AN ACT Relating to excise taxation of vehicles used for short-term rental; amending RCW 82.08.020, 81.100.060, and 81.104.160; reenacting and amending RCW 35.58.273; adding new sections to chapter 46.04 RCW; adding new sections to chapter 82.08 RCW; adding a new section to chapter 82.14 RCW; adding a new section to chapter 46.16 RCW; adding a new section to chapter 46.87 RCW; adding a new section to chapter 82.44 RCW; creating a new section; prescribing penalties; providing effective dates; and declaring an emergency.

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

NEW SECTION. Sec. 1. A new section is added to chapter 46.04 RCW to read as follows:

(1) "Rental car" means a passenger car, as defined in RCW 46.04.382, that is used solely by a rental car business for rental to others, without a driver provided by the rental car business, for periods of not more than thirty consecutive days.

(2) "Rental car" does not include:

(a) Vehicles rented or loaned to customers by automotive repair businesses while the customer's vehicle is under repair;

(b) Vehicles licensed and operated as taxicabs.

NEW SECTION. Sec. 2. A new section is added to chapter 82.08 RCW to read as follows:

For purposes of this chapter, "retail car rental" means renting a rental car, as defined in section 1 of this act, to a consumer.

NEW SECTION. Sec. 3. A new section is added to chapter 82.14 RCW to read as follows:

The legislative authority of any county may impose a sales and use tax, in addition to the tax authorized by RCW 82.14.030, upon retail car rentals within the county that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of tax shall be one percent of the selling price in the case of a sales tax or rental value of the vehicle in the case of a use tax. Proceeds of the tax shall not be used to subsidize any professional sports team and shall be used solely for the following purposes:

(1) Acquiring, constructing, maintaining, or operating public sports stadium facilities;

(2) Engineering, planning, financial, legal, or professional services incidental to public sports stadium facilities; or

(3) Youth or amateur sport activities or facilities.

NEW SECTION. Sec. 4. The legislature intends to exempt rental cars from state and local motor vehicle excise taxes, and to impose additional sales and use taxes in lieu thereof. These additional sales and use taxes are intended to provide as much revenue to the funds currently receiving motor vehicle excise tax revenue, including the transportation funds and the general fund, as each fund would have received if the motor vehicle excise tax exemptions had not been enacted. Revenues from these additional sales and use taxes are intended to be distributed in the same manner as the motor vehicle excise tax revenues they replace.

NEW SECTION. Sec. 5. A new section is added to chapter 46.04 RCW to read as follows:

"Rental car business" means a person engaging within this state in the business of renting rental cars, as determined under rules of the department of licensing.

NEW SECTION. Sec. 6. A new section is added to chapter 46.16 RCW to read as follows:

Rental cars shall be registered and licensed as provided in chapter 46.87 RCW.

NEW SECTION. Sec. 7. A new section is added to chapter 46.87 RCW to read as follows:

(1) Rental car businesses must register with the department of licensing. This registration must be renewed annually by the rental car business.

(2) Rental car businesses must obtain a certificate of ownership and indicate that the vehicle is a rental car. Registration must be obtained for all rental cars and shall be valid for the period in which the rental car is part of an authorized business up to a maximum of twelve months.

(3) In addition to all other fees prescribed for the registration of vehicles under chapter 46.16 RCW, the department shall collect a fee of five dollars per registration for the administration of the program and a vehicle transaction fee as authorized in RCW 46.87.130 to be deposited to the motor vehicle fund.

(4) Use of rental cars is restricted to the rental customer unless otherwise provided by rule.

(5) The department will issue rental car license plates to businesses authorized under this section. A rental car business shall pay a fee of ten dollars for each set of rental car license plates as defined in RCW 46.87.090. Rental cars no longer eligible for use of the rental plates will be considered unlicensed vehicles and must be registered and pay the required motor vehicle excise taxes and registration fees prior to operation on public roads of this state.

(6) The department may authorize rental car businesses to issue temporary authorization permits as defined in RCW 46.87.080.

(7) The department may suspend or cancel the exemptions, benefits, or privileges granted under this section to any person or business firm who violates the laws of this state relating to the operation or registration of vehicles or rules lawfully adopted thereunder. The department may initiate and conduct audits, investigations, and enforcement actions as may be reasonably necessary for administering this section.

(8) Except as provided in this section or by rule adopted pursuant to this section, the transfer or use of the rental plates is a traffic infraction subject to a fine not to exceed five hundred dollars. Any law enforcement agency that determines that a special license plate has not been used in conformance with this section will confiscate the license plates and return them to the department for nullification along with full details of the reasons for confiscation.

(9) The department shall adopt such rules as may be necessary to administer and enforce the provisions of this section.

NEW SECTION. Sec. 8. A new section is added to chapter 82.44 RCW to read as follows:

Rental cars as defined in section 1 of this act are exempt from the taxes imposed in RCW 82.44.020 (1) and (2).

Sec. 9. RCW 82.08.020 and 1985 c 32 s 1 are each amended to read as follows:

(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. Ninety-one percent of the revenue collected under this subsection shall be deposited and distributed in the same manner as motor vehicle excise tax revenue collected under RCW 82.44.020(1). Nine percent of the revenue collected under this subsection shall be deposited in the transportation fund and distributed in the same manner as motor vehicle excise tax revenue collected under RCW 82.44.020(2).

(3) The ((~~tax~~)) taxes imposed under this chapter shall apply to successive retail sales of the same property.

((~~(3)~~)) (4) The rates provided in this section ((~~applies~~)) apply to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

NEW SECTION. Sec. 10. A new section is added to chapter 82.08 RCW to read as follows:

Before January 1, 1994, and January 1 of each odd-numbered year thereafter:

The department of licensing, with the assistance of the department of revenue, shall provide the office of financial management and the fiscal committees of the legislature with an updated estimate of the amount of revenue attributable to the taxes imposed in RCW 82.08.020(2), and the amount of revenue not collected as a result of section 8 of this act.

Sec. 11. RCW 35.58.273 and 1991 c 339 s 29 and 1991 c 309 s 1 are each reenacted and amended to read as follows:

(1) Through June 30, 1992, any municipality, as defined in this subsection, is authorized to levy and collect a special excise tax not exceeding .7824 percent and beginning July 1, 1992, .725 percent on the value, as determined under chapter 82.44 RCW, of every motor vehicle owned by a resident of such municipality for the privilege of using such motor vehicle provided that in no event shall the tax be less than one dollar and, subject to RCW 82.44.150 (3) and (4), the amount of such tax shall be credited against the amount of the excise tax levied by the state under RCW 82.44.020(1). As used in this subsection, the term "municipality" means a municipality that is located within (a) each county with a population of two hundred ten thousand or more and (b) each county with a population of from one hundred twenty-five thousand to less than two hundred ten thousand except for those counties that do not border a county with a population as described under subsection (a) of this subsection.

(2) Through June 30, 1992, any other municipality is authorized to levy and collect a special excise tax not exceeding .815 percent, and beginning July 1, 1992, .725 percent on the value, as determined under chapter 82.44 RCW, of every motor vehicle owned by a resident of such municipality for the privilege of using such motor vehicle provided that in no event shall the tax be less than one dollar and, subject to RCW 82.44.150 (3) and (4), the amount of such tax shall be credited against the amount of the excise tax levied by the state under RCW 82.44.020(1). Before utilization of any excise tax moneys collected under authorization of this section for acquisition of right of way or construction of a mass transit facility on a separate right of way the municipality shall adopt rules affording the public an opportunity for "corridor public hearings" and "design public hearings" as herein defined, which rule shall provide in detail the procedures necessary for public participation in the following instances: (a) prior to adoption of location and design plans having a substantial social, economic or environmental effect upon the locality upon which they are to be constructed or (b) on such mass rapid transit systems operating on a separate right of way whenever a substantial change is proposed relating to location or design in the adopted plan. In adopting rules the municipality shall adhere to the provisions of the Administrative Procedure Act.

(3) A "corridor public hearing" is a public hearing that: (a) is held before the municipality is committed to a specific mass transit route proposal, and before a route location is established; (b) is held to afford an opportunity for participation by those interested in the determination of the need for, and the location of, the mass rapid transit system; (c) provides a public forum that affords a full opportunity for presenting views on the mass rapid transit system route location, and the social, economic and environmental effects on that location and alternate locations: PROVIDED, That such hearing shall not be deemed to be necessary before adoption of an overall mass rapid transit system plan by a vote of the electorate of the municipality.

(4) A "design public hearing" is a public hearing that: (a) is held after the location is established but before the design is adopted; and (b) is held to afford an opportunity for participation by those interested in the determination of major design features of the mass rapid transit system; and (c) provides a public forum to afford a full opportunity for presenting views on the mass rapid transit system design, and the social, economic, environmental effects of that design and alternate designs.

(5) A municipality imposing a tax under subsection (1) or (2) of this section may also impose a sales and use tax, in addition to the tax authorized by RCW 82.14.030, upon retail car rentals within the municipality that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of tax shall bear the same ratio to the rate imposed under RCW 82.08.020(2) as the excise tax rate imposed under subsection (1) of this section bears to the excise tax rate imposed under RCW 82.44.020 (1) and (2). The base of the tax shall be the selling price in the case of a sales tax or the rental value of the vehicle used in the case of a use tax. The tax imposed under this section shall be deducted from the amount of tax otherwise due under RCW 82.08.020(2). The revenue collected under this subsection shall be distributed in the same manner as special excise taxes under subsections (1) and (2) of this section.

Sec. 12. RCW 81.100.060 and 1991 c 363 s 154 are each amended to read as follows:

A county with a population of one million or more and a county with a population of from two hundred ten thousand to less than one million that is adjoining a county with a population of one million or more, having within their boundaries existing or planned high occupancy vehicle lanes on the state highway system may, with voter approval, impose a local surcharge of not more than fifteen percent on the state motor vehicle excise tax paid under RCW 82.44.020(1) on vehicles registered to a person residing within the county and on the state sales and use taxes paid under the rate in RCW 82.08.020(2) on retail car rentals within the county. No surcharge may be imposed on vehicles licensed under RCW 46.16.070 except vehicles with an unladen weight of six thousand pounds or less, RCW 46.16.079, 46.16.080, 46.16.085, or 46.16.090.

Counties imposing a tax under this section shall contract, before the effective date of the resolution or ordinance imposing a surcharge, administration and collection to the state department of licensing, and department of revenue, as appropriate, which shall deduct an amount, as provided by contract, for administration and collection expenses incurred by the department. All administrative provisions in chapters 82.03, 82.32, and 82.44 RCW shall, insofar as they are applicable to state motor vehicle excise taxes, be applicable to surcharges imposed under this section. All administrative provisions in chapters 82.03, 82.08, 82.12, and 82.32 RCW shall, insofar as they are applicable to state sales and use taxes, be applicable to surcharges imposed under this section.

If the tax authorized in RCW 81.100.030 is also imposed by the county, the total proceeds from ((~~both~~)) tax sources imposed under this section and RCW 81.100.030 each year shall not exceed the maximum amount which could be collected under this section.

Sec. 13. RCW 81.104.160 and 1991 c 318 s 12 are each amended to read as follows:

(1) Any city that operates a transit system, county transportation authority, metropolitan municipal corporation, or public transportation benefit area, solely for the purpose of providing high capacity transportation service may submit an authorizing proposition to the voters, and if approved, may levy and collect an excise tax, at a rate approved by the voters, but not exceeding eighty one-hundredths of one percent on the value, under chapter 82.44 RCW, of every motor vehicle owned by a resident of such city, county transportation authority, metropolitan municipal corporation, or public transportation benefit area. In any county imposing a motor vehicle excise tax surcharge pursuant to RCW 81.100.060, the maximum tax rate under this section shall be reduced to a rate equal to eighty one-hundredths of one percent on the value less the equivalent motor vehicle excise tax rate of the surcharge imposed pursuant to RCW 81.100.060. This rate shall not apply to vehicles licensed under RCW 46.16.070 except vehicles with an unladen weight of six thousand pounds or less, RCW 46.16.079, 46.16.080, 46.16.085, or 46.16.090.

(2) An agency imposing a tax under subsection (1) of this section may also impose a sales and use tax solely for the purpose of providing high capacity transportation service, in addition to the tax authorized by RCW 82.14.030, upon retail car rentals within the agency's jurisdiction that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of tax shall bear the same ratio to the rate imposed under RCW 82.08.020(2) as the excise tax rate imposed under subsection (1) of this section bears to the excise tax rate imposed under RCW 82.44.020 (1) and (2). The base of the tax shall be the selling price in the case of a sales tax or the rental value of the vehicle used in the case of a use tax. The revenue collected under this subsection shall be used in the same manner as excise taxes under subsection (1) of this section.

NEW SECTION. Sec. 14. (1) Sections 1 through 3 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 shall take effect June 1, 1992.

(2) Sections 4 through 13 of this act shall take effect January 1, 1993.