BILL REQ. #:  H-0627.1 

Read first time 01/23/2003.   Referred to Committee on Finance.

     AN ACT Relating to excise taxes on generation, distribution, and sale of electric property; amending RCW 54.28.010, 54.28.011, 54.28.020, 54.28.025, 54.28.030, 54.28.040, 54.28.050, 54.28.055, 54.28.060, 54.28.070, 54.28.080, 54.28.090, 54.28.100, 54.28.110, and 54.28.120; adding a new chapter to Title 82 RCW; recodifying RCW 54.28.010, 54.28.011, 54.28.020, 54.28.025, 54.28.030, 54.28.040, 54.28.050, 54.28.055, 54.28.060, 54.28.070, 54.28.080, 54.28.090, 54.28.100, 54.28.110, and 54.28.120; providing an effective date; and declaring an emergency.

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

Sec. 1   RCW 54.28.010 and 1977 ex.s. c 366 s 1 are each amended to read as follows:
     As used in this chapter:
     (1) "Operating property" means all of the property utilized by a ((public utility district)) publicly owned utility in the operation of a plant or system for the generation, transmission, or distribution of electric energy for sale;
     (2) "Taxing districts" means counties, cities, towns, school districts, and road districts;
     (3) "Distributes to consumers" means the sale of electric energy to ultimate consumers thereof, and does not include sales of electric energy for resale by the purchaser;
     (4) "Wholesale value" means all costs of a ((public utility district)) publicly owned utility associated with the generation and transmission of energy from its own generation and transmission system to the point or points of inter-connection with a distribution system owned and used by a ((district)) publicly owned utility to distribute ((such)) energy to consumers, or in the event a distribution system owned by a ((district)) publicly owned utility is not used to distribute ((such)) energy, then the term means the gross revenues derived by a ((district)) publicly owned utility from the sale of ((such)) energy to consumers;
     (5) "Thermal electric generating facility" means a steam-powered electrical energy producing facility utilizing nuclear or fossil fuels;
     (6) "Placed in operation" means delivery of energy into a transmission or distribution system for use or sale in ((such)) a manner as to establish a value accruing to the power plant operator, except operation incidental to testing or startup adjustments;
     (7) "Impacted area" for a thermal electric generating facility on a federal reservation means that area in the state lying within thirty-five statute miles of the most commonly used entrance of the federal reservation and which is south of the southern boundary of township fifteen north;
     (8) "Publicly owned utility" means a public utility district, city, or town operating a plant or system for the generation, transmission, or distribution of electric energy for sale;
     (9) "Telecommunications," "telecommunications facilities," and "wholesale telecommunications services" have the same meaning as under chapter 54.16 RCW.

Sec. 2   RCW 54.28.011 and 1957 c 278 s 12 are each amended to read as follows:
     "Gross revenue" ((shall)) means the amount received from the sale of electric energy excluding any tax levied by a ((municipal corporation)) city or town upon the public utility district pursuant to RCW 54.28.070 (as recodified by this act).

Sec. 3   RCW 54.28.020 and 1983 2nd ex.s. c 3 s 8 are each amended to read as follows:
     (1) There is ((hereby)) levied and there shall be collected from every ((district)) publicly owned utility a tax for the act or privilege of engaging within this state in the business of operating works, plants or facilities for the generation, distribution and sale of electric energy. With respect to each ((such district)) publicly owned utility, except with respect to thermal electric generating facilities taxed under RCW 54.28.025 (as recodified by this act), ((such)) the tax shall be the sum of the following amounts: (a) Two and twenty-eight one-hundredths percent of the gross revenues derived by the ((district)) publicly owned utility from the sale of all electric energy which it distributes to consumers who are served by a distribution system owned by the ((district)) publicly owned utility; (b) ((five)) twenty-one and fifteen one-hundredths percent of the first four mills per kilowatt-hour of wholesale value of self-generated energy distributed to consumers by a ((district)) publicly owned utility; (c) ((five)) twenty-one and fifteen one-hundredths percent of the first four mills per kilowatt-hour of revenue obtained by the ((district)) publicly owned utility from the sale of self-generated energy for resale.
     (2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.

NEW SECTION.  Sec. 4   (1) There is levied and there shall be collected from every publicly owned utility a tax for the act or privilege of engaging within this state in the business of operating works, plants, or facilities for the purposes of selling wholesale telecommunications services. With respect to each such utility, such tax shall be . . . percent of the wholesale value of the services sold.
     (2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.

Sec. 5   RCW 54.28.025 and 1983 2nd ex.s. c 3 s 9 are each amended to read as follows:
     (1) There is ((hereby)) levied and there shall be collected from every ((district)) publicly owned utility operating a thermal electric generating facility, as defined in RCW 54.28.010 ((as now or hereafter amended)) (as recodified by this act), having a design capacity of two hundred fifty thousand kilowatts or more, located on a federal reservation, which is placed in operation after September 21, 1977, a tax for the act or privilege of engaging within the state in the business of generating electricity for use or sale, equal to one and one-half percent of wholesale value of energy produced for use or sale, except energy used in the operation of component parts of the power plant and associated transmission facilities under control of the person operating the power plant.
     (2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.

Sec. 6   RCW 54.28.030 and 1977 ex.s. c 366 s 3 are each amended to read as follows:
     On or before the fifteenth day of March of each year, each ((district)) publicly owned utility subject to this tax shall file with the department of revenue a report verified by the affidavit of its manager or secretary on forms prescribed by the department of revenue. ((Such)) The report shall state (1) the gross revenues derived by the ((district)) publicly owned utility from the sale of all distributed energy to consumers and the respective amounts derived from ((such)) sales within each county; (2) the gross revenues derived by the ((district)) publicly owned utility from the sale of self-generated energy for resale; (3) all revenue derived by the publicly owned utility from the sale of wholesale telecommunications services; (4) the amount of all generated energy distributed from each of the facilities subject to taxation by a ((district)) publicly owned utility from its own generating facilities, the wholesale value ((thereof)), and the basis on which the value is computed; (((4))) (5) the total cost of all generating facilities and the cost of acquisition of land and land rights for ((such)) facilities or for reservoir purposes in each county; (6) the total cost to build and maintain all wholesale telecommunications facilities; and (((5) such)) (7) other and further information as the department of revenue reasonably may require in order to administer the provisions of this chapter. In case of failure by a ((district)) publicly owned utility to file ((such)) a report, the department may proceed to determine the information, which determination shall be contestable by the ((district)) publicly owned utility only for actual fraud.

Sec. 7   RCW 54.28.040 and 1996 c 149 s 16 are each amended to read as follows:
     (1) Before May 1st, the department of revenue shall compute the tax imposed by this chapter for the last preceding calendar year and notify the ((district)) publicly owned utility of the amount ((thereof)), which shall be payable on or before the following June 1st.
     (2) If payment of any tax is not received by the department on or before the due date, there shall be assessed a penalty of five percent of the amount of the tax; if the tax is not received within one month of the due date, there shall be assessed a total penalty of ten percent of the amount of the tax; and if the tax is not received within two months of the due date, there shall be assessed a total penalty of twenty percent of the amount of the tax.
     (3) Upon receipt of the amount of each tax imposed the department of revenue shall deposit the same with the state treasurer, who shall deposit four percent of the revenues received under RCW 54.28.020(1) ((and)), 54.28.025(1) (as recodified by this act), and section 4(1) of this act, and all revenues received under RCW 54.28.020(2) ((and)), 54.28.025(2) (as recodified by this act), and section 4(2) of this act in the general fund of the state and shall distribute the remainder ((in the manner hereinafter)) as set forth in RCW 54.28.050 and 54.28.055 (as recodified by this act). The state treasurer shall send a duplicate copy of each transmittal to the department of revenue.

Sec. 8   RCW 54.28.050 and 1982 1st ex.s. c 35 s 21 are each amended to read as follows:
     (1) After computing the tax imposed by RCW 54.28.020(1) (as recodified by this act) and section 4(1) of this act and making the distribution under RCW 54.28.040 (as recodified by this act), the department of revenue shall instruct the state treasurer, after placing thirty-seven and six-tenths percent in the state general fund to be dedicated for the benefit of the public schools, to distribute the balance as follows:
     (a) For amounts collected under RCW 54.28.020(1)(a) (as recodified by this act), the balance shall be distributed to each county in proportion to the gross revenue from sales made within each county; ((and to distribute the balance))
     (b) For amounts collected under section 4(1) of this act, if the telecommunications facilities are located in only one county, the balance shall be distributed to the county in which the wholesale telecommunications facilities are located. If the telecommunications facilities are located in more than one county, the balance shall be distributed in a pro rata manner to each applicable county based on the cost of the telecommunications facilities; and
     (c) For amounts collected under RCW 54.28.020(1) (b) and (c) (as recodified by this act), the balance shall be distributed as follows: If the entire generating facility, including reservoir, if any, is in a single county then all of the balance to the county where ((such)) the generating facility is located. If any reservoir is in more than one county, then to each county in which the reservoir or any portion ((thereof)) is located, a percentage equal to the percentage determined by dividing the total cost of the generating facilities, including adjacent switching facilities, into twice the cost of land and land rights acquired for any reservoir within each county, land and land rights to be defined the same as used by the federal power commission. If the powerhouse and dam, if any, in connection with ((such)) the reservoir are in more than one county, the balance shall be divided sixty percent to the county in which the owning ((district)) publicly owned utility is located and forty percent to the other county or counties or if ((said)) the powerhouse and dam, if any, are owned by a joint operating agency organized under chapter 43.52 RCW, or by more than one ((district)) publicly owned utility or are outside the county of the owning ((district)) publicly owned utility, then to be divided equally between the counties in which ((such)) the facilities are located. If all of the powerhouse and dam, if any, are in one county, then the balance shall be distributed to the county in which the facilities are located.
     (2) The provisions of this section shall not apply to the distribution of taxes collected under RCW 54.28.025 (as recodified by this act).

Sec. 9   RCW 54.28.055 and 1986 c 189 s 1 are each amended to read as follows:
     (1) After computing the tax imposed by RCW 54.28.025(1) (as recodified by this act) and after making the distribution specified in RCW 54.28.040 (as recodified by this act), the department of revenue shall instruct the state treasurer to distribute the amount collected as follows:
     (a) Fifty percent to the state general fund for the support of schools; and
     (b) Twenty-two percent to the counties, twenty-three percent to the cities, three percent to the fire protection districts, and two percent to the library districts.
     (2) Each county, city, fire protection district and library district shall receive a percentage of the amount for distribution to counties, cities, fire protection districts and library districts, respectively, in the proportion that the population of ((such)) the ((district)) publicly owned utility residing within the impacted area bears to the total population of all ((such districts)) publicly owned utilities residing within the impacted area. For the purposes of this chapter, the term "library district" includes only regional libraries as defined in RCW 27.12.010(4), rural county library districts as defined in RCW 27.12.010(5), intercounty rural library districts as defined in RCW 27.12.010(6), and island library districts as defined in RCW 27.12.010(7). The population of a library district, for purposes of ((such)) a distribution, shall not include any population within the library district and the impact area that also is located within a city or town.
     (3) If any distribution pursuant to subsection (1)(b) of this section cannot be made, then that share shall be prorated among the state and remaining local districts.
     (4) All distributions directed by this section to be made on the basis of population shall be calculated in accordance with data to be provided by the office of financial management.

Sec. 10   RCW 54.28.060 and 1996 c 149 s 12 are each amended to read as follows:
     Interest at the rate as computed under RCW 82.32.050(2) shall be added to the tax ((hereby)) imposed from the due date until the date of payment. The tax ((shall)) constitutes a debt to the state and may be collected as such.

Sec. 11   RCW 54.28.070 and 1941 c 245 s 3 are each amended to read as follows:
     Any city or town in which a public utility district operates works, plants, or facilities for the distribution and sale of electricity, or for the sale of wholesale telecommunications services, shall have the power to levy and collect from ((such)) the district a tax under this section. With respect to the distribution and sale of electricity, a tax may be imposed on the gross revenues derived by ((such)) the district from the sale of electricity within the city or town, exclusive of the revenues derived from the sale of electricity for purposes of resale. ((Such)) With respect to the sale of wholesale telecommunications services, a tax may be imposed under the applicable authority in chapter 35.21 RCW. The tax when levied shall be a debt of the district, and may be collected as such. Any ((such)) district shall have the power to add the amount of ((such)) tax to the rates or charges it makes for electricity ((so)) or wholesale telecommunications services sold within the limits of ((such)) the city or town.

Sec. 12   RCW 54.28.080 and 1957 c 278 s 8 are each amended to read as follows:
     Whenever any public utility district acquires an operating property from any private person, firm, or corporation and a portion of the operating property is situated within the boundaries of any school district and at the time of ((such)) acquisition there is an outstanding bonded indebtedness of the school district, then the public utility district shall, in addition to the tax imposed by this chapter, pay directly to the school district a proportion of all subsequent payments by the school district of principal and interest on ((said)) the bonded indebtedness, ((said)) the additional payments to be computed and paid as follows: The amount of principal and interest required to be paid ((by)) to the school district shall be multiplied by the percentage which the assessed value of the property acquired bore to the assessed value of the total property in the school district at the time of ((such)) the acquisition. ((Such)) The additional amounts shall be paid by the public utility district to the school district not less than fifteen days prior to the date that ((such)) the principal and interest payments are required to be paid by the school district. In addition, any public utility district which acquires from any private person, firm, or corporation an operating property situated within a school district, is authorized to make voluntary payments to ((such)) the school district for the use and benefit of the school district.

Sec. 13   RCW 54.28.090 and 1980 c 154 s 9 are each amended to read as follows:
     The county legislative authority of each county shall direct the county treasurer to deposit funds to the credit of each taxing district in the county, other than school districts, according to the manner they deem most equitable; except not less than an amount equal to three-fourths of one percent of the gross revenues obtained by a district from the sale of electric energy within any incorporated city or town shall be remitted to ((such)) the city or town. Information furnished by the district to the county legislative authority shall be the basis for the determination of the amount to be paid to ((such)) cities or towns.
     The provisions of this section shall not apply to the distribution of taxes collected under RCW 54.28.025 (as recodified by this act).

Sec. 14   RCW 54.28.100 and 1957 c 278 s 11 are each amended to read as follows:
     All money((s)) received by any taxing district shall be used for purposes for which state taxes may be used under the provisions of the state Constitution.

Sec. 15   RCW 54.28.110 and 1957 c 278 s 13 are each amended to read as follows:
     Whenever((, hereafter,)) property is removed from the tax rolls as a result of the acquisition of operating property or the construction of a generating plant by a public utility district, ((such)) the public utility district may make voluntary payments to any municipal corporation or other entity authorized to levy and collect taxes in an amount not to exceed the amount of tax revenues being received by ((such)) the municipal corporation or other entity at the time of ((said)) the acquisition or ((said)) construction and which are lost by ((such)) the municipal corporation or other entity as a result of the acquisition of operating property or the construction of a generating plant by the public utility district((: PROVIDED, That)). However, this section shall not apply to taxing districts as defined in RCW 54.28.010((, and: PROVIDED FURTHER, That)) (as recodified by this act) and in the event any operating property ((so)) removed from the tax rolls is dismantled or partially dismantled the payment which may be paid ((hereunder)) shall be correspondingly reduced.

Sec. 16   RCW 54.28.120 and 1957 c 278 s 14 are each amended to read as follows:
     In the event any ((district hereafter)) publicly owned utility purchases or otherwise acquires electric utility properties comprising all or a portion of an electric generation ((and/or)) or distribution system, or telecommunications properties for the purposes of providing wholesale telecommunications services, from a public service company, as defined in RCW 80.04.010, the total amount of privilege taxes imposed under this chapter ((278, Laws of 1957)) to be paid by the ((district)) publicly owned utility annually on the combined operating property within each county where ((such)) the utility property is located, irrespective of any other basis of levy contained in this chapter, will be not less than the combined total of the ad valorem taxes, based on regular levies, last levied against the electric utility property constituting the system so purchased or acquired, or the telecommunications properties purchased or acquired, plus the taxes paid by the ((district)) publicly owned utility for the same year on the revenues of other operating property in the same county under terms of this chapter. If all or any portion of the property so acquired is subsequently sold, or if rates charged to purchasers of electric energy or wholesale telecommunications services are reduced, the amount of privilege tax required under this section shall be proportionately reduced.

NEW SECTION.  Sec. 17   RCW 54.28.010, 54.28.011, 54.28.020, 54.28.025, 54.28.030, 54.28.040, 54.28.050, 54.28.055, 54.28.060, 54.28.070, 54.28.080, 54.28.090, 54.28.100, 54.28.110, and 54.28.120 are each recodified as a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 18   Section 4 of this act is added to the new chapter created in section 17 of this act.

NEW SECTION.  Sec. 19   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 20   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 July 1, 2003.