S-0254.2  _______________________________________________

                         SENATE BILL 5605

          _______________________________________________

State of Washington      56th Legislature     1999 Regular Session

By Senators Gardner, Haugen, Costa, Patterson, Sellar, Prentice, Goings and Kohl‑Welles

Read first time 01/29/1999.  Referred to Committee on Transportation.

Addressing locally imposed transportation funding options.

    AN ACT Relating to locally imposed transportation funding options; amending RCW 82.80.020, 82.80.080, 84.52.010, 84.52.120, 82.36.440, 82.38.280, 35.21.710, and 82.80.010; adding new sections to chapter 82.80 RCW; adding a new section to chapter 35.21 RCW; adding a new chapter to Title 35 RCW; and creating a new section.

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

NEW SECTION. Sec. 1.  The legislature recognizes that cities and towns throughout the state face a crisis in their ability to meet growing local transportation needs.  Additionally, the need for transportation revenue in the seventeen cities and towns that had implemented the street utility was heightened by the 1995 decision of the state supreme court that invalidated residential street utility charges imposed under the authority of section 2, chapter 141, Laws of 1991.  The legislature recognizes the need to assist cities and towns to replace the local funding that would have been available to them had RCW 82.80.050 been upheld and to provide additional local transportation revenue options to all cities.

    The legislature intends to provide cities and towns the local option, with voter approval, to authorize a city street district levy, similar to the existing county road district levy in RCW 36.82.040, to be levied by the county legislative authority for the city pursuant to RCW 84.52.030 or by the city legislative authority in a city having a population of three hundred thousand or more.  Additionally, cities and towns are provided the local option, subject to voter referendum, to increase the local sales and use tax, and to impose a business and occupation tax of up to two percent on retail sales in the city or town of motor vehicle and special fuel.  Transportation benefit districts are provided the local option to impose a vehicle license fee if that fee has not been imposed by the county in which the transportation benefit district is located.  Moreover, the rate for the county-wide local option fuel tax authorized under RCW 82.80.010 should be increased to twenty percent of the state motor vehicle and special fuel tax rate.

    A city, town, or transportation benefit district may use any combination of the available options.

    Sec. 2.  RCW 82.80.020 and 1998 c 281 s 1 are each amended to read as follows:

    (1) The legislative authority of a county, or subject to subsection (7) of this section, a ((qualifying city or town)) transportation benefit district located in a county that has not imposed a fifteen-dollar fee under this section, may fix and impose an additional fee, not to exceed fifteen dollars per vehicle, for each vehicle that is subject to license fees under RCW 46.16.060 and for each vehicle that is subject to RCW 46.16.070 with an unladen weight of six thousand pounds or less, and that is determined by the department of licensing to be registered within the boundaries of the county or the transportation benefit district, as the case may be.

    (2) The department of licensing shall administer and collect ((the)) fees imposed under this section.  The department shall deduct a percentage amount, as provided by contract, not to exceed two percent of the taxes collected, for administration and collection expenses incurred by it.  The remaining proceeds shall be remitted to the custody of the state treasurer for monthly distribution under RCW 82.80.080.

    (3) The proceeds of ((this)) fees imposed under this section by counties or transportation benefit districts shall be used strictly for transportation purposes in accordance with RCW 82.80.070.

    (4) A county or ((qualifying city or town)) transportation benefit district imposing this fee or initiating an exemption process shall delay the effective date at least six months from the date the ordinance is enacted to allow the department of licensing to implement administration and collection of or exemption from the fee.

    (5) The legislative authority of a county or ((qualifying city or town)) transportation benefit district may develop and initiate an exemption process of the ((fifteen dollar)) fee imposed under this section for the registered owners of vehicles residing within the boundaries of the county or ((qualifying city or town)) transportation benefit district:  (a) Who are sixty-one years old or older at the time payment of the fee is due and whose household income for the previous calendar year is less than an amount prescribed by the county or ((qualifying city or town)) transportation benefit district legislative authority; or (b) who have a physical disability.

    (6) The legislative authority of a county or ((qualifying city or town)) transportation benefit district shall develop and initiate an exemption process of the ((fifteen-dollar)) fee for vehicles registered within the boundaries of the county that are licensed under RCW 46.16.374.

    (7) ((For purposes of this section, a "qualifying city or town" means a city or town residing within a county having a population of greater than seventy-five thousand in which is located all or part of a national monument.))  A ((qualifying city or town)) transportation benefit district may impose the fee authorized in subsection (1) of this section subject to the following conditions and limitations:

    (((a) The city or town may impose the fee only if authorized to do so by a majority of voters voting at a general or special election on a proposition for that purpose.  At a minimum, the ballot measure shall contain:  (i) A description of the transportation project proposed for funding, properly identified by mileposts or other designations that specify the project parameters; (ii) the proposed number of months or years necessary to fund the city or town's share of the project cost; and (iii) the amount of fee to be imposed for the project.

    (b))) The ((city or town)) transportation benefit district may not impose a fee that, if combined with the county fee, exceeds fifteen dollars.  If a county imposes or increases a fee under this section that, if combined with the fee imposed by a ((city or town)) transportation benefit district, exceeds fifteen dollars, the ((city or town)) transportation benefit district fee shall be reduced or eliminated as needed so that in no ((city or town)) transportation benefit district does the combined fee exceed fifteen dollars.  All revenues from county-imposed fees shall be distributed as called for in RCW ((82.80.020)) 82.80.080.

    (((c) Any fee imposed by a city or town under this section shall expire at the end of the term of months or years provided in the ballot measure, or when the city or town's bonded indebtedness on the project is retired, whichever is sooner.))

    (8) ((The)) Fees imposed ((under subsection (7) of this section shall apply only to renewals and)) by transportation benefit districts shall not apply to ((ownership transfer transactions)) vehicles sold by a vehicle dealer licensed under chapter 46.70 RCW.

    Sec. 3.  RCW 82.80.080 and 1998 c 281 s 2 are each amended to read as follows:

    (1) The state treasurer shall distribute revenues, less authorized deductions, generated by the local option taxes authorized in RCW 82.80.010 and 82.80.020, levied by counties to the levying counties, and cities contained in those counties, based on the relative per capita population.  County population for purposes of this section is equal to one and one-half of the unincorporated population of the county.  In calculating the distributions, the state treasurer shall use the population estimates prepared by the state office of financial management and shall further calculate the distribution based on information supplied by the departments of licensing and revenue, as appropriate.

    (2) The state treasurer shall distribute revenues, less authorized deductions, generated by the local option taxes authorized in RCW ((82.80.010 and)) 82.80.020 levied by ((qualifying cities and towns)) transportation benefit districts to the levying ((cities and towns)) transportation benefit districts.

NEW SECTION. Sec. 4.  For the purpose of efficient administration of the streets and for other transportation purposes of each city or town, the legislative authority may establish in its respective city or town a city street district, if authorized to do so by a majority of its voters voting at a general or special election on a proposition for that purpose, and shall cause its action in so doing to be entered upon its records.

    The city street district must be coterminous with the city or town.  Territory later annexed into the city or town automatically becomes part of the city street district, and territory ceasing to be part of the city or town automatically ceases to be part of the city street district.

    A city street district may be disestablished, effective at the start of a new calendar year, by action of the city or town legislative authority.

NEW SECTION. Sec. 5.  Each city or town that has established a city street district must create an account to be known as the city street district account.  Any funds accruing to and to be deposited in the city street district account arising from a levy in a city street district must be expended for proper city street and other transportation purposes, in accordance with RCW 82.80.070.

NEW SECTION. Sec. 6.  For the purpose of raising revenue for establishing, laying out, constructing, altering, repairing, improving, and maintaining city streets and bridges, and for other proper city transportation purposes in accordance with RCW 82.80.070, a city or town that has created a city street district must make a uniform tax levy throughout each city street district of an amount not to exceed fifty cents per thousand dollars of assessed value of the last assessed valuation of the taxable property in the city street district.  This tax levy must be made annually at the time of making the property tax levy for general purposes, and must be made by the county legislative authority for the city pursuant to RCW 84.52.030, or by the city legislative authority in a city having a population of three hundred thousand or more.  All funds accruing from the levy must be credited to and deposited in the city street district account.

    Sec. 7.  RCW 84.52.010 and 1995 2nd sp.s. c 13 s 4 are each amended to read as follows:

    Except as is permitted under RCW 84.55.050, all taxes shall be levied or voted in specific amounts.

    The rate percent of all taxes for state and county purposes, and purposes of taxing districts coextensive with the county, shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the county, as shown by the completed tax rolls of the county, and the rate percent of all taxes levied for purposes of taxing districts within any county shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the taxing districts respectively.

    When a county assessor finds that the aggregate rate of tax levy on any property, that is subject to the limitations set forth in RCW 84.52.043 or 84.52.050, exceeds the limitations provided in either of these sections, the assessor shall recompute and establish a consolidated levy in the following manner:

    (1) The full certified rates of tax levy for state, county, county road district, and city or town purposes shall be extended on the tax rolls in amounts not exceeding the limitations established by law; however any state levy shall take precedence over all other levies and shall not be reduced for any purpose other than that required by RCW 84.55.010.  If, as a result of the levies imposed under RCW 84.52.069, 84.34.230, the portion of the levy by a metropolitan park district that was protected under RCW 84.52.120, and 84.52.105, the combined rate of regular property tax levies that are subject to the one percent limitation exceeds one percent of the true and fair value of any property, then these levies shall be reduced as follows:  (a) The certified levy of a city street district shall be reduced until the combined rate no longer exceeds one percent of the true and fair value of any property or shall be eliminated; (b) if the combined rate of regular property tax levies that are subject to the one percent limitation still exceeds one percent of the true and fair value of any property, then the portion of the levy by a metropolitan park district that is protected under RCW 84.52.120 shall be reduced until the combined rate no longer exceeds one percent of the true and fair value of any property or shall be eliminated; (((b))) (c) if the combined rate of regular property tax levies that are subject to the one percent limitation still exceeds one percent of the true and fair value of any property, then the levies imposed under RCW 84.34.230, 84.52.105, and any portion of the levy imposed under RCW 84.52.069 that is in excess of thirty cents per thousand dollars of assessed value, shall be reduced on a pro rata basis until the combined rate no longer exceeds one percent of the true and fair value of any property or shall be eliminated; and (((c))) (d) if the combined rate of regular property tax levies that are subject to the one percent limitation still exceeds one percent of the true and fair value of any property, then the thirty cents per thousand dollars of assessed value of tax levy imposed under RCW 84.52.069 shall be reduced until the combined rate no longer exceeds one percent of the true and fair value of any property or eliminated.

    (2) The certified rates of tax levy subject to these limitations by all junior taxing districts imposing taxes on such property shall be reduced or eliminated as follows to bring the consolidated levy of taxes on such property within the provisions of these limitations:

    (a) First, the certified ((property tax)) levy ((rates of those junior taxing districts authorized under RCW 36.68.525, 36.69.145, and 67.38.130)) of a city street district shall be reduced ((on a pro rata basis)) or eliminated;

    (b) Second, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of ((flood control zone)) those junior taxing districts authorized under RCW 36.68.525, 36.69.145, and 67.38.130 shall be reduced on a pro rata basis or eliminated;

    (c) Third, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of flood control zone districts shall be reduced on a pro rata basis or eliminated;

(d) Fourth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of all other junior taxing districts, other than fire protection districts, library districts, the first fifty cent per thousand dollars of assessed valuation levies for metropolitan park districts, and the first fifty cent per thousand dollars of assessed valuation levies for public hospital districts, shall be reduced on a pro rata basis or eliminated;

    (((d) Fourth)) (e) Fifth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized to fire protection districts under RCW 52.16.140 and 52.16.160 shall be reduced on a pro rata basis or eliminated; and

    (((e) Fifth)) (f) Sixth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized for fire protection districts under RCW 52.16.130, library districts, metropolitan park districts under their first fifty cent per thousand dollars of assessed valuation levy, and public hospital districts under their first fifty cent per thousand dollars of assessed valuation levy, shall be reduced on a pro rata basis or eliminated.

    In determining whether the aggregate rate of tax levy on any property, that is subject to the limitations set forth in RCW 84.52.050, exceeds the limitations provided in that section, the assessor shall use the hypothetical state levy, as apportioned to the county under RCW 84.48.080, that was computed under RCW 84.48.080 without regard to the reduction under RCW 84.55.012.

    Sec. 8.  RCW 84.52.120 and 1995 c 99 s 1 are each amended to read as follows:

    A metropolitan park district with a population of one hundred fifty thousand or more may submit a ballot proposition to voters of the district authorizing the protection of the district's tax levy from prorationing under RCW 84.52.010(2) by imposing all or any portion of the district's twenty-five cent per thousand dollars of assessed valuation tax levy outside of the five dollar and ninety cent per thousand dollar of assessed valuation limitation established under RCW 84.52.043(2), if those taxes otherwise would be prorated under RCW 84.52.010(2)(((c))) (d), for taxes imposed in any year on or before the first day of January six years after the ballot proposition is approved.  A simple majority vote of voters voting on the proposition is required for approval.

NEW SECTION. Sec. 9.  A new section is added to chapter 82.80 RCW to read as follows:

    (1) Cities and towns may fix and impose a sales and use tax in accordance with the terms of this section, to be used strictly for transportation purposes in accordance with RCW 82.80.070.  The tax authorized pursuant to this section shall be in addition to the tax authorized by RCW 82.14.030 and shall be collected from those persons who are taxable by the state pursuant to chapters 82.08 and 82.12 RCW upon the occurrence of any taxable event within the city or town imposing the tax.  The rate of such tax shall be equal to one-tenth of one 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 exemptions in RCW 82.08.820 and 82.12.820 are for the state portion of the sales and use tax and do not extend to the tax authorized in this section.

    (2) The legislative authority of a city or town may limit the purposes or length of time for which a sales and use tax authorized by this section will be imposed.  If the legislative authority determines to impose a sales and use tax only to provide funds for a specific transportation project or projects, an ordinance imposing the sales and use tax under this section shall contain, at a minimum:

    (a) A description of the transportation project or projects proposed for funding, properly identified by mileposts or other designations that specify the project parameters;

    (b) The proposed number of months or years expected to be necessary to fund the city's or town's share of the project costs; and

    (c) The tax rate of the proposed sales and use tax.

    (3) If a limited purpose was specified in an ordinance, the city or town legislative authority must certify completion of payment when the costs of each specific project for which the city or town sales and use tax was imposed have been fully paid, including the retirement of any debt issued for the project.  Upon certification of completion of payment for all the projects, the sales and use tax imposed to pay for the projects shall cease.

    (4) In no event shall the tax under this section begin at a date other than the beginning of a calendar quarter or end at a date other  than the end of a calendar quarter.

    (5) The administrative provisions of chapter 82.32 RCW apply to the tax imposed under this section.

NEW SECTION. Sec. 10.  A new section is added to chapter 82.80 RCW to read as follows:

    Cities and towns that impose a tax under section 9 of this act may contract with the state department of revenue or other appropriate entities for administration and collection of that tax.

    Sec. 11.  RCW 82.36.440 and 1991 c 173 s 4 are each amended to read as follows:

    The tax levied in this chapter is in lieu of any excise, privilege, or occupational tax upon the business of manufacturing, selling, or distributing motor vehicle fuel, and no city, town, county, township or other subdivision or municipal corporation of the state shall levy or collect any excise tax upon or measured by the sale, receipt, distribution, or use of motor vehicle fuel, except as provided in RCW 82.80.010 and 82.47.020, and except that a city or town may impose its license fee or tax upon the business of making retail sales of motor vehicle fuel within the limits of the city or town at a rate of up to two percent of the gross receipts from retail sales of motor vehicle fuel within the limits of the city or town.  The imposition or increase in rate of any such city or town license fee or tax shall be subject to the referendum procedure in RCW 35.21.706, but shall not be subject to the limitations of RCW 35.21.710.

    Sec. 12.  RCW 82.38.280 and 1991 c 173 s 5 are each amended to read as follows:

    The tax levied in this chapter is in lieu of any excise, privilege, or occupational tax upon the business of manufacturing, selling, or distributing special fuel, and no city, town, county, township or other subdivision or municipal corporation of the state shall levy or collect any excise tax upon or measured by the sale, receipt, distribution, or use of special fuel, except as provided in RCW 82.80.010 and 82.47.020, and except that a city or town may impose its license fee or tax upon the business of making retail sales of special fuel within the limits of the city or town at a rate of up to two percent of the gross receipts from retail sales of special fuel within the limits of the city or town.  The imposition or increase in rate of any such city or town license fee or tax shall be subject to the referendum procedure in RCW 35.21.706, but shall not be subject to the limitations of RCW 35.21.710.

    Sec. 13.  RCW 35.21.710 and 1983 2nd ex.s. c 3 s 33 are each amended to read as follows:

    Any city which imposes a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property which are measured by gross receipts or gross income from such sales, shall impose such tax at a single uniform rate upon all such business activities.  The taxing authority granted to cities for taxes upon business activities measured by gross receipts or gross income from sales shall not exceed a rate of .0020; except that any city with an adopted ordinance at a higher rate, as of January 1, 1982 shall be limited to a maximum increase of ten percent of the January 1982 rate, not to exceed an annual incremental increase of two percent of current rate:  PROVIDED, That any adopted ordinance which classifies according to different types of business or services shall be subject to both the ten percent and the two percent annual incremental increase limitation on each tax rate:  PROVIDED FURTHER, That all surtaxes on business and occupation classifications in effect as of January 1, 1982, shall expire no later than December 31, 1982, or by expiration date established by local ordinance.  Cities which impose a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property which are measured by gross receipts or gross income from such sales shall be required to submit an annual report to the state auditor identifying the rate established and the revenues received from each fee or tax.  This section shall not apply to any business activities subject to the tax imposed by chapter 82.16 RCW, by RCW 82.36.440, or by RCW 82.38.280.  For purposes of this section, the providing to consumers of competitive telephone service, as defined in RCW 82.04.065, shall be deemed to be the retail sale of tangible personal property.

NEW SECTION. Sec. 14.  A new section is added to chapter 35.21 RCW to read as follows:

    The legislative authority of a city or town may limit the purposes or length of time for which a license fee or tax, or a portion thereof, authorized by RCW 82.36.440 or 82.38.280 will be imposed.  If the legislative authority determines that a license fee or tax upon the business of making retail sales of motor vehicle fuel or special fuel, or a portion thereof, shall be authorized only to provide funds for a specific transportation project or projects, the ordinance or resolution authorizing or increasing the rate of a license fee or tax shall contain, at a minimum:

    (1) A description of the transportation project or projects proposed for funding, properly identified by mileposts or other designations that specify the project parameters; and

    (2) The proposed number of months or years expected to be necessary to fund the city's or town's share of the project costs.

    If a limited purpose was specified in an ordinance or resolution authorizing the license fee or tax, or portion thereof, the city or town legislative authority must certify the completion of payment when the costs of each specific project for which the license fee or tax was authorized have been fully paid, including the retirement of any debt issued for the project.  Upon certification of completion of payment for all the projects, the license fee or tax upon the business of making retail sales of motor vehicle fuel or special fuel, or portion thereof, authorized to pay for the projects shall cease.

    Sec. 15.  RCW 82.80.010 and 1998 c 176 s 86 are each amended to read as follows:

    (1) Subject to the conditions of this section, any county may levy, by approval of its legislative body and a majority of the registered voters of the county voting on the proposition at a general or special election, additional excise taxes equal to ((ten)) twenty percent of the state-wide motor vehicle fuel tax rate under RCW 82.36.025 on each gallon of motor vehicle fuel as defined in RCW 82.36.010 and on each gallon of special fuel as defined in RCW 82.38.020 sold within the boundaries of the county.  Vehicles paying an annual license fee under RCW 82.38.075 are exempt from the county fuel excise tax.  An election held under this section must be held not more than twelve months before the date on which the proposed tax is to be levied.  The ballot setting forth the proposition shall state the tax rate that is proposed.  The county's authority to levy additional excise taxes under this section includes the incorporated and unincorporated areas of the county.  The additional excise taxes are subject to the same exceptions and rights of refund as applicable to other motor vehicle fuel and special fuel excise taxes levied under chapters 82.36 and 82.38 RCW.  The proposed tax shall not be levied less than one month from the date the election results are certified by the county election officer.  The commencement date for the levy of any tax under this section shall be the first day of January, April, July, or October.

    (2) Every person subject to the tax shall pay, in addition to any other taxes provided by law, an additional excise tax to the director of licensing at the rate levied by a county exercising its authority under this section.

    (3) The state treasurer shall distribute monthly to the levying county and cities contained therein the proceeds of the additional excise taxes collected under this section, after the deductions for payments and expenditures as provided in RCW 46.68.090 (1) and (2) and under the conditions and limitations provided in RCW 82.80.080.

    (4) The proceeds of the additional excise taxes levied under this section shall be used strictly for transportation purposes in accordance with RCW 82.80.070.

    (5) The department of licensing shall administer and collect the county fuel taxes.  The department shall deduct a percentage amount, as provided by contract, for administrative, collection, refund, and audit expenses incurred.  The remaining proceeds shall be remitted to the custody of the state treasurer for monthly distribution under RCW 82.80.080.

NEW SECTION. Sec. 16.  Sections 4 through 6 of this act constitute a new chapter in Title 35 RCW.

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