"Sec. 1   RCW 79.64.110 and 2003 c 334 s 207 are each amended to read as follows:
     Any moneys derived from the lease of state forest lands or from the sale of valuable materials, oils, gases, coal, minerals, or fossils from those lands, must be distributed as follows:
     (1) State forest lands acquired through RCW 79.22.040 or by exchange for lands acquired through RCW 79.22.040:
     (a) The expense incurred by the state for administration, reforestation, and protection, not to exceed twenty-five percent, which rate of percentage shall be determined by the board, must be returned to the forest development account in the state general fund.
     (b) Any balance remaining must be paid to the county in which the land is located to be paid, distributed, and prorated, except as otherwise provided in this section, to the various funds in the same manner as general taxes are paid and distributed during the year of payment, except that no distribution may be made to the state general fund. Revenues that would otherwise be dedicated to the state general fund shall be deposited in the city-county assistance account created in section 2 of this act.
     (c) Any balance remaining, paid to a county with a population of less than sixteen thousand, must first be applied to the reduction of any indebtedness existing in the current expense fund of the county during the year of payment.
     (d) With regard to moneys remaining under this subsection (1), within seven working days of receipt of these moneys, the department shall certify to the state treasurer the amounts to be distributed to the counties. The state treasurer shall distribute funds to the counties four times per month, with no more than ten days between each payment date.
     (2) State forest lands acquired through RCW 79.22.010 or by exchange for lands acquired through RCW 79.22.010, except as provided in RCW 79.64.120:
     (a) Fifty percent shall be placed in the forest development account.
     (b) Fifty percent shall be prorated and distributed to the state general fund, to be dedicated for the benefit of the public schools, and the county in which the land is located according to the relative proportions of tax levies of all taxing districts in the county. The portion to be distributed to the state general fund shall be based on the regular school levy rate under RCW 84.52.065 and the levy rate for any maintenance and operation special school levies. With regard to the portion to be distributed to the counties, the department shall certify to the state treasurer the amounts to be distributed within seven working days of receipt of the money. The state treasurer shall distribute funds to the counties four times per month, with no more than ten days between each payment date. The money distributed to the county must be paid, distributed, and prorated to the various other funds in the same manner as general taxes are paid and distributed during the year of payment.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.14 RCW to read as follows:
     (1) The city-county assistance account is created in the state treasury. Money in the account may be spent only after appropriation. Expenditures from the account may be used only for the purposes provided in this section.
     (2) Fifty percent of the receipts deposited in the city-county assistance account shall be allocated to counties, and the remainder shall be allocated to cities.
     (3) Revenues allocated to counties shall be distributed as provided under this subsection.
     (a) Except as provided in (b) and (c) of this subsection, the amount distributed to a county under this section shall be an amount equal to twenty-five percent of the greater of the amounts described under (a)(i) through (iii) of this subsection.
     (i) For a county imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than the base amount from the tax in the measurement year, an amount from the city-county assistance account sufficient, when added to the amount of revenues received by the county in the measurement year, to equal the base amount. For the purposes of this subsection (3)(a)(i), "base amount" means two hundred fifty thousand dollars in the first distribution year. Thereafter, "base amount" means two hundred fifty thousand dollars increased by the rate of inflation as provided under subsection (5) of this section.
     (ii)(A) For a county with an unincorporated population of one hundred thousand or less and imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than seventy percent of the statewide weighted average per capita level of revenues for the unincorporated areas of all counties in the measurement year as determined by the department, an amount from the city-county assistance account sufficient, when added to the per capita level of revenues for the unincorporated area received by the county in the measurement year, to equal seventy percent of the statewide weighted average per capita level of revenues for the unincorporated areas of all counties in the measurement year.
     (B) For a county with an unincorporated population of more than one hundred thousand and imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than sixty-five percent of the statewide weighted average per capita level of revenues for the unincorporated areas of all counties in the measurement year as determined by the department, an amount from the city-county assistance account sufficient, when added to the per capita level of revenues for the unincorporated area received by the county in the measurement year, to equal sixty-five percent of the statewide weighted average per capita level of revenues for the unincorporated areas of all counties in the measurement year.
     (iii)(A) For a county with an unincorporated population of fifteen thousand or less, an amount equal to the amount provided to the county for fiscal year 2005 by section 716, chapter 276, Laws of 2004.
     (B) For a county with an unincorporated population of more than fifteen thousand and less than twenty-two thousand, and with respect to distributions made under this section in calendar years 2006 and 2007 only, an amount equal to the amount provided to the county for fiscal year 2005 by section 716, chapter 276, Laws of 2004.
     (b) If funds in the city-county assistance account for allocation to the counties are inadequate to make the distributions in (a) of this subsection, then the distributions shall be reduced ratably among the qualifying counties.
     (c) If funds in the city-county assistance account for allocation to the counties exceed the amount necessary to make the distributions in (a) of this subsection, the excess funds shall be apportioned ratably among those counties receiving funds under this section and imposing the tax under RCW 82.14.030(1) at the maximum rate.
     (4) Revenues allocated to cities shall be distributed as provided under this subsection.
     (a) Except as provided in (c), (d), and (e) of this subsection, the amount distributed to a city under this section shall be an amount equal to twenty-five percent of the greater of the amounts described under (a)(i) through (iii) of this subsection. This subsection (4)(a) applies only to cities with a population of five thousand or less and with a per capita assessed value of taxable property in the measurement year less than twice the statewide average per capita assessed value of taxable property for all cities for the measurement year.
     (i) For a city imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than fifty-five percent of the statewide weighted average per capita level of revenues for all cities in the measurement year as determined by the department, an amount from the city-county assistance account sufficient, when added to the per capita level of revenues received by the city in the measurement year, to equal fifty-five percent of the statewide weighted average per capita level of revenues for all cities in the measurement year.
     (ii) An amount equal to the amount provided to the city for fiscal year 2005 by section 721, chapter 25, Laws of 2003 1st sp. sess.
     (iii) For a city with a per capita assessed value of taxable property in the measurement year less than fifty percent of the statewide average per capita assessed value of taxable property for all cities in the measurement year as determined by the department, an amount determined by subtracting the city's per capita assessed value of taxable property in the measurement year from fifty percent of the statewide average per capita assessed value of taxable property for all cities in the measurement year, dividing that amount by one thousand, and multiplying the result by the city's population.
     (b) Except as provided in (c), (d), and (e) of this subsection, the amount distributed to a city under this section shall be an amount equal to twenty-five percent of the greater of the amounts described under (b)(i) through (iii) of this subsection. This subsection (4)(b) applies only to cities with a population of more than five thousand and with a per capita assessed value of taxable property in the measurement year less than the statewide average per capita assessed value of taxable property for all cities for the measurement year.
     (i) For a city imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than fifty percent of the statewide weighted average per capita level of revenues for all cities in the measurement year as determined by the department, an amount from the city-county assistance account sufficient, when added to the per capita level of revenues received by the city in the measurement year, to equal fifty percent of the statewide weighted average per capita level of revenues for all cities in the measurement year.
     (ii) For distributions in calendar years 2006 and 2007 only, an amount equal to the amount provided to the city for fiscal year 2005 by section 721, chapter 25, Laws of 2003 1st sp. sess.
     (iii) For a city with a per capita assessed value of taxable property in the measurement year less than fifty percent of the statewide average per capita assessed value of taxable property for all cities in the measurement year as determined by the department, an amount determined by subtracting the city's per capita assessed value of taxable property in the measurement year from fifty percent of the statewide average per capita assessed value of taxable property for all cities in the measurement year, dividing that amount by one thousand, and multiplying the result by the city's population.
     (c) A city may not receive an amount in any distribution year that would cause cumulative distributions to the city under this section for the year to exceed one hundred thousand dollars, increased after the first distribution year by the rate of inflation as provided under subsection (5) of this section.
     (d) If funds in the city-county assistance account for allocation to the cities are inadequate to make the distributions in (a) and (b) of this subsection, then the distributions shall be reduced ratably among the qualifying cities.
     (e) If funds in the city-county assistance account for allocation to the cities exceed the amount necessary to make the distributions in (a) and (b) of this subsection, the excess funds shall be apportioned ratably among those cities receiving funds under this section and imposing the tax under RCW 82.14.030(1) at the maximum rate.
     (f) This subsection (4) applies only to cities incorporated prior to the effective date of this section.
     (5)(a) For the purpose of certifications under subsection (6) of this section, the department shall calculate the base amount in subsection (3)(a)(i) of this section and the amount in subsection (4)(c) of this section for distribution years after the first distribution year using an adjustment for inflation as defined in RCW 84.55.005.
     (b) With respect to a city, town, or county to which or from which unincorporated territory is annexed during a measurement year, and for the purposes of calculating amounts for distribution under subsections (3) and (4) of this section based upon information from that year, the department shall utilize estimates of the population and assessed value of taxable property in the jurisdiction immediately prior to the annexation.
     (6)(a) Distributions of the amounts provided under subsections (3) and (4) of this section shall be made quarterly beginning on January 1, 2006, based on receipts to the city-county assistance account as provided in (b) of this subsection. The department shall certify the amounts to be distributed under this section to the state treasurer. Amounts certified by the department are final and may not be appealed. The certification shall be made by January 1, 2006, for the January 1, 2006, distribution, and by April 1, 2006, for the April 1, 2006, distribution. The certification shall be made by June 1, 2006, with respect to the distributions occurring in the ensuing distribution year, and by June 1st of each year thereafter with respect to the distributions occurring in each subsequent distribution year.
     (b) The quarterly distributions shall be made based on receipts to the city-county assistance account as follows:
     (i) Any distribution made on January 1st shall be based on receipts to the account during the immediately preceding September, October, and November;
     (ii) Any distribution made on April 1st shall be based on receipts to the account during the immediately preceding December, January, and February;
     (iii) Any distribution made on July 1st shall be based on receipts to the account during the immediately preceding March, April, and May; and
     (iv) Any distribution made on October 1st shall be based on receipts to the account during the immediately preceding June, July, and August.
     (7) All distributions to local governments from the city-county assistance account constitute increases in state distributions of revenue to political subdivisions for purposes of state reimbursement for the costs of new programs and increases in service levels under RCW 43.135.060, including any claims or litigation pending against the state on or after January 1, 2005.
     (8) For the purposes of this section, the following definitions apply:
     (a) Except for the initial distribution year, "distribution year" means the twelve-month period beginning July 1st. For the purposes of the initial distribution year, "distribution year" means the twelve-month period ending June 30, 2006.
     (b) "Measurement year" means the calendar year prior to the year in which the certification under subsection (6) of this section is made.
     (c) "Population" means the population for the county or city as determined by the office of financial management for the measurement year.
     (d) "City" means city or town.

NEW SECTION.  Sec. 3   A new section is added to chapter 44.28 RCW to read as follows:
     During calendar year 2008, the joint legislative audit and review committee shall review the distributions to cities and counties under section 2 of this act to determine the extent to which the distributions target the needs of cities and counties for which the repeal of the motor vehicle excise tax had the greatest fiscal impact. In conducting the study, the committee shall solicit input from the cities and counties. The department of revenue and the state treasurer shall provide the committee with any data within their purview that the committee considers necessary to conduct the review. The committee shall report to the legislature the results of its findings, and any recommendations for changes to the distribution formulas under section 2 of this act, by December 31, 2008.

Sec. 4   RCW 43.84.092 and 2003 c 361 s 602, 2003 c 324 s 1, 2003 c 150 s 2, and 2003 c 48 s 2 are each reenacted and amended to read as follows:
     (1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.
     (2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.
     (3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:
     (a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the city-county assistance account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the drinking water assistance account, the drinking water assistance administrative account, the drinking water assistance repayment account, the Eastern Washington University capital projects account, the education construction fund, the election account, the emergency reserve fund, The Evergreen State College capital projects account, the federal forest revolving account, the health services account, the public health services account, the health system capacity account, the personal health services account, the state higher education construction account, the higher education construction account, the highway infrastructure account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the multimodal transportation account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the oyster reserve land account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system combined plan 2 and plan 3 account, the public facilities construction loan revolving account beginning July 1, 2004, the public health supplemental account, the public works assistance account, the Puyallup tribal settlement account, the regional transportation investment district account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the Tacoma Narrows toll bridge account, the teachers' retirement system plan 1 account, the teachers' retirement system combined plan 2 and plan 3 account, the tobacco prevention and control account, the tobacco settlement account, the transportation infrastructure account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' and reserve officers' relief and pension principal fund, the volunteer fire fighters' and reserve officers' administrative fund, the Washington fruit express account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan 1 retirement account, the Washington law enforcement officers' and fire fighters' system plan 2 retirement account, the Washington school employees' retirement system combined plan 2 and 3 account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the county arterial preservation account, the department of licensing services account, the essential rail assistance account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the special category C account, the state patrol highway account, the transportation 2003 account (nickel account), the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, and the urban arterial trust account.
     (5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

Sec. 5   RCW 43.84.092 and 2004 c 242 s 60 are each amended to read as follows:
     (1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.
     (2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.
     (3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:
     (a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the city-county assistance account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the drinking water assistance account, the drinking water assistance administrative account, the drinking water assistance repayment account, the Eastern Washington University capital projects account, the education construction fund, the election account, the emergency reserve fund, The Evergreen State College capital projects account, the federal forest revolving account, the health services account, the public health services account, the health system capacity account, the personal health services account, the state higher education construction account, the higher education construction account, the highway infrastructure account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the multimodal transportation account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the oyster reserve land account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system combined plan 2 and plan 3 account, the public facilities construction loan revolving account beginning July 1, 2004, the public health supplemental account, the public works assistance account, the Puyallup tribal settlement account, the regional transportation investment district account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the Tacoma Narrows toll bridge account, the teachers' retirement system plan 1 account, the teachers' retirement system combined plan 2 and plan 3 account, the tobacco prevention and control account, the tobacco settlement account, the transportation infrastructure account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' and reserve officers' relief and pension principal fund, the volunteer fire fighters' and reserve officers' administrative fund, the Washington fruit express account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan 1 retirement account, the Washington law enforcement officers' and fire fighters' system plan 2 retirement account, the Washington public safety employees' plan 2 retirement account, the Washington school employees' retirement system combined plan 2 and 3 account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the county arterial preservation account, the department of licensing services account, the essential rail assistance account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the special category C account, the state patrol highway account, the transportation 2003 account (nickel account), the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, and the urban arterial trust account.
     (5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 6   This act takes effect August 1, 2005, except for section 5 of this act which takes effect July 1, 2006.

NEW SECTION.  Sec. 7   Section 4 of this act expires July 1, 2006."