BP BHEAD INT S

AN ACT Relating to correcting an error in the 1993 health care reform act; amending RCW 82.04.431; creating new sections; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. The 1993 health care reform act, chapter 492, Laws of 1993, established a business and occupation tax on nonprofit and public hospitals to finance, in part, health care coverage for the citizens of the state. However, by inadvertent error, the health care reform act failed to address an existing deduction from the business and occupation tax for governmental payments to nonprofit organizations for health and social welfare services, such as federal medicaid and medicare payments. Failure to correct this error will result in revenues significantly less than those assumed by the legislature in adopting the health care reform act and making appropriations from the health services account. It is therefore the intent of this act to clarify that revenues received by nonprofit and public hospitals from governmental entities for health and social services are subject to the business and occupation tax as intended by chapter 492, Laws of 1993.

Sec. 2. RCW 82.04.431 and 1986 c 261 s 6 are each amended to read as follows:

(1) For the purposes of RCW 82.04.4297, the term "health or social welfare organization" means an organization, including any community action council, which renders health or social welfare services as defined in subsection (2) of this section, which is a not-for-profit corporation under chapter 24.03 RCW and which is managed by a governing board of not less than eight individuals none of whom is a paid employee of the organization or which is a corporation sole under chapter 24.12 RCW. Health or social welfare organization does not include a corporation providing professional services as authorized in chapter 18.100 RCW, nor does it include any 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. In addition a corporation in order to be exempt under RCW 82.04.4297 shall satisfy the following conditions:

(a) No part of its income may be paid directly or indirectly to its members, stockholders, officers, directors, or trustees except in the form of services rendered by the corporation in accordance with its purposes and bylaws;

(b) Salary or compensation paid to its officers and executives must be only for actual services rendered, and at levels comparable to the salary or compensation of like positions within the public service of the state;

(c) Assets of the corporation must be irrevocably dedicated to the activities for which the exemption is granted and, on the liquidation, dissolution, or abandonment by the corporation, may not inure directly or indirectly to the benefit of any member or individual except a nonprofit organization, association, or corporation which also would be entitled to the exemption;

(d) The corporation must be duly licensed or certified where licensing or certification is required by law or regulation;

(e) The amounts received qualifying for exemption must be used for the activities for which the exemption is granted;

(f) Services must be available regardless of race, color, national origin, or ancestry; and

(g) The director of revenue shall have access to its books in order to determine whether the corporation is exempt from taxes within the intent of RCW 82.04.4297 and this section.

(2) The term "health or social welfare services" includes and is limited to:

(a) Mental health, drug, or alcoholism counseling or treatment;

(b) Family counseling;

(d) Therapeutic, diagnostic, rehabilitative, or restorative services for the care of the sick, aged, or physically, developmentally, or emotionally-disabled individuals;

(e) Activities which are for the purpose of preventing or ameliorating juvenile delinquency or child abuse, including recreational activities for those purposes;

(f) Care of orphans or foster children;

(g) Day care of children;

(h) Employment development, training, and placement;

(i) Legal services to the indigent;

(j) Weatherization assistance or minor home repair for low-income homeowners or renters;

(k) Assistance to low-income homeowners and renters to offset the cost of home heating energy, through direct benefits to eligible households or to fuel vendors on behalf of eligible households; and

(l) Community services to low-income individuals, families, and groups, which are designed to have a measurable and potentially major impact on causes of poverty in communities of the state.

NEW SECTION. Sec. 3. If this act is not implemented on April 1, 1994, the appropriations from the health services account for the 1993-1995 fiscal biennium, as provided in chapter 24, Laws of 1993 sp. sess., as amended, shall be reduced in the manner provided in this section. The following are the maximum amounts that may be expended in the 1993-1995 fiscal biennium from the health services account for the specified programs:

Washington state health care authority............... $ 122,092,000

Department of social and health services............. $...................................... 58,348,000

Health services commission........................... $ 3,580,000

Office of financial management....................... $ 224,000

Office of the attorney general....................... $ 156,000

Department of health................................. $ 29,133,000

Legislative budget committee......................... $ 505,000

Office of the administrator for the courts........... $ 105,000

Higher education coordinating board.................. $.................................. 1,994,000

University of Washington............................. $ 5,185,000

Washington State University.......................... $ 1,252,000

Eastern Washington University........................ $ 179,000

Central Washington University........................ $ 125,000

Western Washington University........................ $ 179,000

NEW SECTION. Sec. 4. 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 shall take effect April 1, 1994.