[atlas:bill]

AN ACT Relating to increasing property tax relief for senior citizens and disabled persons by providing a tax credit for taxes levied by the state, continuing tax relief while residing in adult family homes and boarding homes, allowing deduction of health care insurance when computing eligibility for tax relief, and allowing deduction of disabled veteran benefits when computing eligibility for tax relief by veterans with service-connected disabilities of at least fifty percent; amending RCW 84.36.381 and 84.36.383; adding a new section to chapter 84.55 RCW; adding a new section to chapter 82.14 RCW; and creating a new section.

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

Sec. 1. RCW 84.36.381 and 1998 c 333 s 1 are each amended to read as follows:

A person shall be exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:

(1) The property taxes must have been imposed upon a residence which was occupied by the person claiming the exemption as a principal place of residence as of the time of filing((~~: PROVIDED, That~~)). Any person who sells, transfers, or is displaced from his or her residence may transfer his or her exemption status to a replacement residence, but no claimant shall receive an exemption on more than one residence in any year((~~: PROVIDED FURTHER, That~~)). Confinement of the person to a hospital, adult family home, boarding home, or nursing home shall not disqualify the claim of exemption if:

(a) The residence is temporarily unoccupied;

(b) The residence is occupied by a spouse and/or a person financially dependent on the claimant for support; or

(2) The person claiming the exemption must have owned, at the time of filing, in fee, as a life estate, or by contract purchase, the residence on which the property taxes have been imposed or if the person claiming the exemption lives in a cooperative housing association, corporation, or partnership, ((~~such~~)) the person must own a share therein representing the unit or portion of the structure in which ((~~he or she~~)) the person resides. For purposes of this subsection, a residence owned by a marital community or owned by cotenants shall be deemed to be owned by each spouse or cotenant, and any lease for life shall be deemed a life estate;

(3) The person claiming the exemption must be sixty-one years of age or older on December 31st of the year in which the exemption claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of physical disability((~~: PROVIDED, That any~~)). A surviving spouse of ((a)) the person who was receiving an exemption at the time of the person's death shall qualify if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this section;

(4) The amount that the person shall be exempt from an obligation to pay shall be calculated on the basis of combined disposable income, as defined in RCW 84.36.383. If the person claiming the exemption was retired for two months or more of the assessment year, the combined disposable income of ((~~such~~)) the person shall be calculated by multiplying the average monthly combined disposable income of ((~~such~~)) the person during the months ((~~such~~)) the person was retired by twelve. If the income of the person claiming exemption is reduced for two or more months of the assessment year by reason of the death of the person's spouse, or when other substantial changes occur in disposable income that are likely to continue for an indefinite period of time, the combined disposable income of ((~~such~~)) the person shall be calculated by multiplying the average monthly combined disposable income of ((~~such~~)) the person after ((~~such~~)) the occurrences by twelve. If it is necessary to estimate income to comply with this subsection, the assessor may require confirming documentation of ((~~such~~)) the income prior to May 31st of the year following application;

(5)(a) A person who otherwise qualifies under this section and has a combined disposable income of thirty thousand dollars or less shall be exempt from all excess property taxes; and

(b)(i) A person who otherwise qualifies under this section and has a combined disposable income of twenty-four thousand dollars or less but greater than eighteen thousand dollars shall be exempt from all regular property taxes on the greater of forty thousand dollars or thirty-five percent of the valuation of ((~~his or her~~)) the residence, but not to exceed sixty thousand dollars of the valuation of ((~~his or her~~)) the residence; or

(ii) A person who otherwise qualifies under this section and has a combined disposable income of eighteen thousand dollars or less shall be exempt from all regular property taxes on the greater of fifty thousand dollars or sixty percent of the valuation of ((~~his or her~~)) the residence; and

(6) For a person who otherwise qualifies under this section and has a combined disposable income of thirty thousand dollars or less, the valuation of the residence shall be the assessed value of the residence on the later of January 1, 1995, or January 1st of the assessment year the person first qualifies under this section. If the person subsequently fails to qualify under this section only for one year because of high income, this same valuation shall be used upon requalification. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification shall be the assessed value on January 1st of the assessment year in which the person requalifies. If the person transfers the exemption under this section to a different residence, the valuation of the different residence shall be the assessed value of the different residence on January 1st of the assessment year in which the person transfers the exemption.

In no event may the valuation under this subsection be greater than the true and fair value of the residence on January 1st of the assessment year.

This subsection does not apply to subsequent improvements to the property in the year in which the improvements are made. Subsequent improvements to the property shall be added to the value otherwise determined under this subsection at their true and fair value in the year in which they are made.

All taxpayers who qualify for exemption under this section shall be allowed a credit against the state levy equal to the tax imposed on the assessed value of the owner-occupied residential property for the state levy.

Sec. 2. RCW 84.36.383 and 1999 c 358 s 18 are each amended to read as follows:

As used in RCW 84.36.381 through 84.36.389, except where the context clearly indicates a different meaning:

(1) The term "residence" means a single family dwelling unit whether such unit be separate or part of a multiunit dwelling, including the land on which such dwelling stands not to exceed one acre. The term shall also include a share ownership in a cooperative housing association, corporation, or partnership if the person claiming exemption can establish that his or her share represents the specific unit or portion of such structure in which he or she resides. The term shall also include a single family dwelling situated upon lands the fee of which is vested in the United States or any instrumentality thereof including an Indian tribe or in the state of Washington, and notwithstanding the provisions of RCW 84.04.080 and 84.04.090, such a residence shall be deemed real property.

(2) The term "real property" shall also include a mobile home which has substantially lost its identity as a mobile unit by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a foundation (posts or blocks) with fixed pipe, connections with sewer, water, or other utilities. A mobile home located on land leased by the owner of the mobile home is subject, for tax billing, payment, and collection purposes, only to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.

(3) "Department" means the state department of revenue.

(4) "Combined disposable income" means the disposable income of the person claiming the exemption, plus the disposable income of his or her spouse, and the disposable income of each cotenant occupying the residence for the assessment year, less amounts paid by the person claiming the exemption or his or her spouse during the assessment year for:

(a) Drugs supplied by prescription of a medical practitioner authorized by the laws of this state or another jurisdiction to issue prescriptions; ((~~and~~))

(b) The treatment or care of either person received in the home or in a nursing home, adult family home, or boarding home; and

(c) Health care insurance of either person, including any deduction for medicare under Title XVIII of the social security act.

(5) "Disposable income" means adjusted gross income as defined in the federal internal revenue code, as amended prior to January 1, 1989, or such subsequent date as the director may provide by rule consistent with the purpose of this section, plus all of the following items to the extent they are not included in or have been deducted from adjusted gross income:

(a) Capital gains, other than gain excluded from income under section 121 of the federal internal revenue code to the extent it is reinvested in a new principal residence;

(b) Amounts deducted for loss;

(d) Pension and annuity receipts;

(e) Military pay and benefits other than attendant-care and medical-aid payments;

(f) Veterans benefits, other than (i) attendant-care and medical-aid payments or (ii) benefits for disabilities related to the performance of military duties received by veterans of the armed forces of the United States with service-connected disabilities of at least fifty percent;

(g) Federal social security act and railroad retirement benefits;

(h) Dividend receipts; and

(i) Interest received on state and municipal bonds.

(6) "Cotenant" means a person who resides with the person claiming the exemption and who has an ownership interest in the residence.

(7) "Adult family home" means a home licensed under chapter 70.128 RCW.

(8) "Boarding home" means a facility licensed under chapter 18.20 RCW.

(9) "Hospital" means a facility licensed under chapter 70.41 RCW.

(10) "Nursing home" means a facility licensed under chapter 18.51 RCW.

NEW SECTION. Sec. 3. A new section is added to chapter 84.55 RCW to read as follows:

The levy for a taxing district in any year shall be reduced as necessary to prevent increased exemptions resulting from the 2000 amendments to RCW 84.36.381 in section 1 of this act and to RCW 84.36.383 in section 2 of this act from resulting in a higher tax rate than would have occurred without this amendment.

NEW SECTION. Sec. 4. A new section is added to chapter 82.14 RCW to read as follows:

(1) The legislative authority of a county may impose an annual sales and use tax in accordance with the terms of this chapter. The rate of tax shall not exceed three percent of the selling price in the case of a sales tax or value of the article used in the case of a use tax. The tax shall take effect on or after January 1st of each year. The tax shall expire when the revenue from the tax is equal to the total amount of revenue reductions for the year for all taxing districts in the county, other than the state, resulting from the 2000 amendments to RCW 84.36.381 in section 1 of this act and to RCW 84.36.383 in section 2 of this act, but not later than the end of the calendar year.

(2) Taxes imposed under this section are in addition to other taxes authorized by law and shall be collected from those persons who are taxable by the state under chapters 82.08 and 82.12 RCW upon the occurrence of any taxable event within the county. Taxes imposed under this section shall be deducted from the amount of tax otherwise required to be collected or paid over to the department under chapter 82.08 or 82.12 RCW. The department shall perform the collection of such taxes on behalf of the county at no cost to the county.

(3) All revenues collected under this section shall be distributed to taxing districts in the county, other than the state, in proportion to the revenue reductions for the year resulting from the 2000 amendments to RCW 84.36.381 in section 1 of this act and to RCW 84.36.383 in section 2 of this act.

NEW SECTION. Sec. 5. Sections 1 and 2 of this act apply to taxes levied for collection in 2001 and thereafter.