BILL REQ. #:  H-3571.2 

Prefiled 12/07/09. Read first time 01/11/10.   Referred to Committee on Health Care & Wellness.

     AN ACT Relating to public health financing; amending RCW 43.70.514, 43.70.516, 82.08.0293, and 82.12.0293; adding new sections to chapter 43.70 RCW; adding a new section to chapter 82.32 RCW; creating a new section; and repealing RCW 43.70.512 and 43.70.522.

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

NEW SECTION.  Sec. 1   The legislature finds that public health is a core function of state government. The local health jurisdictions in Washington state's decentralized public health system depend on a combination of federal, state, and local funding. This funding system can make public health funding unstable on the local level and can adversely affect the public health services available to the citizens of the state. It is therefore the intent of the legislature to help provide local health jurisdictions with a more stable dedicated funding system by providing a dedicated state revenue stream and creating a single account through which all state funding for public health will be distributed. The legislature further intends that local health jurisdictions receiving state funds be held accountable for the use of those funds based on the minimum standards of public health protection in the state's public health improvement plan.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.70 RCW to read as follows:
     (1) The public health improvement account is created in the state treasury. Moneys in the account may be spent only after appropriation.
     (2) Except as provided in subsection (3) of this section, during the month of January 2011, and every January thereafter, the state treasurer shall distribute the account's annual receipts to each local health jurisdiction in the state to be used for core public health functions of statewide significance. The state treasurer must distribute the moneys required under this subsection as follows:
     (a) To the extent available, each local health jurisdiction must receive a base level of funding of one hundred thousand dollars.
     (b) The remainder of the funds to be distributed under this subsection (2) must be distributed among the jurisdictions on a per capita basis.
     (3) The state treasurer may not distribute funds to a local health jurisdiction under subsection (2)(a) of this section if he or she receives notice from the secretary of health, under RCW 43.70.516, that the jurisdiction is not in substantial compliance with the minimum standards for public health protection established under RCW 43.70.520. The state treasurer must retain funds withheld under this subsection until he or she receives notification from the secretary, under RCW 43.70.516, that the jurisdiction has achieved substantial compliance.
     (4) A local health jurisdiction may use funds provided under this section to supplant other funding sources for public health programs.
     (5) For purposes of this section:
     (a) "Per capita basis" means the amount multiplied by the proportion of the population of the jurisdiction in the previous calendar year to the population of the state in the previous calendar year.
     (b) "Population" means the number of persons as last determined by the office of financial management. If the jurisdiction is comprised of a single county, "population" means the number of persons in that county. If the jurisdiction is comprised of two or more counties, "population" means the number of persons in all counties of which the jurisdiction is comprised.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.70 RCW to read as follows:
     (1) The secretary must establish a review process for determining whether a local health jurisdiction is in substantial compliance with the minimum standards for public health protection established under RCW 43.70.520.
     (2) Except as provided in subsection (5) of this section, the secretary must use the process established in subsection (1) of this section to review each local health jurisdiction in the state at least once every three years.
     (3)(a) If the secretary finds that a local health jurisdiction is not in substantial compliance with the minimum standards for public health protection, he or she must notify the local health jurisdiction in writing.
     (b) A local health jurisdiction receiving written notice under this subsection must submit a plan of correction within sixty days. The plan of correction must explain the measures that the jurisdiction will undertake to achieve substantial compliance with the standards within one hundred eighty days.
     (c) If the secretary determines that the plan of correction is likely to bring the jurisdiction into substantial compliance within one hundred eighty days, he or she must provide technical assistance to the jurisdiction to help it to successfully complete the plan of correction. If the secretary determines that the plan of correction is not likely to bring the jurisdiction into substantial compliance within one hundred eighty days, he or she must reject the plan of correction and allow the jurisdiction to revise and resubmit the plan within fifteen days. If the secretary finds that the revised plan of correction is not likely to bring the jurisdiction into substantial compliance within one hundred eighty days, or if the jurisdiction does not resubmit a revised plan within fifteen days, he or she shall send notice to the state treasurer that the jurisdiction is out of substantial compliance under subsection (4) of this section.
     (d) The secretary must review a local health jurisdiction with an approved plan of correction one hundred eighty days after the approved plan's submission. If the secretary finds that the jurisdiction remains out of substantial compliance after the review required by this subsection (3)(d), he or she must send notice to the state treasurer that the jurisdiction is out of substantial compliance under subsection (4) of this section.
     (4)(a) The secretary must notify the state treasurer when the secretary finds, under subsections (3)(c) or (d) of this section, that a local health jurisdiction is out of substantial compliance established under RCW 43.70.520. Upon notification under this subsection, the state treasurer must suspend any distributions made to the jurisdiction under section 2 of this act until the secretary sends notice that the jurisdiction is back in substantial compliance.
     (b) The secretary must review, using the process established under subsection (1) of this section, a jurisdiction subject to suspension under (a) of this subsection no sooner than one hundred eighty days after notice of suspension was sent to the state treasurer. If the secretary finds that the jurisdiction remains out of substantial compliance, the secretary must continue the suspension and review the jurisdiction at intervals of at least one hundred eighty days until the secretary finds that the jurisdiction is in substantial compliance. Once the secretary finds that the jurisdiction is in substantial compliance after a review under this subsection, he or she must notify the state treasurer, who must immediately resume the distributions required under section 2 of this act and distribute any moneys the jurisdiction should have received during the period of suspension.
     (5) The secretary may exempt a local health jurisdiction from the review process required by this section if the jurisdiction is accredited by an organization whose accreditation standards meet or exceed the minimum standards for public health protection established under RCW 43.70.520.

Sec. 4   RCW 43.70.514 and 2007 c 259 s 61 are each amended to read as follows:
     The definitions in this section apply throughout ((sections 60 through 65 of this act)) this section and RCW 43.70.516 unless the context clearly requires otherwise.
     (1) "Core public health functions of statewide significance" or "public health functions" means health services that:
     (a) Address: Communicable disease prevention and response; preparation for, and response to, public health emergencies caused by pandemic disease, earthquake, flood, or terrorism; prevention and management of chronic diseases and disabilities; promotion of healthy families and the development of children; assessment of local health conditions, risks, and trends, and evaluation of the effectiveness of intervention efforts; and environmental health concerns;
     (b) Promote uniformity in the public health activities conducted by all local health jurisdictions in the public health system, increase the overall strength of the public health system, or apply to broad public health efforts; and
     (c) If left neglected or inadequately addressed, are reasonably likely to have a significant adverse impact on counties beyond the borders of the local health jurisdiction.
     (2) "Local health jurisdiction" or "jurisdiction" means a county board of health organized under chapter 70.05 RCW, a health district organized under chapter 70.46 RCW, or a combined city and county health department organized under chapter 70.08 RCW.

Sec. 5   RCW 43.70.516 and 2007 c 259 s 62 are each amended to read as follows:
     (1) ((The department shall accomplish the tasks included in subsection (2) of this section by utilizing the expertise of varied interests, as provided in this subsection.
     (a) In addition to the perspectives of local health jurisdictions, the state board of health, the Washington health foundation, and department staff that are currently engaged in development of the public health services improvement plan under RCW 43.70.520, the secretary shall actively engage:
     (i) Individuals or entities with expertise in the development of performance measures, accountability and systems management, such as the University of Washington school of public health and community medicine, and experts in the development of evidence-based medical guidelines or public health practice guidelines; and
     (ii) Individuals or entities who will be impacted by performance measures developed under this section and have relevant expertise, such as community clinics, public health nurses, large employers, tribal health providers, family planning providers, and physicians.
     (b) In developing the performance measures, consideration shall be given to levels of performance necessary to promote uniformity in core public health functions of statewide significance among all local health jurisdictions, best scientific evidence, national standards of performance, and innovations in public health practice. The performance measures shall be developed to meet the goals and outcomes in RCW 43.70.512. The office of the state auditor shall provide advice and consultation to the committee to assist in the development of effective performance measures and health status indicators.
     (c) On or before November 1, 2007, the experts assembled under this section shall provide recommendations to the secretary related to the activities and services that qualify as core public health functions of statewide significance and performance measures. The secretary shall provide written justification for any departure from the recommendations.
     (2))) By January 1, 2008, the department shall((:
     (a))) adopt a prioritized list of activities and services performed by local health jurisdictions that qualify as core public health functions of statewide significance as defined in RCW 43.70.514((; and
     (b) Adopt appropriate performance measures with the intent of improving health status indicators applicable to the core public health functions of statewide significance that local health jurisdictions must provide)).
     (((3))) (2) The secretary may revise the list of activities ((and the performance measures)) in future years as appropriate. Prior to modifying ((either)) the list ((or the performance measures)), the secretary must provide a written explanation of the rationale for such changes.
     (((4) The department and the local health jurisdictions shall abide by the prioritized list of activities and services and the performance measures developed pursuant to this section.
     (5) The department, in consultation with representatives of county governments, shall provide local jurisdictions with financial incentives to encourage and increase local investments in core public health functions. The local jurisdictions shall not supplant existing local funding with such state-incented resources.))

NEW SECTION.  Sec. 6   The following acts or parts of acts are each repealed:
     (1) RCW 43.70.512 (Public health -- Required measurable outcomes) and 2007 c 259 s 60; and
     (2) RCW 43.70.522 (Public health performance measures -- Assessing the use of funds -- Secretary's duties) and 2007 c 259 s 65.

Sec. 7   RCW 82.08.0293 and 2009 c 483 s 2 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 ((shall)) does not apply to sales of food and food ingredients. "Food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. "Food and food ingredients" does not include:
     (a) "Alcoholic beverages," which means beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume; and
     (b) "Tobacco," which means cigarettes, cigars, chewing or pipe tobacco, or any other item that contains tobacco.
     (2) The exemption of "food and food ingredients" provided for in subsection (1) of this section ((shall)) does not apply to prepared food, soft drinks, candy, or dietary supplements.
     (a) "Prepared food" means:
     (i) Food sold in a heated state or heated by the seller;
     (ii) Food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws. A plate does not include a container or packaging used to transport the food; or
     (iii) Two or more food ingredients mixed or combined by the seller for sale as a single item, except:
     (A) Food that is only cut, repackaged, or pasteurized by the seller; or
     (B) Raw eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the federal food and drug administration in chapter 3, part 401.11 of The Food Code, published by the food and drug administration, as amended or renumbered as of January 1, 2003, so as to prevent foodborne illness.
     (b) "Prepared food" does not include the following food or food ingredients, if the food or food ingredients are sold without eating utensils provided by the seller:
     (i) Food sold by a seller whose proper primary North American industry classification system (NAICS) classification is manufacturing in sector 311, except subsector 3118 (bakeries), as provided in the "North American industry classification system -- United States, 2002";
     (ii) Food sold in an unheated state by weight or volume as a single item; or
     (iii) Bakery items. The term "bakery items" includes bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, tortes, pies, tarts, muffins, bars, cookies, or tortillas.
     (c) "Soft drinks" means nonalcoholic beverages that contain natural or artificial sweeteners. Soft drinks do not include beverages that contain: Milk or milk products; soy, rice, or similar milk substitutes; or greater than fifty percent of vegetable or fruit juice by volume.
     (d) "Dietary supplement" means any product, other than tobacco, intended to supplement the diet that:
     (i) Contains one or more of the following dietary ingredients:
     (A) A vitamin;
     (B) A mineral;
     (C) An herb or other botanical;
     (D) An amino acid;
     (E) A dietary substance for use by humans to supplement the diet by increasing the total dietary intake; or
     (F) A concentrate, metabolite, constituent, extract, or combination of any ingredient described in this subsection;
     (ii) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and
     (iii) Is required to be labeled as a dietary supplement, identifiable by the "supplement facts" box found on the label as required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered as of January 1, 2003.
     (e) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. "Candy" does not include any preparation containing flour and does not require refrigeration.
     (3) Notwithstanding anything in this section to the contrary, the exemption of "food and food ingredients" provided in this section shall apply to food and food ingredients that are furnished, prepared, or served as meals:
     (a) Under a state administered nutrition program for the aged as provided for in the older Americans act (P.L. 95-478 Title III) and RCW 74.38.040(6);
     (b) That are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or
     (c) That are provided to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility. The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (3)(c) if at least one of the spouses or domestic partners is at least sixty-two years of age. For purposes of this subsection, "qualified low-income senior housing facility" means a facility:
     (i) That meets the definition of a qualified low-income housing project under Title 26 U.S.C. Sec. 42 of the federal internal revenue code, as existing on August 1, 2009;
     (ii) That has been partially funded under Title 42 U.S.C. Sec. 1485 of the federal internal revenue code; and
     (iii) For which the lessor or operator has at any time been entitled to claim a federal income tax credit under Title 26 U.S.C. Sec. 42 of the federal internal revenue code.
     (4)(a) Subsection (1) of this section notwithstanding, the retail sale of food and food ingredients is subject to sales tax under RCW 82.08.020 if the food and food ingredients are sold through a vending machine, and in this case the selling price for purposes of RCW 82.08.020 is fifty-seven percent of the gross receipts.
     (b) This subsection (4) does not apply to hot prepared food and food ingredients, other than food and food ingredients which are heated after they have been dispensed from the vending machine.
     (c) For tax collected under this subsection (4), the requirements that the tax be collected from the buyer and that the amount of tax be stated as a separate item are waived.

Sec. 8   RCW 82.12.0293 and 2009 c 483 s 4 are each amended to read as follows:
     (1) The provisions of this chapter ((shall)) do not apply in respect to the use of food and food ingredients for human consumption. "Food and food ingredients" has the same meaning as in RCW 82.08.0293.
     (2) The exemption of "food and food ingredients" provided for in subsection (1) of this section ((shall)) does not apply to prepared food, soft drinks, candy, or dietary supplements. "Prepared food," "soft drinks," ((and)) "dietary supplements," and "candy" have the same meanings as in RCW 82.08.0293.
     (3) Notwithstanding anything in this section to the contrary, the exemption of "food and food ingredients" provided in this section shall apply to food and food ingredients which are furnished, prepared, or served as meals:
     (a) Under a state administered nutrition program for the aged as provided for in the older Americans act (P.L. 95-478 Title III) and RCW 74.38.040(6);
     (b) Which are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or
     (c) That are provided to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility. The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (3)(c) if at least one of the spouses or domestic partners is at least sixty-two years of age. For purposes of this subsection, "qualified low-income senior housing facility" has the same meaning as in RCW 82.08.0293.

NEW SECTION.  Sec. 9   A new section is added to chapter 82.32 RCW to read as follows:
     (1) By December 1, 2010, and by December 1st for each year thereafter, the state treasurer must transfer from the general fund to the public health improvement account created in section 2 of this act the amount specified by the department as required under subsection (2) of this section.
     (2) By November 1, 2010, and by November 1st for each year thereafter, the department must notify the state treasurer of the estimated amount of state sales and use taxes that will be collected during the current calendar year resulting from the elimination of the sales and use tax exemption on candy in section 7 of this act.