"NEW SECTION.  Sec. 1   (1) Under federal law, Indian nations are federally dependent domestic sovereigns that are distinct, independent political entities legally separate from the state and owing no allegiance to the state. Indian nations are uniquely empowered to generate income for their communities through taxing and other revenue mechanisms, such as operating casinos, that are not available to constitutionally authorized political subdivisions of the state. Indian nations do not pay property tax on land held in trust by the federal government nor on nonreservation land used for essential government services. Tribally owned businesses are not subject to sales and excise taxes on transactions conducted by tribal members on tribal land. The state of Washington, through the Centennial Accord, has agreed to treat Indian nations on a sovereign-to-sovereign basis.
     (2) The legislature finds that many statutory provisions treat Indian nations not as independent sovereigns but as state-dependent entities, which they are not, creating a clear conflict in the application of state laws. Indian nations have numerous independent sources of revenue. In 2011, the tribes generated nearly one billion nine hundred fifty-four million dollars in net gambling receipts. The Washington state office of financial management estimates that less than two percent of the state's population is Native American.
     (3) In this time when the state faces significant continuing budget deficits and must make funding reductions to service programs it is providing to all its citizens, the legislature has made policy changes in many areas to require those that have independent sources of revenue to pay for the state services they use. The legislature intends to clarify the sovereign legal standing of Indian nations with respect to the state of Washington and the eligibility of Indian nations to apply for and receive state-provided program resources contingent upon sovereign-to-sovereign revenue sharing agreements to help defray the costs of such program services. The legislature intends the state to eventually govern sovereign-to-sovereign relations with each tribe through single compacts with individual tribes that address the multitude of issues between each tribe and the state instead of the multitude of compacts on select issues created today.

NEW SECTION.  Sec. 2   (1) To be eligible to apply for and receive money from programs identified in section 3 of this act, a tribal government of a federally recognized Indian tribe located within the state must have a sovereign-to-sovereign agreement with the state that provides for the state to receive remuneration from the Indian nation for the privileges provided by these state programs and services in an amount sufficient so that the state receives a benefit for extending the privilege of state programs and services to federally recognized Indian nations.
     (2) The requirements and conditions of this section apply unless the application of a requirement or condition is prohibited by federal law.

NEW SECTION.  Sec. 3   (1) State-funded programs subject to the conditions of section 2 of this act include but are not limited to:
     (a) Public facilities loans and grants from the community economic revitalization board;
     (b) The local infrastructure financing tool program;
     (c) Bond funding from the state and local improvements revolving account for:
     (i) Waste disposal facilities;
     (ii) Water supply facilities;
     (iii) Recreation areas and facilities; and
     (iv) Health and social service facilities;
     (d) Department of agriculture programs for:
     (i) Funding and technical assistance under the department's pest program;
     (ii) Surface water monitoring; and
     (iii) Food safety;
     (e) The building communities fund program;
     (f) The tourism competitive grant program;
     (g) Programs funded under the recreation and conservation office;
     (h) Lake Roosevelt Columbia partnership agreements;
     (i) Toxic clean-up programs under the department of ecology;
     (j) The centennial clean water program;
     (k) Public health emergency preparedness and response under the department of health;
     (l) Grant programs under the emergency management division of the military department;
     (m) The competitive grant program for economic development activity designed to further regional cluster growth administered by the department of commerce;
     (n) Grants and loans through the department of transportation for planning, acquisition, construction, improvement, and maintenance or operation of an airport;
     (o) Funds received from counties using the county road administration board ferry capital improvement program;
     (p) State maintenance funds to eligible tribes under the temporary assistance for needy families program;
     (q) Housing-based supportive services for homeless families;
     (r) Funds available through housing assistance programs and the Washington housing trust fund;
     (s) Affordable housing programs and tax exemptions for tribal and intertribal housing authorities;
     (t) Funds from the home visiting services account;
     (u) Funds from the American Indian scholarship endowment fund;
     (v) Grants made available for heritage capital projects;
     (w) Funding from the forest and fish support account;
     (x) State funds provided through the department of social and health services as follows:
     (i) Funds by the juvenile rehabilitation administration;
     (ii) Funds provided for outpatient and prevention services and administration of those programs;
     (iii) Funds provided as part of the mental health block grant;
     (iv) Programs through the children's administration that foster independent living and life skills; and
     (v) Funds provided for alcohol, drug, and problem-gambling treatment unless the tribe has made contributions to the state through provisions of Appendix X2 to the tribal-state gaming compacts;
     (y) Services provided by the Washington state patrol in Indian country or to Indian members on their property; and
     (z) State programs or funding provided through the superintendent of public instruction, including:
     (i) The building bridges dropout prevention grants; and
     (ii) Services provided by the office of native education.
     (2) Nothing in this section or section 2 of this act prohibits allowing access to federally recognized Indian tribes located within the state and their members to federally provided funding for which they are otherwise eligible.
     (3) State agencies may require compliance with section 2 of this act for Indian nations seeking access to state-funded programs not listed in subsection (1) of this section that come into existence after the effective date of this section unless prohibited by statute.
     (4) Nothing in this chapter prevents tribal citizens as individuals from applying for and receiving state services that they are eligible to receive under the law.

NEW SECTION.  Sec. 4   (1) The governor may enter an agreement with an Indian tribe to receive payment for the privilege of participating in state programs under section 2 of this act subject to the conditions of this section.
     (2) The agreement with each Indian tribe must be for an amount sufficient to provide the state with a benefit for extending the privilege of state programs and services to federally recognized Indian tribes. The agreement must specify that payments are made to the state treasurer on a quarterly basis.
     (3) A sovereign-to-sovereign agreement entered into pursuant to this chapter must include:
     (a) Mechanisms to allow the state auditor and state agencies to conduct audits of recipients of state services in the same manner as they would for local governments or other program participants; and
     (b) A provision that agreements are public records and must be disclosed upon request and posted on an appropriate state web site.

NEW SECTION.  Sec. 5   The Indian nation eligibility for state services account is created in the state treasury. All receipts from the agreements in section 4 of this act must be deposited into the account. The state treasurer must track amounts received from individual Indian tribes and report amounts received quarterly to the department of revenue. The state treasurer must transfer on July 1st of each year the entire fund balance of the account into the general fund.

NEW SECTION.  Sec. 6   The state may consent to the jurisdiction of the federal courts in actions brought by an Indian tribe seeking enforcement of an agreement under section 4 of this act, conditioned upon the Indian tribe providing similar consent in the agreement and waiver of claims of sovereign immunity that would prevent enforcement of any provisions of this chapter or in relation to state government services provided pursuant to an agreement under section 4 of this act.

Sec. 7   RCW 43.06.455 and 2001 c 235 s 2 are each amended to read as follows:
     (1) The governor may enter into cigarette tax contracts concerning the sale of cigarettes. All cigarette tax contracts ((shall)) must meet the requirements for cigarette tax contracts under this section. Except for cigarette tax contracts under RCW 43.06.460, the rates, revenue sharing, and exemption terms of a cigarette tax contract are not effective unless authorized in a bill enacted by the legislature.
     (2) Cigarette tax contracts ((shall be)) are in regard to retail sales in which Indian retailers make delivery and physical transfer of possession of the cigarettes from the seller to the buyer within Indian country, and are not in regard to transactions by non-Indian retailers. In addition, contracts ((shall)) must provide that retailers ((shall)) do not sell or give, or permit to be sold or given, cigarettes to any person under the age of eighteen years.
     (3) A cigarette tax contract with a tribe ((shall)) must provide for a tribal cigarette tax in lieu of all state cigarette taxes and state and local sales and use taxes on sales of cigarettes in Indian country by Indian retailers. The tribe may allow an exemption for sales to tribal members.
     (4) Cigarette tax contracts ((shall)) must provide that all cigarettes possessed or sold by a retailer ((shall)) bear a cigarette stamp obtained by wholesalers from a bank or other suitable stamp vendor and applied to the cigarettes. The procedures to be used by the tribe in obtaining tax stamps must include a means to assure that the tribal tax will be paid by the wholesaler obtaining such cigarettes. Tribal stamps must have serial numbers or some other discrete identification so that each stamp can be traced to its source.
     (5) Cigarette tax contracts ((shall)) must provide that retailers ((shall)) purchase cigarettes only from:
     (a) Wholesalers or manufacturers licensed to do business in the state of Washington;
     (b) Out-of-state wholesalers or manufacturers who, although not licensed to do business in the state of Washington, agree to comply with the terms of the cigarette tax contract, are certified to the state as having so agreed, and who do in fact so comply. However, the state may in its sole discretion exercise its administrative and enforcement powers over such wholesalers or manufacturers to the extent permitted by law;
     (c) A tribal wholesaler that purchases only from a wholesaler or manufacturer described in (a), (b), or (d) of this subsection; and
     (d) A tribal manufacturer.
     (6) Cigarette tax contracts ((shall)) must be for renewable periods of no more than eight years. A renewal may not include a renewal of the phase-in period. For renewals occurring after the effective date of this section, any agreement must include a provision requiring the tribe to provide for the state to receive remuneration from the Indian nation for the privileges provided by these state programs and services in an amount sufficient so that the state receives a benefit for extending the privilege of state programs and services to federally recognized Indian nations.
     (7) Cigarette tax contracts ((shall)) must include provisions for compliance, such as transport and notice requirements, inspection procedures, stamping requirements, recordkeeping, and audit requirements.
     (8) Tax revenue retained by a tribe must be used for essential government services. Use of tax revenue for subsidization of cigarette and food retailers is prohibited.
     (9) The cigarette tax contract may include provisions to resolve disputes using a nonjudicial process, such as mediation.
     (10) The governor may delegate the power to negotiate cigarette tax contracts to the department of revenue. The department of revenue ((shall)) must consult with the liquor control board during the negotiations.
     (11) Information received by the state or open to state review under the terms of a contract is subject to the provisions of RCW 82.32.330.
     (12) It is the intent of the legislature that the liquor control board and the department of revenue continue the division of duties and shared authority under chapter 82.24 RCW and therefore the liquor control board is responsible for enforcement activities that come under the terms of chapter 82.24 RCW.
     (13) Each cigarette tax contract ((shall)) must include a procedure for notifying the other party that a violation has occurred, a procedure for establishing whether a violation has in fact occurred, an opportunity to correct such violation, and a provision providing for termination of the contract should the violation fail to be resolved through this process, such termination subject to mediation should the terms of the contract so allow. A contract ((shall)) must provide for termination of the contract if resolution of a dispute does not occur within twenty-four months from the time notification of a violation has occurred. Intervening violations do not extend this time period. In addition, the contract ((shall)) must include provisions delineating the respective roles and responsibilities of the tribe, the department of revenue, and the liquor control board.
     (14) For purposes of this section and RCW 43.06.460, 82.08.0316, 82.12.0316, and 82.24.295:
     (a) "Essential government services" means services such as tribal administration, public facilities, fire, police, public health, education, job services, sewer, water, environmental and land use, transportation, utility services, and economic development;
     (b) "Indian retailer" or "retailer" means (i) a retailer wholly owned and operated by an Indian tribe, (ii) a business wholly owned and operated by a tribal member and licensed by the tribe, or (iii) a business owned and operated by the Indian person or persons in whose name the land is held in trust; and
     (c) "Indian tribe" or "tribe" means a federally recognized Indian tribe located within the geographical boundaries of the state of Washington.

Sec. 8   RCW 84.36.010 and 2010 c 281 s 1 are each amended to read as follows:
     (1) All property belonging exclusively to the United States, the state, or any county or municipal corporation subject to subsection (3) of this section; all property belonging exclusively to any federally recognized Indian tribe located in the state, if that property is used exclusively for essential government services; all state route number 16 corridor transportation systems and facilities constructed under chapter 47.46 RCW; all property under a financing contract pursuant to chapter 39.94 RCW or recorded agreement granting immediate possession and use to the public bodies listed in this section or under an order of immediate possession and use pursuant to RCW 8.04.090; and, for a period of forty years from acquisition, all property of a community center; is exempt from taxation. All property belonging exclusively to a foreign national government is exempt from taxation if that property is used exclusively as an office or residence for a consul or other official representative of the foreign national government, and if the consul or other official representative is a citizen of that foreign nation.
     (2) For the purposes of this section the following definitions apply unless the context clearly requires otherwise.
     (a) "Community center" means property, including a building or buildings, determined to be surplus to the needs of a district by a local school board, and purchased or acquired by a nonprofit organization for the purposes of converting them into community facilities for the delivery of nonresidential coordinated services for community members. The community center may make space available to businesses, individuals, or other parties through the loan or rental of space in or on the property.
     (b) "Essential government services" means services such as tribal administration, public facilities, fire, police, public health, education, sewer, water, environmental and land use, transportation, and utility services.
     (3) The exemption for a federally recognized Indian tribe located in the state is only allowed for those tribes with a valid sovereign-to-sovereign remuneration agreement under chapter 43.--- RCW (the new chapter created in section 9 of this act).

NEW SECTION.  Sec. 9   Sections 1 through 6 of this act constitute a new chapter in Title 43 RCW.

NEW SECTION.  Sec. 10   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 11   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately."