H-2469

AN ACT Relating to commercial activity by government agencies; adding a new section to chapter 43.01 RCW; creating new sections; and providing an expiration date.

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

NEW SECTION. Sec. 1. The legislature finds that private enterprise is essential to the health, welfare, and prosperity of Washington state citizens. When government engages in commercial activities and provides goods and services to private citizens, private businesses are unable to compete with the prices offered by government because the true costs of the goods and services are not reflected in the price. This sometimes results in businesses failing or reducing the number of their employees.

The legislature also recognizes that it has been ten years since legislation was enacted governing commercial activities by institutions of higher education. No review of this legislation has been conducted to determine whether it is achieving its intended purpose.

In addition, the legislature finds that there is no entity that is designated as a source to which private enterprise may file complaints against unfair competition by a government agency or institution of higher education.

NEW SECTION. Sec. 2. (1) The joint legislative audit and review committee shall conduct a performance audit of commercial activities performed by institutions of higher education pursuant to chapter 28B.63 RCW. The audit shall include, at a minimum, a review of the policies adopted by the institutions of higher education, the criteria used in developing these policies, mechanisms in place for reviewing commercial activities, and the procedures for responding to complaints by private businesses. The committee shall seek input from private sector businesses in conducting the audit. As part of the audit process, the committee shall examine the extent to which goods, services, or facilities are provided to people other than faculty, staff, students, patients, or their guests, and how the costs of these goods, services, and facilities compare to the costs of comparable goods, services, and facilities from the private sector in the general vicinity.

(2) In conducting the performance audit under subsection (1) of this section, the joint legislative audit and review committee shall review the regional universities, the University of Washington and its branch campuses, Washington State University and its branch campuses, The Evergreen State College, and a sample of community and technical colleges within the state.

NEW SECTION. Sec. 3. A new section is added to chapter 43.01 RCW to read as follows:

(1) By December 1, 1997, the office of financial management shall develop a methodology for reflecting the fully allocated costs of conducting a commercial activity by a state agency or institution of higher education. The methodology shall include, but is not limited to: Employee salaries and benefits; capital outlays, including supplies and equipment; administrative and overhead expenditures; contract administration and evaluation; and taxes that would be received by state and local governments from private providers of goods, services, and facilities.

(2) By January 1, 1998, each state agency or institution of higher education must determine the fully allocated costs of commercial activities that it conducts in which it sells or rents goods, services, or facilities to the general public. An agency must use the methodology developed by the office of financial management under subsection (1) of this section, or may develop its own methodology. Copies of the breakdown of fully allocated costs for commercial activities, as well as the methodology used, shall be available for public inspection and copying.

(3) The office of financial management shall prepare a report by July 1, 1998, on the implementation of this section by state agencies, institutions of higher education, and related boards. The report shall be submitted to the members of the government administration committee and the appropriations committee of the house of representatives, and to the members of the government operations committee and the ways and means committee of the senate.

NEW SECTION. Sec. 4. (1) A task force on commercial activities by government is established. The task force shall consist of the following twelve members: (a) Two members of the house of representatives, one member from each major political caucus, appointed by the speaker of the house of representatives; (b) two members of the senate, one member from each major political caucus, appointed by the president of the senate; (c) four government representatives, one member representing institutions of higher education appointed by the governor, one member representing state agencies appointed by the governor, one member representing local government appointed by the governor, and the director of the office of financial management or the director's designee; and (d) four members from private enterprise who are owners or officers of small business, appointed by the governor. The governor shall appoint one of the small business members to serve as the chair of the task force. The task force may contract for consultant or other services subject to available funds.

(2) The task force shall study and develop recommendations pertaining to commercial activities by government, including but not limited to: (a) The development of an effective mechanism for private businesses to file and resolve complaints of unfair competition by government; and (b) minimizing the impact of commercial activities on small businesses by establishing criteria as to when commercial activities can be engaged in by government. The task force shall include as part of its study the operation of central stores by the department of general administration, including the sale of surplus items, and the provision of emergency medical services by local governments.

(3) The task force shall report its findings and recommendations to the appropriate legislative committees by December 1, 1998.

(4) This section expires January 1, 1999.