BILL REQ. #:  S-0463.1 

Read first time 01/21/09.   Referred to Committee on Economic Development, Trade & Innovation.

     AN ACT Relating to funding for residential infrastructure development; amending RCW 43.330.010, 82.45.060, and 82.45.180; reenacting and amending RCW 43.84.092; adding new sections to chapter 43.330 RCW; and adding a new section to chapter 43.135 RCW.

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

Sec. 1   RCW 43.330.010 and 2007 c 322 s 2 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Affordable residential development" or "affordable housing" means housing that is owned or rented where monthly housing costs, including utilities other than telephone, do not exceed thirty percent of the household's monthly income.
     (2) "Associate development organization" means a local economic development nonprofit corporation that is broadly representative of community interests.
     (((2))) (3) "Comparable replacement housing" means any dwelling that is (a) decent, safe, and sanitary; (b) adequate in size to accommodate the occupants; (c) within the financial means of the displaced person; (d) functionally equivalent; (e) in an area not subject to unreasonably adverse environmental conditions; and (f) in a location generally not less desirable than the location of the displaced person's dwelling with respect to public utilities, facilities, services, and the displaced person's place of employment.
     (4) "Consumer price index" means, for any calendar year, that year's annual average consumer price index, for Washington state, for wage earners and clerical workers, all items, compiled by the bureau of labor and statistics, United States department of labor.
     (5) "Dense" means the same as transit-supportive density.
     (6) "Department" means the department of community, trade, and economic development.
     (((3))) (7) "Director" means the director of the department of community, trade, and economic development.
     (((4))) (8) "Eligible jurisdiction" means a county or city planning under RCW 36.70A.040 or a federally recognized Indian tribe in the state of Washington.
     (9) "Financial institution" means a bank, trust company, mutual savings bank, savings and loan association, or credit union authorized to do business in this state under state or federal law.
     (((5))) (10) "High capacity transit station" means a stop or station for public transportation that operates on a fixed guideway rail system or designated bus rapid transit line.
     (11) "Low-income household" has the same meaning as in RCW 43.185A.010.
     (12) "Major transit stop" means a stop for a bus or other transit mode providing fixed route service in intervals of at least every thirty minutes during peak hours of operation.
     (13) "Market rate" means the current average market interest rate that is determined at the time an individual loan is closed upon, or grant is awarded, using a widely recognized current market interest rate measurement to be selected for use by the department. This interest rate must be noted in an attachment to the closing documents for any loan and in any grant contract for reference if the loan or grant must be repaid with interest.
     (14) "Microenterprise development organization" means a community development corporation, a nonprofit development organization, a nonprofit social services organization or other locally operated nonprofit entity that provides services to low-income entrepreneurs.
     (((6))) (15) "Nonprofit organization" means an organization that is tax exempt, or not required to apply for an exemption, under section 501(c)(3) of the federal internal revenue code, or similar successor provisions.
     (16) "Statewide microenterprise association" means a nonprofit entity with microenterprise development organizations as members that serves as an intermediary between the department of community, trade, and economic development and local microenterprise development organizations.
     (17) "Transfer of development rights" or "rural and resource land transfer of development rights" includes methods for protecting land from development by voluntarily removing the development rights from a transfer of development rights sending site and transferring them to a transfer of development receiving site for the purpose of increasing development density in the receiving site. Methods for protecting sending sites and increasing the development density in receiving sites include awarding bonuses or regulatory flexibility to receiving sites when persons within a receiving site purchase development rights from a sending site through a transfer of development rights bank or from a landowner who is a willing development rights seller. Bonuses include, but are not limited to, increased height, density, or floor area ratio. Options for regulations on which a jurisdiction could award increased flexibility include, but are not limited to, parking requirements, impervious surface limits, or setbacks.
     (18) "Transfer of development rights receiving site" or "transfer of development rights sending site" means an area that a city or county has designated as either a receiving site or sending site in accordance with a rural and resource land transfer of development rights program.
     (19) "Transit-proximate" means within one-half mile of a high capacity transit station or within one-quarter mile of another major transit stop.
     (20) "Transit-supportive density" means a net minimum of fifty units of residential development for each acre of land within one-half mile of a high capacity transit station and a net minimum of ten residential development units for each acre of land within one-quarter mile of another major transit stop where units for each acre of land are measured as net zoned density.
     (21) "Very low-income household" means a single person, family, or unrelated persons living together whose adjusted income is less than fifty percent of the median family income, adjusted for household size, for the county where the project is located.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.330 RCW to read as follows:
     (1) The residential infrastructure program is created in the department to provide loans to eligible jurisdictions and grants to nonprofit organizations for public infrastructure that supports increased capacity for dense, affordable residential development in transit-proximate areas.
     (2) The department may provide direct loans to eligible jurisdictions for projects meeting the requirements of subsection (3) of this section or provide grants to nonprofit organizations for projects meeting the requirements of subsection (4) of this section. Funds appropriated through the program must be used to pay for the cost of public infrastructure projects that support increased capacity for dense, affordable residential development in transit-proximate areas, including the planning, construction, repair, reconstruction, replacement, rehabilitation, or improvement of sidewalks, streets and roads, bridges, publicly owned utilities, drinking water systems, and storm and sanitary sewage systems. The department may also provide loans to eligible jurisdictions or grants to nonprofit organizations for the acquisition of real property when the acquisition is directly related to the development of public infrastructure projects to support dense, affordable residential development in transit-proximate areas.
     (3) An eligible jurisdiction seeking funding from the residential infrastructure program must:
     (a) Designate a project area within its urban growth area designated under RCW 36.70A.110 and demonstrate with official plans that overall development within the project area will increase the supply of dense, affordable residential development units and that the project area currently, or will within eight years of the loan award, meets the definitions of transit-proximate and will achieve minimum transit-supportive density;
     (b) Demonstrate that designated infrastructure projects, for which an eligible jurisdiction seeks funding:
     (i) Are contained in the eligible jurisdictions' capital facilities element of the comprehensive plan under RCW 36.70A.070;
     (ii) Maximize the use of existing infrastructure; and
     (iii) Will increase existing system capacity to accommodate projected population growth in a manner that supports infill and redevelopment of existing urban areas;
     (c) Demonstrate a commitment to promoting affordable residential development within the designated project area through:
     (i) Local funding commitments to affordable residential housing projects in the proposed project area; or
     (ii) The official adoption and implementation of policies and ordinances that include affordable housing incentive initiatives, such as those outlined within RCW 36.70A.540, or other policies and programs intended to promote the creation of affordable housing;
     (d) Include a plan to construct, or pay for the construction of, comparable replacement housing within the eligible jurisdiction when housing units are lost as a direct result of the public infrastructure projects funded under this program. A residential unit lost as a result of the infrastructure project must be replaced one-for-one with a unit at an equal or better affordability rate, and relocation assistance must be paid to any displaced households. Projects receiving financing from the residential infrastructure program must comply with any relocation standards and requirements and real property acquisition policies established by the department as a condition of residential infrastructure program assistance; and
     (e) Commit to paying the prevailing wage as described under RCW 39.12.020 for each infrastructure project.
     (4) A nonprofit organization seeking funding from the residential infrastructure program must:
     (a) Demonstrate that the funding will support public infrastructure projects or the acquisition of property related to the development of infrastructure projects, as described in subsection (2) of this section, related to a specific affordable residential development that has also received a commitment of funding from the Washington housing trust fund under chapter 43.185 or 43.185A RCW;
     (b) Demonstrate that the area in which the infrastructure project will take place is within an urban growth area designated by a local jurisdiction under RCW 36.70A.110, and demonstrate with official plans from the jurisdiction that overall development within the project area will increase the supply of dense, affordable residential development and that the project area currently, or will within eight years of the grant award, meets the definitions of transit-proximate and will achieve minimum transit-supportive density;
     (c) Demonstrate that the specific affordable housing development described in (a) of this subsection will, within eight years of the grant award, contribute to an increase in the supply of dense, affordable residential development within the area referenced in (b) of this subsection; and
     (d) Comply with the requirements of subsection (3)(d) of this section, related to the provision of comparable replacement housing and relocation standards and requirements.
     (5) The department must determine each year the total amount of funding available in loans and grants and must establish the total amount of financial assistance to be appropriated to eligible jurisdiction and nonprofit organization applicants based on (a) the total amount of money appropriated to the program; (b) the quality of applications received; and (c) the best available projections of total revenue likely to be available for the program for the subsequent three years. The total amount of financial assistance allocated must not exceed ten million dollars per project for eligible jurisdictions and not exceed one million dollars per project for nonprofit organizations. The maximum project funding limits established in this section must be adjusted for inflation by the office of financial management every other year beginning July 1, 2011, based upon changes in the consumer price index during the time period since the last adjustment. If the bureau of labor and statistics develops more than one consumer price index for areas within the state, the index covering the greatest number of people, covering areas exclusively within the boundaries of the state, and including all items shall be used for the adjustments for inflation in this section. The office of financial management must calculate the new maximum project funding limits and transmit those new limits to the department.
     (6) Loan interest rates must not exceed one-half of one percent a year. The department shall establish policies, priorities, and procedures by which all or part of a loan may be forgiven if an eligible jurisdiction:
     (a) Creates a significantly greater number of affordable residential housing units within the project area than the number agreed to during loan contract negotiations;
     (b) Creates a significant number of residential units that are available and affordable to households of income levels significantly below the maximum income levels allowable under the program; or
     (c) Significantly exceeds program expectations in other ways to be identified by the department.
     (7) During each fiscal year in which funds are available for use by the department for the residential infrastructure program, the department shall announce to all known interested parties, and through major media throughout the state, a competitive application period of at least ninety days' duration. This announcement must be made as often as the director deems appropriate for proper utilization of resources.
     (8) The department shall establish a competitive process for loan and grant awards and shall review and prioritize proposals in consultation with the public works board and the transportation improvement board or designees selected by those boards to represent them.
     (a) Priority must be awarded to projects that include plans to:
     (i) Maximize capacity to accommodate growth;
     (ii) Maximize residential density;
     (iii) Maximize the number of affordable housing units;
     (iv) Maintain the affordability of the housing for the longest period of time;
     (v) Maximize affordability to low-income households and very low-income households;
     (vi) Maximize access to public transit; and
     (vii) Demonstrate readiness to proceed.
     (b) The department shall give additional consideration to jurisdictions that demonstrate a commitment to creating receiving areas for rural and resource land transfer of development rights, which may be demonstrated through one of the following actions, listed in order of highest value and priority:
     (i) The jurisdiction has in place at the time of application, within the area specified by the application or in other areas within the jurisdiction, designated receiving sites for rural and resource land transfer of development rights established through an ordinance by the jurisdiction and an interlocal agreement with a sending site jurisdiction that enables transfers from rural and resource lands;
     (ii) The jurisdiction has in place at the time of application, within the area specified by the application or in other areas within the jurisdiction, designated receiving sites for rural and resource land transfer of development rights established through an ordinance by the jurisdiction; or
     (iii) The jurisdiction states in its comprehensive plan at the time of application a commitment to consider the development and implementation of a rural and resource land transfer of development rights program.
     (9) Eligible jurisdictions and nonprofit organizations that receive support from the residential infrastructure program must report to the department annually by December 31st of each year following the date of the receipt of the loan or grant until ten years after the completion of the infrastructure project.
     (a) Reporting before and during the construction of the infrastructure project must include information on the status of the project, the estimated completion date, and any variations from the approved proposal.
     (b) Reporting after completion of the project must include a description of how the project area is transit-proximate and has achieved transit-supportive density requirements or how the eligible jurisdiction or nonprofit organization is working toward complying with those requirements. The report must also include information about the status of the residential development occurring within the project area, including:
     (i) The total number of residential units developed or under construction; and
     (ii) The total number of residential units meeting the definition of affordable residential development.
     (10)(a) If an infrastructure project funded by the residential infrastructure program is not completed by the agreed upon date or varies substantially from the approved proposal in a way that will result in the creation of less affordable residential development than that agreed to at the time of the project funding award as a condition of the funding, the eligible jurisdiction or nonprofit organization associated with the project shall make the necessary project adjustments as determined by the department or refund all or a portion of the loan or grant amount.
     (b) If an eligible jurisdiction rescinds its public commitment to promoting affordable residential development within the designated project area by changing officially adopted policies and ordinances or failing to implement these policies and ordinances, eligible jurisdictions may be required to refund all or a portion of the principal loan amount plus compounded interest calculated at the current market rate.
     (c) If a nonprofit organization fails to produce the agreed upon number of affordable residential units within its designated project, the nonprofit organizations may be required to refund all or a portion of its grant amount plus compounded interest calculated at the current market rate.
     (d) The department may grant a partial or total exemption from the repayment requirement under this section if the department determines that a project is substantially complete or that the property has been substantially used in keeping with the original affordable residential housing purpose of the loan or grant.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.330 RCW to read as follows:
     The residential infrastructure account is created in the state treasury. All receipts from transfers to the account under section 4 of this act, repayments of loans or grants made under section 2 of this act, and other sources identified by the legislature must be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the purposes identified in section 2 of this act.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.135 RCW to read as follows:
     (1) By August 31, 2010, and by August 31st of every year thereafter, the state treasurer shall transfer from the general fund into the residential infrastructure account created in section 3 of this act the lesser of fifty million dollars or the excess real estate excise tax growth amount.
     (2) By August 1, 2010, and by August 1st of each year thereafter, the director of the office of financial management shall notify the state treasurer of the amount to be transferred to the residential infrastructure account.
     (3) RCW 43.135.035(4) does not apply to the transfers required under this section.
     (4) For the purposes of this section:
     (a) "Excess growth factor" means the difference between the annual growth in real estate excise tax collections and the fiscal growth factor for the current fiscal year, as determined under this chapter. If the difference is at or below zero, the excess growth factor is zero.
     (b) "Excess real estate excise tax growth amount" means the dollar amount derived by multiplying real estate excise tax collections by the excess growth factor.
     (c) "Prior fiscal year" means the fiscal year prior to the fiscal year in which the transfer under subsection (1) of this section is made.
     (d) "Real estate excise tax collections" means the excise tax collections under chapter 82.45 RCW that are deposited into the general fund under RCW 82.45.060(2)(c) in the prior fiscal year.

Sec. 5   RCW 82.45.060 and 2005 c 450 s 1 are each amended to read as follows:
     (1) There is imposed an excise tax upon each sale of real property at the rate of one and twenty-eight one-hundredths percent of the selling price.
     (2) The tax imposed under subsection (1) of this section shall be distributed as provided in this subsection.
     (a) An amount equal to six and one-tenth percent of the proceeds of this tax to the state treasurer shall be deposited in the public works assistance account created in RCW 43.155.050.
     (b) An amount equal to one and six-tenths percent of the proceeds of this tax to the state treasurer shall be deposited in the city-county assistance account created in RCW 43.08.290.
     (c) The remainder shall be deposited in the general fund.

Sec. 6   RCW 82.45.180 and 2006 c 312 s 1 are each amended to read as follows:
     (1)(a) For taxes collected by the county under this chapter, the county treasurer shall collect a five-dollar fee on all transactions required by this chapter where the transaction does not require the payment of tax. A total of five dollars shall be collected in the form of a tax and fee, where the calculated tax payment is less than five dollars. Through June 30, 2006, the county treasurer shall place one percent of the taxes collected by the county under this chapter and the treasurer's fee in the county current expense fund to defray costs of collection. After June 30, 2006, the county treasurer shall place one and three-tenths percent of the taxes collected by the county under this chapter and the treasurer's fee in the county current expense fund to defray costs of collection. For taxes collected by the county under this chapter before July 1, 2006, the county treasurer shall pay over to the state treasurer and account to the department of revenue for the proceeds at the same time the county treasurer remits funds to the state under RCW 84.56.280. For taxes collected by the county under this chapter after June 30, 2006, on a monthly basis the county treasurer shall pay over to the state treasurer the month's transmittal. The month's transmittal must be received by the state treasurer by 12:00 p.m. on the last working day of each month. The county treasurer shall account to the department for the month's transmittal by the twentieth day of the month following the month in which the month's transmittal was paid over to the state treasurer. The state treasurer shall deposit the proceeds ((in the general fund)) as provided in RCW 82.45.060(2).
     (b) For purposes of this subsection, the definitions in this subsection apply.
     (i) "Close of business" means the time when the county treasurer makes his or her daily deposit of proceeds.
     (ii) "Month's transmittal" means all proceeds deposited by the county through the close of business of the day that is two working days before the last working day of the month. This definition of "month's transmittal" shall not be construed as requiring any change in a county's practices regarding the timing of its daily deposits of proceeds.
     (iii) "Proceeds" means moneys collected and receipted by the county from the taxes imposed by this chapter, less the county's share of the proceeds used to defray the county's costs of collection allowable in (a) of this subsection.
     (iv) "Working day" means a calendar day, except Saturdays, Sundays, and all legal holidays as provided in RCW 1.16.050.
     (2) For taxes collected by the department of revenue under this chapter, the department shall remit the tax to the state treasurer who shall deposit the proceeds of any state tax ((in the general fund)) as provided in RCW 82.45.060(2). The state treasurer shall deposit the proceeds of any local taxes imposed under chapter 82.46 RCW in the local real estate excise tax account hereby created in the state treasury. Moneys in the local real estate excise tax account may be spent only for distribution to counties, cities, and towns imposing a tax under chapter 82.46 RCW. Except as provided in RCW 43.08.190, all earnings of investments of balances in the local real estate excise tax account shall be credited to the local real estate excise tax account and distributed to the counties, cities, and towns monthly. Monthly the state treasurer shall make distribution from the local real estate excise tax account to the counties, cities, and towns the amount of tax collected on behalf of each taxing authority. The state treasurer shall make the distribution under this subsection without appropriation.
     (3)(a) The real estate excise tax electronic technology account is created in the custody of the state treasurer. An appropriation is not required for expenditures and the account is not subject to allotment procedures under chapter 43.88 RCW.
     (b) Through June 30, 2010, the county treasurer shall collect an additional five-dollar fee on all transactions required by this chapter, regardless of whether the transaction requires the payment of tax. The county treasurer shall remit this fee to the state treasurer at the same time the county treasurer remits funds to the state under subsection (1) of this section. The state treasurer shall place money from this fee in the real estate excise tax electronic technology account. By the twentieth day of the subsequent month, the state treasurer shall distribute to each county treasurer according to the following formula: Three-quarters of the funds available shall be equally distributed among the thirty-nine counties; and the balance shall be ratably distributed among the counties in direct proportion to their population as it relates to the total state's population based on most recent statistics by the office of financial management.
     (c) When received by the county treasurer, the funds shall be placed in a special real estate excise tax electronic technology fund held by the county treasurer to be used exclusively for the development, implementation, and maintenance of an electronic processing and reporting system for real estate excise tax affidavits. Funds may be expended to make the system compatible with the automated real estate excise tax system developed by the department and compatible with the processes used in the offices of the county assessor and county auditor. Any funds held in the account that are not expended by July 1, 2015, revert to the county capital improvements fund in accordance with RCW 82.46.010.

Sec. 7   RCW 43.84.092 and 2008 c 128 s 19 and 2008 c 106 s 4 are each reenacted and amended to read as follows:
     (1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.
     (2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.
     (3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:
     The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the budget stabilization account, the capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the cleanup settlement account, the Columbia river basin water supply development account, the common school construction fund, the county arterial preservation account, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of licensing services account, the department of retirement systems expense account, the developmental disabilities community trust account, the drinking water assistance account, the drinking water assistance administrative account, the drinking water assistance repayment account, the Eastern Washington University capital projects account, the education construction fund, the education legacy trust account, the election account, the energy freedom account, the essential rail assistance account, The Evergreen State College capital projects account, the federal forest revolving account, the ferry bond retirement fund, the freight congestion relief account, the freight mobility investment account, the freight mobility multimodal account, the grade crossing protective fund, the health services account, the public health services account, the health system capacity account, the personal health services account, the high capacity transportation account, the state higher education construction account, the higher education construction account, the highway bond retirement fund, the highway infrastructure account, the highway safety account, the high occupancy toll lanes operations account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the motor vehicle fund, the motorcycle safety education account, the multimodal transportation account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the oyster reserve land account, the pension funding stabilization account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system combined plan 2 and plan 3 account, the public facilities construction loan revolving account beginning July 1, 2004, the public health supplemental account, the public transportation systems account, the public works assistance account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the Puyallup tribal settlement account, the real estate appraiser commission account, the recreational vehicle account, the regional mobility grant program account, the residential infrastructure account, the resource management cost account, the rural arterial trust account, the rural Washington loan fund, the safety and education account, the site closure account, the small city pavement and sidewalk account, the special category C account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the state patrol highway account, the supplemental pension account, the Tacoma Narrows toll bridge account, the teachers' retirement system plan 1 account, the teachers' retirement system combined plan 2 and plan 3 account, the tobacco prevention and control account, the tobacco settlement account, the transportation 2003 account (nickel account), the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, the transportation infrastructure account, the transportation partnership account, the traumatic brain injury account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the urban arterial trust account, the volunteer firefighters' and reserve officers' relief and pension principal fund, the volunteer firefighters' and reserve officers' administrative fund, the Washington fruit express account, the Washington judicial retirement system account, the Washington law enforcement officers' and firefighters' system plan 1 retirement account, the Washington law enforcement officers' and firefighters' system plan 2 retirement account, the Washington public safety employees' plan 2 retirement account, the Washington school employees' retirement system combined plan 2 and 3 account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.