"NEW SECTION.  Sec. 1   A new section is added to chapter 70.44 RCW to read as follows:
     (1) In addition to any other investment authority granted by law, a public hospital district with annual revenues exceeding one hundred million dollars, of which less than five percent is derived from regular property taxes as defined in RCW 84.04.140, is authorized to invest eligible funds and moneys in accordance with the applicable investment policies established by the state investment board, subject to the following conditions:
     (a) The district's board of commissioners first must adopt a policy that governs the investment of eligible funds and moneys; and
     (b) The district must use an investment manager that currently manages at least five hundred million dollars in assets and has at least five years of experience managing investments authorized by the district's policy that governs the investment of eligible funds and moneys.
     (2) For the purposes of this section, "eligible funds and moneys" means funds and moneys that belong to the district, are in its custody or possession, and are available for investing in long-term investment vehicles as defined by generally accepted accounting principles.

Sec. 2   RCW 35.39.030 and 1975 1st ex.s. c 11 s 1 are each amended to read as follows:
     Every city and town may invest any portion of the moneys in its inactive funds or in other funds in excess of current needs in:
     (1) United States bonds;
     (2) United States certificates of indebtedness;
     (3) Bonds or warrants of this state;
     (4) General obligation or utility revenue bonds or warrants of its own or of any other city or town in the state;
     (5) Its own bonds or warrants of a local improvement district which are within the protection of the local improvement guaranty fund law; and
     (6) In any other investments authorized by law for any other taxing districts, except for investments authorized for public hospital districts under section 1 of this act.

Sec. 3   RCW 39.59.020 and 1988 c 281 s 2 are each amended to read as follows:
     In addition to any other investment authority granted by law and notwithstanding any provision of law to the contrary, the state of Washington and local governments in the state of Washington are authorized to invest their funds and money in their custody or possession, eligible for investment, in:
     (1) Bonds of the state of Washington and any local government in the state of Washington, which bonds have at the time of investment one of the three highest credit ratings of a nationally recognized rating agency;
     (2) General obligation bonds of a state other than the state of Washington and general obligation bonds of a local government of a state other than the state of Washington, which bonds have at the time of investment one of the three highest credit ratings of a nationally recognized rating agency;
     (3) Subject to compliance with RCW 39.56.030, registered warrants of a local government in the same county as the government making the investment; or
     (4) Any investments authorized by law for the treasurer of the state of Washington or any local government of the state of Washington other than a public hospital district authorized to invest funds under section 1 of this act and a metropolitan municipal corporation but, except as provided in chapter 39.58 RCW, such investments shall not include certificates of deposit of banks or bank branches not located in the state of Washington.

Sec. 4   RCW 39.59.030 and 1988 c 281 s 3 are each amended to read as follows:
     In addition to any other investment authority granted by law, the state of Washington and local governments in the state of Washington are authorized to invest their funds and money in their custody or possession, eligible for investment and subject to the arbitrage provisions of section 148 of the federal internal revenue code or similar provision concerning the investment of state and local money and funds, in:
     (1) Shares of mutual funds with portfolios consisting of only United States government bonds or United States government guaranteed bonds issued by federal agencies with average maturities less than four years, or bonds described in RCW 39.59.020 (1) or (2), except that bonds otherwise described in RCW 39.59.020 (1) or (2) shall have one of the four highest credit ratings of a nationally recognized rating agency;
     (2) Shares of money market funds with portfolios consisting of only bonds of states and local governments or other issuers authorized by law for investment by local governments, which bonds have at the time of investment one of the two highest credit ratings of a nationally recognized rating agency; or
     (3) Shares of money market funds with portfolios consisting of securities otherwise authorized by law for investment by local governments other than public hospital districts authorized to invest funds under section 1 of this act."