"Sec. 1   RCW 74.46.803 and 2001 1st sp.s. c 8 s 16 are each amended to read as follows:
     (1) The department shall establish rules for issuing a certificate of capital authorization. ((Applications for a certificate of capital authorization shall be submitted and approved on a biennial basis.)) The rules shall address the following subjects, among others:
     (a) The period of time during which applications for certificates of capital authorization will be accepted;
     (b) The period of time for which a certificate of capital authorization will be valid; and
     (c) The prioritization of applications for certificates of capital authorization, consistent with the principles set out in this section.
     (2) The rules for a certificate of capital authorization shall be consistent with the following principles:
     (((1) The certificate of capital authorization shall be approved on a first-come, first-served basis.
     (2) Those projects that do not receive approval in one authorization period shall have priority the following biennium should the project be resubmitted.))
     (a) A certificate of capital authorization is only required for capital expenditures exceeding the expenditure minimum as defined in RCW 70.38.025.
     (b) In processing and approving certificates of capital authorization, priority shall be given to major renovation of existing facilities or construction of replacement facilities. Those existing or replacement facilities with the greatest length of time since their last major renovation or construction, exceeding the expenditure minimum as defined in RCW 70.38.025, shall be given first priority.
     (c) Certificates of capital authorization for new facilities shall receive last priority and be assigned on a first-come, first-served basis.
     (d) Within the priorities established by this section, applications for certificates of capital authorization that do not receive approval in one state fiscal year because that year's authorization limit has been reached shall have priority the following year if the applications are resubmitted. For example, a renovation or replacement project not receiving certificate of capital authorization approval for one state fiscal year shall have priority over other renovation or replacement projects in the following year, if the applications are resubmitted; and new facility projects not receiving certificate of capital authorization approval for one state fiscal year shall have priority over other new facility projects in the following fiscal year, if the applications are resubmitted.
     (e) Certificate of capital authorization applications must be filed with the department by the end of the previous calendar year to be considered for priority assignment the following state fiscal year beginning July 1. For example, a facility requesting a certificate of capital authorization for state fiscal year July 1, 2009, through June 30, 2010, must file a request for capital authorization no later than December 31, 2008. Within ninety days of receipt of an application, the department shall either reject the application as unacceptable or act upon it.
     (3) The department shall have the authority to give first priority for a project that is necessitated by an emergency situation even if the project is not submitted in a timely fashion. ((The department shall establish rules for determining what constitutes an emergency.)) Projects shall be considered on an emergency basis if the construction or renovation must be completed as soon as possible to:
     (a) Retain a facility's license or certification;
     (b) Protect the health or safety of the facility's residents; or
     (c) Avoid closure.
     (4) The department shall establish deadlines for progress and the department shall have the authority to withdraw the certificate of capital authorization where the holder of the certificate has not complied with those deadlines in a good faith manner.

Sec. 2   RCW 74.46.807 and 2001 1st sp.s. c 8 s 15 are each amended to read as follows:
     The total capital authorization available for any ((biennial period)) state fiscal year shall be specified in the biennial appropriations act and shall be calculated on an annual basis. ((When setting the capital authorization level, the legislature shall consider both the need for, and the cost of, new and replacement beds.))"