[atlas:bill]

AN ACT Relating to tax incentives for industrial facilities that use large amounts of electricity and that have curtailed production; adding a new chapter to Title 82 RCW; and declaring an emergency.

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

NEW SECTION. Sec. 1. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

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

(2) "Electrical generating equipment or facilities" means any machinery, equipment, and buildings used in the generation of electricity. The term excludes administrative buildings and other buildings or parts of buildings not related to the generation of electricity. The term does not include transmission lines or towers or other distribution equipment located away from the industrial facility.

(3) "Eligible area" means 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) "High price or unavailability of electricity" means electricity was not available to the facility at any price or the price of electricity was too high to operate economically. The price of electricity is "too high to operate economically" if the person certifies to the department of revenue that its decision to not operate the plant in question is based on the high price of electricity.

(5) "Industrial facility" means a manufacturing plant located in an eligible area that has the capacity to consume twenty-five megawatt hours of electricity or more per calendar year and at least twenty-five percent of the facility was idle due to the high price, as certified by the person, or unavailability of electricity for a minimum of thirty consecutive days after October 1, 2000.

(6) "Manufacturing" means the same as defined in RCW 82.04.120.

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

NEW SECTION. Sec. 2. (1) A person who owns and operates an industrial facility is allowed to defer taxes due under chapters 82.08, 82.12, and 82.14 RCW on sales or charges made for tangible personal property consumed and/or for labor and services rendered in respect to the construction or installation of electrical generating equipment or facilities necessary to increase production at the industrial facility to levels prior to October 1, 2000, subject to the requirements of this chapter.

(2) A person who owns and operates an industrial facility may defer taxes due under chapter 82.04 RCW on sales of electricity to the Bonneville power administration or to a light and power business taxable under chapter 82.16 RCW if the sale occurred after October 1, 2000, and before the earlier of October 1, 2003, or the date the production at the industrial facility reaches levels of production prior to October 1, 2000.

NEW SECTION. Sec. 3. Electrical generating equipment or facilities eligible for deferral under this chapter shall be located at the industrial facility. However, electrical generating equipment or facilities located off the site of the industrial facility are eligible:

(1) To the extent that the industrial facility is contractually required to purchase the equipment and services without reimbursement and must purchase at least ten percent of the electricity generated from that equipment; or

(2) If the eligible industrial facility has at least a twenty-five percent ownership interest in the electrical generating equipment or facilities.

NEW SECTION. Sec. 4. Application for deferral of taxes under section 2(1) of this act shall be made before purchase, or use in the case of a use tax, of tangible personal property, labor, or services in respect to the construction or installation of the electrical generating equipment or facilities. Application for deferral of taxes under section 2(2) of this act shall be made before payment of the taxes. The application shall be made to the department in a form and manner prescribed by the department. The application shall contain any information required by the department to determine eligibility under this chapter. The department shall rule on the application within sixty days.

NEW SECTION. Sec. 5. If the department approves an application under section 4 of this act for a deferral under section 2(1) of this act, 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 for the electrical generating equipment and facilities.

NEW SECTION. Sec. 6. (1) Except as provided in subsection (2) of this section, taxes deferred under this chapter need not be repaid.

(2) If the department finds that an industrial facility has not increased production to October 1, 2000, levels by October 1, 2003, or that the industrial facility does not remain in operation for eight years after it has reached the October 1, 2000, levels, a portion of deferred taxes shall be immediately due. To determine the portion of deferred taxes that shall be due, subtract the production level on October 1, 2003, from the production level on October 1, 2000. Divide the result by the production level on October 1, 2000, less the production level on the date of application under section 4 of this act. That portion shall be paid according to the following schedule:

Year in which use occurs % of deferred taxes due

1 100%

2 87.5%

3 75%

4 62.5%

5 50%

6 37.5%

7 25%

8 12.5%

The department shall assess interest at the rate provided for delinquent taxes, but not penalties, retroactively to the date of deferral. The debt for deferred taxes shall not be extinguished by insolvency or other failure of the recipient. Transfer of ownership does not terminate the deferral. The deferral is transferred, subject to the successor meeting the eligibility requirements of this chapter, for the remaining periods of the deferral.

(3) Notwithstanding subsection (2) 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.

NEW SECTION. Sec. 7. No application may be approved under this chapter after October 1, 2003.

NEW SECTION. Sec. 8. Chapter 82.32 RCW applies to the administration of this chapter.

NEW SECTION. Sec. 9. Applications and supporting documents received by the department under this chapter are not confidential and are subject to disclosure.

NEW SECTION. Sec. 10. Sections 1 through 9 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION. Sec. 11. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.