Finds that the number, location, and functionality of on-site sewage disposal systems in operation in Washington is unknown. Creating a locally designed inventory and inspection system for on-site sewage disposal systems, and encouraging expansion of sanitary sewage systems, are necessary first steps towards addressing the problems inherent with failing systems. When prioritizing inventories and inspections, areas within incorporated cities should be addressed as early as possible because of the inherent proximity of sanitary sewage systems to existing on-site sewage disposal systems in use within a city.

Requires all cities and towns with a population of thirty-one thousand residents or greater, as forecasted by the office of financial management as of the effective date of this act, not located within a marine recovery area designated under RCW 70.118A.040, to, either directly or by contract with a local health jurisdiction, consistent with this act: (1) Create and maintain an inventory of the households and businesses within the boundaries of the city or town that do not receive sanitary sewage services by January 1, 2009; and

(2) Institute a program for the inspection of all on-site sewage disposal systems within the city's or town's jurisdiction by January 1, 2012.

Requires that, by January 15, 2009, the department shall submit to the appropriate committees of the legislature a report summarizing the information provided by cities and towns under this act.

Declares that the report required by this provision must contain summarized information regarding, at a minimum: (1) The number and general location of inventoried on-site sewage disposal systems;

(2) The functionality or failure rates of the state's on-site sewage disposal systems;

(3) The number of jurisdictions in full compliance with this act;

(4) The actual reimbursement requests received from local jurisdictions under this act; and

(5) Anticipated future reimbursement requests received from local jurisdictions under this act.

Provides that the report required by this act must be updated no fewer than three times, with each update reported to the appropriate committees of the legislature by: (1) January 15, 2011;

(2) January 15, 2013; and

(3) January 15, 2015.