CERTIFICATION OF ENROLLMENT

                   SUBSTITUTE HOUSE BILL 1906

                    Chapter 24, Laws of 2001

                         (partial veto)

                        57th Legislature

            2001 Second Special Legislative Session

FARM EQUIPMENT--TAX EXEMPTION

                    EFFECTIVE DATE:  9/20/01

Passed by the House June 4, 2001   Yeas 88   Nays 0               FRANK CHOPP Speaker of the House of Representatives              CLYDE BALLARD Speaker of the House of Representatives Passed by the Senate June 21, 2001   Yeas 26   Nays 11

CERTIFICATE We, Timothy A. Martin and Cynthia Zehnder, Co-Chief Clerks of the House of Representatives of the State of Washington, do hereby certify that the attached is SUBSTITUTE HOUSE BILL 1906 as passed by the House of Representatives and the Senate on the dates hereon set forth.           TIMOTHY A. MARTIN                           Chief Clerk            CYNTHIA ZEHNDER                           Chief Clerk

BRAD OWEN President of the Senate

Approved July 13, 2001, with the exception of section 2, which is vetoed.Place Style On Codes above, and Style Off Codes below.	FILED                             July 13, 2001 - 3:15 p.m.
GARY LOCKE Governor of the State of Washington	Secretary of State                  State of Washington

H-2229.1  _______________________________________________

                    SUBSTITUTE HOUSE BILL 1906

          _______________________________________________

           Passed Legislature - 2001 2^nd Special Session

State of Washington      57th Legislature     2001 Regular Session

By House Committee on Finance (originally sponsored by Representatives Linville, G. Chandler, Schoesler, Haigh, B. Chandler, Hunt, Morris, Kirby, Grant, Jackley, Cox, Hatfield, Mielke, Armstrong, Delvin, Mulliken, Sump, McMorris, Barlean, Pflug, Kessler, Pearson and Conway)

Read first time 03/08/2001.  Referred to Committee on .

Exempting farming machinery and equipment from the state property tax.  

    AN ACT Relating to the exemption of machinery and equipment used in farming operations from the state property tax and preventing a shift of property taxes; adding a new section to chapter 84.36 RCW; adding a new section to chapter 84.55 RCW; and creating a new section.

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

NEW SECTION. Sec. 1.  A new section is added to chapter 84.36 RCW to read as follows:

    (1) All machinery and equipment owned by a farmer that is personal property is exempt from property taxes levied for any state purpose if it is used exclusively in growing and producing agricultural products during the calendar year for which the claim for exemption is made.

    (2) "Farmer" has the same meaning as defined in RCW 82.04.213.

    (3) A claim for exemption under this section shall be filed with the county assessor together with the verified statement required under RCW 84.40.190, for exemption from taxes payable the following year.  The claim shall be made solely upon forms as prescribed and furnished by the department of revenue.

    *NEW SECTION.  Sec. 2.  A new section is added to chapter 84.55 RCW to read as follows:

    The levy for the state in any year shall be reduced as necessary to prevent exemptions under section 1 of this act from resulting in a higher tax rate than would have occurred in the absence of the exemptions under section 1 of this act.

*Sec. 2 was vetoed.  See message at end of chapter.

NEW SECTION. Sec. 3.  This act applies to taxes levied for collection in 2003 and every year thereafter.

    Passed the House June 4, 2001.

    Passed the Senate June 21, 2001.

Approved by the Governor July 13, 2001, with the exception of certain items that were vetoed.

    Filed in Office of Secretary of State July 13, 2001.

    Note:  Governor's explanation of partial veto is as follows:

    "I am returning herewith, without my approval as to section 2, Substitute House Bill No. 1906 entitled:

"AN ACT Relating to the exemption of machinery and equipment used in farming operations from the state property tax and preventing a shift of property taxes;"

    Substitute House Bill No. 1906 authorizes an exemption from the state property tax for machinery and equipment owned by a farmer and used exclusively to grow agricultural products.  Under the bill, farmers will continue to pay local property taxes on the machinery and equipment.

    Section 2 of the bill would have required the state levy to be recalculated so that the exemption would not increase the rate of the state property tax levy, shifting the property tax burden to other property tax payers.  The result would have been to permanently reduce revenues going into the state General Fund.

    In the 2003-2005 biennium, section 2 would have caused a reduction in General Fund revenues of almost seven million dollars.  The recently passed operating budget already leaves an uncomfortably small reserve for the future.  My veto of section 2 will preserve revenue for the state General Fund and increase the reserves available for the state school levy.

    For these reasons, I have vetoed section 2 of Substitute House Bill No. 1906.

    With the exception of section 2, Substitute House Bill No. 1906 is approved."