[atlas:bill]

AN ACT Relating to authorizing the governor to enter into tax compacts with up to three federally recognized tribes on a pilot basis; adding a new section to chapter 82.02 RCW; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 82.16 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that tribal governments face demands similar to those of the state. For instance, tribal governments fund education, health care, and law enforcement. Like state and local governments, tribes need a stable and predictable tax base from which to produce tax revenues. The legislature also finds that the Indian lands tax base is already at or near tax capacity due to the presence of the state tax. Furthermore, the existence of the state tax makes it difficult for tribes to implement their own taxes without negatively impacting the businesses located on Indian lands. Therefore, it is the legislature's intent to authorize the governor to enter into tax compacts on a pilot basis in order to accurately determine the value and costs to the state of entering into tax compacts with tribes on a broad basis.

It is the intent of the legislature that this act permit, but not require, the governor to enter into tax compacts on a pilot basis with up to three Indian tribes when the governor determines it is in the mutual interest of the Indian tribes and the state to do so. The legislature recognizes that the circumstances and elements of each compact will be unique and separate to that compact. Nothing in this act should be taken as an attempt by the state to require any action by any Indian tribe except by that tribe's agreement under compact. Further, no elements of any one compact shall be taken or interpreted as binding upon or limiting the scope of negotiations with any other tribe not party to that specific compact except as the governor may be limited by this act.

NEW SECTION. Sec. 2. A new section is added to chapter 82.02 RCW to read as follows:

The governor is authorized to enter into tax compacts with up to three Indian tribes in the state of Washington.

(1) The tax compacts are subject to the following limitations:

(a) The compacts are limited to the taxes imposed under chapters 82.04, 82.08, 82.12, and 82.16 RCW.

(b) The compacts must provide that the revenue from the taxes imposed under the compact be used exclusively for essential government services, such as education, health care, roads, sewers, water supply, law enforcement, and fire protection.

(d) The compacts may provide for revenue sharing and may provide for sharing of services and interlocal cooperation agreements.

(e) The compacts shall be for a nonrenewable period of no more than five years.

(2) The governor shall enter into compacts with a small tribe, a medium tribe, and a large tribe. If by January 1, 2002, no tribe from one of these groups has indicated an interest in negotiating a compact then the governor may negotiate with other interested tribes independent of size.

(3) The governor shall report to the legislature by December 1, 2003, regarding the compacts entered into under this section. The report shall contain information on the fiscal impact of the compacts, administrative issues encountered during implementation, any legal issues that need to be addressed in state law, and any other matter significant to this issue. The report shall contain a recommendation on the feasibility of extending this pilot project on a permanent basis. The report shall also recommend what other taxes should be considered as eligible for compacts.

(4) The governor may delegate the power to negotiate cooperative agreements to the department of revenue.

(5) For the purposes of this section:

(a) "Indian tribe" or "tribe" means a federally recognized Indian tribe located within the geographical boundaries of the state of Washington.

(b) "Indian lands" means all land within the exterior boundaries of a reservation and land held in trust for a tribe or Indian person by the United States.

(c) "Tribal service population" means Indian resident service population as published by the secretary of interior under P.L. 102-477. If Indian resident service population numbers are not available then tribal enrollments shall be substituted for Indian resident service population. "Small tribe" means a tribe with an Indian resident service population in the lower third of Washington tribes. "Medium tribe" means a tribe with an Indian resident service population in the middle third of Washington tribes. "Large tribe" means a tribe with an Indian resident service population in the upper third of Washington tribes.

NEW SECTION. Sec. 3. A new section is added to chapter 82.04 RCW to read as follows:

Activities subject to this chapter are not subject to the tax imposed under this chapter during the effective period of a cooperative agreement under section 1 of this act if covered by the terms of such agreement.

NEW SECTION. Sec. 4. A new section is added to chapter 82.08 RCW to read as follows:

Taxable events subject to this chapter are not subject to the tax imposed under this chapter during the effective period of a cooperative agreement under section 1 of this act if covered by the terms of such agreement.

NEW SECTION. Sec. 5. A new section is added to chapter 82.12 RCW to read as follows:

Use of tangible personal property or services subject to this chapter are not subject to the tax imposed by this chapter during the effective period of a cooperative agreement under section 1 of this act if covered by the terms of such agreement.

NEW SECTION. Sec. 6. A new section is added to chapter 82.16 RCW to read as follows: