6078-SAMHMCINAMH562SSB 6078H AMD TO APP COMM AMD (H2969.1)By Representative McIntireADOPTED AS AMENDED 04/15/2005 On page 1, of the amendment, after line 2, strike the remainder ofthe amendment and insert:NEW SECTION.Sec. The legislature finds that the citizens ofthe state benefit from a state expenditure limit that ensures that thestate budget operates with stability and predictability, whileencouraging the establishment of budget priorities and a periodicreview of state programs and the delivery of state services. A stateexpenditure limit can prevent budgeting crises that can occur becauseof increased spending levels during periods of revenue surplus followedby drastic reductions in state services in lean years. The citizens ofthe state are best served by an expenditure limit that keeps pace withthe growth in the state's economy yet ensures budget discipline andtaxpayer protection. For these reasons, the legislature finds thatmodifications to the state expenditure limit, after ten years ofexperience following the initial implementation of Initiative MeasureNo. 601, will recognize the economic productivity of the state'seconomy and better balance the needs of the citizens for essentialgovernment services with the obligation of the legislature for strictspending accountability and protection of its taxpayers.Sec. RCW 43.135.035 and 2001 c 3 s 8 and 2000 2nd sp.s. c 2 s2 are each reenacted and amended to read as follows: (1) After July 1, 1995, any action or combination of actions by thelegislature that raises state revenue or requires revenueneutral taxshifts may be taken only if approved by a twothirds vote of eachhouse, and then only if state expenditures in any fiscal year,including the new revenue, will not exceed the state expenditure limitsestablished under this chapter. However, for legislation enactedbetween the effective date of this 2005 act and June 30, 2007, anyaction or combination of actions by the legislature that raises state 1 revenue or requires revenueneutral tax shifts may be taken with theapproval of a majority of members elected to each house, so long asstate expenditures in any fiscal year, including the new revenue, willnot exceed the state expenditure limits established under this chapter. (2)(a) If the legislative action under subsection (1) of thissection will result in expenditures in excess of the state expenditurelimit, then the action of the legislature shall not take effect untilapproved by a vote of the people at a November general election. The((office of financial management)) state expenditure limit committeeshall adjust the state expenditure limit by the amount of additionalrevenue approved by the voters under this section. This adjustmentshall not exceed the amount of revenue generated by the legislativeaction during the first full fiscal year in which it is in effect. Thestate expenditure limit shall be adjusted downward upon expiration orrepeal of the legislative action. (b) The ballot title for any vote of the people required under thissection shall be substantially as follows: "Shall taxes be imposed on ....... in order to allow aspending increase above last year's authorized spending adjusted forinflation and population increases?" (3)(a) The state expenditure limit may be exceeded upon declarationof an emergency for a period not to exceed twentyfour months by a lawapproved by a twothirds vote of each house of the legislature andsigned by the governor. The law shall set forth the nature of theemergency, which is limited to natural disasters that require immediategovernment action to alleviate human suffering and provide humanitarianassistance. The state expenditure limit may be exceeded for no morethan twentyfour months following the declaration of the emergency andonly for the purposes contained in the emergency declaration. (b) Additional taxes required for an emergency under this sectionmay be imposed only until thirty days following the next generalelection, unless an extension is approved at that general election.The additional taxes shall expire upon expiration of the declaration ofemergency. The legislature shall not impose additional taxes foremergency purposes under this subsection unless funds in the educationconstruction fund have been exhausted. (c) The state or any political subdivision of the state shall not 2 impose any tax on intangible property listed in RCW 84.36.070 as thatstatute exists on January 1, 1993. (4) If the cost of any state program or function is shifted fromthe state general fund on or after January 1, 1993, to another sourceof funding, or if moneys are transferred from the state general fund toanother fund or account, the state expenditure limit committee, actingpursuant to RCW 43.135.025(5), shall lower the state expenditure limitto reflect the shift. For the purposes of this section, a transfer ofmoney from the state general fund to another fund or account includesany state legislative action taken ((after July 1, 2000,)) that has theeffect of reducing revenues from a particular source, where suchrevenues would otherwise be deposited into the state general fund,while increasing the revenues from that particular source to anotherstate or local government account. This subsection does not apply tothe dedication or use of lottery revenues under RCW 67.70.240(3) orproperty taxes under RCW 84.52.068, in support of education oreducation expenditures. (5) If the cost of any state program or function is shifted to thestate general fund on or after January 1, 2000, from another source offunding, or if moneys are transferred to the state general fund fromanother fund or account, the state expenditure limit committee, actingpursuant to RCW 43.135.025(5), shall increase the state expenditurelimit to reflect the shift.Sec. RCW 43.135.010 and 1994 c 2 s 1 are each amended to readas follows: The people of the state of Washington hereby find and declare: (1) The continuing increases in our state tax burden and thecorresponding growth of state government is contrary to the interest ofthe people of the state of Washington. (2) It is necessary to limit the rate of growth of state governmentwhile assuring adequate funding of essential services, including basiceducation as defined by the legislature. (3) The current budgetary system in the state of Washington lacksstability. The system encourages crisis budgeting and results incutbacks during lean years and overspending during surplus years. (4) It is therefore the intent of this chapter to: 3 (a) Establish a limit on state expenditures that will assure thatthe growth rate of state expenditures does not exceed the growth rate((of inflation and state population)) in Washington personal income; (b) Assure that local governments are provided funds adequate torender those services deemed essential by their citizens; (c) Assure that the state does not impose responsibility on localgovernments for new programs or increased levels of service underexisting programs unless the costs thereof are paid by the state; (d) Provide for adjustment of the limit when costs of a program aretransferred between the state and another political entity; (e) Establish a procedure for exceeding this limit in emergencysituations; (f) Provide for voter approval of tax increases; and (g) Avoid overfunding and underfunding state programs by providingstability, consistency, and longrange planning.Sec. RCW 43.135.025 and 2000 2nd sp.s. c 2 s 1 are each amendedto read as follows: (1) The state shall not expend from the general fund and relatedfunds during any fiscal year state moneys in excess of the stateexpenditure limit established under this chapter. (2) Except pursuant to a declaration of emergency under RCW43.135.035 or pursuant to an appropriation under RCW 43.135.045(4)(b),the state treasurer shall not issue or redeem any check, warrant, orvoucher that will result in a state general fund or related fundexpenditure for any fiscal year in excess of the state expenditurelimit established under this chapter. A violation of this subsectionconstitutes a violation of RCW 43.88.290 and shall subject the statetreasurer to the penalties provided in RCW 43.88.300. (3) The state expenditure limit for any fiscal year shall be theprevious fiscal year's state expenditure limit increased by apercentage rate that equals the fiscal growth factor. (4) For purposes of computing the state expenditure limit for thefiscal year beginning July 1, ((1995)) 2007, the phrase "the previousfiscal year's state expenditure limit" means the total stateexpenditures from the state general fund and related funds, notincluding federal funds, for the fiscal year beginning July 1, ((1989)) 4 2006, plus the fiscal growth factor. ((This calculation is thencomputed for the state expenditure limit for fiscal years 1992, 1993,1994, and 1995, and as required under RCW 43.135.035(4).)) (5) A state expenditure limit committee is established for thepurpose of determining and adjusting the state expenditure limit asprovided in this chapter. The members of the state expenditure limitcommittee are the director of financial management, the attorneygeneral or the attorney general's designee, and the chairs and rankingminority members of the senate committee on ways and means and thehouse of representatives committee on appropriations. All actions ofthe state expenditure limit committee taken pursuant to this chapterrequire an affirmative vote of at least ((three)) four members. (6) Each November, the state expenditure limit committee shalladjust the expenditure limit for the preceding fiscal year based onactual expenditures and known changes in the fiscal growth factor andthen project an expenditure limit for the next two fiscal years. If,by November 30th, the state expenditure limit committee has not adoptedthe expenditure limit adjustment and projected expenditure limit asprovided in subsection (5) of this section, the attorney general or hisor her designee shall adjust or project the expenditure limit, asnecessary. (7) "Fiscal growth factor" means the average ((of the sum ofinflation and population change for each of the prior three fiscalyears)) growth in state personal income for the prior ten fiscal years. (8) (("Inflation" means the percentage change in the implicit pricedeflator for the United States for each fiscal year as published by thefederal bureau of labor statistics. (9) "Population change" means the percentage change in statepopulation for each fiscal year as reported by the office of financialmanagement.)) "General fund" means the state general fund. (9) "Related fund" means the health services account, violencereduction and drug enforcement account, public safety and educationaccount, water quality account, or student achievement fund.Sec. RCW 43.135.035 and 2005 c ... s 2 (section 2 of this act)are each amended to read as follows: (1) After July 1, 1995, any action or combination of actions by thelegislature that raises state revenue or requires revenueneutral tax 5 shifts may be taken only if approved by a two thirds vote of eachhouse, and then only if state expenditures in any fiscal year,including the new revenue, will not exceed the state expenditure limitsestablished under this chapter. ((However, for legislation enactedbetween the effective date of this 2005 act and June 30, 2007, anyaction or combination of actions by the legislature that raises staterevenue or requires revenueneutral tax shifts may be taken with theapproval of a majority of members elected to each house, so long asstate expenditures in any fiscal year, including the new revenue, willnot exceed the state expenditure limits established under thischapter.)) (2)(a) If the legislative action under subsection (1) of thissection will result in expenditures in excess of the state expenditurelimit, then the action of the legislature shall not take effect untilapproved by a vote of the people at a November general election. Thestate expenditure limit committee shall adjust the state expenditurelimit by the amount of additional revenue approved by the voters underthis section. This adjustment shall not exceed the amount of revenuegenerated by the legislative action during the first full fiscal yearin which it is in effect. The state expenditure limit shall beadjusted downward upon expiration or repeal of the legislative action. (b) The ballot title for any vote of the people required under thissection shall be substantially as follows: "Shall taxes be imposed on ....... in order to allow aspending increase above last year's authorized spending adjusted for((inflation and population increases)) personal income growth?" (3)(a) The state expenditure limit may be exceeded upon declarationof an emergency for a period not to exceed twentyfour months by a lawapproved by a twothirds vote of each house of the legislature andsigned by the governor. The law shall set forth the nature of theemergency, which is limited to natural disasters that require immediategovernment action to alleviate human suffering and provide humanitarianassistance. The state expenditure limit may be exceeded for no morethan twentyfour months following the declaration of the emergency andonly for the purposes contained in the emergency declaration. (b) Additional taxes required for an emergency under this sectionmay be imposed only until thirty days following the next generalelection, unless an extension is approved at that general election. 6 The additional taxes shall expire upon expiration of the declaration ofemergency. The legislature shall not impose additional taxes foremergency purposes under this subsection unless funds in the educationconstruction fund have been exhausted. (c) The state or any political subdivision of the state shall notimpose any tax on intangible property listed in RCW 84.36.070 as thatstatute exists on January 1, 1993. (4) If the cost of any state program or function is shifted fromthe state general fund ((on or after January 1, 1993,)) or a relatedfund to another source of funding, or if moneys are transferred fromthe state general fund or a related fund to another fund or account,the state expenditure limit committee, acting pursuant to RCW43.135.025(5), shall lower the state expenditure limit to reflect theshift. For the purposes of this section, a transfer of money from thestate general fund or a related fund to another fund or accountincludes any state legislative action taken that has the effect ofreducing revenues from a particular source, where such revenues wouldotherwise be deposited into the state general fund or a related fund,while increasing the revenues from that particular source to anotherstate or local government account. This subsection does not apply tothe dedication or use of lottery revenues under RCW 67.70.240(3) orproperty taxes under RCW 84.52.068, in support of education oreducation expenditures. (5) If the cost of any state program or function ((is)) and theongoing revenue necessary to fund the program or function are shiftedto the state general fund or a related fund on or after January 1,((2000, from another source of funding, or if moneys are transferred tothe state general fund from another fund or account)) 2007, the stateexpenditure limit committee, acting pursuant to RCW 43.135.025(5),shall increase the state expenditure limit to reflect the shift.Sec. RCW 43.135.045 and 2003 1st sp.s. c 25 s 920 are eachamended to read as follows: (1) The emergency reserve fund is established in the statetreasury. During each fiscal year, the state treasurer shall ((depositin the emergency reserve fund all general fundstate revenues inexcess of the state expenditure limit for that fiscal year. Deposits))transfer an amount from the state general fund to the emergency reserve 7 fund. The amount transferred shall equal the amount by which totalstate revenue for the general fund and related funds exceeds the stateexpenditure limit, multiplied by the percentage that general fundexpenditures are of total expenditures from the general fund andrelated funds. Transfers shall be made at the end of each fiscalquarter based on projections of state revenues, expenditures, and thestate expenditure limit. The treasurer shall make transfers betweenthese accounts as necessary to reconcile actual annual revenues and theexpenditure limit for fiscal year 2000 and thereafter. (2) The legislature may appropriate moneys from the emergencyreserve fund only with approval of at least twothirds of the membersof each house of the legislature, and then only if the appropriationdoes not cause total expenditures to exceed the state expenditure limitunder this chapter. (3) The emergency reserve fund balance shall not exceed fivepercent of annual general fundstate revenues as projected by theofficial state revenue forecast. Any balance in excess of five percentshall be transferred on a quarterly basis by the state treasurer asfollows: Seventyfive percent to the student achievement fund herebycreated in the state treasury and twentyfive percent to the generalfund balance. The treasurer shall make transfers between theseaccounts as necessary to reconcile actual annual revenues for fiscalyear 2000 and thereafter. When perstudent state funding for themaintenance and operation of K12 education meets a level of no lessthan ninety percent of the national average of total funding from allsources per student as determined by the most recent published datafrom the national center for education statistics of the United Statesdepartment of education, as calculated by the office of financialmanagement, further deposits to the student achievement fund shall berequired only to the extent necessary to maintain the ninetypercentlevel. Remaining funds are part of the general fund balance and thesefunds are subject to the expenditure limits of this chapter. (4) The education construction fund is hereby created in the statetreasury. (a) Funds may be appropriated from the education construction fundexclusively for common school construction or higher educationconstruction. 8 (b) Funds may be appropriated for any other purpose only ifapproved by a twothirds vote of each house of the legislature and ifapproved by a vote of the people at the next general election. Anappropriation approved by the people under this subsection shall resultin an adjustment to the state expenditure limit only for the fiscalperiod for which the appropriation is made and shall not affect anysubsequent fiscal period. (5) Funds from the student achievement fund shall be appropriatedto the superintendent of public instruction strictly for distributionto school districts to meet the provisions set out in the studentachievement act. Allocations shall be made on an equal per fulltimeequivalent student basis to each school district. (((6) Earnings of the emergency reserve fund under RCW43.84.092(4)(a) shall be transferred quarterly to the multimodaltransportation account, except for those earnings that are in excess ofthirtyfive million dollars each fiscal year. Within thirty daysfollowing any fiscal year in which earnings transferred to themultimodal transportation account under this subsection did not totalthirtyfive million dollars, the state treasurer shall transfer fromthe emergency reserve fund an amount necessary to bring the totaldeposited in the multimodal transportation account under thissubsection to thirtyfive million dollars. The revenues to themultimodal transportation account reflected in this subsection provideongoing support for the transportation programs of the state. However,it is the intent of the legislature that any new longterm financialsupport that may be subsequently provided for transportation programswill be used to replace and supplant the revenues reflected in thissubsection, thereby allowing those revenues to be returned to thepurposes to which they were previously dedicated. No transfers fromthe emergency reserve fund to the multimodal fund shall be made duringthe 200305 fiscal biennium.))NEW SECTION.Sec. (1) Sections 1 and 2 of this act arenecessary for the immediate preservation of the public peace, health,or safety, or support of the state government and its existing publicinstitutions, and take effect immediately. (2) Sections 3 through 6 of this act take effect July 1, 2007. 9 Correct the title.Between the effective date of this act and June 30, 2007,a 2/3 vote of both houses is not required for legislative actions thatraise revenue if the state expenditures do not exceed the stateexpenditure limit. Other changes effective July 1, 2007: Basesexpenditure limit growth on ten year average of state personal incomegrowth. Continues rebasing of expenditure limit when actualexpenditures are below the limit. When revenue exceeds limit transfersmoney from general fund to emergency reserve fund in proportion to thegeneral fund share of limited funds. Removes requirement to transferinterest earning of the emergency reserve fund to the multimodaltransportation account.--- END --- 10