2009, and by November 1, 2010, that evaluate whether savings continue to exceed costs for this program.  If the certified public expenditures (CPE) program in its current form is no longer cost-effective to maintain, the department shall submit a report to the governor and legislature detailing cost-effective alternative uses of local, state, and federal resources as a replacement for this program.  During fiscal year 2010 and fiscal year 2011, hospitals in the program shall be paid and shall retain one hundred percent of the federal portion of the allowable hospital cost for each medicaid inpatient fee-for-service claim payable by medical assistance and one hundred percent of the federal portion of the maximum disproportionate share hospital payment allowable under federal regulations.  Inpatient medicaid payments shall be established using an allowable methodology that approximates the cost of claims submitted by the hospitals.  Payments made to each hospital in the program in each fiscal year of the biennium shall be compared to a baseline amount.  The baseline amount will be determined by the total of (a) the inpatient claim payment amounts that would have been paid during the fiscal year had the hospital not been in the CPE program based on the reimbursement rates developed, implemented, and consistent with policies approved in the 2009-11 biennial operating appropriations act (chapter 564, Laws of 2009) and in effect on July 1, 2009, (b) one half of the indigent assistance disproportionate share hospital payment amounts paid to and retained by each hospital during fiscal year 2005, and (c) all of the other disproportionate share hospital payment amounts paid to and retained by each hospital during fiscal year 2005 to the extent the same disproportionate share hospital programs exist in the 2009-11 biennium.  If payments during the fiscal year exceed the hospital's baseline amount, no additional payments will be made to the hospital except the federal portion of allowable disproportionate share hospital payments for which the hospital can certify allowable match.  If payments during the fiscal year are less than the baseline amount, the hospital will be paid a state grant equal to the difference between payments during the fiscal year and the applicable baseline amount.  Payment of the state grant shall be made in the applicable fiscal year and distributed in monthly payments.  The grants will be recalculated and redistributed as the baseline is updated during the fiscal year.  The grant payments are subject to an interim settlement within eleven months after the end of the fiscal year.  A final settlement shall be performed.  To the extent that either settlement determines that a hospital has received funds in excess of what it would have received as described in this subsection, the hospital must repay the excess amounts to the state when requested.  $20,403,000 of the general fund--state appropriation for fiscal year 2010, of which $6,570,000 ((of the general fund--state appropriation for fiscal year 2010, which)) is appropriated in section 204(1) of this act, and (($1,500,000 of the general fund--state appropriation for fiscal year 2011, which)) $29,480,000 of the general fund--state appropriation for fiscal year 2011, of which $6,570,000 is appropriated in section 204(1) of this act, are provided solely for state grants for the participating hospitals.  ((Sufficient amounts are appropriated in this section for the remaining state grants for the participating hospitals.)) CPE hospitals will receive the inpatient and outpatient reimbursement rate restorations in section 9 and rate increases in section 10(1)(b) of Engrossed Second Substitute House Bill No. 2956 (hospital safety net assessment) funded through the hospital safety net assessment fund rather than through the baseline mechanism specified in this subsection.

      (9) The department is authorized to use funds appropriated in this section to purchase goods and supplies through direct contracting with vendors when the department determines it is cost-effective to do so.

      (10) $93,000 of the general fund--state appropriation for fiscal year 2010 and $93,000 of the general fund--federal appropriation are provided solely for the department to pursue a federal Medicaid waiver pursuant to Second Substitute Senate Bill No. 5945 (Washington health partnership plan).  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (11) The department shall require managed health care systems that have contracts with the department to serve medical assistance clients to limit any reimbursements or payments the systems make to providers not employed by or under contract with the systems to no more than the medical assistance rates paid by the department to providers for comparable services rendered to clients in the fee-for-service delivery system.

      (12) A maximum of (($166,875,000 of the general fund--state appropriation and $38,389,000 of the general fund--federal)) $241,141,000 in total funds from the general fund--state, general fund--federal, and tobacco and prevention control account--state appropriations may be expended in the fiscal biennium for the ((general assistance-unemployable)) medical program pursuant to chapter 8, Laws of 2010 1st sp. sess. (security lifeline act), and these amounts are provided solely for this program.  Of these amounts, $10,749,000 of the general fund--state appropriation for fiscal year 2010 and $10,892,000 of the general fund--federal appropriation are provided solely for payments to hospitals for providing outpatient services to low income patients who are recipients of ((general assistance-unemployable)) lifeline benefits.  Pursuant to RCW 74.09.035, the department shall not expend for the ((general assistance)) lifeline medical care services program any amounts in excess of the amounts provided in this subsection.

      (13) ((If the department determines that it is feasible within the amounts provided in subsection (16) of this section, and without the loss of federal disproportionate share hospital funds, the department shall contract with the carrier currently operating a managed care pilot project for the provision of medical care services to general assistance-unemployable clients.))  Mental health services shall be included in the services provided through the managed care system((.  If the department determines that it is feasible, effective October 1, 2009, in addition to serving clients in the pilot counties, the carrier shall expand managed care services to clients residing in at least the following counties:  Spokane, Yakima, Chelan, Kitsap, and Cowlitz.  If the department determines that it is feasible, the carrier shall complete implementation into the remaining counties.  Total per person costs to the state, including outpatient and inpatient services and any additional costs due to stop loss agreements, shall not exceed the per capita payments projected for the general assistance-unemployable eligibility category, by fiscal year, in the February 2009 medical assistance expenditures forecast)) for lifeline clients under chapter 8, Laws of 2010 1st sp. sess.  In transitioning lifeline clients to managed care, the department shall attempt to deliver care to lifeline clients through medical homes in community and migrant health centers.  The department, in collaboration with the carrier, shall seek to improve the transition rate of ((general assistance)) lifeline clients to the federal supplemental security income program.  The department shall renegotiate the contract with the managed care plan that provides services for lifeline clients to maximize state retention of future hospital savings as a result of improved care coordination.  The department, in collaboration with stakeholders, shall propose a new name for the lifeline program.

      (14) The department shall evaluate the impact of the use of a managed care delivery and financing system on state costs, savings, and outcomes for ((general assistance)) lifeline medical clients.  Outcomes measured shall include state costs, utilization, changes in mental health status and symptoms, and involvement in the criminal justice system.  Outcomes measured shall also include the total costs or savings resulting from utilization changes due to care management, and how much of those costs or savings accrued to the state and the managed care organization.  The department shall provide a report on these outcomes to the relevant policy and fiscal committees of the legislature by November 1, 2010.  Monthly encounter data shall be included in the report.

      (15) The department shall report to the governor and the fiscal committees of the legislature by June 1, 2010, on its progress toward achieving a twenty percentage point increase in the generic prescription drug utilization rate.

      (16) State funds shall not be used by hospitals for advertising purposes.

      (17) $24,356,000 of the general fund--private/local appropriation and $35,707,000 of the general fund--federal appropriation are provided solely for the implementation of professional services supplemental payment programs.  The department shall seek a medicaid state plan amendment to create a professional services supplemental payment program for University of Washington medicine professional providers no later than July 1, 2009.  The department shall apply federal rules for identifying the shortfall between current fee-for-service medicaid payments to participating providers and the applicable federal upper payment limit.  Participating providers shall be solely responsible for providing the local funds required to obtain federal matching funds. Any incremental costs incurred by the department in the development, implementation, and maintenance of this program will be the responsibility of the participating providers.  Participating providers will retain the full amount of supplemental payments provided under this program, net of any potential costs for any related audits or litigation brought against the state.  The department shall report to the governor and the legislative fiscal committees on the prospects for expansion of the program to other qualifying providers as soon as feasibility is determined but no later than December 31, 2009.  The report will outline estimated impacts on the participating providers, the procedures necessary to comply with federal guidelines, and the administrative resource requirements necessary to implement the program.  The department will create a process for expansion of the program to other qualifying providers as soon as it is determined feasible by both the department and providers but no later than June 30, 2010.

      (18) (($9,350,000)) $9,075,000 of the general fund--state appropriation for fiscal year 2010, (($8,313,000)) $8,588,000 of the general fund--state appropriation for fiscal year 2011, and (($20,371,000)) $39,747,000 of the general fund--federal appropriation are provided solely for development and implementation of a replacement system for the existing medicaid management information system.  The amounts provided in this subsection are conditioned on the department satisfying the requirements of section 902 of this act.

      (19) $506,000 of the general fund--state appropriation for fiscal year 2011 and $657,000 of the general fund--federal appropriation are provided solely for the implementation of Second Substitute House Bill No. 1373 (children's mental health).  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (20) Pursuant to 42 U.S.C. Sec. 1396(a)(25), the department shall pursue insurance claims on behalf of medicaid children served through its in-home medically intensive child program under WAC 388-551-3000.  The department shall report to the Legislature by December 31, 2009, on the results of its efforts to recover such claims.

      (21) The department may, on a case-by-case basis and in the best interests of the child, set payment rates for medically intensive home care services to promote access to home care as an alternative to hospitalization.  Expenditures related to these increased payments shall not exceed the amount the department would otherwise pay for hospitalization for the child receiving medically intensive home care services.

      (22) $425,000 of the general fund--state appropriation for fiscal year 2010((, $425,000 of the general fund--state appropriation for fiscal year 2011,)) and (($1,580,000)) $790,000 of the general fund--federal appropriation are provided solely to continue children's health coverage outreach and education efforts under RCW 74.09.470.  These efforts shall rely on existing relationships and systems developed with local public health agencies, health care providers, public schools, the women, infants, and children program, the early childhood education and assistance program, child care providers, newborn visiting nurses, and other community-based organizations.  The department shall seek public-private partnerships and federal funds that are or may become available to provide on-going support for outreach and education efforts under the federal children's health insurance program reauthorization act of 2009.

      (23) The department, in conjunction with the office of financial management, shall ((reduce outpatient and inpatient hospital rates and)) implement a prorated inpatient payment policy.  ((In determining the level of reductions needed, the department shall include in its calculations services paid under fee-for-service, managed care, and certified public expenditure payment methods; but reductions shall not apply to payments for psychiatric inpatient services or payments to critical access hospitals.))

      (24) The department will pursue a competitive procurement process for antihemophilic products, emphasizing evidence-based medicine and protection of patient access without significant disruption in treatment.

      (25) The department will pursue several strategies towards reducing pharmacy expenditures including but not limited to increasing generic prescription drug utilization by 20 percentage points and promoting increased utilization of the existing mail-order pharmacy program.

      (26) The department shall reduce reimbursement for over-the-counter medications while maintaining reimbursement for those over-the-counter medications that can replace more costly prescription medications.

      (27) The department shall seek public-private partnerships and federal funds that are or may become available to implement health information technology projects under the federal American recovery and reinvestment act of 2009.

      (28) The department shall target funding for maternity support services towards pregnant women with factors that lead to higher rates of poor birth outcomes, including hypertension, a preterm or low birth weight birth in the most recent previous birth, a cognitive deficit or developmental disability, substance abuse, severe mental illness, unhealthy weight or failure to gain weight, tobacco use, or African American or Native American race.

      (29) $260,036,000 of the hospital safety net assessment fund--state appropriation and $255,448,000 of the general fund--federal appropriation are provided solely for the implementation of Engrossed Second Substitute House Bill No. 2956 (hospital safety net assessment).  If the bill is not enacted by June 30, 2010, the amounts provided in this subsection shall lapse.
      (30) $79,000 of the general fund--state appropriation for fiscal year 2010 and $53,000 of the general fund--federal appropriation are provided solely to implement Substitute House Bill No. 1845 (medical support obligations).

      (((30))) (31) $63,000 of the general fund--state appropriation for fiscal year 2010, $583,000 of the general fund--state appropriation for fiscal year 2011, and $864,000 of the general fund--federal appropriation are provided solely to implement Engrossed House Bill No. 2194 (extraordinary medical placement for offenders).  The department shall work in partnership with the department of corrections to identify services and find placements for offenders who are released through the extraordinary medical placement program.  The department shall collaborate with the department of corrections to identify and track cost savings to the department of corrections, including medical cost savings, and to identify and track expenditures incurred by the aging and disability services program for community services and by the medical assistance program for medical expenses.  A joint report regarding the identified savings and expenditures shall be provided to the office of financial management and the appropriate fiscal committees of the legislature by November 30, 2010.  If this bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (((31))) (32) $73,000 of the general fund--state appropriation for fiscal year 2011 and $50,000 of the general fund--federal appropriation is provided solely for supplemental services that will be provided to offenders in lieu of a prison sentence pursuant to chapter 224, Laws of 2010 (Substitute Senate Bill No. 6639).
      (33) Sufficient amounts are provided in this section to provide full benefit dual eligible beneficiaries with medicare part D prescription drug copayment coverage in accordance with RCW 74.09.520.

(34) In addition to other reductions, the appropriations in this section reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect providers, direct client services, or direct service delivery or programs.
      (35) The department shall contract with an organization that provides medication therapy management services to increase the use of lower cost alternative medications, improve patient compliance with prescribed regimens, reduce harmful side effects from medication, and ensure that medications achieve their desired therapeutic results.  The department shall not contract for these services unless the contractor guarantees that the services will generate savings, as measured by the department's actual experience after implementation, that are greater than the cost of the contracted services.
      (36) $331,000 of the general fund--state appropriation for fiscal year 2010, $331,000 of the general fund--state appropriation for fiscal year 2011, and $1,228,000 of the general fund--federal appropriation are provided solely for the department to support the activities of the Washington poison center.  The department shall seek federal authority to receive matching funds from the federal government through the children's health insurance program.
      (37) $528,000 of the general fund--state appropriation and $2,955,000 of the general fund--federal appropriation are provided solely for the implementation of the lifeline program under chapter 8, Laws of 2010 1st sp. sess. (security lifeline act).
      (38) If the cost of a brand name drug, after receiving discounted prices and rebates, is less than the cost of the generic version of the drug for the medical assistance program, the brand name drug shall be purchased.
      (39) The department shall propose a new medicaid prescription drug pricing benchmark to replace the average wholesale price (AWP), and report on the transition plan, the potential impact on stakeholders, and impact on state expenditures for the 2011-13 biennium to the governor and the fiscal committees of the legislature by November 1, 2010.  This effort will include collaboration with stakeholders and be consistent with the recommendations of the American medicaid pharmacy administrators association and the national association of medicaid directors working group on post-AWP pricing and reimbursement.
      (40) Sufficient amounts are provided in this section to provide medicaid school-based medical services.
      (41) The department shall pursue all opportunities to maximize discounted drug pricing through the 340B drug pricing program in section 340B of the public health service act.  The department shall report its findings to the governor and the fiscal committees of the legislature by December 1, 2010.
      (42) The department shall develop a transition plan from a fee-for-service delivery system to a managed care delivery system for aged, blind, and disabled clients eligible for medical assistance coverage by June 1, 2011.
      (43) Reductions in dental services are to be achieved by focusing on the fastest growing areas of dental care.  Reductions in preventative care, particularly for children, will be avoided to the extent possible.
      (44) The department shall develop the capability to implement apple health for kids express lane eligibility enrollments for children receiving basic food assistance by June 30, 2011.
      (45)(a) The department, in coordination with the health care authority, shall actively continue to negotiate a medicaid section 1115 waiver with the federal centers for medicare and medicaid services that would provide federal matching funds for services provided to persons enrolled in the basic health plan under chapter 70.47 RCW and the medical care services program under RCW 74.09.035.
      (b) If the waiver in (a) of this subsection is granted, the department and the health care authority may implement the waiver if it allows the program to remain within appropriated levels, after providing notice of its terms and conditions to the relevant policy and fiscal committees of the legislature in writing thirty days prior to the planned implementation date of the waiver.
      (46) $704,000 of the general fund--state appropriation for fiscal year 2010, $812,000 of the general fund--state appropriation for fiscal year 2011, and $1,516,000 of the general fund--federal appropriation are provided solely for maintaining employer-sponsored insurance program staff, coordination of benefits unit staff, the payment integrity audit team, and family planning nursing.
      (47) For healthy options managed care rates established on or after July 1, 2010, the department shall pay health plans operating in the same county the same base capitation rates for that county, with plan-specific adjustments related to risk characteristics of the plan's members including age, gender, and diagnostic-based risk adjustments, such as chronic disability payment system risk scores.  The department shall provide preliminary rates for the upcoming fiscal year to all the healthy options plans and the fiscal committees of the legislature by September 30, 2010.
      (48) Every effort shall be made to maintain current employment levels and achieve administrative savings through vacancies and employee attrition.  Efficiencies shall be implemented as soon as possible in order to minimize actual reduction in force.  The department shall implement a management strategy that minimizes disruption of service and negative impacts on employees.

Sec. 210.  2010 c 3 s 209 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-VOCATIONAL REHABILITATION PROGRAM

General Fund‑-State Appropriation (FY 2010)…….(($10,451,000))

$10,327,000

General Fund‑-State Appropriation (FY 2011)……(($10,125,000))

$10,077,000

General Fund‑-Federal Appropriation…………….(($83,534,000))

$107,961,000

Telecommunications Devices for the Hearing and

      Speech Impaired‑-State Appropriation…………(($1,979,000))

$5,976,000

             TOTAL APPROPRIATION…………….(($106,089,000))

$134,341,000

      The appropriations in this section are subject to the following conditions and limitations:  The vocational rehabilitation program shall coordinate closely with the economic services program to serve ((general assistance unemployable)) lifeline clients under chapter 8, Laws of 2010 1st sp. sess. who are referred for eligibility determination and vocational rehabilitation services, and shall make every effort, within the requirements of the federal rehabilitation act of 1973, to serve these clients.

Sec. 211.  2010 c 3 s 210 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-SPECIAL COMMITMENT PROGRAM

General Fund‑-State Appropriation (FY 2010)…….(($49,818,000))

$48,827,000

General Fund‑-State Appropriation (FY 2011)…….(($47,259,000))

$46,922,000

             TOTAL APPROPRIATION……………..(($97,077,000))

$95,749,000

Sec. 212.  2010 c 3 s 211 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-ADMINISTRATION AND SUPPORTING SERVICES PROGRAM

General Fund‑-State Appropriation (FY 2010)…….(($34,425,000))

$33,604,000

General Fund‑-State Appropriation (FY 2011)…….(($34,627,000))

$29,407,000

General Fund‑-Federal Appropriation…………….(($55,169,000))

$51,119,000

General Fund‑-Private/Local Appropriation………..(($1,526,000))

$1,121,000

Institutional Impact Account--State Appropriation………..$22,000

             TOTAL APPROPRIATION…………….(($125,747,000))

$115,273,000

      The appropriations in this section are subject to the following conditions and limitations:  In addition to other reductions, the appropriations in this section reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

      (1) (($150,000)) $333,000 of the general fund--state appropriation for fiscal year 2010 and (($150,000)) $300,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the Washington state mentors program to continue its public-private partnerships to provide technical assistance and training to mentoring programs that serve at-risk youth.

      (2) $445,000 of the general fund--state appropriation for fiscal year 2010 and $445,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for funding of the teamchild project through the governor's juvenile justice advisory committee.

      (3) $178,000 of the general fund--state appropriation for fiscal year 2010 and $178,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the juvenile detention alternatives initiative.

      (4) Amounts appropriated in this section reflect a reduction to the family policy council.  The family policy council shall reevaluate staffing levels and administrative costs to ensure to the extent possible a maximum ratio of grant moneys provided and administrative costs.

      (5) Amounts appropriated in this section reflect a reduction to the council on children and families.  The council on children and families shall reevaluate staffing levels and administrative costs to ensure to the extent possible a maximum ratio of grant moneys provided and administrative costs.

(6) The department shall not reduce funding to the governor's juvenile justice advisory committee from the amounts appropriated for this purpose in chapter 564, Laws of 2009.
      (7) $25,000 of the general fund--state appropriation for fiscal year 2010 is provided for the department, in collaboration with the department of health and the health care authority, to report to the fiscal committees of the legislature by November 1, 2010, on estimates of the full costs and savings to all state-purchased health care from the inclusion of coverage for the diagnosis and treatment of autism spectrum disorders for individuals less than twenty-one years of age.  Autism spectrum disorders are defined to mean any of the pervasive developmental disorders defined by the most recent edition of the diagnostic and statistical manual of mental disorders.  Coverage must include all medically necessary care which is defined to include any care, treatment, intervention, service, or item that is prescribed, provided, or ordered by a licensed physician or licensed psychologist.  Treatment of autism spectrum disorders includes the following care prescribed, ordered, or provided for an individual diagnosed with one of the autism spectrum disorders by a licensed physician or licensed psychologist who determines the care to be medically necessary:  (a) Habilitative or rehabilitative care; (b) pharmacy care, except when plans do not offer any pharmacy benefits; (c) psychiatric care; and (d) psychological care.  The estimates should fully consider all potential offsets to currently funded care and services and should consider including the coverage of the diagnosis and treatment of autism spectrum disorders within the currently mandated provision of mental health benefits.

Sec. 213.  2009 c 564 s 213 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SOCIAL AND HEALTH SERVICES-PAYMENTS TO OTHER AGENCIES PROGRAM

General Fund‑-State Appropriation (FY 2010)…….(($53,431,000))

$61,985,000

General Fund‑-State Appropriation (FY 2011)…….(($53,472,000))

$61,461,000

General Fund‑-Federal Appropriation……………..(($49,494,000))

$56,572,000

             TOTAL APPROPRIATION…………….(($156,397,000))

$180,018,000

Sec. 214.  2009 c 564 s 214 (uncodified) is amended to read as follows:

FOR THE STATE HEALTH CARE AUTHORITY

General Fund‑-State Appropriation (FY 2010)…...(($206,295,000))

$208,258,000

General Fund‑-State Appropriation (FY 2011)…..(($182,138,000))

$159,306,000

General Fund‑-Federal Appropriation………………(($6,302,000))

$34,727,000

State Health Care Authority Administration Account‑-

      State Appropriation……………………….…..(($35,261,000))

$34,880,000

Medical Aid Account‑-State Appropriation………….(($529,000))

$527,000

             TOTAL APPROPRIATION…………….(($430,525,000))

$437,698,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) Within amounts appropriated in this section and sections 205 and 206 of this act, the health care authority shall continue to provide an enhanced basic health plan subsidy for foster parents licensed under chapter 74.15 RCW and workers in state-funded home care programs.  Under this enhanced subsidy option, foster parents eligible to participate in the basic health plan as subsidized enrollees and home care workers with family incomes below 200 percent of the federal poverty level shall be allowed to enroll in the basic health plan at the minimum premium amount charged to enrollees with incomes below sixty-five percent of the federal poverty level.

      (2) The health care authority shall require organizations and individuals that are paid to deliver basic health plan services and that choose to sponsor enrollment in the subsidized basic health plan to pay 133 percent of the premium amount which would otherwise be due from the sponsored enrollees.

      (3) The administrator shall take at least the following actions to assure that persons participating in the basic health plan are eligible for the level of assistance they receive:  (a) Require submission of (i) income tax returns, and recent pay history, from all applicants, or (ii) other verifiable evidence of earned and unearned income from those persons not required to file income tax returns; (b) check employment security payroll records at least once every twelve months on all enrollees; (c) require enrollees whose income as indicated by payroll records exceeds that upon which their subsidy is based to document their current income as a condition of continued eligibility; (d) require enrollees for whom employment security payroll records cannot be obtained to document their current income at least once every six months; (e) not reduce gross family income for self-employed persons by noncash-flow expenses such as, but not limited to, depreciation, amortization, and home office deductions, as defined by the United States internal revenue service; and (f) pursue repayment and civil penalties from persons who have received excessive subsidies, as provided in RCW 70.47.060(9).

      (4)(a) In order to maximize the funding appropriated for the basic health plan, the health care authority is directed to make modifications that will reduce the total number of subsidized enrollees to approximately 65,000 by January 1, 2010.  In addition to the reduced enrollment, other modifications may include changes in enrollee premium obligations, changes in benefits, enrollee cost-sharing, and termination of the enrollment of individuals concurrently enrolled in a medical assistance program as provided in Substitute House Bill No. 2341.

(b) The health care authority shall coordinate with the department of social and health services to negotiate a medicaid section 1115 waiver with the federal centers for medicare and medicaid services that would provide matching funds for services provided to persons enrolled in the basic health plan under chapter 70.47 RCW.
      (c) If the waiver in (b) of this subsection is granted, the health care authority may implement the waiver if it allows the program to remain within appropriated levels, after providing notice of its terms and conditions to the relevant policy and fiscal committees of the legislature in writing thirty days prior to the planned implementation date of the waiver.

      (5) $250,000 of the general fund--state appropriation for fiscal year 2010 and $250,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the implementation of Substitute Senate Bill No. 5360 (community collaboratives).  If the bill is not enacted by June 30, 2009, the amounts provided in this section shall lapse.

      (6) The ((department)) authority shall seek public-private partnerships and federal funds that are or may become available to implement health information technology projects under the federal American recovery and reinvestment act of 2009.

(7)(a) $2,495,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for the authority for grants to two pilot projects, one each based in Spokane and Whatcom counties, to provide a full continuum of health care services to low-income adults.  The pilot project in Spokane county shall aim for an enrollment of five hundred individuals and the pilot project in Whatcom county shall aim for an enrollment of one thousand individuals.  All individuals enrolled in the pilot projects shall meet the criteria in (b) of this subsection.  Grantees must demonstrate experience in working with an established network of health care providers in the county capable of providing continuity of health care services that may include a primary care medical home and catastrophic insurance coverage, to low-income adults.  Expectations of grantees will include:  Coordinating public, private, and volunteer efforts within the county to maximize participation within the grant funds available; and providing continuity of care to participants that promotes improved health outcomes as determined by the health care authority.  Grantees will submit reports as directed by the health care authority.
      (b) In order to participate in a pilot, eligible low-income adults must have an income at or below two hundred percent of the federal poverty level; reside in the county where the project is based; be on the basic health waiting list at the time of application to participate; have no other health insurance coverage; and not be eligible for full-scope medical assistance programs, federal medicare programs, or health insurance through their employer.  Grantees may require participants to meet other criteria, such as qualifying for health insurance coverage and paying premiums or other costs in order to participate in the pilot.
      (c) The authority, in collaboration with the grantees of the pilots in (a) of this subsection, shall seek any federal funds that may be available with the enactment of federal health care reform.
      (8) In the event that the authority markets a nonsubsidized version of the basic health plan, the authority must also provide information on other health care coverage options to potential clients.
      (9) $20,000 of the general fund--state appropriation for fiscal year 2010 and $63,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the implementation of chapter 220, Laws of 2010 (accountable care organizations).

Sec. 215.  2010 c 3 s 212 (uncodified) is amended to read as follows:

FOR THE HUMAN RIGHTS COMMISSION

General Fund‑-State Appropriation (FY 2010)…………$2,638,000

General Fund‑-State Appropriation (FY 2011)……..(($2,533,000))

$2,511,000

General Fund‑-Federal Appropriation………………(($1,299,000))

$1,584,000

             TOTAL APPROPRIATION……………….(($6,470,000))

$6,733,000

Sec. 216.  2009 c 564 s 216 (uncodified) is amended to read as follows:

FOR THE BOARD OF INDUSTRIAL INSURANCE APPEALS

Worker and Community Right-to-Know Account‑-

      State Appropriation…………………………………...$20,000

Accident Account‑-State Appropriation…………...(($18,453,000))

$18,139,000

Medical Aid Account‑-State Appropriation……….(($18,453,000))

$18,139,000

             TOTAL APPROPRIATION……………..(($36,926,000))

$36,298,000

Sec. 217.  2009 c 564 s 217 (uncodified) is amended to read as follows:

FOR THE CRIMINAL JUSTICE TRAINING COMMISSION

General Fund‑-State Appropriation (FY 2010)…….(($19,146,000))

$17,273,000

General Fund‑-State Appropriation (FY 2011)……(($19,176,000))

$17,843,000

General Fund--Federal Appropriation……………………$143,000

General Fund--Private/Local Appropriation…………..(($200,000))

$1,303,000

Death Investigations Account‑-State Appropriation….….$148,000

 Municipal Criminal Justice Assistance Account‑-

      State Appropriation………………………………….$460,000

Washington Auto Theft Prevention Authority Account‑-

      State Appropriation………………………………..$5,844,000

             TOTAL APPROPRIATION……………..(($44,974,000))

$43,014,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) (($1,874,000 of the general fund--state appropriation for fiscal year 2010 and $1,922,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for 10 additional basic law enforcement academies in fiscal year 2010 and 10 additional basic law enforcement academies in fiscal year 2011.
      (2))) $1,191,000 of the general fund--state appropriation for fiscal year 2010 and $1,191,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the Washington association of sheriffs and police chiefs to continue to develop, maintain, and operate the jail booking and reporting system (JBRS) and the statewide automated victim information and notification system (SAVIN).

      (((3))) (2) $5,000,000 of the general fund--state appropriation for fiscal year 2010 and $5,000,000 of the general fund--state appropriation for fiscal year 2011, are provided to the Washington association of sheriffs and police chiefs solely to verify the address and residency of registered sex offenders and kidnapping offenders under RCW 9A.44.130.  The Washington association of sheriffs and police chiefs shall:

      (a) Enter into performance-based agreements with units of local government to ensure that registered offender address and residency are verified:

      (i) For level I offenders, every twelve months;

      (ii) For level II offenders, every six months; and

      (iii) For level III offenders, every three months.

      For the purposes of this subsection, unclassified offenders and kidnapping offenders shall be considered at risk level I unless in the opinion of the local jurisdiction a higher classification is in the interest of public safety.

      (b) Collect performance data from all participating jurisdictions sufficient to evaluate the efficiency and effectiveness of the address and residency verification program; and

      (c) Submit a report on the effectiveness of the address and residency verification program to the governor and the appropriate committees of the house of representatives and senate by December 31, each year.

The Washington association of sheriffs and police chiefs may retain up to three percent of the amount provided in this subsection for the cost of administration.  Any funds not disbursed for address and residency verification or retained for administration may be allocated to local prosecutors for the prosecution costs associated with failing-to-register offenses.

      (((4))) (3) $30,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for the implementation of Second Substitute House Bill No. 2078 (persons with developmental disabilities in correctional facilities or jails).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

(4) $171,000 of the general fund--local appropriation is provided solely to purchase ammunition for the basic law enforcement academy.  Jurisdictions with one hundred or more full-time commissioned officers shall reimburse to the criminal justice training commission the costs of ammunition, based on the average cost of ammunition per cadet, for cadets that they enroll in the basic law enforcement academy.
      (5) The criminal justice training commission may not run a basic law enforcement academy class of fewer than 30 students.
      (6) $1,500,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for continuing the enforcement of illegal drug laws in the rural pilot project enforcement areas as set forth in chapter 339, Laws of 2006.

Sec. 218.  2009 c 564 s 218 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF LABOR AND INDUSTRIES

General Fund‑-State Appropriation (FY 2010)……(($24,224,000))

$24,975,000

General Fund‑-State Appropriation (FY 2011)……(($25,237,000))

$19,336,000

 ((General Fund-Federal Appropriation……………….$100,000))

General Fund‑-Federal Appropriation…………….(($10,000,000))

$10,100,000

Asbestos Account‑-State Appropriation………………(($924,000))

$923,000

Electrical License Account‑-State Appropriation….(($43,162,000))

$36,977,000

Farm Labor Revolving Account‑-Private/Local Appropriation……………………………………………...$28,000

Worker and Community Right-to-Know Account‑-

      State Appropriation…………………………….(($1,979,000))

$1,987,000

Public Works Administration Account‑-State

      Appropriation…………………………………..(($5,764,000))

$6,021,000

Manufactured Home Installation Training Account‑-

      State Appropriation……………………………....(($138,000))

$143,000

Accident Account‑-State Appropriation………….(($248,281,000))

$250,509,000

Accident Account‑-Federal Appropriation………..(($13,622,000))

$13,621,000

Medical Aid Account‑-State Appropriation………(($249,537,000))

$249,232,000

Medical Aid Account‑-Federal Appropriation…………$3,186,000

Plumbing Certificate Account‑-State Appropriation..(($1,693,000))

$1,704,000

Pressure Systems Safety Account‑-State Appropriation………………………………………(($3,775,000))

$4,144,000

             TOTAL APPROPRIATION…………….(($631,650,000))

$622,886,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) Pursuant to RCW 43.135.055, the department is authorized to increase fees related to factory assembled structures, contractor registration, electricians, plumbers, asbestos removal, boilers, elevators, and manufactured home installers.  These increases are necessary to support expenditures authorized in this section, consistent with chapters 43.22, 18.27, 19.28, and 18.106 RCW, RCW 49.26.130, and chapters 70.79, 70.87, and 43.22A RCW.

      (2) $424,000 of the accident account--state appropriation and $76,000 of the medical aid account--state appropriation are provided solely for implementation of a community agricultural worker safety grant at the department of agriculture.  The department shall enter into an interagency agreement with the department of agriculture to implement the grant.

      (3) $4,850,000 of the medical aid account--state appropriation is provided solely to continue the program of safety and health as authorized by RCW 49.17.210 to be administered under rules adopted pursuant to chapter 34.05 RCW, provided that projects funded involve workplaces insured by the medical aid fund, and that priority is given to projects fostering accident prevention through cooperation between employers and employees or their representatives.

      (4) $150,000 of the medical aid account--state appropriation is provided solely for the department to contract with one or more independent experts to evaluate and recommend improvements to the rating plan under chapter 51.18 RCW, including analyzing how risks are pooled, the effect of including worker premium contributions in adjustment calculations, incentives for accident and illness prevention, return-to-work practices, and other sound risk-management strategies that are consistent with recognized insurance principles.

      (5) The department shall continue to conduct utilization reviews of physical and occupational therapy cases at the 24th visit.  The department shall continue to report performance measures and targets for these reviews on the agency web site.  The reports are due September 30th for the prior fiscal year and must include the amount spent and the estimated savings per fiscal year.

      (6) The appropriations in this section reflect reductions in the appropriations for the department of labor and industries' administrative expenses.  It is the intent of the legislature that these reductions shall be achieved, to the greatest extent possible, by reducing administrative costs only.

      (7) $500,000 of the accident account--state appropriation is provided solely for the department to contract with one or more independent experts to oversee and assist the department's implementation of improvements to the rating plan under chapter 51.18 RCW, in collaboration with the department and with the department's work group of retrospective rating and workers' compensation stakeholders.  The independent experts will validate the impact of recommended changes on retrospective rating participants and nonparticipants, confirm implementation technology changes, and provide other implementation assistance as determined by the department.

      (8) $194,000 of the accident account--state appropriation and $192,000 of the medical aid account--state appropriation are provided solely for implementation of Senate Bill No. 5346 (health care administrative procedures).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

      (9) $131,000 of the accident account--state appropriation and $128,000 of the medical aid account--state appropriation are provided solely for implementation of Senate Bill No. 5613 (stop work orders).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

      (10) $68,000 of the accident account--state appropriation and $68,000 of the medical aid account--state appropriation are provided solely for implementation of Senate Bill No. 5688 (registered domestic partners).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

      (11) $320,000 of the accident account--state appropriation and $147,000 of the medical aid account--state appropriation are provided solely for implementation of Senate Bill No. 5873 (apprenticeship utilization).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.
      (15))) (12) $73,000 of the general fund--state appropriation for fiscal year 2010, $66,000 of the general fund--state appropriation for fiscal year 2011, $606,000 of the accident account--state appropriation, and $600,000 of the medical aid account--state appropriation are provided solely for the implementation of House Bill No. 1555 (underground economy).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.
      (16))) (13) $574,000 of the accident account--state appropriation and $579,000 of the medical account--state appropriation are provided solely for the implementation of House Bill No. 1402 (industrial insurance appeals).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

(14) Within statutory guidelines, the boiler program shall explore opportunities to increase program efficiency.  Strategies may include the consolidation of routine multiple inspections to the same site and trip planning to ensure the least number of miles traveled.
      (15) $16,000 of the general fund--state appropriation for fiscal year 2010 and $50,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the crime victims compensation program to pay claims for mental health services for crime victim compensation program clients who have an established relationship with a mental health provider and subsequently obtain coverage under the medicaid program or the medical care services program under chapter 74.09 RCW.  Prior to making such payment, the program must have determined that payment for the specific treatment or provider is not available under the medicaid or medical care services program.  In addition, the program shall make efforts to contact any healthy options or medical care services health plan in which the client may be enrolled to help the client obtain authorization to pay the claim on an out-of-network basis.
      (16) $48,000 of the accident account--state appropriation and $48,000 of the medical aid account--state appropriation are provided solely for the implementation of Substitute House Bill No. 2789 (issuance of subpoenas for purposes of agency investigations of underground economic activity).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (17) $71,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for implementation of Senate Bill No. 6349 (farm internship program).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (18) $127,000 of the general fund--state appropriation for fiscal year 2010 and $133,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the department to provide benefits in excess of the cap established by sections 1 and 2, chapter 122, Laws of 2010.  These benefits shall be paid for claimants who were determined eligible for and who were receiving crime victims' compensation benefits because they were determined to be permanently and totally disabled, as defined by RCW 51.08.160, prior to April 1, 2010.  The director shall establish, by May 1, 2010, a process to aid crime victims' compensation recipients in identifying and applying for appropriate alternative benefit programs.
      (19) $155,000 of the public works administration account--state appropriation is provided solely for the implementation of Engrossed House Bill No. 2805 (offsite prefabricated items).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.

Sec. 219.  2010 c 3 s 213 (uncodified) is amended to read as follows:

FOR THE INDETERMINATE SENTENCE REVIEW BOARD

General Fund‑-State Appropriation (FY 2010)…………$1,882,000

General Fund‑-State Appropriation (FY 2011)……...(($1,886,000))

$1,864,000

             TOTAL APPROPRIATION……………….(($3,768,000))

$3,746,000

Sec. 220.  2009 c 564 s 220 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF VETERANS AFFAIRS

      (1) HEADQUARTERS

General Fund‑-State Appropriation (FY 2010)…………$1,913,000

General Fund‑-State Appropriation (FY 2011)……..(($1,899,000))

$1,865,000

Charitable, Educational, Penal, and Reformatory

      Institutions Account‑-State Appropriation…………….$10,000

             TOTAL APPROPRIATION……………….(($3,822,000))

$3,788,000

      The appropriations in this subsection are subject to the following conditions and limitations:  In addition to other reductions, the appropriations in this section reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

      (2) FIELD SERVICES

General Fund‑-State Appropriation (FY 2010)…………$4,885,000

General Fund‑-State Appropriation (FY 2011)……...(($4,943,000))

$4,964,000

General Fund‑-Federal Appropriation………………(($1,842,000))

$2,382,000

General Fund‑-Private/Local Appropriation………..(($3,491,000))

$4,512,000

Veterans Innovations Program Account--State

      Appropriation…………………………………….(($648,000))

$897,000

Veteran Estate Management Account--Private/Local

      Appropriation…………………………………..(($1,069,000))

$1,072,000

             TOTAL APPROPRIATION……………...(($16,878,000))

$18,712,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) The department shall collaborate with the department of social and health services to identify and assist eligible general assistance unemployable clients to access the federal department of veterans affairs benefits.

      (b) $648,000 of the veterans innovations program account--state appropriation is provided solely for the department to continue support for returning combat veterans through the veterans innovation program, including emergency financial assistance through the defenders' fund and long-term financial assistance through the competitive grant program.

      (c) In addition to other reductions, the appropriations in this section reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

      (3) INSTITUTIONAL SERVICES

General Fund‑-State Appropriation (FY 2010)……...(($3,638,000))

$3,318,000

General Fund‑-State Appropriation (FY 2011)……...(($2,845,000))

$2,371,000

General Fund‑-Federal Appropriation…………….(($50,791,000))

$50,353,000

 General Fund‑-Private/Local Appropriation……...(($31,734,000))

      $34,189,000

             TOTAL APPROPRIATION……………..(($89,008,000))

$90,231,000

      The appropriations in this subsection are subject to the following conditions and limitations:

(a) In addition to other reductions, the appropriations in this section reflect reductions targeted specifically to state government administrative costs.  These administrative reductions shall be achieved, to the greatest extent possible, by reducing those administrative costs that do not affect direct client services or direct service delivery or programs.

(b) The reductions in this subsection shall be achieved through savings from contract revisions and shall not impact the availability of goods and services for residents of the three state veterans homes.

Sec. 221.  2010 c 3 s 214 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF HEALTH

General Fund‑-State Appropriation (FY 2010)…...(($107,413,000))

$98,414,000

General Fund‑-State Appropriation (FY 2011)……(($82,806,000))

$81,735,000

General Fund‑-Federal Appropriation……………(($480,871,000))

$564,379,000

General Fund‑-Private/Local Appropriation……...(($138,846,000))

$162,237,000

Hospital Data Collection Account‑-State Appropriation(($326,000))

$218,000

Health Professions Account‑-State Appropriation…(($76,218,000))

$82,850,000

Aquatic Lands Enhancement Account‑-State Appropriation……………………………………………$603,000

Emergency Medical Services and Trauma Care Systems

      Trust Account‑-State Appropriation…………..(($13,531,000))

$13,206,000

Safe Drinking Water Account‑-State Appropriation..(($2,723,000))

$2,731,000

Drinking Water Assistance Account‑-Federal

      Appropriation…………………………………(($22,817,000))

$22,862,000

Waterworks Operator Certification‑-State

      Appropriation…………………………….…….(($1,519,000))

$1,522,000

Drinking Water Assistance Administrative Account‑-

      State Appropriation………………………………….$326,000

State Toxics Control Account‑-State Appropriation..(($3,600,000))

$4,106,000

Medical Test Site Licensure Account‑-State

      Appropriation…………………………………..(($2,117,000))

$2,261,000

Youth Tobacco Prevention Account‑-State Appropriation………………………………………….$1,512,000

Public Health Supplemental Account‑-Private/Local

      Appropriation…………………………………..(($3,525,000))

$3,804,000

Community and Economic Development Fee Account—State

      Appropriation………………………………………..$298,000

Accident Account‑-State Appropriation………………(($295,000))

$292,000

Medical Aid Account‑-State Appropriation……………….$48,000

Tobacco Prevention and Control Account‑-

      State Appropriation…………………………...(($46,852,000))

$44,196,000

Biotoxin Account--State Appropriation…………….(($1,165,000))

$1,163,000

             TOTAL APPROPRIATION…………….(($987,113,000))

$1,088,763,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) The department of health shall not initiate any services that will require expenditure of state general fund moneys unless expressly authorized in this act or other law.  The department of health and the state board of health shall not implement any new or amended rules pertaining to primary and secondary school facilities until the rules and a final cost estimate have been presented to the legislature, and the legislature has formally funded implementation of the rules through the omnibus appropriations act or by statute.  The department may seek, receive, and spend, under RCW 43.79.260 through 43.79.282, federal moneys not anticipated in this act as long as the federal funding does not require expenditure of state moneys for the program in excess of amounts anticipated in this act.  If the department receives unanticipated unrestricted federal moneys, those moneys shall be spent for services authorized in this act or in any other legislation that provides appropriation authority, and an equal amount of appropriated state moneys shall lapse.  Upon the lapsing of any moneys under this subsection, the office of financial management shall notify the legislative fiscal committees.  As used in this subsection, "unrestricted federal moneys" includes block grants and other funds that federal law does not require to be spent on specifically defined projects or matched on a formula basis by state funds.

      (2) In accordance with RCW 43.70.250 and 43.135.055, the department is authorized to establish and raise fees in fiscal year 2011 as necessary to meet the actual costs of conducting business and the appropriation levels in this section.  This authorization applies to fees for the review of sewage tank designs, fees related to regulation and inspection of farmworker housing, and fees associated with the following professions:  Acupuncture, dental, denturist, mental health counselor, nursing, nursing assistant, optometry, radiologic technologist, recreational therapy, respiratory therapy, social worker, cardiovascular invasive specialist, and practitioners authorized under chapter 18.240 RCW.
      (3) Pursuant to RCW 43.135.055 and RCW 43.70.250, the department is authorized to establish fees by the amount necessary to fully support the cost of activities related to the administration of long-term care worker certification.  The department is further authorized to increase fees by the amount necessary to implement the regulatory requirements of the following bills:  House Bill No. 1414 (health care assistants), House Bill No. 1740 (dental residency licenses), and House Bill No. 1899 (retired active physician licenses).

      (((3))) (4) $764,000 of the health professions account--state appropriation is provided solely for the medical quality assurance commission to maintain disciplinary staff and associated costs sufficient to reduce the backlog of disciplinary cases and to continue to manage the disciplinary caseload of the commission.

      (((4))) (5) $57,000 of the general fund--state appropriation for fiscal year 2010 and $58,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the midwifery licensure and regulatory program to offset a reduction in revenue from fees.  ((There shall be no change to the current annual fees for new or renewed licenses for the midwifery program.))  The department shall convene the midwifery advisory committee on a quarterly basis to address issues related to licensed midwifery.  The appropriations in this section assume that the current application and renewal fee for midwives shall be increased by fifty dollars and all other fees for midwives be adjusted accordingly.

      (((5))) (6) Funding for the human papillomavirus vaccine shall not be included in the department's universal vaccine purchase program in fiscal year 2010.  Remaining funds for the universal vaccine purchase program shall be used to continue the purchase of all other vaccines included in the program until May 1, 2010, ((or until state funds are exhausted,)) at which point state funding for the universal vaccine purchase program shall be discontinued.  ((Funds from section 317 of the federal public health services act direct assistance shall not be used in lieu of state funds.
      (6))) (7) Beginning July 1, 2010, the department, in collaboration with the department of social and health services, shall maximize the use of existing federal funds, including section 317 of the federal public health services act direct assistance as well as federal funds that may become available under the American recovery and reinvestment act, in order to continue to provide immunizations for low-income, nonmedicaid eligible children up to three hundred percent of the federal poverty level in state-sponsored health programs.

      (((7))) (8) The department shall eliminate outreach activities for the health care directives registry and use the remaining amounts to maintain the contract for the registry and minimal staffing necessary to administer the basic entry functions for the registry.

      (((8))) (9) Funding in this section reflects a temporary reduction of resources for the 2009-11 fiscal biennium for the state board of health to conduct health impact reviews.

      (((9))) (10) Pursuant to RCW 43.135.055 and 43.70.125, the department is authorized to adopt rules to establish a fee schedule to apply to applicants for initial certification surveys of health care facilities for purposes of receiving federal health care program reimbursement.  The fees shall only apply when the department has determined that federal funding is not sufficient to compensate the department for the cost of conducting initial certification surveys.  The fees for initial certification surveys may be established as follows:  Up to $1,815 for ambulatory surgery centers, up to $2,015 for critical access hospitals, up to $980 for end stage renal disease facilities, up to $2,285 for home health agencies, up to $2,285 for hospice agencies, up to $2,285 for hospitals, up to $520 for rehabilitation facilities, up to $690 for rural health clinics, and up to $7,000 for transplant hospitals.

      (((10))) (11) Funding for family planning grants for fiscal year 2011 is reduced in the expectation that federal funding shall become available to expand coverage of services for individuals through programs at the department of social and health services.  In the event that such funding is not provided, the legislature intends to continue funding through a supplemental appropriation at fiscal year 2010 levels.  $4,500,000 of the general fund--state appropriation is provided solely for the department of health-funded family planning clinic grants due to federal funding not becoming available.

      (((11))) (12) $16,000,000 of the tobacco prevention and control account--state appropriation is provided solely for local health jurisdictions to conduct core public health functions as defined in RCW 43.70.514.

      (((12))) (13) $100,000 of the health professions account appropriation is provided solely for implementation of Substitute House Bill No. 1414 (health care assistants).  If the bill is not enacted by June 30, 2009, the amount provided in this subsection shall lapse.

      (((13))) (14) $42,000 of the health professions account--state appropriation is provided solely to implement Substitute House Bill No. 1740 (dentistry license issuance).  If the bill is not enacted by June 30, 2009, the amount provided in this section shall lapse.

      (((14))) (15) $23,000 of the health professions account--state appropriation is provided solely to implement Second Substitute House Bill No. 1899 (retired active physician licenses).  If the bill is not enacted by June 30, 2009, the amount provided in this section shall lapse.

      (((15))) (16) $12,000 of the general fund--state appropriation for fiscal year 2010 and $67,000 of the general fund--private/local appropriation are provided solely to implement House Bill No. 1510 (birth certificates).  If the bill is not enacted by June 30, 2009, the amount provided in this section shall lapse.

      (((16))) (17) $31,000 of the health professions account is provided for the implementation of Second Substitute Senate Bill No. 5850 (human trafficking).  If the bill is not enacted by June 2009, the amount provided in this subsection shall lapse.

      (((17))) (18) $282,000 of the health professions account is provided for the implementation of Substitute Senate Bill No. 5752 (dentists cost recovery).  If the bill is not enacted by June 2009, the amount provided in this subsection shall lapse.

      (((18))) (19) $106,000 of the health professions account is provided for the implementation of Substitute Senate Bill No. 5601 (speech language assistants).  If the bill is not enacted by June 2009, the amount provided in this subsection shall lapse.

(20) Subject to existing resources, the department of health is encouraged to examine, in the ordinary course of business, current and prospective programs, treatments, education, and awareness of cardiovascular disease that are needed for a thriving and healthy Washington.
      (21) $400,500 from the health professions account is appropriated to fund nursing commission programs related to discipline, impaired practitioner programs, and expedited credentialing.  Funding comes from a reduction in the $20 fees that nurses pay for access to University of Washington library resources.
      (22) $390,000 of the health professions account--state appropriation is provided solely to implement chapter 169, Laws of 2010 (nursing assistants).  The amount provided in this subsection is from fee revenue authorized by Engrossed Substitute Senate Bill No. 6582.
      (23) $10,000 of the health professions account--state appropriation for fiscal year 2010 and $40,000 of the health professions account--state appropriation for fiscal year 2011 are provided solely for the department to study cost effective options for collecting demographic data related to the health care professions workforce to be submitted to the legislature by December 1, 2010.
      (24) $66,000 of the health professions account--state appropriation is provided solely to implement chapter 209, Laws of 2010 (pain management).
      (25) $10,000 of the health professions account--state appropriation is provided solely to implement chapter 92, Laws of 2010 (cardiovascular invasive specialists).
      (26) $23,000 of the general fund--state appropriation is provided solely to implement chapter 182, Laws of 2010 (tracking ephedrine, etc.).

      (27) The department is authorized to coordinate a tobacco cessation media campaign using all appropriate media with the purpose of maximizing the use of quit-line services and youth smoking prevention.
      (28) For all contracts for smoking cessation and awareness services agreed to after the effective date of this section, at least ten percent of the value of that contract shall be dedicated to supporting smoking cessation and prevention programs for underserved and hard to reach populations, including populations with smoking rates higher than the state average.
      (29) It is the intent of the legislature that the reductions in appropriations to the AIDS/HIV programs shall be achieved, to the greatest extent possible, by reducing those state government administrative costs that do not affect direct client services or direct service delivery or programs.  The agency shall, to the greatest extent possible, reduce spending in those areas that shall have the least impact on implementing these programs.
      (30) $400,000 of the state toxics control account--state appropriation is provided solely for granting to a willing local public entity to provide emergency water supplies or water treatment for households with individuals at high public health risk from nitrate-contaminated wells in the lower Yakima basin.
      (31) $100,000 of the state toxics control account--state appropriation is provided solely for an interagency contract to the department of ecology to grant to agencies involved in improving groundwater quality in the lower Yakima Valley.  These agencies will develop a local plan for improving water quality and reducing nitrate contamination.  The department of ecology will report to the appropriate committees of the legislature and to the office of financial management no later than December 1, 2010, summarizing progress towards developing and implementing this plan.

NEW SECTION.  Sec. 222.  A new section is added to 2009 c 564 (uncodified) to read as follows:

FOR THE DEPARTMENT OF CORRECTIONS.  The appropriations to the department of corrections in this act shall be expended for the programs and in the amounts specified herein.  However, after May 1, 2010, after approval by the director of financial management and unless specifically prohibited by this act, the department may transfer general fund--state appropriations for fiscal year 2010 between programs.  The department shall not transfer funds, and the director of financial management shall not approve the transfer, unless the transfer is consistent with the objective of conserving, to the maximum extent possible, the expenditure of state funds and not federal funds.  The director of financial management shall notify the appropriate fiscal committees of the senate and house of representatives in writing seven days prior to approving any deviations from appropriation levels.  The written notification shall include a narrative explanation and justification of the changes, along with expenditures and allotments by budget unit and appropriation, both before and after any allotment modifications or transfers.

Sec. 223.  2010 c 3 s 215 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF CORRECTIONS

      (1) ADMINISTRATION AND SUPPORT SERVICES

General Fund‑-State Appropriation (FY 2010)…….(($55,622,000))

$55,772,000

General Fund‑-State Appropriation (FY 2011)……(($56,318,000))

$55,417,000

             TOTAL APPROPRIATION…………….(($111,940,000))

$111,189,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) Within funds appropriated in this section, the department shall seek contracts for chemical dependency vendors to provide chemical dependency treatment of offenders in corrections facilities, including corrections centers and community supervision facilities, which have demonstrated effectiveness in treatment of offenders and are able to provide data to show a successful treatment rate.

      (b) $35,000 of the general fund--state appropriation for fiscal year 2010 and $35,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for the support of a statewide council on mentally ill offenders that includes as its members representatives of community-based mental health treatment programs, current or former judicial officers, and directors and commanders of city and county jails and state prison facilities.  The council will investigate and promote cost-effective approaches to meeting the long-term needs of adults and juveniles with mental disorders who have a history of offending or who are at-risk of offending, including their mental health, physiological, housing, employment, and job training needs.

      (2) CORRECTIONAL OPERATIONS

General Fund‑-State Appropriation (FY 2010)…...(($456,657,000))

$458,503,000

General Fund‑-State Appropriation (FY 2011)…..(($626,303,000))

$600,657,000

General Fund‑-Federal Appropriation……………(($185,131,000))

$186,719,000

((General Fund--Private/Local Appropriation…….….$3,536,000))

Washington Auto Theft Prevention Authority Account--

      State Appropriation…………………………….(($5,960,000))

$5,936,000

State Efficiency and Restructuring Account—State

      Appropriation…………………………………….$34,522,000

             TOTAL APPROPRIATION…………..(($1,277,587,000))

$1,286,337,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) The department may expend funds generated by contractual agreements entered into for mitigation of severe overcrowding in local jails.  Any funds generated in excess of actual costs shall be deposited in the state general fund.  Expenditures shall not exceed revenue generated by such agreements and shall be treated as a recovery of costs.

      (b) The department shall accomplish personnel reductions with the least possible impact on correctional custody staff, community custody staff, and correctional industries.  For the purposes of this subsection, correctional custody staff means employees responsible for the direct supervision of offenders.

      (c) During the 2009-11 biennium, when contracts are established or renewed for offender pay phone and other telephone services provided to inmates, the department shall select the contractor or contractors primarily based on the following factors:  (i) The lowest rate charged to both the inmate and the person paying for the telephone call; and (ii) the lowest commission rates paid to the department, while providing reasonable compensation to cover the costs of the department to provide the telephone services to inmates and provide sufficient revenues for the activities funded from the institutional welfare betterment account.

      (d) The Harborview medical center and the University of Washington medical center shall provide inpatient and outpatient hospital services to offenders confined in department of corrections facilities at a rate no greater than the average rate that the department has negotiated with other community hospitals in Washington state.

      (e) A political subdivision which is applying for funding to mitigate one-time impacts associated with construction or expansion of a correctional institution, consistent with WAC 137-12A-030, may apply for the mitigation funds in the fiscal biennium in which the impacts occur or in the immediately succeeding fiscal biennium.

      (f) Within amounts provided in this subsection, the department, jointly with the department of social and health services, shall identify the number of offenders released through the extraordinary medical placement program, the cost savings to the department of corrections, including estimated medical cost savings, and the costs for medical services in the community incurred by the department of social and health services.  The department and the department of social and health services shall jointly report to the office of financial management and the appropriate fiscal committees of the legislature by November 30, 2010.

      (g) $11,863,000 of the general fund--state appropriation for fiscal year 2010, $11,864,000 of the general fund--state appropriation for fiscal year 2011, and $2,336,000 of the general fund-private/local appropriation are provided solely for in-prison evidence-based programs and for the reception diagnostic center program as part of the offender re-entry initiative.

(h) The department shall appropriately transition offenders from custody as close as possible to the offender's earned release date without adversely affecting public safety.   The number of offenders held beyond their earned release date should not exceed the number of offenders held beyond their earned release date in fiscal year 2008.  By June 1, 2010, the department shall provide a report on its offender population to the office of financial management and the legislative fiscal committees.  The report shall include (i) an explanation for the increase in the adult inmate population between the November 2009 forecast and the February 2010 forecast; (ii) an explanation for the increase in the number of offenders held beyond their earned release date between fiscal year 2008 and calendar year 2009; and (iii) a description of the department's actions to reduce and maintain the number of offenders held beyond their earned release date to the population level from fiscal year 2008, and a timetable for achieving that goal.
      (i) The appropriations in this subsection are based on savings assumed from decreasing the offender population at the McNeil Island corrections center to 256 minimum security offenders, decreasing the offender population at the Larch corrections center to 240 offenders, the closure of the Ahtanum View corrections center, and the closure of the Pine Lodge corrections center for women.

      (3) COMMUNITY SUPERVISION

General Fund‑-State Appropriation (FY 2010)…...(($151,249,000))

$150,729,000

General Fund‑-State Appropriation (FY 2011)…..(($141,785,000))

$139,945,000

             TOTAL APPROPRIATION……………(($293,034,000))

$290,674,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (a) The department shall accomplish personnel reductions with the least possible impact on correctional custody staff, community custody staff, and correctional industries.  For the purposes of this subsection, correctional custody staff means employees responsible for the direct supervision of offenders.

      (b) $2,083,000 of the general fund--state appropriation for fiscal year 2010 and $2,083,000 of the general fund--state appropriation for fiscal year 2011 are provided solely to implement Senate Bill No. 5525 (state institutions/release).  If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.

      (c) The appropriations in this subsection are based upon savings assumed from the implementation of Engrossed Substitute Senate Bill No. 5288 (supervision of offenders).

      (d) $2,791,000 of the general fund--state appropriation for fiscal year 2010 and $3,166,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for evidence-based community programs and for community justice centers as part of the offender re-entry initiative.

(e) $418,300 of the general fund--state appropriation for fiscal year 2010 is provided solely for the purposes of settling all claims in Hilda Solis, Secretary of Labor, United States Department of Labor v. State of Washington, Department of Corrections, United States District Court, Western District of Washington, Cause No. C08-cv-05362-RJB.  The expenditure of this amount is contingent on the release of all claims in the case, and total settlement costs shall not exceed the amount provided in this subsection.  If settlement is not fully executed by June 30, 2010, the amount provided in this subsection shall lapse.
      (f) $984,000 of the general fund--state appropriation for fiscal year 2011 is provided solely for supplemental services that will be provided to offenders in lieu of a prison sentence, pursuant to chapter 224, Laws of 2010 (confinement alternatives).

      (4) CORRECTIONAL INDUSTRIES

General Fund‑-State Appropriation (FY 2010)…………$2,574,000

General Fund‑-State Appropriation (FY 2011)……..(($2,565,000))

$2,547,000

             TOTAL APPROPRIATION……………….(($5,139,000))

$5,121,000

      The appropriations in this subsection are subject to the following conditions and limitations:  $132,000 of the general fund--state appropriation for fiscal year 2010 and $132,000 of the general fund--state appropriation for fiscal year 2011 are provided solely for transfer to the jail industries board.  The board shall use the amounts provided only for administrative expenses, equipment purchases, and technical assistance associated with advising cities and counties in developing, promoting, and implementing consistent, safe, and efficient offender work programs.

      (5) INTERAGENCY PAYMENTS

General Fund‑-State Appropriation (FY 2010)…….(($40,455,000))

$40,728,000

General Fund‑-State Appropriation (FY 2011)…….(($40,450,000))

$40,084,000

             TOTAL APPROPRIATION……………...(($80,905,000))

$80,812,000

      The appropriations in this subsection are subject to the following conditions and limitations:
      (a) The state prison institutions may use funds appropriated in this subsection to rent uniforms from correctional industries in accordance with existing legislative mandates.
      (b) The state prison medical facilities may use funds appropriated in this subsection to purchase goods and supplies through hospital or other group purchasing organizations when it is cost effective to do so.

Sec. 224.  2009 c 564 s 224 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF SERVICES FOR THE BLIND

General Fund‑-State Appropriation (FY 2010)….......(($2,544,000))

$2,504,000

General Fund‑-State Appropriation (FY 2011)…….(($2,550,000))

$2,390,000

General Fund‑-Federal Appropriation……………..(($18,125,000))

$18,116,000

General Fund‑-Private/Local Appropriation……………(($20,000))

$30,000

             TOTAL APPROPRIATION……………..(($23,239,000))

$23,040,000

      The amounts appropriated in this section are subject to the following conditions and limitations:  Sufficient amounts are appropriated in this section to support contracts for services that provide employment support and help with life activities for deaf and blind individuals in King county.

Sec. 225.  2010 c 3 s 216 (uncodified) is amended to read as follows:

FOR THE SENTENCING GUIDELINES COMMISSION

General Fund‑-State Appropriation (FY 2010)…………...$962,000

General Fund‑-State Appropriation (FY 2011)………..(($960,000))

$948,000

             TOTAL APPROPRIATION……………….(($1,922,000))

$1,910,000

      The appropriations in this section are subject to the following conditions and limitations:

      (1) Within the amounts appropriated in this section, the sentencing guidelines commission, in partnership with the courts, shall develop a plan to implement an evidence-based system of community custody for adult felons that will include the consistent use of evidence-based risk and needs assessment tools, programs, supervision modalities, and monitoring of program integrity.  The plan for the evidence-based system of community custody shall include provisions for identifying cost-effective rehabilitative programs; identifying offenders for whom such programs would be cost-effective; monitoring the system for cost-effectiveness; and reporting annually to the legislature.  In developing the plan, the sentencing guidelines shall consult with:  The Washington state institute for public policy; the legislature; the department of corrections; local governments; prosecutors; defense attorneys; victim advocate groups; law enforcement; the Washington federation of state employees; and other interested entities.  The sentencing guidelines commission shall report its recommendations to the governor and the legislature by December 1, 2009.

      (2)(a) Except as provided in subsection (b), during the 2009-11 biennium, the reports required by RCW 9.94A.480(2) and 9.94A.850(2) (d) and (h) shall be prepared within the available funds and may be delayed or suspended at the discretion of the commission.

      (b) The commission shall submit the analysis described in section 15 of Engrossed Substitute Senate Bill No. 5288 no later than December 1, 2011.

(3) Within the amounts appropriated in this section, the sentencing guidelines commission shall survey the practices of other states relating to offenders who violate any conditions of their community custody.  In conducting the survey, the sentencing guidelines commission shall perform a review of the research studies to determine if a mandatory minimum confinement policy is an evidence-based practice, investigate the implementation of such a policy in other states, and estimate the fiscal impacts of implementing such a policy in Washington state.  The sentencing guidelines commission shall report its findings to the governor and the legislature by December 1, 2010.

Sec. 226.  2009 c 564 s 226 (uncodified) is amended to read as follows:

FOR THE EMPLOYMENT SECURITY DEPARTMENT

General Fund‑-State Appropriation (FY 2010)……...(($7,054,000))

$2,054,000

General Fund‑-State Appropriation (FY 2011)…………(($53,000))

$5,053,000

General Fund‑-Federal Appropriation……………(($320,561,000))

$324,135,000

General Fund‑-Private/Local Appropriation……….(($33,825,000))

$33,640,000

Unemployment Compensation Administration

      Account‑-Federal Appropriation…………….(($332,904,000))

$362,740,000

Administrative Contingency Account‑-State

      Appropriation…………………………………….(($293,000))

$345,000

Employment Service Administrative Account‑-

      State Appropriation…………………………...(($37,195,000))

$37,775,000

             TOTAL APPROPRIATION……………(($731,885,000))

$765,742,000

      The appropriations in this subsection are subject to the following conditions and limitations:

      (1) (($55,029,000)) $59,829,000 of the unemployment compensation administration account‑-federal appropriation is provided from amounts made available to the state by section 903(d) and (f) of the social security act (Reed act).  This amount is authorized to continue current unemployment insurance functions and department services to employers and job seekers.

      (2) $32,067,000 of the unemployment compensation administration account--federal appropriation is provided from amounts made available to the state by section 903(d) and (f) of the social security act (Reed act).  This amount is authorized to fund the replacement of the unemployment insurance tax information system (TAXIS) for the employment security department.  This section is subject to section 902 of this act.

      (3) $110,000 of the unemployment compensation administration account--federal appropriation is provided solely for implementation of Senate Bill No. 5804 (leaving part time work voluntarily).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

      (4) $1,263,000 of the unemployment compensation administration account--federal appropriation is provided solely for implementation of Senate Bill No. 5963 (unemployment insurance).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

      (5) $159,000 of the unemployment compensation account--federal appropriation is provided solely for the implementation of House Bill No. 1555 (underground economy) from funds made available to the state by section 903(d) of the social security act (Reed act).

      (6) (($293,000)) $295,000 of the administrative contingency--state appropriation for fiscal year 2010 is provided solely for the implementation of House Bill No. 2227 (evergreen jobs act).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

      (7) $7,000,000 of the general fund--state appropriation for fiscal year 2010 is provided solely for the implementation of Senate Bill No. 5809 (WorkForce employment and training).  ((If the bill is not enacted by June 30, 2009, the amounts provided in this subsection shall lapse.))

(8) $444,000 of the unemployment compensation administration account--federal appropriation is provided solely for the implementation of Substitute Senate Bill No. 6524 (unemployment insurance penalties and contribution rates) from funds made available to the state by section 903 (d) or (f) of the social security act (Reed 12 act).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.
      (9) $232,000 of the unemployment compensation administration account--federal appropriation from funds made available to the state by section 903(c) or (f) of the social security act (Reed act) is provided solely for the implementation of Substitute House Bill No. 2789 (underground economic activity).  If the bill is not enacted by June 30, 2010, the amount provided in this subsection shall lapse.

Sec. 227.  2009 c 564 s 221 (uncodified) is amended to read as follows:

FOR THE HOME CARE QUALITY AUTHORITY

General Fund‑-State Appropriation (FY 2010),,,,,,,,,,,,,,,,,$1,229,000

((General Fund-State Appropriation (FY 2011),,,,,,,,,,,,,$1,221,000

      TOTAL APPROPRIATION…………………….$2,450,000))

 

(End of Part)

 

PART III

NATURAL RESOURCES

 

Sec. 301.  2009 c 564 s 301 (uncodified) is amended to read as follows:

FOR THE COLUMBIA RIVER GORGE COMMISSION

General Fund‑-State Appropriation (FY 2010)…………...$441,000

General Fund‑-State Appropriation (FY 2011)………..(($445,000))

$440,000

General Fund‑-Federal Appropriation……………………..$30,000

General Fund‑-Private/Local Appropriation………….(($864,000))

$845,000

             TOTAL APPROPRIATION……………….(($1,780,000))

$1,756,000

Sec. 302.  2010 c 3 s 301 (uncodified) is amended to read as follows:

FOR THE DEPARTMENT OF ECOLOGY

General Fund‑-State Appropriation (FY 2010)…….(($59,991,000))

$58,552,000

General Fund‑-State Appropriation (FY 2011)…….(($58,047,000))

$52,725,000

General Fund‑-Federal Appropriation……………..(($82,452,000))

$82,079,000

General Fund‑-Private/Local Appropriation……….(($16,668,000))

$16,688,000

Special Grass Seed Burning Research Account‑-State

      Appropriation…………………………………………$14,000

Reclamation Account‑-State Appropriation………...(($3,679,000))

$3,649,000

Flood Control Assistance Account‑-State

Appropriation…………………………………..(($1,965,000))

$1,943,000

State Emergency Water Projects Revolving

      Account--State Appropriation………………………..$240,000

Waste Reduction/Recycling/Litter Control‑-State

      Appropriation…………………………………(($14,554,000))

$12,467,000

State Drought Preparedness Account—State

      Appropriation……………………………………...$4,000,000

State and Local Improvements Revolving Account

      (Water Supply Facilities)‑-State Appropriation…...(($426,000))

$424,000

Freshwater Aquatic Algae Control Account‑-State

      Appropriation…………………………………….(($509,000))

$508,000

Water Rights Tracking System Account‑-State

      Appropriation……………………………………….$116,000

Site Closure Account‑-State Appropriation…………..(($706,000))

$922,000

Wood Stove Education and Enforcement Account‑-

      State Appropriation………………………………….$612,000

Worker and Community Right-to-Know Account‑-

      State Appropriation…………………………….(($1,670,000))

$1,663,000

State Toxics Control Account‑-State

      Appropriation………………………………..(($101,705,000))

$106,642,000

State Toxics Control Account‑-Private/Local

      Appropriation…………………………………….(($383,000))

$379,000

Local Toxics Control Account‑-Stat