S-1737.1  _______________________________________________

                         SENATE BILL 5906

          _______________________________________________

State of Washington      55th Legislature     1997 Regular Session

By Senators Swanson, Fraser, West and Oke

Read first time 02/19/97.  Referred to Committee on Ways & Means.

Dedicating revenue to K through 12 education through state lottery revenues.

    AN ACT Relating to dedicating revenue to K through 12 education through state lottery revenues; amending RCW 67.70.040, 67.70.190, 67.70.240, and 43.84.092; and creating a new section.

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

    Sec. 1.  RCW 67.70.040 and 1994 c 218 s 4 are each amended to read as follows:

    The commission shall have the power, and it shall be its duty:

    (1) To promulgate such rules governing the establishment and operation of a state lottery as it deems necessary and desirable in order that such a lottery be initiated at the earliest feasible and practicable time, and in order that such lottery produce the maximum amount of net revenues for the state consonant with the dignity of the state and the general welfare of the people.  Such rules shall include, but shall not be limited to, the following:

    (a) The type of lottery to be conducted which may include the selling of tickets or shares.  The use of electronic or mechanical devices or video terminals which allow for individual play against such devices or terminals shall be prohibited.  Approval of the legislature shall be required before entering any agreement with other state lotteries to conduct shared games;

    (b) The price, or prices, of tickets or shares in the lottery;

    (c) The numbers and sizes of the prizes on the winning tickets or shares;

    (d) The manner of selecting the winning tickets or shares;

    (e) The manner and time of payment of prizes to the holder of winning tickets or shares which, at the director's option, may be paid in lump sum amounts or installments over a period of years;

    (f) The frequency of the drawings or selections of winning tickets or shares.  Approval of the legislature is required before conducting any on-line game in which the drawing or selection of winning tickets occurs more frequently than once every twenty-four hours;

    (g) Without limit as to number, the type or types of locations at which tickets or shares may be sold;

    (h) The method to be used in selling tickets or shares;

    (i) The licensing of agents to sell or distribute tickets or shares, except that a person under the age of eighteen shall not be licensed as an agent;

    (j) The manner and amount of compensation, if any, to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public;

    (k) The apportionment of the total revenues accruing from the sale of lottery tickets or shares and from all other sources among:  (i) The payment of prizes to the holders of winning tickets or shares, which shall not be less than forty-five percent of the gross annual revenue from such lottery, (ii) transfers to the lottery administrative account created by RCW 67.70.260, and (iii) transfer to the ((state's general fund)) education account.  Transfers to the ((state general fund)) education account shall be made in compliance with RCW 43.01.050;

    (l) Such other matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.

    (2) To ensure that in each place authorized to sell lottery tickets or shares, on the back of the ticket or share, and in any advertising or promotion there shall be conspicuously displayed an estimate of the probability of purchasing a winning ticket.

    (3) To amend, repeal, or supplement any such rules from time to time as it deems necessary or desirable.

    (4) To advise and make recommendations to the director for the operation and administration of the lottery.

    Sec. 2.  RCW 67.70.190 and 1994 c 218 s 5 are each amended to read as follows:

(1) Unclaimed prizes shall be retained in the state lottery account for the person entitled thereto for one hundred eighty days after the drawing in which the prize is won, or after the official end of the game for instant prizes.  If no claim is made for the prize within this time, the prize shall be ((retained in the state lottery fund for further use as prizes)) used as provided in subsection (2) of this section, and all rights to the prize shall be extinguished.

(2) Moneys from unclaimed prizes shall be used as follows:

(a) Fifty percent of the moneys shall be deposited quarterly in the education account.

(b) The remainder of the moneys shall be retained in the state lottery account for further use as prizes.

    Sec. 3.  RCW 67.70.240 and 1995 3rd sp.s. c 1 s 105 are each amended to read as follows:

    The moneys in the state lottery account shall be used only:  (1) For the payment of prizes to the holders of winning lottery tickets or shares; (2) for purposes of making deposits into the reserve account created by RCW 67.70.250 and into the lottery administrative account created by RCW 67.70.260; (3) for purposes of making deposits into the ((state's general fund; (4) for purposes of making deposits into the housing trust fund under the provisions of section 7 of this 1987 act; (5))) education account; (4) for distribution to a county for the purpose of paying the principal and interest payments on bonds issued by the county to construct a baseball stadium, as defined in RCW 82.14.0485, including reasonably necessary preconstruction costs; (((6))) (5) for the purchase and promotion of lottery games and game-related services; and (((7))) (6) for the payment of agent compensation.  Three million dollars shall be distributed under subsection (((5))) (4) of this section during calendar year 1996.  During subsequent years, such distributions shall equal the prior year's distributions increased by four percent.  Distributions under subsection (((5))) (4) of this section shall cease when the bonds issued for the construction of the baseball stadium are retired, but not more than twenty years after the tax under RCW 82.14.0485 is first imposed.

    The office of financial management shall require the allotment of all expenses paid from the account and shall report to the ways and means committees of the senate and house of representatives any changes in the allotments.

NEW SECTION. Sec. 4.  The education account is created in the state treasury.  All receipts from the state lottery directed to this account shall be deposited into the account.  Moneys in the account may be spent only after appropriation for the support of the common schools.

    Sec. 5.  RCW 43.84.092 and 1996 c 262 s 4 are each amended to read as follows:

    (1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

    (2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990.  The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act.  Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation.  The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act.  The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection.  Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.

    (3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies.  The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions.  Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.

    (4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account.  The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:

    (a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period:  The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the Eastern Washington University capital projects account, the education account, the education construction fund, the emergency reserve fund, the federal forest revolving account, the health services account, the public health services account, the health system capacity account, the personal health services account, the highway infrastructure account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the perpetual surveillance and maintenance account, the public employees' retirement system plan I account, the public employees' retirement system plan II account, the Puyallup tribal settlement account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the teachers' retirement system plan I account, the teachers' retirement system plan II account, the transportation infrastructure account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' relief and pension principal account, the volunteer fire fighters' relief and pension administrative account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan I retirement account, the Washington law enforcement officers' and fire fighters' system plan II retirement account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account.  Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts.  All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

    (b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period:  The aeronautics account, the aircraft search and rescue account, the central Puget Sound public transportation account, the city hardship assistance account, the county arterial preservation account, the department of licensing services account, the economic development account, the essential rail assistance account, the essential rail banking account, the ferry bond retirement fund, the gasohol exemption holding account, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway construction stabilization account, the highway safety account, the marine operating fund, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the small city account, the special category C account, the state patrol highway account, the transfer relief account, the transportation capital facilities account, the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation revolving loan account, and the urban arterial trust account.

    (5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

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