BP BHEAD INT H

AN ACT Relating to city and town annexations under the petition/election method of annexation; amending RCW 66.08.210, 82.14.210, and 82.08.170; adding a new section to chapter 35.13 RCW; and adding a new section to chapter 35A.14 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 35.13 RCW to read as follows:

(1) If a city or town council rejects, or geographically modifies, a proposed annexation to the city or town that is presented by petition under RCW 35.13.020, and the area proposed to be annexed constitutes all of the influence area designated for the city or town, the city or town shall not receive the following distributions of money from the following funds or accounts:

(a) The municipal sales and use tax equalization account authorized under RCW 82.14.210;

(b) The liquor revolving fund authorized under RCW 66.08.190 and 66.08.210; and

Moneys that would have been distributed to such a city or town from these funds or accounts shall be distributed to the county or counties in which the influence area is located and the county or counties shall expend these moneys for criminal justice purposes, as defined in RCW 82.14.320, targeted for the influence area.

A city or town that rejects or geographically modifies the proposed annexation shall receive distributions from these funds or accounts, and the county or counties in which the influence area is located shall no longer receive what otherwise would have been the city's or town's distributions, if at a later date the city or town annexes all of its influence area. A city or town shall continue receiving distributions from these funds and accounts if the city accepts the proposed annexation, but the annexation is rejected by a boundary review board or other annexation review board or if the ballot proposition authorizing the annexation is not approved by voters.

(2) As used in this section, "influence area" means the following areas within the urban growth area designated under RCW 36.70A.110 within which a city or town is located: (a) If only one city or town is located within the urban growth area, then all of the urban growth area outside of the city or town; or (b) if two or more cities or towns are located within the same urban growth area, then any portion of that urban growth area outside of a city or town that is formally designated as a joint planning area for the city or town and county, a potential annexation area for the city or town, an existing or future service area for the city or town, or other area of influence for the city or town.

NEW SECTION. Sec. 2. A new section is added to chapter 35A.14 RCW to read as follows:

Code cities are subject to section 1 of this act.

Sec. 3. RCW 66.08.210 and 1979 c 151 s 168 are each amended to read as follows:

With respect to the forty percent share coming to the incorporated cities and towns, the computations for distribution shall be made by the state agency responsible for collecting the same as follows:

The share coming to each eligible city or town shall be determined by a division among the eligible cities and towns within the state ratably on the basis of population as last determined by the office of financial management: ((~~AND~~)) PROVIDED, That no city or town in which the sale of liquor is forbidden as the result of an election shall be entitled to any share in such distribution. However, as provided in sections 1 and 2 of this act, distributions that otherwise would be made to a city or town shall be made to the county or counties in which the influence area of the city or town is located. If the influence area is located in more than one county, the city's or town's distribution shall be made to each of these counties in proportion to the percentage of the population in the influence area residing in that county. The department of community, trade, and economic development shall notify the state treasurer if a city or town becomes ineligible under section 1 or 2 of this act to receive a share of such distributions and, if the influence area is located in more than one county, shall indicate the percentage of the population of the influence area residing in each county.

Sec. 4. RCW 82.14.210 and 1991 sp.s. c 13 s 16 are each amended to read as follows:

There is created in the state treasury a special account to be known as the "municipal sales and use tax equalization account." Into this account shall be placed such revenues as are provided under RCW 82.44.110(1)(e). Funds in this account shall be allocated by the state treasurer according to the following procedure:

(1) Prior to January 1st of each year the department of revenue shall determine the total and the per capita levels of revenues for each city and the state-wide weighted average per capita level of revenues for all cities imposing the sales and use tax authorized under RCW 82.14.030(1) for the previous calendar year.

(2) At such times as distributions are made under RCW 82.44.150, the state treasurer shall apportion to each city not imposing the sales and use tax under RCW 82.14.030(2) an amount from the municipal sales and use tax equalization account equal to the amount distributed to the city under RCW 82.44.155, multiplied by thirty-five sixty-fifths.

(3) Subsequent to the distributions under subsection (2) of this section, and at such times as distributions are made under RCW 82.44.150, the state treasurer shall apportion to each city imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than seventy percent of the state-wide weighted average per capita level of revenues for all cities as determined by the department of revenue under subsection (1) of this section, an amount from the municipal sales and use tax equalization account sufficient, when added to the per capita level of revenues received the previous calendar year by the city, to equal seventy percent of the state-wide weighted average per capita level of revenues for all cities determined under subsection (1) of this section, subject to reduction under subsection (6) of this section.

(4) Subsequent to the distributions under subsection (3) of this section, and at such times as distributions are made under RCW 82.44.150, the state treasurer shall apportion to each city imposing the sales and use tax under RCW 82.14.030(2) at the maximum rate and receiving a distribution under subsection (3) of this section, a third distribution from the municipal sales and use tax equalization account. The distribution to each qualifying city shall be equal to the distribution to the city under subsection (3) of this section, subject to the reduction under subsection (6) of this section. To qualify for the distributions under this subsection, the city must impose the tax under RCW 82.14.030(2) for the entire calendar year. Cities imposing the tax for less than the full year shall qualify for prorated allocations under this subsection proportionate to the number of months of the year during which the tax is imposed.

(5) For a city with an official incorporation date after January 1, 1990, municipal sales and use tax equalization distributions shall be made according to the procedures in this subsection. Municipal sales and use tax equalization distributions to eligible new cities shall be made at the same time as distributions are made under subsections (3) and (4) of this section. The department of revenue shall follow the estimating procedures outlined in this subsection until the new city has received a full year's worth of revenues under RCW 82.14.030(1) as of the January municipal sales and use tax equalization distribution.

(a) Whether a newly incorporated city determined to receive funds under this subsection receives its first equalization payment at the January, April, July, or October municipal sales and use tax equalization distribution shall depend on the date the city first imposes the tax authorized under RCW 82.14.030(1).

(i) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of January 1st shall be eligible to receive funds under this subsection beginning with the April municipal sales and use tax equalization distribution of that year.

(ii) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of February 1st, March 1st, or April 1st shall be eligible to receive funds under this subsection beginning with the July municipal sales and use tax equalization distribution of that year.

(iii) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of May 1st, June 1st, or July 1st shall be eligible to receive funds under this subsection beginning with the October municipal sales and use tax equalization distribution of that year.

(iv) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of August 1st, September 1st, or October 1st shall be eligible to receive funds under this subsection beginning with the January municipal sales and use tax equalization distribution of the next year.

(v) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of November 1st or December 1st shall be eligible to receive funds under this subsection beginning with the April municipal sales and use tax equalization distribution of the next year.

(b) For purposes of calculating the amount of funds the new city should receive under this subsection, the department of revenue shall:

(i) Estimate the per capita amount of revenues from the tax authorized under RCW 82.14.030(1) that the new city would have received had the city received revenues from the tax the entire calendar year;

(ii) Calculate the amount provided under subsection (3) of this section based on the per capita revenues determined under (b)(i) of this subsection;

(iii) Prorate the amount determined under (b)(ii) of this subsection by the number of months the tax authorized under RCW 82.14.030(1) is imposed.

(c) A new city imposing the tax under RCW 82.14.030(2) at the maximum rate and receiving a distribution calculated under (b) of this subsection shall receive another distribution from the municipal sales and use tax equalization account. This distribution shall be equal to the calculation made under (b)(ii) of this subsection, prorated by the number of months the city imposes the tax authorized under RCW 82.14.030(2) at the full rate.

(d) The department of revenue shall advise the state treasurer of the amounts calculated under (b) and (c) of this subsection and the state treasurer shall distribute these amounts to the new city from the municipal sales and use tax equalization account subject to the limitations imposed in subsection (6) of this section.

(e) Revenues estimated under this subsection shall not affect the calculation of the state-wide weighted average per capita level of revenues for all cities made under subsection (1) of this section.

(6) If inadequate revenues exist in the municipal sales and use tax equalization account to make the distributions under subsection (3), (4), or (5) of this section, then the distributions under subsections (3), (4), and (5) of this section shall be reduced ratably among the qualifying cities. At such time during the year as additional funds accrue to the municipal sales and use tax equalization account, additional distributions shall be made under subsections (3), (4), and (5) of this section to the cities.

(7) If the level of revenues in the municipal sales and use tax equalization account exceeds the amount necessary to make the distributions under subsections (2) through (5) of this section, then the additional revenues shall be apportioned among the several cities within the state ratably on the basis of population as last determined by the office of financial management: PROVIDED, That no such distribution shall be made to those cities receiving a distribution under subsection (2) of this section.

(8) However, as provided in sections 1 and 2 of this act, distributions that otherwise would be made to a city or town shall be made to the county or counties in which the influence area of the city or town is located. If the influence area is located in more than one county, the city's or town's distribution shall be made to each of these counties in proportion to the percentage of the population in the influence area residing in that county. The department of community, trade, and economic development shall notify the state treasurer if a city or town becomes ineligible under section 1 or 2 of this act to receive a share of such distributions and, if the influence area is located in more than one county, shall indicate the percentage of the population of the influence area residing in each county.

Sec. 5. RCW 82.08.170 and 1983 c 3 s 215 are each amended to read as follows:

On the first day of the months of January, April, July and October of each year, the state treasurer shall make the apportionment and distribution of all moneys in the liquor excise tax fund to the counties, cities and towns in the following proportions: Twenty percent of the moneys in said liquor excise tax fund shall be divided among and distributed to the counties of the state in accordance with the provisions of RCW 66.08.200; eighty percent of the moneys in said liquor excise tax fund shall be divided among and distributed to the cities and towns of the state in accordance with the provisions of RCW 66.08.210.

However, as provided in sections 1 and 2 of this act, distributions that otherwise would be made to a city or town shall be made to the county or counties in which the influence area of the city or town is located. If the influence area is located in more than one county, the city's or town's distribution shall be made to each of these counties in proportion to the percentage of the population in the influence area residing in that county. The department of community, trade, and economic development shall notify the state treasurer if a city or town becomes ineligible under section 1 or 2 of this act to receive a share of such distributions and, if the influence area is located in more than one county, shall indicate the percentage of the population of the influence area residing in each county.