H-1831.1  _______________________________________________

                          HOUSE BILL 2179

          _______________________________________________

State of Washington      57th Legislature     2001 Regular Session

By Representatives Keiser, Ruderman, Conway, McIntire, Schual‑Berke, Pflug and Edwards

Read first time 02/21/2001.  Referred to Committee on Finance.

Creating procedures to evaluate and terminate tax preferences.

    AN ACT Relating to termination of tax preferences; adding a new section to chapter 43.131 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 tax preferences are enacted by the legislature to meet public interest objectives.  The legislature finds, however, that some tax preferences may not be efficient or equitable tools for the achievement of current legislative objectives.  The legislature finds that unless the public interest is served by the continued existence of tax preferences, they should be terminated or modified.  The legislature further finds that an evaluation of tax preferences is needed to determine if they continue to serve the public interest.  It is the intent of the legislature to create a procedure to evaluate and terminate tax preferences.  By this procedure the legislature intends to ensure that thorough evaluations are made and that tax preferences which do not continue to serve the public interest are repealed.

NEW SECTION. Sec. 2.  A new section is added to chapter 43.131 RCW to read as follows:

    (1) The definitions in this subsection apply for the purposes of this section.

    (a) "Tax preference" means an exemption, exclusion, or deduction from the base of a state tax; a credit against a state tax; a deferral of a state tax; or a preferential state tax rate.

    (b) "Selected tax preference" is a tax preference which reduces state tax revenue by more than five million dollars in a biennium.

    (c) "Selection biennium" means the biennium for which the tax preference's state revenue reduction first exceeds five million dollars.

    (2) All selected tax preferences enacted after the effective date of this act shall be reviewed under this chapter before July 1st of the third year after the selection biennium.  The review shall include, but is not limited to, the following:

    (a) Public interest objectives that provide a justification for the tax preference;

    (b) Evidence that the tax preference has contributed to the achievement of these public interest objectives; and

    (c) Fiscal impacts of the tax preference, including past impacts and expected future impacts if the tax preference is not repealed.

    (3) The agency responsible for administering the tax preference shall provide information necessary for the joint legislative audit and review committee to conduct the required review.

    (4) All selected tax preferences enacted after the effective date of this act are repealed effective June 30th of the fourth year after the selection biennium.  A tax preference shall not be excepted from this section without specific amendment to this section in conformance with Article II, section 37 of the state Constitution.

                            --- END ---