5594-S2.E AMH EDHT H2636.1

5594-S2.E AMH EDHT H2636.1

E2SSB 5594 - H COMM AMD NOT ADOPTED 04/13/99

By Committee on Economic Development, Housing & Trade

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. The legislature finds that while Washington's economy is currently prospering, economic growth continues to be uneven, particularly as between metropolitan and rural areas. This has created in effect two Washingtons. One afflicted by inadequate infrastructure to support and attract investment, another suffering from congestion and soaring housing prices. In order to address these problems, the legislature intends to use resources strategically to build on our state's strengths while addressing threats to our prosperity.

PART I

HOUSING

NEW SECTION. Sec. 101. A new section is added to chapter 43.63A RCW to read as follows:

The department shall establish and administer a "one-stop clearinghouse" to coordinate state assistance for growers and nonprofit organizations in developing housing for agricultural employees. Growers, housing authorities, and nonprofit organizations shall have direct access to the one-stop clearinghouse. The department one-stop clearinghouse shall provide assistance on planning and design, building codes, temporary worker housing regulations, financing options, and management to growers and nonprofit organizations interested in farmworker construction. The department one-stop clearinghouse shall also provide educational materials and services to local government authorities on Washington state law concerning farmworker housing.

PART II

RURAL DEVELOPMENT COUNCIL

NEW SECTION. Sec. 201. A new section is added to chapter 43.31 RCW to read as follows:

(1) The rural development council executive committee and the department are authorized to establish a successor organization to the rural development council executive committee created under RCW 43.31.855. The purpose of the successor organization is, at least in part, to improve the delivery and accessibility of public and private resources for meeting the needs of rural communities in Washington.

(2) For purposes of this section, "successor organization" means a private nonprofit corporation created specifically to assume responsibility for administering funds provided by the federal government and other sources to carry out the purpose state in subsection (1) of this section. A successor organization must qualify as a tax-exempt nonprofit corporation under section 501(c) of the federal internal revenue code.

(3) This section expires June 30, 2002.

NEW SECTION. Sec. 202. A new section is added to chapter 43.31 RCW to read as follows:

(1) The executive committee and the department are authorized to take all steps reasonably necessary and proper to effect the orderly transition of the rural development council executive committee to the successor organization. This authorization includes, but is not necessarily limited to, the authority to:

(a) Transfer any equipment, records, other assets, or contracts for services to the successor organization under appropriate terms and conditions, including reasonable compensation for assets acquired with state funds;

(b) Assist in the establishment of a successor organization, including entering into contracts preparatory to the establishment of the organization; and

(c) Unless otherwise provided by agreement, assign to the successor organization any membership agreements, contracts, license, and other duties and obligations related to the rural development council.

(2) This section expires June 30, 2002.

Sec. 203. RCW 42.52.080 and 1994 c 154 s 108 are each amended to read as follows:

(1) No former state officer or state employee may, within a period of one year from the date of termination of state employment, accept employment or receive compensation from an employer if:

(a) The officer or employee, during the two years immediately preceding termination of state employment, was engaged in the negotiation or administration on behalf of the state or agency of one or more contracts with that employer and was in a position to make discretionary decisions affecting the outcome of such negotiation or the nature of such administration;

(b) Such a contract or contracts have a total value of more than ten thousand dollars; and

(c) The duties of the employment with the employer or the activities for which the compensation would be received include fulfilling or implementing, in whole or in part, the provisions of such a contract or contracts or include the supervision or control of actions taken to fulfill or implement, in whole or in part, the provisions of such a contract or contracts. This subsection shall not be construed to prohibit a state officer or state employee from accepting employment with a state employee organization.

(2) No person who has served as a state officer or state employee may, within a period of two years following the termination of state employment, have a direct or indirect beneficial interest in a contract or grant that was expressly authorized or funded by specific legislative or executive action in which the former state officer or state employee participated.

(3) No former state officer or state employee may accept an offer of employment or receive compensation from an employer if the officer or employee knows or has reason to believe that the offer of employment or compensation was intended, in whole or in part, directly or indirectly, to influence the officer or employee or as compensation or reward for the performance or nonperformance of a duty by the officer or employee during the course of state employment.

(4) No former state officer or state employee may accept an offer of employment or receive compensation from an employer if the circumstances would lead a reasonable person to believe the offer has been made, or compensation given, for the purpose of influencing the performance or nonperformance of duties by the officer or employee during the course of state employment.

(5) No former state officer or state employee may at any time subsequent to his or her state employment assist another person, whether or not for compensation, in any transaction involving the state in which the former state officer or state employee at any time participated during state employment. This subsection shall not be construed to prohibit any employee or officer of a state employee organization from rendering assistance to state officers or state employees in the course of employee organization business.

(6) As used in this section, "employer" means a person as defined in RCW 42.52.010 or any other entity or business that the person owns or in which the person has a controlling interest. For purposes of subsection (1) of this section, the term "employer" does not include a successor organization to the rural development council under chapter 43.31 RCW.

NEW SECTION. Sec. 204. A new section is added to chapter 43.31 RCW to read as follows:

Notwithstanding anything to the contrary in chapter 41.06 RCW or any other provision of law, the department may contract to provide funding to a successor organization under section 201 of this act to carry out activities of the organization that are consistent with the department's powers and duties. All moneys for contracts entered into under this section are subject to appropriation.

NEW SECTION. Sec. 205. The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 2000:

(1) RCW 43.31.855 (Rural development council) and 1997 c 377 s 1;

(2) RCW 43.31.857 (Rural development council‑-Financial contributions encouraged) and 1997 c 377 s 2; and

(3) 1997 c 377 s 3 (uncodified).

PART III

ECONOMIC VITALITY COMMITTEE

NEW SECTION. Sec. 301. (1) The legislature shall establish an ad hoc economic development group to analyze potential economic development projects of state-wide significance and recommend appropriate administrative or legislative actions.

(2) The group shall include one representative each from the department of community, trade, and economic development, the department of agriculture, and the department of revenue as well as two representatives from rural economic development councils appointed by the legislature.

(3) The group shall promote economic development and business diversification throughout the state with special attention given to the economic difficulties of rural counties.

(4) In order to expedite coordinated responses, the governor may direct the group to meet on an emergency basis when projects of state-wide significance arise.

(5) The department of community, trade, and economic development shall establish criteria to determine whether a project meets the standards of a "project of state-wide significance." These criteria may include such economic indicators as local unemployment and personal income levels and project scope indicators such as the assessed value of the project in relation to the assessed value of the county.

PART IV

DISTRESSED COUNTY ASSISTANCE ACCOUNT

Sec. 401. RCW 82.14.380 and 1998 c 321 s 10 (Referendum Bill No. 49) are each amended to read as follows:

(1) The distressed county assistance account is created in the state treasury. Into this account shall be placed a portion of all motor vehicle excise tax receipts as provided in RCW 82.44.110. At such times as distributions are made under RCW 82.44.150, the state treasurer shall distribute the funds in the distressed county assistance account to each county imposing the sales and use tax authorized under RCW 82.14.370 as of January 1, 1999, in the same proportions as distributions of the tax imposed under RCW 82.14.370 for these counties for the previous quarter.

(2) Funds distributed from the distressed county assistance account shall be expended by the counties for criminal justice and other purposes.

PART V

DISTRESSED AREA SALES AND USE TAX DEFERRAL

Sec. 501. RCW 82.60.020 and 1996 c 290 s 4 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Applicant" means a person applying for a tax deferral under this chapter.

(2) "Department" means the department of revenue.

(3) "Eligible area" means((: (a) A county in which the average level of unemployment for the three years before the year in which an application is filed under this chapter exceeds the average state unemployment for those years by twenty percent; (b) a county that has a median household income that is less than seventy-five percent of the state median household income for the previous three years; (c) a metropolitan statistical area, as defined by the office of federal statistical policy and standards, United States department of commerce, in which the average level of unemployment for the calendar year immediately preceding the year in which an application is filed under this chapter exceeds the average state unemployment for such calendar year by twenty percent; (d) a designated community empowerment zone approved under RCW 43.63A.700 or a county containing such a community empowerment zone; (e) a town with a population of less than twelve hundred persons in those counties that are not covered under (a) of this subsection that are timber impact areas as defined in RCW 43.31.601; (f) a county designated by the governor as an eligible area under RCW 82.60.047; or (g) a county that is contiguous to a county that qualifies as an eligible area under (a) or (f) of this subsection)) a county with fewer than one hundred persons per square mile as determined annually by the office of financial management and published by the department of revenue effective for the period July 1st through June 30th.

(4)(a) "Eligible investment project" means((:

~~(i)~~)) an investment project in an eligible area as defined in subsection (3)((~~(a), (b), (c), (e), or (f)~~)) of this section((~~; or~~

(ii) That portion of an investment project in an eligible area as defined in subsection (3)(d) or (g) of this section which is directly utilized to create at least one new full-time qualified employment position for each three hundred thousand dollars of investment on which a deferral is requested in an application approved before July 1, 1994, and for each seven hundred fifty thousand dollars of investment on which a deferral is requested in an application approved after June 30, 1994)).

(b) The lessor/owner of a qualified building is not eligible for a deferral unless the underlying ownership of the buildings, machinery, and equipment vests exclusively in the same person, or unless the lessor by written contract agrees to pass the economic benefit of the deferral to the lessee in the form of reduced rent payments.

(i) The department shall consider the entire investment project, including any investment in machinery and equipment that otherwise qualifies for exemption under RCW 82.08.02565 or 82.12.02565, for purposes of determining the portion of the investment project that qualifies for deferral as an eligible investment project; and

(ii) The number of new full-time qualified employment positions created by an investment project shall be deemed to be reduced by the number of full-time employment positions maintained by the recipient in any other community in this state that are displaced as a result of the investment project.

~~(d)~~)) "Eligible investment project" does not include any portion of an investment project undertaken by a light and power business as defined in RCW 82.16.010(5), other than that portion of a cogeneration project that is used to generate power for consumption within the manufacturing site of which the cogeneration project is an integral part, or investment projects which have already received deferrals under this chapter.

(5) "Investment project" means an investment in qualified buildings or qualified machinery and equipment, including labor and services rendered in the planning, installation, and construction of the project.

(6) "Manufacturing" means ((all activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials so that as a result thereof a new, different, or useful substance or article of tangible personal property is produced for sale or commercial or industrial use and shall include the production or fabrication of specially made or custom made articles)) the same as defined in RCW 82.04.120. "Manufacturing" also includes computer programming, the production of computer software, and other computer-related services, and the activities performed by research and development laboratories and commercial testing laboratories.

(7) "Person" has the meaning given in RCW 82.04.030.

(8) "Qualified buildings" means construction of new structures, and expansion or renovation of existing structures for the purpose of increasing floor space or production capacity used for manufacturing and research and development activities, including plant offices and warehouses or other facilities for the storage of raw material or finished goods if such facilities are an essential or an integral part of a factory, mill, plant, or laboratory used for manufacturing or research and development. If a building is used partly for manufacturing or research and development and partly for other purposes, the applicable tax deferral shall be determined by apportionment of the costs of construction under rules adopted by the department.

(9) ((~~"Qualified employment position" means a permanent full-time employee employed in the eligible investment project during the entire tax year.~~

~~(10)~~)) "Qualified machinery and equipment" means all new industrial and research fixtures, equipment, and support facilities that are an integral and necessary part of a manufacturing or research and development operation. "Qualified machinery and equipment" includes: Computers; software; data processing equipment; laboratory equipment; manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; operating structures; and all equipment used to control or operate the machinery.

((~~(11)~~)) (10) "Recipient" means a person receiving a tax deferral under this chapter.

((~~(12)~~)) (11) "Research and development" means the development, refinement, testing, marketing, and commercialization of a product, service, or process before commercial sales have begun. As used in this subsection, "commercial sales" excludes sales of prototypes or sales for market testing if the total gross receipts from such sales of the product, service, or process do not exceed one million dollars.

Sec. 502. RCW 82.60.040 and 1997 c 156 s 5 are each amended to read as follows:

(1) The department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project that((:

~~(a)~~)) is located in an eligible area as defined in RCW 82.60.020((~~(3) (a), (b), (c), (e), or (f);~~

(b) Is located in an eligible area as defined in RCW 82.60.020(3)(g) if seventy-five percent of the new qualified employment positions are to be filled by residents of a contiguous county that is an eligible area as defined in RCW 82.60.020(3) (a) or (f); or

(c) Is located in an eligible area as defined in RCW 82.60.020(3)(d) if seventy-five percent of the new qualified employment positions are to be filled by residents of a designated community empowerment zone approved under RCW 43.63A.700 located within the county in which the eligible investment project is located)).

(2) The department shall keep a running total of all deferrals granted under this chapter during each fiscal biennium.

(3) This section expires July 1, 2004.

Sec. 503. RCW 82.60.070 and 1995 1st sp.s. c 3 s 9 are each amended to read as follows:

(1) ((Each recipient of a deferral granted under this chapter prior to July 1, 1994, shall submit a report to the department on December 31st of each year during the repayment period until the tax deferral is repaid.)) Each recipient of a deferral granted under this chapter after June 30, 1994, shall submit a report to the department on December 31st of the year in which the investment project is certified by the department as having been operationally completed, and on December 31st of each of the seven succeeding calendar years. The report shall contain information, as required by the department, from which the department may determine whether the recipient is meeting the requirements of this chapter. If the recipient fails to submit a report or submits an inadequate report, the department may declare the amount of deferred taxes outstanding to be immediately assessed and payable.

(2) If, on the basis of a report under this section or other information, the department finds that an investment project is not eligible for tax deferral under this chapter ((~~for reasons other than failure to create the required number of qualified employment positions~~)), the amount of deferred taxes outstanding for the project shall be immediately due.

(3) ((If, on the basis of a report under this section or other information, the department finds that an investment project for which a deferral has been granted under this chapter prior to July 1, 1994, has been operationally complete for three years and has failed to create the required number of qualified employment positions, the department shall assess interest, but not penalties, on the deferred taxes for the project. The interest shall be assessed at the rate provided for delinquent excise taxes, shall be assessed retroactively to the date of deferral, and shall accrue until the deferred taxes are repaid.

(4) If, on the basis of a report under this section or other information, the department finds that an investment project for which a deferral has been granted under this chapter after June 30, 1994, has been operationally complete for three years and has failed to create the required number of qualified employment positions, the amount of taxes not eligible for deferral shall be immediately due. The department shall assess interest at the rate provided for delinquent excise taxes, but not penalties, retroactively to the date of deferral.

(5) If, on the basis of a report under this section or other information, the department finds that an investment project qualifying for deferral under RCW 82.60.040(1) (b) or (c) has failed to comply with any requirement of RCW 82.60.045 for any calendar year for which reports are required under subsection (1) of this section, twelve and one-half percent of the amount of deferred taxes shall be immediately due. The department shall assess interest at the rate provided for delinquent excise taxes, but not penalties, retroactively to the date of deferral.

~~(6)~~)) Notwithstanding any other subsection of this section, deferred taxes need not be repaid on machinery and equipment for lumber and wood products industries, and sales of or charges made for labor and services, of the type which qualifies for exemption under RCW 82.08.02565 or 82.12.02565 to the extent the taxes have not been repaid before July 1, 1995.

((~~(7)~~)) (4) Notwithstanding any other subsection of this section, deferred taxes on the following need not be repaid:

(a) Machinery and equipment, and sales of or charges made for labor and services, which at the time of purchase would have qualified for exemption under RCW 82.08.02565; and

(b) Machinery and equipment which at the time of first use would have qualified for exemption under RCW 82.12.02565.

PART VI

DISTRESSED AREA BUSINESS AND OCCUPATION TAX JOB CREDIT

Sec. 601. RCW 82.62.010 and 1996 c 290 s 5 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Applicant" means a person applying for a tax credit under this chapter.

(2) "Department" means the department of revenue.

(4)(a) "Eligible business project" means manufacturing or research and development activities which are conducted by an applicant in an eligible area at a specific facility, provided the applicant's average full-time qualified employment positions at the specific facility will be at least fifteen percent greater in the year for which the credit is being sought than the applicant's average full-time qualified employment positions at the same facility in the immediately preceding year.

(b) "Eligible business project" does not include any portion of a business project undertaken by a light and power business as defined in RCW 82.16.010(5) or that portion of a business project creating qualified full-time employment positions outside an eligible area or those recipients of a sales tax deferral under chapter 82.61 RCW.

(5) "Manufacturing" means ((all activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials so that as a result thereof a new, different, or useful substance or article of tangible personal property is produced for sale or commercial or industrial use and shall include the production or fabrication of specially made or custom made articles)) the same as defined in RCW 82.04.120. "Manufacturing" also includes computer programming, the production of computer software, and other computer-related services, and the activities performed by research and development laboratories and commercial testing laboratories.

(6) "Person" has the meaning given in RCW 82.04.030.

(7) "Qualified employment position" means a permanent full-time employee employed in the eligible business project during the entire tax year.

(8) "Tax year" means the calendar year in which taxes are due.

(9) "Recipient" means a person receiving tax credits under this chapter.

(10) "Research and development" means the development, refinement, testing, marketing, and commercialization of a product, service, or process before commercial sales have begun. As used in this subsection, "commercial sales" excludes sales of prototypes or sales for market testing if the total gross receipts from such sales of the product, service, or process do not exceed one million dollars.

Sec. 602. RCW 82.62.030 and 1997 c 366 s 5 are each amended to read as follows:

(1) A person shall be allowed a credit against the tax due under chapter 82.04 RCW as provided in this section. ((For an application approved before January 1, 1996, the credit shall equal one thousand dollars for each qualified employment position directly created in an eligible business project. For an application approved on or after January 1, 1996, the credit shall equal two thousand dollars for each qualified employment position directly created in an eligible business project. For an application approved on or after July 1, 1997,)) The credit shall equal: (a) Four thousand dollars for each qualified employment position with wages and benefits greater than forty thousand dollars annually that is directly created in an eligible business((~~. For an application approved on or after July 1, 1997, the credit shall equal~~)) and (b) two thousand dollars for each qualified employment position with wages and benefits less than or equal to forty thousand dollars annually that is directly created in an eligible business.

(2) The department shall keep a running total of all credits granted under this chapter during each fiscal year. The department shall not allow any credits which would cause the tabulation to exceed ((~~five million five hundred thousand dollars in fiscal year 1998 or 1999 or~~)) seven million five hundred thousand dollars in any fiscal year ((~~thereafter~~)). If all or part of an application for credit is disallowed under this subsection, the disallowed portion shall be carried over for approval the next fiscal year. However, the applicant's carryover into the next fiscal year is only permitted if the tabulation for the next fiscal year does not exceed the cap for that fiscal year as of the date on which the department has disallowed the application.

(3) No recipient may use the tax credits to decertify a union ((~~or to displace existing jobs in any community in the state~~)).

(4) No recipient may receive a tax credit on taxes which have not been paid during the taxable year.

PART VII

TECHNOLOGY-BASED BUSINESSES

Software

NEW SECTION. Sec. 701. It is the intent of the legislature to attract and retain technology-based businesses in distressed counties. Section 702 of this act provides a tax incentive to those businesses that develop or manufacture software in distressed counties. Encouragement of these types of business will stimulate the information technology industry and be of benefit to the state economy in general. To further the impact and benefit of this program, this incentive is limited to those counties of the state that are characterized by unemployment or low income. The legislature finds that providing this targeted incentive will both increase its effectiveness and create a high technology work force in distressed counties.

NEW SECTION. Sec. 702. A new section is added to chapter 82.04 RCW to read as follows:

(1) Subject to the limits and provisions of this section, a credit is authorized against the tax otherwise due under this chapter for persons engaged in a distressed county in the business of manufacturing or programming of software, as those terms are defined in this section.

(2) A person who partially or totally relocates a business from one distressed county to another distressed county is eligible for any qualifying new jobs created as a result of the relocation but is not eligible to receive credit for the jobs moved from one county to the other.

(3)(a) To qualify for the credit, the qualifying activity of the person must be conducted in a distressed county and the qualified employment position must be located in the distressed county.

(b) If an activity is conducted both from a distressed county and outside of a distressed county, the credit is available if at least ninety percent of the qualifying activity takes place within a distressed county. If the qualifying activity is a service taxable activity, the place where the work is performed is the place at which the activity is conducted.

(4)(a) The credit under this section shall equal one thousand dollars for each qualified employment position created after July 1, 1999, in an eligible area. A credit is earned for the calendar year the person is hired to fill the position. Additionally a credit is earned for each year the position is maintained over the subsequent consecutive years, up to six years. The county must meet the definition of a distressed county at the time the position is filled. If the county does not have a distressed county status the following year or years, the position is still eligible for the remaining years if all other conditions are met.

(b) Credit may not be taken for hiring of persons into positions that exist before July 1, 1999. Credit is authorized for new employees hired for new positions created on or after July 1, 1999. New positions filled by existing employees are eligible for the credit under this section only if the position vacated by the existing employee is filled by a new hire. A business that is a sole proprietorship without any employees is equivalent to one employee position and this type of business is eligible to receive credit for one position.

(c) If a position is filled before July 1st, this position is eligible for the full yearly credit. If it is filled after June 30th, this position is eligible for half of the credit.

(d) A person that has engaged in qualifying activities in the distressed county before the effective date of this section qualifies for the credit under this section for positions created and filled after the effective date of this section.

(5) No application is necessary for the tax credit. The person must keep records necessary for the department to verify eligibility under this section. This information includes information relating to description of qualifying activity engaged in the distressed county and outside the distressed county by the person as well as detailed records on positions and employees. The department shall, in consultation with a representative group of affected taxpayers, develop a method of segregating activity and related income so that those persons who engage in multiple activities can determine eligibility for credit under this section.

(6) If at any time the department finds that a person is not eligible for tax credit under this section, the amount of taxes for which a credit has been claimed shall be immediately due. The department shall assess interest, but not penalties, on the taxes for which the person is not eligible. The interest shall be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, shall be assessed retroactively to the date the tax credit was taken, and shall accrue until the taxes for which a credit has been used are repaid.

(7) The credit under this section may be used against any tax due under this chapter, but in no case may a credit earned during one calendar year be carried over to be credited against taxes incurred in a subsequent calendar year. A person is not eligible to receive a credit under this section if the person is receiving credit for the same position under chapter 82.62 RCW or RCW 82.04.44525. No refunds may be granted for credits under this section.

(8) County eligibility under this section shall be based on the same list as published by the department under chapter 82.60 RCW. The eligibility period is from July 1st of each year to June 30th of the next year.

(9) A person taking tax credits under this section shall make an annual report to the department. The report shall be in a letter form and shall include the following information: Number of positions for which credit is being claimed, type of position for which credit is being claimed, type of activity in which the person is engaged in the county, and how long the person has been located in the county. The report must be filed by January 30th of each year for which credit was claimed during the previous year.

(10) Transfer of ownership does not affect credit eligibility; however, the credit is available to the successor for remaining periods in the seven years only if the eligibility conditions of this section are met.

(11) As used in this section:

(a) "Distressed county" means an eligible area as defined in RCW 82.60.020.

(b) "Manufacturing" means the same as "to manufacture" under RCW 82.04.120. Manufacturing includes the activities of both manufacturers and processors for hire.

(c) "Programming" means the activities that involve the creation or modification of software, as that term is defined in this chapter, and that are taxable as a service under RCW 82.04.290(2) or as a retail sale under RCW 82.04.050.

(d) "Qualifying activity" means manufacturing or programming of software.

(e) "Qualified employment position" means a permanent full-time position doing programming of software or manufacturing of software. This excludes administrative, professional, service, executive, and other similar positions. If an employee is either voluntarily or involuntarily separated from employment, the employment position is considered filled on a full-time basis if the employer is either training or actively recruiting a replacement employee. Full-time means a position for at least thirty-five hours a week.

(f) "Software" has the same meaning as defined in RCW 82.04.215.

PART VIII

ELECTRIC UTILITIES

NEW SECTION. Sec. 801. The legislature finds that it is necessary to employ multiple approaches to revitalize the economy of Washington state's rural areas. The legislature also finds that where possible, Washington state should develop programs which can complement other private, state, and federal programs. It is the intent of section 802 of this act to complement such rural economic development efforts by creating a public utility tax offset program to help establish locally based electric utility revolving fund programs to be used for economic development and job creation.

NEW SECTION. Sec. 802. A new section is added to chapter 82.16 RCW to read as follows:

(1) The following definitions apply to this section:

(a) "Qualifying project" means a project designed to achieve job creation or business retention, to add or upgrade nonelectrical infrastructure, to add or upgrade health and safety facilities, to accomplish energy and water use efficiency improvements, including renewable energy development, or to add or upgrade emergency services in any designated qualifying rural area.

(b) "Qualifying rural area" means:

(i) An eligible area as defined in RCW 82.60.020; or

(ii) Any geographic area in the state that receives electricity from a light and power business with fewer than twenty-six meters per mile of distribution line as determined and published by the department of revenue effective July 1st of each year. The department shall use current data provided by the electricity industry.

(c) "Electric utility rural economic development revolving fund" means a fund devoted exclusively to funding qualifying projects in qualifying rural areas.

(d) "Local board" is a board of directors with at least, but not limited to, three members who have been appointed by the sponsoring electric utility to oversee and direct the activities of the electric utility rural economic development revolving fund.

(e) "Geographic area" means any portion of a light and power business' service territory, either in whole or any subdivision thereof.

(2) A light and power business with fewer than twenty-six active meters per mile of distribution line in any geographic area in the state shall be allowed a credit against taxes due under this chapter in an amount equal to fifty percent of contributions made in any calendar year directly to an electric utility rural economic development revolving fund. The credit under this section shall not exceed one hundred thousand dollars per calendar year. The credit may not exceed the tax that would otherwise be due under this chapter. Refunds shall not be granted in the place of credits and excess expenditures shall not be carried over to subsequent years.

(3) The right to claim tax credits under this section expires December 31, 2005. However any credits claimed prior to that date remain available for use indefinitely, subject to restrictions set forth in subsection (6) of this section.

(4) To qualify for the credit in subsection (2) of this section, the light and power business shall establish an electric utility rural economic development revolving fund which is governed by a local board whose members shall reside in the qualifying rural area served by the light and power business. The local board shall have authority to determine all criteria and conditions for the expenditure of funds from the electric utility rural economic development fund, and for the terms and conditions of repayment.

(5) Any funds repaid to the electric utility rural economic development fund by recipients shall be made available for additional qualifying projects.

(6) If at any time the electric utility rural economic development fund is dissolved, any moneys claimed as a tax credit under this section shall either be granted to a qualifying project or refunded to the state within two years of termination.

(7) The total amount of credits granted under this section shall not exceed seven hundred fifty thousand dollars in any fiscal year.

PART IX

COMMUNITY EMPOWERMENT ZONES

NEW SECTION. Sec. 901. A new section is added to chapter 82.60 RCW to read as follows:

(1) For the purposes of this section:

(a) "Eligible area" also means a designated community empowerment zone approved under RCW 43.63A.700.

(b) "Eligible investment project" also means an investment project in an eligible area as defined in this section.

(2) In addition to the provisions of RCW 82.60.040, the department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW, on each eligible investment project that is located in an eligible area, if the applicant establishes that at the time the project is operationally complete:

(a) The applicant will hire at least one qualified employment position for each seven hundred fifty thousand dollars of investment on which a deferral is requested; and

(b) The positions will be filled by persons who at the time of hire are residents of the community empowerment zone in which the project is located. As used in this subsection, "resident" means the person makes his or her home in the community empowerment zone. A mailing address alone is insufficient to establish that a person is a resident for the purposes of this section. The persons must be hired after the date the application is filed with the department.

(3) All other provisions and eligibility requirements of this chapter apply to applicants eligible under this section.

(4) If a person does not meet the requirements of this section by the end of the calendar year following the year in which the project is certified as operationally complete, all deferred taxes are immediately due.

NEW SECTION. Sec. 902. A new section is added to chapter 82.62 RCW to read as follows:

(1) For the purposes of this section "eligible area" also means a designated community empowerment zone approved under RCW 43.63A.700.

(2) An eligible business project located within an eligible area as defined in this section qualifies for a credit under this chapter for those employees who at the time of hire are residents of the community empowerment zone in which the project is located, if the fifteen percent threshold is met. As used in this subsection, "resident" means the person makes his or her home in the community empowerment zone. A mailing address alone is insufficient to establish that a person is a resident for the purposes of this section.

(3) All other provisions and eligibility requirements of this chapter apply to applicants eligible under this section.

PART X

REPEALED SECTIONS

Sec. 1001. RCW 43.131.386 and 1997 c 367 s 19 are each amended to read as follows:

The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective June 30, 2001:

(1) RCW 43.31.601 and 1997 c 367 s 1, 1995 c 226 s 1, 1992 c 21 s 2, & 1991 c 314 s 2;

(2) RCW 43.31.641 and 1997 c 367 s 6, 1995 c 226 s 4, 1993 c 280 s 50, & 1991 c 314 s 7;

(3) RCW 50.22.090 and ((~~1995 c 226 s 5, 1993 c 316 s 10, 1992 c 47 s 2, & 1991 c 315 s 4~~)) 1997 c 367 s 4;

(4) ((~~RCW 43.160.212 and 1996 c 168 s 4, 1995 c 226 s 6, & 1993 c 316 s 5;~~

~~(5)~~)) RCW 43.63A.021 and 1997 c 367 s 5 & 1995 c 226 s 11;

((~~(6)~~)) (5) RCW 43.63A.600 and 1995 c 226 s 12, 1994 c 114 s 1, 1993 c 280 s 77, & 1991 c 315 s 23;

((~~(7)~~)) (6) RCW 43.63A.440 and 1997 c 367 s 7, 1995 c 226 s 13, 1993 c 280 s 74, & 1989 c 424 s 7;

((~~(8) RCW 43.160.200 and 1995 c 226 s 16, 1993 c 320 s 7, 1993 c 316 s 4, & 1991 c 314 s 23;~~

~~(9)~~)) (7) RCW 28B.50.258 and 1995 c 226 s 18 & 1991 c 315 s 16;

((~~(10)~~)) (8) RCW 28B.50.262 and 1995 c 226 s 19 & 1994 c 282 s 3;

((~~(11)~~)) (9) RCW 28B.80.570 and 1997 c 367 s 14, 1995 c 226 s 20, 1992 c 21 s 6, & 1991 c 315 s 18;

((~~(12)~~)) (10) RCW 28B.80.575 and 1995 c 269 s 1001, 1995 c 226 s 21, & 1991 c 315 s 19;

((~~(13)~~)) (11) RCW 28B.80.580 and 1997 c 367 s 15, 1995 c 226 s 22, 1993 sp.s. c 18 s 34, 1992 c 231 s 31, & 1991 c 315 s 20;

((~~(14)~~)) (12) RCW 28B.80.585 and 1995 c 226 s 23 & 1991 c 315 s 21;

((~~(15)~~)) (13) RCW 43.17.065 and 1995 c 226 s 24, 1993 c 280 s 37, 1991 c 314 s 28, & 1990 1st ex.s. c 17 s 77;

((~~(16)~~)) (14) RCW 43.20A.750 and ((~~1995 c 226 s 25, 1993 c 280 s 38, 1992 c 21 s 4, & 1991 c 153 s 28~~)) 1997 c 367 s 16;

((~~(17)~~)) (15) RCW 43.168.140 and 1995 c 226 s 28 & 1991 c 314 s 20;

((~~(18)~~)) (16) RCW 50.12.270 and 1997 c 367 s 17, 1995 c 226 s 30, & 1991 c 315 s 3;

((~~(19)~~)) (17) RCW 50.70.010 and 1995 c 226 s 31, 1992 c 21 s 1, & 1991 c 315 s 5; and

((~~(20)~~)) (18) RCW 50.70.020 and 1995 c 226 s 32 & 1991 c 315 s 6.

NEW SECTION. Sec. 1002. RCW 43.160.212 (Rural natural resources impact areas--Loans for public works facilities) and 1996 c 168 s 4, 1995 c 226 s 6, 1993 c 316 s 5, 1992 c 21 s 8, & 1991 c 314 s 26 are each repealed.

NEW SECTION. Sec. 1003. 1997 c 367 s 11, 1995 c 226 s 8, 1993 c 316 s 7, & 1991 c 314 s 33 (uncodified) are each repealed.

PART XI

MISCELLANEOUS

NEW SECTION. Sec. 1101. Part headings and subheadings used in this act are not any part of the law.

NEW SECTION. Sec. 1102. Sections 1, 101, 201 through 205, 301, 401, 501 through 503, 601, 602, 701, 702, 801, 802, 901, 902, and 1001 through 1003 of this act take effect August 1, 1999.

NEW SECTION. Sec. 1103. Sections 501 through 503, 601, and 602 of this act do not affect any existing right acquired or liability or obligation under the sections amended or repealed in those sections or any rule or order adopted under those sections, nor does it affect any proceeding instituted under those sections.

NEW SECTION. Sec. 1104. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected."

E2SSB 5594 - H COMM AMD

By Committee on Economic Development, Housing & Trade

On page 1, line 1 of the title, after "vitality;" strike the remainder of the title and insert "amending RCW 42.52.080, 82.14.380, 82.60.020, 82.60.040, 82.60.070, 82.62.010, 82.62.030, and 43.131.386; adding a new section to chapter 43.63A RCW; adding new sections to chapter 43.31 RCW; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.16 RCW; adding a new section to chapter 82.60 RCW; adding a new section to chapter 82.62 RCW; creating new sections; repealing RCW 43.31.855, 43.31.857, and 43.160.212; repealing 1997 c 377 s 3 (uncodified); repealing 1997 c 367 s 11, 1995 c 226 s 8, 1993 c 316 s 7, and 1991 c 314 s 33 (uncodified); providing an effective date; and providing expiration dates."