BILL REQ. #:  S-0547.3 

Read first time 01/26/11.   Referred to Committee on Ways & Means.

     AN ACT Relating to creating a local mineral severance tax; reenacting and amending RCW 43.84.092; and adding a new chapter to Title 82 RCW.

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

NEW SECTION.  Sec. 1   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Mineral" means rock, stone, sand, and gravel.
     (2) "Person" means "person" as defined in RCW 82.04.030.
     (3) "Producer" means any person subject to tax under chapter 82.04 RCW who, from the person's own land or from the land of another under a right or license granted by lease or other contract, either directly or by contracting with others for the necessary labor or mechanical services, severs minerals for sale or for commercial or industrial use.
     (4) "Severance" or "sever" means the taking of or producing from the lands or waters of this state any mineral by whatever means used.
     (5) "Value" means "value of products" as determined under RCW 82.04.450.

NEW SECTION.  Sec. 2   (1) The legislative body of any county, by ordinance, may impose an excise tax upon the privilege of severing minerals from the land or waters within the county. The tax is imposed upon the entire production in the county regardless of the place of sale or that delivery may be made outside the county or the state. The tax authorized in this section is in addition to any other taxes authorized by law.
     (2) The tax imposed by this chapter on the severance of minerals is the liability of the producer.
     (3) The rate of the tax imposed is up to five percent.
     (4) The measure of the tax is the value of the minerals.

NEW SECTION.  Sec. 3   (1) Counties must contract, no less than seventy-five days prior to the effective date of an ordinance imposing the severance tax, for the administration and collection of the tax by the department. A county must provide the department with at least seventy-five days' notice prior to the expiration of the tax in section 2 of this act and the department must notify affected taxpayers before the expiration. The department must deduct an amount, as provided by contract, not to exceed one percent of the taxes collected for administration and collection expenses incurred by the department. The remainder of any portion of any tax authorized by this chapter that is collected by the department must be deposited in the county severance taxation account created in the state treasury.
     (2) Monthly, the state treasurer must distribute moneys in the county severance taxation account to counties imposing a county severance tax authorized in section 2 of this act. Fifty percent of the moneys must be deposited in the county general fund and fifty percent must be deposited into the county road fund. Except as provided in RCW 43.08.190, all earnings of investments of balances in the county severance taxation account must be credited to the county severance taxation account and distributed monthly to the counties imposing the tax. The state treasurer must make the distribution under this section without appropriation.

NEW SECTION.  Sec. 4   (1) The taxes imposed under this chapter are due and payable monthly within twenty-five days after the end of the month in which the taxable activity occurs. The department may relieve any taxpayer from the obligation of filing a monthly return and may require the return to cover other periods, but in no event may periodic returns be filed for a period greater than one year. In such cases tax returns and payments are due on or before the last day of the month next succeeding the end of the period covered by the return. The department must assign a reporting frequency for the tax authorized in this chapter that coincides with the taxpayer's reporting frequency for the tax imposed in chapter 82.04 RCW.
     (2) The taxpayer must file a return, upon the forms, or electronically as provided in RCW 82.32.080, setting forth the information, as the department may require, showing the amount of tax for which the taxpayer is liable for the reporting period. The taxpayer must transmit the return and remit payment of the amount due to the department by the due date.

NEW SECTION.  Sec. 5   The following are exempt from the taxes imposed under this chapter:
     (1) The value of any minerals severed from the land or waters by a person and incorporated into a construction project located on the site where the minerals were severed;
     (2) The value of any minerals owned by a producer:
     (a) Regulated by chapters 78.56 and 78.44 RCW; or
     (b) Exempt from tax by reason of federal law or a compact negotiated by the state with a tribal government.

NEW SECTION.  Sec. 6   Chapter 82.32 RCW applies to the tax authorized in section 2 of this act. The department may adopt any administrative rules necessary for the effective administration of this chapter.

Sec. 7   RCW 43.84.092 and 2010 1st sp.s. c 30 s 20, 2010 1st sp.s. c 9 s 7, 2010 c 248 s 6, 2010 c 222 s 5, 2010 c 162 s 6, and 2010 c 145 s 11 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:
     (a) 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 county severance taxation 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 energy recovery act 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 public health services account, the health system capacity 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 hospital safety net assessment fund, 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 marine resources stewardship trust account, the medical aid account, the mobile home park relocation fund, the motor vehicle fund, the motorcycle safety education account, the multiagency permitting team 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 resource management cost account, the rural arterial trust account, the rural Washington loan fund, 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 state route number 520 civil penalties account, the state route number 520 corridor 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 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.
     (b) Any state agency that has independent authority over accounts or funds not statutorily required to be held in the state treasury that deposits funds into a fund or account in the state treasury pursuant to an agreement with the office of the state treasurer shall receive its proportionate share of earnings based upon each account's or fund's average daily balance for the period.
     (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.

NEW SECTION.  Sec. 8   Sections 1 through 6 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 9   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.