BILL REQ. #:  H-3415.1 

READ FIRST TIME 04/21/09.   

     AN ACT Relating to funding health care and the working families' tax rebate with a voter-approved temporary sales tax increase; amending RCW 82.08.020, 82.08.0206, 36.100.040, 67.28.181, and 82.14.410; reenacting and amending RCW 82.08.064 and 43.135.035; adding a new section to chapter 43.79 RCW; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; creating new sections; making appropriations; providing a contingent effective date; providing expiration dates; and providing for submission of certain sections of this act to a vote of the people.

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

NEW SECTION.  Sec. 1   INTENT. An unprecedented shortfall in state general fund revenues has threatened the state's ability to fund vital health services and has harmed working families. For this reason, the legislature is asking the voters to approve temporary tax increases in order to fund health care and to support working families during this time of revenue shortfalls.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.79 RCW to read as follows:
     HEALTH CARE TRUST ACCOUNT. (1) The health care trust account is created in the state treasury. The portion of the receipts from the temporary increase in the retail sales tax as authorized in RCW 82.08.020(4) must be deposited into the account. Moneys in the account may be spent only after appropriation. The legislature may appropriate from the account only to fund the basic health plan, public health services, health care, mental health care, hospitals, and long-term care nursing homes.
     (2) This section expires January 1, 2013.

Sec. 3   RCW 82.08.020 and 2006 c 1 s 3 are each amended to read as follows:
     TEMPORARY SALES TAX INCREASE. (1) There is levied and there shall be collected a tax on each retail sale in this state equal to six and five-tenths percent of the selling price.
     (2) There is levied and there shall be collected an additional tax on each retail car rental, regardless of whether the vehicle is licensed in this state, equal to five and nine-tenths percent of the selling price. The revenue collected under this subsection shall be deposited in the multimodal transportation account created in RCW 47.66.070.
     (3) Beginning July 1, 2003, there is levied and collected an additional tax of three-tenths of one percent of the selling price on each retail sale of a motor vehicle in this state, other than retail car rentals taxed under subsection (2) of this section. The revenue collected under this subsection shall be deposited in the multimodal transportation account created in RCW 47.66.070.
     (4) From January 1, 2010, through December 31, 2012, there is levied and there shall be collected an additional tax of three-tenths of one percent of the selling price on each retail sale in this state. Of the revenue collected under this subsection:
     (a) 13.2 percent of the revenue for fiscal years 2010 and 2011, and twenty-two percent of the revenue for fiscal year 2012 shall be deposited in the general fund and used to fund the working families' tax rebate for low-income persons created in RCW 82.08.0206.
     (b) The remainder shall be deposited in the health care trust account created in section 2 of this act.
     (5) For purposes of subsection (3) of this section, "motor vehicle" has the meaning provided in RCW 46.04.320, but does not include farm tractors or farm vehicles as defined in RCW 46.04.180 and 46.04.181, off-road and nonhighway vehicles as defined in RCW 46.09.020, and snowmobiles as defined in RCW 46.10.010.
     (((5))) (6) Beginning on December 8, 2005, 0.16 percent of the taxes collected under subsection (1) of this section shall be dedicated to funding comprehensive performance audits required under RCW 43.09.470. The revenue identified in this subsection shall be deposited in the performance audits of government account created in RCW 43.09.475.
     (((6))) (7) The taxes imposed under this chapter shall apply to successive retail sales of the same property.
     (((7))) (8) The rates provided in this section apply to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.08 RCW to read as follows:
     TAX EXPIRATION DATE. The tax increases authorized in RCW 82.08.020(4) are temporary in nature and expire on December 31, 2012. This expiration date may not be repealed or extended without a two-thirds vote of both houses of the legislature or a vote of the people.

NEW SECTION.  Sec. 5   A new section is added to chapter 82.12 RCW to read as follows:
     USE TAX DEDICATION. (1) From January 1, 2010, through December 31, 2012, use taxes collected on the rate provided in RCW 82.08.020(4) shall be deposited in the general fund and the health care trust account in the same proportions established in RCW 82.08.020(4).
     (2) This section expires January 1, 2013.

Sec. 6   RCW 82.08.064 and 2003 c 361 s 304 and 2003 c 168 s 205 are each reenacted and amended to read as follows:
     SALES TAX ADMINISTRATION. (1) A sales and use tax rate change under this chapter or chapter 82.12 RCW shall be imposed (a) no sooner than seventy-five days after its enactment into law and (b) only on the first day of January, April, July, or October.
     (2) Subsection (1) of this section does not apply to the tax rate change in section 301, chapter 361, Laws of 2003, and section 3, chapter . . ., Laws of 2009 (section 3 of this act).
     (3)(a) A sales and use tax rate increase under this chapter or chapter 82.12 RCW imposed on services applies to the first billing period starting on or after the effective date of the increase.
     (b) A sales and use tax rate decrease under this chapter or chapter 82.12 RCW imposed on services applies to bills rendered on or after the effective date of the decrease.
     (c) For the purposes of this subsection (3), "services" means retail services such as installing and constructing and retail services such as telecommunications, but does not include services such as tattooing.

Sec. 7   RCW 43.135.035 and 2008 c 1 s 5 (Initiative Measure No. 960) and 2007 c 484 s 6 are each reenacted and amended to read as follows:
     EXPENDITURE LIMIT. (1) After July 1, 1995, any action or combination of actions by the legislature that raises taxes may be taken only if approved by a two-thirds vote of each house of the legislature, and then only if state expenditures in any fiscal year, including the new revenue, will not exceed the state expenditure limits established under this chapter. Pursuant to the referendum power set forth in Article II, section 1(b) of the state Constitution, tax increases may be referred to the voters for their approval or rejection at an election.
     (2)(a) If the legislative action under subsection (1) of this section will result in expenditures in excess of the state expenditure limit, then the action of the legislature shall not take effect until approved by a vote of the people at a November general election. The state expenditure limit committee shall adjust the state expenditure limit by the amount of additional revenue approved by the voters under this section. This adjustment shall not exceed the amount of revenue generated by the legislative action during the first full fiscal year in which it is in effect. The state expenditure limit shall be adjusted downward upon expiration or repeal of the legislative action.
     (b) The ballot title for any vote of the people required under this section shall be substantially as follows:

     "Shall taxes be imposed on . . . . . . . in order to allow a spending increase above last year's authorized spending adjusted for personal income growth?"

     (3)(a) The state expenditure limit may be exceeded upon declaration of an emergency for a period not to exceed twenty-four months by a law approved by a two-thirds vote of each house of the legislature and signed by the governor. The law shall set forth the nature of the emergency, which is limited to natural disasters that require immediate government action to alleviate human suffering and provide humanitarian assistance. The state expenditure limit may be exceeded for no more than twenty-four months following the declaration of the emergency and only for the purposes contained in the emergency declaration.
     (b) Additional taxes required for an emergency under this section may be imposed only until thirty days following the next general election, unless an extension is approved at that general election. The additional taxes shall expire upon expiration of the declaration of emergency. The legislature shall not impose additional taxes for emergency purposes under this subsection unless funds in the education construction fund have been exhausted.
     (c) The state or any political subdivision of the state shall not impose any tax on intangible property listed in RCW 84.36.070 as that statute exists on January 1, 1993.
     (4) If the cost of any state program or function is shifted from the state general fund or a related fund to another source of funding, or if moneys are transferred from the state general fund or a related fund to another fund or account, the state expenditure limit committee, acting pursuant to RCW 43.135.025(5), shall lower the state expenditure limit to reflect the shift. For the purposes of this section, a transfer of money from the state general fund or a related fund to another fund or account includes any state legislative action taken that has the effect of reducing revenues from a particular source, where such revenues would otherwise be deposited into the state general fund or a related fund, while increasing the revenues from that particular source to another state or local government account. This subsection does not apply to: (a) The dedication or use of lottery revenues under RCW 67.70.240(3) or property taxes under RCW 84.52.068, in support of education or education expenditures; (b) a transfer of moneys to, or an expenditure from, the budget stabilization account; or (c) expenditures from the health care trust account created in section 2 of this act.
     (5) If the cost of any state program or function and the ongoing revenue necessary to fund the program or function are shifted to the state general fund or a related fund on or after January 1, 2007, the state expenditure limit committee, acting pursuant to RCW 43.135.025(5), shall increase the state expenditure limit to reflect the shift unless the shifted revenue had previously been shifted from the general fund or a related fund.
     (6) For the purposes of chapter 1, Laws of 2008, "raises taxes" means any action or combination of actions by the legislature that increases state tax revenue deposited in any fund, budget, or account, regardless of whether the revenues are deposited into the general fund.

Sec. 8   RCW 82.08.0206 and 2008 c 325 s 2 are each amended to read as follows:
     (1) A working families' tax ((exemption)) rebate, in the form of a remittance of tax due under this chapter and chapter 82.12 RCW, is provided to eligible low-income persons for sales taxes paid under this chapter ((after January 1, 2008)).
     (2) For purposes of the ((exemption)) rebate in this section, an eligible low-income person is:
     (a) An individual, or an individual and that individual's spouse if they file a federal joint income tax return;
     (b) (([An individual who])) An individual who is eligible for, and is granted, the credit provided in Title 26 U.S.C. Sec. 32; and
     (c) (([An individual who])) An individual who properly files a federal income tax return as a Washington resident, and has been a resident of the state of Washington more than one hundred eighty days of the year for which the ((exemption)) rebate is claimed.
     (3) For remittances made in ((2009 and 2010)) calendar years 2010 and 2011, the working families' tax ((exemption for the prior year is a retail sales tax exemption)) rebate is equal to the greater of five percent of the credit granted as a result of Title 26 U.S.C. Sec. 32 ((in the most recent year for which data is available)) or twenty-five dollars. For ((2011)) calendar year 2012 and thereafter, the working families' tax ((exemption for the prior year)) rebate is equal to the greater of ten percent of the credit granted as a result of Title 26 U.S.C. Sec. 32 ((in the most recent year for which data is available)) or fifty dollars.
     (4) For any fiscal ((period)) year, the working families' tax ((exemption)) rebate authorized under this section shall be approved by the legislature in the state omnibus appropriations act before persons may claim the ((exemption)) rebate during the fiscal ((period)) year.
     (5) The working families' tax ((exemption)) rebate shall be administered as provided in this subsection.
     (a) An eligible low-income person claiming ((an exemption)) a rebate under this section must pay the tax imposed under chapters 82.08, 82.12, and 82.14 RCW in the year for which the ((exemption)) rebate is claimed. The eligible low-income person may then apply to the department for ((the remittance as calculated under subsection (3) of this section)) a rebate the following calendar year.
     (b) Application shall be made to the department in a form and manner determined by the department, but the department must provide alternative filing methods for applicants who do not have access to electronic filing.
     (c) Application for the ((exemption remittance)) rebate under this section ((must be made in the year following the year for which the federal return was filed, but in no case may any remittance be provided for any period before January 1, 2008. The department may use the best available data to process the exemption remittance)) is based on the earned income tax credit granted for the year prior to the application year. The department shall begin accepting applications ((October 1, 2009)) July 1, 2010. Applications may be accepted on January 1, 2011, and January 1st every year thereafter for rebates approved by the legislature under subsection (4) of this section.
     (d) The department shall review the application and determine eligibility for the working families' tax ((exemption)) rebate based on information provided by the applicant and through audit and other administrative records, including, when it deems it necessary, verification through internal revenue service data.
     (e) The department shall remit the ((exempted)) rebated amounts to eligible low-income persons who submitted applications. Remittances may be made by electronic funds transfer or other means.
     (f) The department may, in conjunction with other agencies or organizations, design and implement a public information campaign to inform potentially eligible persons of the existence of and requirements for this ((exemption)) rebate.
     (g) The department may contact persons who appear to be eligible low-income persons as a result of information received from the internal revenue service under such conditions and requirements as the internal revenue service may by law require.
     (6) The provisions of chapter 82.32 RCW apply to the ((exemption)) rebate in this section.
     (7) The department may adopt rules necessary to implement this section.
     (((8) The department shall limit its costs for the exemption program to the initial start-up costs to implement the program. The state omnibus appropriations act shall specify funding to be used for the ongoing administrative costs of the program. These ongoing administrative costs include, but are not limited to, costs for: The processing of internet and mail applications, verification of application claims, compliance and collections, additional full-time employees at the department's call center, processing warrants, updating printed materials and web information, media advertising, and support and maintenance of computer systems.))

NEW SECTION.  Sec. 9   AUTHORIZATION FOR THE WORKING FAMILIES' TAX REBATE. (1) The department of revenue is authorized to implement the working families' tax rebate for fiscal years 2010 and 2011. The department may not accept applications until July 1, 2010.
     (2) The sum of $68,500,000 for the fiscal year ending June 30, 2011, or so much thereof as may be necessary, is appropriated from the state general fund to the department of revenue for payments under the working families' tax rebate pursuant to RCW 82.08.0206.

NEW SECTION.  Sec. 10   APPROPRIATIONS FOR THE BASIC HEALTH PLAN. The sum of $187,352,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the health care authority for the purposes of restoring basic health plan enrollment beyond the level appropriated in the 2009-11 biennial operating budget.

NEW SECTION.  Sec. 11   APPROPRIATIONS FOR LONG-TERM CARE AND NURSING HOMES. The sum of $77,250,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the department of social and health services aging and disability services administration solely for the purpose of providing long-term care, including in-home care, adult day health care, adult family homes, boarding homes, and nursing homes.

NEW SECTION.  Sec. 12   APPROPRIATIONS FOR HOSPITALS. The sum of $75,000,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the department of social and health services medical assistance program for the purposes of hospital payments.

NEW SECTION.  Sec. 13   APPROPRIATIONS FOR MENTAL HEALTH CARE. The sum of $28,214,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the department of social and health services mental health division solely for the purpose of providing community mental health services and critical services at state hospitals.

NEW SECTION.  Sec. 14   APPROPRIATIONS FOR HEALTH CARE FOR CHILDREN. The sum of $13,350,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the department of social and health services medical assistance program for the purposes of reimbursing providers of health care for children.

NEW SECTION.  Sec. 15   APPROPRIATIONS FOR THE HEALTHY OPTIONS HEALTH CARE PROGRAM. The sum of $19,200,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the department of social and health services medical assistance program for the purposes of providing health care through managed health care systems.

NEW SECTION.  Sec. 16   APPROPRIATIONS FOR PUBLIC HEALTH SERVICES. The sum of $10,100,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the department of health for the purposes of tobacco prevention activities and for distribution to local health jurisdictions to spend on core public health functions of statewide significance as defined in RCW 43.70.514.

NEW SECTION.  Sec. 17   APPROPRIATIONS FOR VISION AND HEARING SERVICES. The sum of $5,400,000 dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2011, from the health care trust account to the department of social and health services medical assistance program for the purposes of providing vision and hearing services.

NEW SECTION.  Sec. 18   EXPENDITURES. Pursuant to RCW 43.88.260(2)(b), the office of financial management is authorized to take necessary steps to ensure that expenditures of appropriations from the health care trust account in sections 10 through 17 of this act begin as soon as possible after the appropriations take effect.

NEW SECTION.  Sec. 19   FEDERAL FUNDS. The department of social and health services and the office of financial management shall seek matching federal matching funds for appropriations from the health care trust account in sections 10 through 17 of this act to the maximum extent permitted by federal law. Upon receipt, such revenues may be expended as permitted by RCW 43.79.270.

Sec. 20   RCW 36.100.040 and 2008 c 137 s 5 are each amended to read as follows:
     CONFORMING AMENDMENT. (1) A public facilities district may impose an excise tax on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW, except that no such tax may be levied on any premises having fewer than forty lodging units. However, if a public facilities district has not imposed such an excise tax prior to December 31, 1995, the public facilities district may only impose the excise tax if a ballot proposition authorizing the imposition of the tax has been approved by a simple majority vote of voters of the public facilities district voting on the proposition.
     (2) The rate of the tax shall not exceed two percent and the proceeds of the tax shall only be used for the acquisition, design, construction, remodeling, maintenance, equipping, reequipping, repairing, and operation of its public facilities. This excise tax shall not be imposed until the district has approved the proposal to acquire, design, and construct the public facilities.
     (3) A public facilities district may not impose the tax authorized in this section if, after the tax authorized in this section was imposed, the effective combined rate of state and local excise taxes, including sales and use taxes and excise taxes on lodging, imposed on the sale of or charge made for furnishing of lodging in any jurisdiction in the public facilities district exceeds eleven and one-half percent. In determining the effective combined rate of tax, the tax rate under RCW 82.08.020(4) is not included.
     (4) The tax imposed in this section does not apply to sales of temporary medical housing exempt under RCW 82.08.997.

Sec. 21   RCW 67.28.181 and 2004 c 79 s 8 are each amended to read as follows:
     CONFORMING AMENDMENT. (1) The legislative body of any municipality may impose an excise tax on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW. The rate of tax shall not exceed the lesser of two percent or a rate that, when combined with all other taxes imposed upon sales of lodging within the municipality under this chapter and chapters 36.100, 67.40, 82.08, and 82.14 RCW, equals twelve percent. A tax under this chapter shall not be imposed in increments smaller than tenths of a percent.
     (2) Notwithstanding subsection (1) of this section:
     (a) If a municipality was authorized to impose taxes under this chapter or RCW 67.40.100 or both with a total rate exceeding four percent before July 27, 1997, such total authorization shall continue through January 31, 1999, and thereafter the municipality may impose a tax under this section at a rate not exceeding the rate actually imposed by the municipality on January 31, 1999.
     (b) If a city or town, other than a municipality imposing a tax under (a) of this subsection, is located in a county that imposed taxes under this chapter with a total rate of four percent or more on January 1, 1997, the city or town may not impose a tax under this section.
     (c) If a city has a population of four hundred thousand or more and is located in a county with a population of one million or more, the rate of tax imposed under this chapter by the city shall not exceed the lesser of four percent or a rate that, when combined with all other taxes imposed upon sales of lodging in the municipality under this chapter and chapters 36.100, 67.40, 82.08, and 82.14 RCW, equals fifteen and two-tenths percent.
     (d) If a municipality was authorized to impose taxes under this chapter or RCW 67.40.100, or both, at a rate equal to six percent before January 1, 1998, the municipality may impose a tax under this section at a rate not exceeding the rate actually imposed by the municipality on January 1, 1998.
     (3) Any county ordinance or resolution adopted under this section shall contain a provision allowing a credit against the county tax for the full amount of any city or town tax imposed under this section upon the same taxable event.
     (4) In determining the combined rate of tax for the purpose of a combined tax rate limitation under this section, the tax rate under RCW 82.08.020(4) is not included.

Sec. 22   RCW 82.14.410 and 2001 c 6 s 1 are each amended to read as follows:
     CONFORMING AMENDMENT. (1) A local sales and use tax change adopted after December 1, 2000, must provide an exemption for those sales of lodging for which, but for the exemption, the total sales tax rate imposed on sales of lodging would exceed the greater of:
     (a) Twelve percent; or
     (b) The total sales tax rate that would have applied to the sale of lodging if the sale were made on December 1, 2000.
     (2) For the purposes of this section:
     (a) "Local sales and use tax change" is defined as provided in RCW 82.14.055.
     (b) "Sale of lodging" means the sale of or charge made for the furnishing of lodging and all other services by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property.
     (c) "Total sales tax rate" means the combined rates of all state and local taxes imposed under this chapter and chapters 36.100, 67.28, 67.40, and 82.08 RCW, and any other tax authorized after March 29, 2001, if the tax is in the nature of a sales tax collected from the buyer, but excluding taxes imposed under RCW 81.104.170 before December 1, 2000, and taxes imposed under RCW 82.08.020(4).

NEW SECTION.  Sec. 23   REFERRAL TO VOTERS FOR APPROVAL--BALLOT TITLE. (1) The secretary of state shall submit sections 1 through 7 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 of the state Constitution and the laws adopted to facilitate its operation.
     (2) Pursuant to RCW 29A.72.050, the statement of subject and concise description for the ballot title shall be as follows:

"The legislature has passed House Bill . . . [this act], concerning funding for health care and the working families' tax rebate. This bill would fund working families' tax rebate and health care trust for basic health plan, nursing homes, hospitals, and health services through a temporary 0.3% sales tax increase expiring December 31, 2012."

NEW SECTION.  Sec. 24   This act takes effect upon approval of sections 1 through 7 of this act by the voters by December 15, 2009, as provided in section 23 of this act. If sections 1 through 7 of this act are not approved by the voters by December 15, 2009, as provided in section 23 of this act, this act is null and void in its entirety.

NEW SECTION.  Sec. 25   As used in this act, captions constitute no part of the law.

NEW SECTION.  Sec. 26   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.