BILL REQ. #:  S-4356.2 

Read first time 01/24/08.   Referred to Committee on Ways & Means.

     AN ACT Relating to increasing city-county assistance account funding and distributions; amending RCW 43.08.290; reenacting and amending RCW 43.135.035; creating a new section; and providing an effective date.

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

Sec. 1   RCW 43.08.290 and 2005 c 450 s 2 are each amended to read as follows:
     (1) The city-county assistance account is created in the state treasury. All receipts from real estate excise tax disbursements provided under RCW 82.45.060 shall be deposited into the account. Beginning on July 1, 2008, the state treasurer shall transfer annually the sum of ten million dollars from the state general fund into the city-county assistance account. Moneys 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) Funds deposited in the city-county assistance account shall be distributed equally to the cities and counties.
     (3)(a) Funds distributed to counties shall, to the extent possible, increase the revenues received under RCW 82.14.030(1) by each county to the greater of ((two)) nine hundred ((fifty)) thousand dollars or:
     (i) For a county with an unincorporated population of one hundred thousand or less, seventy percent of the statewide weighted average per capita level of sales and use tax revenues collected under RCW 82.14.030(1) for the unincorporated areas of all counties imposing the sales and use tax authorized under RCW 82.14.030(1) in the previous calendar year; and
     (ii) For a county with an unincorporated population of more than one hundred thousand, sixty-five percent of the statewide weighted average per capita level of sales and use tax revenues collected under RCW 82.14.030(1) for the unincorporated areas of all counties imposing the sales and use tax authorized under RCW 82.14.030(1) in the previous calendar year.
     (b) For each county with an unincorporated population of fifteen thousand or less, the county shall receive the greater of the amount in (a) of this subsection or the amount received in local government assistance provided by section 716, chapter 276, Laws of 2004.
     (c) For each county with an unincorporated population of more than fifteen thousand and less than twenty-two thousand, the county shall receive in calendar year 2006 and 2007 the greater of the amount provided in (a) of this subsection or the amount received in local government assistance provided by section 716, chapter 276, Laws of 2004.
     (d) To the extent that revenues are insufficient to fund the distributions under this subsection, the distributions of all counties as otherwise determined under this subsection shall be ratably reduced.
     (e) To the extent that revenues exceed the amounts needed to fund the distributions under this subsection, the excess funds shall be divided ratably based upon unincorporated population among those counties receiving funds under this subsection and imposing the tax collected under RCW 82.14.030(2) at the maximum rate.
     (4)(a) For each city with a population of five thousand or less with a per capita assessed property value less than twice the statewide average per capita assessed property value for all cities for the calendar year previous to the certification under subsection (6) of this section, the city shall receive the greater of the following three amounts:
     (i) An amount necessary to increase the revenues collected under RCW 82.14.030(1) up to ((fifty-five)) seventy percent of the statewide weighted average per capita level of sales and use tax revenues collected under RCW 82.14.030(1) for all cities imposing the sales and use tax authorized under RCW 82.14.030(1) in the previous calendar year.
     (ii) The amount received in local government assistance provided for fiscal year 2005 by section 721, chapter 25, Laws of 2003 1st sp. sess.
     (iii) For a city with a per capita assessed property value less than fifty-five percent of the statewide average per capita assessed property value for all cities, an amount determined by subtracting the city's per capita assessed property value from fifty-five percent of the statewide average per capita assessed property value, dividing that amount by one thousand, and multiplying the result by the city's population.
     (b) For each city with a population of more than five thousand with a per capita assessed property value less than the statewide average per capita assessed property value for all cities for the calendar year previous to the certification under subsection (6) of this section, the city shall receive the greater of the following three amounts:
     (i) An amount necessary to increase the revenues collected under RCW 82.14.030(1) up to ((fifty)) seventy percent of the statewide weighted average per capita level of sales and use tax revenues collected under RCW 82.14.030(1) for all cities imposing the sales and use tax authorized under RCW 82.14.030(1) in the previous calendar year.
     (ii) For calendar year 2006 and 2007, the amount received in local government assistance provided for fiscal year 2005 by section 721, chapter 25, Laws of 2003 1st sp. sess.
     (iii) For a city with a per capita assessed property value less than fifty-five percent of the statewide average per capita assessed property value for all cities, an amount determined by subtracting the city's per capita assessed property value from fifty-five percent of the statewide average per capita assessed property value, dividing that amount by one thousand, and multiplying the result by the city's population.
     (c) No city may receive an amount greater than one hundred seventy-five thousand dollars a year under (a) or (b) of this subsection.
     (d) To the extent that revenues are insufficient to fund the distributions under this subsection, the distributions of all cities as otherwise determined under this subsection shall be ratably reduced.
     (e) To the extent that revenues exceed the amounts needed to fund the distributions under this subsection, the excess funds shall be divided ratably based upon population among those cities receiving funds under this subsection and imposing the tax collected under RCW 82.14.030(2) at the maximum rate.
     (f) This subsection only applies to cities incorporated prior to August 1, 2005.
     (5) The ((two)) nine hundred ((fifty)) thousand dollar amount in subsection (3) of this section and the one hundred seventy-five thousand dollar amount in subsection (4) of this section shall be increased each year beginning in calendar year ((2006)) 2009 by inflation as defined in RCW 84.55.005, as determined by the department of revenue.
     (6) Distributions under subsections (3) and (4) of this section shall be made quarterly beginning on October 1, 2005, based on population as last determined by the office of financial management. The department of revenue shall certify the amounts to be distributed under this section to the state treasurer. The certification shall be made by October 1, 2005, for the October 1, 2005, distribution and the January 1, 2006, distribution, based on calendar year 2004 collections. The certification shall be made by March 1, 2006, for distributions beginning April 1, 2006, and by March 1st of every year thereafter. The March 1st certification shall be used for distributions occurring on April 1st, July 1st, and October 1st of the year of certification and on January 1st of the year following certification.
     (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.

NEW SECTION.  Sec. 2   For the purposes of RCW 43.08.290(6), this act applies to distributions made on or after July 1, 2008.

Sec. 3   RCW 43.135.035 and 2008 c 1 s 5 (Initiative Measure No. 960) and 2007 c 484 s 6 are each reenacted and amended to read as follows:
     (1) After July 1, 1995, any action or combination of actions by the legislature that raises taxes may be taken only if approved by a two-thirds vote of each house of the legislature, and then only if state expenditures in any fiscal year, including the new revenue, will not exceed the state expenditure limits established under this chapter. Pursuant to the referendum power set forth in Article II, section 1(b) of the state Constitution, tax increases may be referred to the voters for their approval or rejection at an election.
     (2)(a) If the legislative action under subsection (1) of this section will result in expenditures in excess of the state expenditure limit, then the action of the legislature shall not take effect until approved by a vote of the people at a November general election. The state expenditure limit committee shall adjust the state expenditure limit by the amount of additional revenue approved by the voters under this section. This adjustment shall not exceed the amount of revenue generated by the legislative action during the first full fiscal year in which it is in effect. The state expenditure limit shall be adjusted downward upon expiration or repeal of the legislative action.
     (b) The ballot title for any vote of the people required under this section shall be substantially as follows:

     "Shall taxes be imposed on . . . . . . . in order to allow a spending increase above last year's authorized spending adjusted for personal income growth?"

     (3)(a) The state expenditure limit may be exceeded upon declaration of an emergency for a period not to exceed twenty-four months by a law approved by a two-thirds vote of each house of the legislature and signed by the governor. The law shall set forth the nature of the emergency, which is limited to natural disasters that require immediate government action to alleviate human suffering and provide humanitarian assistance. The state expenditure limit may be exceeded for no more than twenty-four months following the declaration of the emergency and only for the purposes contained in the emergency declaration.
     (b) Additional taxes required for an emergency under this section may be imposed only until thirty days following the next general election, unless an extension is approved at that general election. The additional taxes shall expire upon expiration of the declaration of emergency. The legislature shall not impose additional taxes for emergency purposes under this subsection unless funds in the education construction fund have been exhausted.
     (c) The state or any political subdivision of the state shall not impose any tax on intangible property listed in RCW 84.36.070 as that statute exists on January 1, 1993.
     (4) If the cost of any state program or function is shifted from the state general fund or a related fund to another source of funding, or if moneys are transferred from the state general fund or a related fund to another fund or account, the state expenditure limit committee, acting pursuant to RCW 43.135.025(5), shall lower the state expenditure limit to reflect the shift. For the purposes of this section, a transfer of money from the state general fund or a related fund to another fund or account includes any state legislative action taken that has the effect of reducing revenues from a particular source, where such revenues would otherwise be deposited into the state general fund or a related fund, while increasing the revenues from that particular source to another state or local government account. This subsection does not apply to: (a) The dedication or use of lottery revenues under RCW 67.70.240(3) or property taxes under RCW 84.52.068, in support of education or education expenditures; ((or)) (b) a transfer of moneys to, or an expenditure from, the budget stabilization account; or (c) transfers to the city-county assistance account under RCW 43.08.290.
     (5) If the cost of any state program or function and the ongoing revenue necessary to fund the program or function are shifted to the state general fund or a related fund on or after January 1, 2007, the state expenditure limit committee, acting pursuant to RCW 43.135.025(5), shall increase the state expenditure limit to reflect the shift unless the shifted revenue had previously been shifted from the general fund or a related fund.
     (6) For the purposes of chapter 1, Laws of 2008, "raises taxes" means any action or combination of actions by the legislature that increases state tax revenue deposited in any fund, budget, or account, regardless of whether the revenues are deposited into the general fund.

NEW SECTION.  Sec. 4   This act takes effect July 1, 2008.