AN ACT Relating to health care; amending RCW 82.08.020, 82.04.050, 82.04.190, 82.04.460, 82.08.0273, 82.14.020, 35.21.710, 35A.82.050, 48.14.080, 82.02.020, 82.04.060, 82.04.4282, 82.04.470, 82.04.480, 82.08.0273, 82.08.080, 82.08.090, 82.12.0252, 82.12.0253, 82.12.0254, 82.12.0255, 82.12.0259, 82.12.0279, 82.12.035, 82.12.040, and 82.12.060; reenacting and amending RCW 82.12.010; adding a new section to chapter 50.20 RCW; adding a new section to chapter 51.28 RCW; adding a new section to chapter 74.08 RCW; adding a new section to chapter 82.08 RCW; adding new sections to chapter 82.12 RCW; adding a new chapter to Title 70 RCW; creating a new section; making appropriations; providing effective dates; and declaring an emergency.

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

NEW SECTION. Sec. 1. This chapter shall be known and may be cited as the health care access act of 1987.

NEW SECTION. Sec. 2. (1) The legislature finds that:

(a) A significant percentage of the population of this state does not have reasonably available insurance or other coverage of the costs of necessary basic health care services;

(b) This lack of basic health care coverage is detrimental to the health of the individuals lacking coverage and to the public welfare, and results in substantial expenditures for emergency and remedial health care, often at the expense of health care providers, health care facilities, and all purchasers of health care, including the state;

(c) A program designed to meet this need for basic health care for those lacking access to such coverage is a societal obligation and the public expenditures required should be derived from broadly based revenue sources that recognize the availability of any federal funding and the responsibility of employers; and

(d) The use of managed health care systems, as defined in section 3 of this act, has significant potential to reduce the growth of health care costs incurred by the people of this state generally, and by low-income pregnant women who are an especially vulnerable population, along with their children, and who need greater access to managed health care.

(2) The purpose of this chapter is to provide necessary basic health care services in an appropriate setting to working persons and others who lack coverage, at a cost to these persons that does not create barriers to the utilization of necessary health care services. To that end, this chapter establishes a program to be made available to those residents under sixty-five years of age with gross family income at or below two hundred percent of the federal poverty guidelines who share in the cost of receiving basic health care services from a managed health care system. The program, initially limited in size and availability, would be expanded through a developmental period with the cost of individual subsidies funded by tax revenues accruing to a basic health plan trust account.

NEW SECTION. Sec. 3. As used in this chapter:

(1) "Washington basic health plan" or "plan" means the system of enrollment and payment on a prepaid capitated basis for basic health care services, administered by the board through participating managed health care systems, created by this chapter.

(2) "Board" means the Washington basic health plan board created under section 5 of this act.

(3) "Managed health care system" means any health care organization, including health care providers, insurers, health care service contractors, health maintenance organizations, or any combination thereof, that provides directly or by contract basic health care services, as defined by the board and rendered by duly licensed providers, on a prepaid capitated basis to a defined patient population enrolled in the plan and in the managed health care system.

(4) "Enrollee" means an individual, or an individual plus the individual's spouse and/or dependent children, all under the age of sixty-five, who resides in an area of the state served by a managed health care system participating in the plan, whose gross family income at the time of enrollment does not exceed twice the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services, who chooses to obtain basic health care coverage from a particular managed health care system in return for periodic payments to the board.

(5) "Subsidy" means the difference between the amount of periodic payment the board makes, from funds appropriated from the basic health plan trust account, to a managed health care system on behalf of an enrollee and the amount the board determines to be the enrollee's responsibility under section 9(2) of this act.

(6) "Premium" means a periodic payment, based upon gross family income and determined under section 9(2) of this act, which an enrollee makes to the board as consideration for enrollment in the plan.

(7) "Rate" means the per capita amount, negotiated by the board with and paid to a participating managed health care system, that is based upon the enrollment of enrollees in the plan and in that system.

NEW SECTION. Sec. 4. The basic health plan trust account is hereby established in the state treasury. All revenue received under RCW 82.08.020(1)(b) and sections 18 and 27 of this act shall be deposited in the basic health plan trust account. Disbursements from the account shall be made pursuant to appropriation and upon warrants drawn by the Washington basic health plan board. Moneys in the account shall be used exclusively for the purposes of this chapter, including payments to participating managed health care systems on behalf of enrollees in the plan and payment of costs of administering the plan. The earnings on any surplus balances in the basic health project trust account shall be credited to the account, notwithstanding RCW 43.84.090. After January 1, 1988, the legislature shall not appropriate for an ensuing fiscal period amounts exceeding ninety percent of the ending balance anticipated to accrue to the account during the fiscal period.

NEW SECTION. Sec. 5. There is created the Washington basic health plan board, which shall be a separate and independent board of the state. The board shall be composed of five members appointed by the governor. The governor shall select one member to serve as chairman. Not more than one member may have any fiduciary obligation to any health care provider or facility or any material financial interest in the provision of health care services.

Members of the board shall serve for four-year terms. However, of the members initially appointed after the effective date of this act, two shall be appointed to four-year terms, one to a three-year term, one to a two-year term, and one to a one-year term. Appointments shall require senate confirmation. No member of the board may serve for more than two consecutive terms. A vacancy shall be filled by appointment for the remainder of the unexpired term and the initial appointments and vacancies shall not require senate confirmation until the legislature next convenes.

NEW SECTION. Sec. 6. Meetings of the board shall be held as frequently as its duties require. The board shall keep minutes of its meetings and adopt procedures for the governing of its meetings, minutes, and transactions. Three members of the board constitute a quorum, but a vacancy on the board shall not impair its power to act. No action of the board shall be effective unless three members concur therein. The board may, consistent with the procedural requirements of chapter 42.30 RCW, meet in executive session with representatives of prospective or participating managed health care systems to discuss matters of a proprietary or sensitive nature.

The members of the board shall be compensated in accordance with RCW 43.03.250 and shall be reimbursed for their travel expenses in accordance with RCW 43.03.050 and 43.03.060.

NEW SECTION. Sec. 7. The board shall employ a full-time executive director, who shall be the chief administrative officer of the board and shall be subject to its direction. The executive director, medical director, and up to five other employees shall be exempt from the civil service law, chapter 41.06 RCW.

The board shall employ such other staff as are necessary to fulfill the responsibilities and duties of the board, such staff to be subject to the civil service law, chapter 41.06 RCW. In addition, the board may contract with third parties for services necessary to carry out its activities where this will promote economy, avoid duplication of effort, and make best use of available expertise. Any such contractor or consultant shall be prohibited from releasing, publishing, or otherwise using any information made available to it under its contractual responsibility without specific permission of the board. The board may call upon other agencies of the state to provide available information as necessary to assist the board in meeting its responsibilities under this chapter, which information shall be supplied as promptly as circumstances permit.

The board may create committees from its membership, and may appoint such technical or other advisory committees as it deems necessary. The board shall appoint a standing technical advisory committee that is representative of health care professionals, health care providers, and those directly involved in the purchase, provision, or delivery of health care services, as well as consumers and those knowledgeable of the ethical issues involved with health care public policy. Individuals appointed to any technical or other advisory committee shall serve without compensation for their services as members, but may be reimbursed for their expenses in the same manner as members of the board.

The board may apply for, receive, and accept grants, gifts, and other payments, including property and service, from any governmental or other public or private entity or person, and may make arrangements as to the use of these receipts, including the undertaking of special studies and other projects relating to health care costs and access to health care.

NEW SECTION. Sec. 8. The board may promulgate and adopt rules consistent with this chapter to carry out the purposes of this chapter. All rules shall be adopted in accordance with chapter 34.04 RCW.

NEW SECTION. Sec. 9. The board has the following powers and duties:

(1) To design and from time to time revise a schedule of covered basic health care services, including physician services, inpatient and outpatient hospital services, and other services that may be necessary for basic health care, which enrollees in any participating managed health care system under the Washington basic health plan shall be entitled to receive in return for premium payments to the board. The schedule of services shall emphasize preventive and primary health care, shall include all services necessary for prenatal, postnatal, and well-child care, and shall include a separate schedule of basic health care services for children, eighteen years of age and younger, for those enrollees who choose to secure basic coverage through the plan only for their dependent children. In designing and revising the schedule of services, the board shall consider the guidelines for assessing health services under the mandated benefits act of 1984, RCW 48.42.080, the report of the Washington health care project commission established pursuant to chapter 303, Laws of 1986, and such other factors as the board deems appropriate. Before July 1, 1989, the board shall not exclude from coverage any preexisting health conditions, and thereafter the board may exclude any such conditions for new enrollees, based upon experience in the utilization of services, as it deems appropriate.

(2) To design and implement a structure of periodic premiums due the board from enrollees that is based upon gross family income, giving appropriate consideration to family size as well as the ages of all family members. The enrollment of children shall not require the enrollment of their parent or parents who are eligible for the plan.

(3) To design and implement a structure of nominal copayments due a managed health care system from enrollees. The structure shall discourage inappropriate enrollee utilization of health care services, but shall not be so costly to enrollees as to constitute a barrier to appropriate utilization of necessary health care services.

(4) To limit enrollment of persons who qualify for subsidies so as to prevent an overexpenditure of appropriations for such purposes. Whenever the board finds that there is danger of such an overexpenditure, the board shall close enrollment until the board finds the danger no longer exists.

(5) To adopt a schedule for the orderly development of the delivery of services and availability of the plan to residents of the state, subject to the limitations contained in section 11 of this act.

In the selection of any area of the state for the initial operation of the plan, the board shall take into account the levels and rates of unemployment in different areas of the state, the need to provide basic health care coverage to a population reasonably representative of the portion of the state's population that lacks such coverage, and the need for geographic, demographic, and economic diversity.

Before July 1, 1988, the board shall endeavor to secure participation contracts with managed health care systems in at least four congressional districts.

(6) To solicit and accept applications from managed health care systems, as defined in this chapter, for inclusion as eligible basic health care providers under the plan. The board shall endeavor to assure that covered basic health care services are available to any enrollee of the plan from among a selection of two or more participating managed health care systems. In adopting any rules or procedures applicable to managed health care systems and in its dealings with such systems, the board shall consider and make suitable allowance for the need for health care services and the differences in local availability of health care resources, along with other resources, within and among the several areas of the state.

(7) To receive periodic premiums from enrollees, deposit them in the basic health plan operating account, keep records of enrollee status, and authorize periodic payments to managed health care systems on the basis of the number of enrollees participating in the respective managed health care systems.

(8) To accept applications from individuals residing in areas served by the plan, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health plan, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, upon application and at least annually thereafter, or at the request of any enrollee, eligibility due to current gross family income for sliding scale premiums. An enrollee who remains current in payment of the sliding-scale premium, as determined by the board under subsection (2) of this section, and whose gross family income has risen above twice the federal poverty level, may continue enrollment unless and until the enrollee's gross family income has remained above twice the poverty level for six consecutive months, by making payment at the unsubsidized rate required for the managed health care system in which he or she may be enrolled. No subsidy may be paid with respect to any enrollee whose current gross family income exceeds twice the federal poverty level or, subject to section 14 of this act, who is a recipient of medical assistance or medical care services under chapter 74.09 RCW. In the event a number of enrollees drop their enrollment for no apparent good cause, the board may establish appropriate rules or requirements that are applicable to such individuals before they will be allowed to re-enroll in the plan.

(9) To require that prospective enrollees who may be eligible for categorically needy medical coverage under RCW 74.09.510 or whose income does not exceed the medically needy income level under RCW 74.09.700 apply for such coverage, but the board shall enroll the individuals in the plan pending the determination of eligibility under chapter 74.09 RCW.

(10) To determine the rate to be paid to each participating managed health care system in return for the provision of covered basic health care services to enrollees in the system. Although the schedule of covered basic health care services will be the same for similar enrollees, the rates negotiated with participating managed health care systems may vary among the systems. In negotiating rates with participating systems, the board shall consider the characteristics of the populations served by the respective systems, economic circumstances of the local area, the need to conserve the resources of the basic health plan trust account, and other factors the board finds relevant.

(11) To monitor the provision of covered services to enrollees by participating managed health care systems in order to assure enrollee access to good quality basic health care, to require periodic reports on health care services rendered to enrollees in order to provide adequate information for evaluation, and to inspect the books and records of participating managed health care systems to assure compliance with the purposes of this chapter. In requiring reports from participating managed health care systems, including data on services rendered enrollees, the board shall endeavor to minimize costs, both to the managed health care systems and to the board. The board shall coordinate any such reporting requirements with other state agencies, such as the insurance commissioner and the hospital commission, to minimize duplication of effort.

(12) To monitor the access that state residents have to adequate and necessary health care services, determine the extent of any unmet needs for such services or lack of access that may exist from time to time, and make such reports and recommendations to the legislature as it deems appropriate.

NEW SECTION. Sec. 10. The benefits available under the plan shall be subject to RCW 48.21.200 and shall be excess to the benefits payable under the terms of any insurance policy issued to or on the behalf of an enrollee that provides payments toward medical expenses without a determination of liability for the injury.

NEW SECTION. Sec. 11. On and after July 1, 1988, the board shall accept for enrollment applicants eligible to receive covered basic health care services from the respective managed health care systems which are then participating in the plan.

The board shall not allow the total enrollment of those eligible for subsidies to exceed twenty-eight thousand before July 1, 1989; eighty-four thousand before July 1, 1990; and one hundred thirty-nine thousand before July 1, 1991. Thereafter, total enrollment shall not exceed the number established by the legislature in any act appropriating funds to the board from the trust account.

Before July 1, 1988, the board shall endeavor to secure participation contracts from managed health care systems in at least four congressional districts of the state and in such manner as to allow residents of both urban and rural areas access to enrollment in the plan. Before July 1, 1991, the board shall endeavor to expand operation of the plan into all congressional districts of the state.

The board shall at all times closely monitor growth patterns of enrollment so as not to exceed that consistent with the orderly development of the plan as a whole, in any area of the state or in any participating managed health care system.

NEW SECTION. Sec. 12. Any enrollee whose premium payments to the board are delinquent or who moves his or her residence out of an area served by the plan may be dropped from enrollment status. The board shall provide delinquent enrollees with written notice of their removal from the plan and shall provide for a hearing under chapters 34.04 and 34.12 RCW for any enrollee who contests the board's decision to drop the enrollee from the plan. If an enrollee contests the board's decision, the board shall maintain responsibility for payments to the managed health care system until a final decision has been issued pursuant to a hearing under chapters 34.04 and 34.12 RCW. Upon removal of an enrollee from the plan, the board shall promptly notify the managed health care system in which the enrollee has been enrolled, and shall not be responsible for payment for health care services provided to the enrollee (including, if applicable, members of the enrollee's family) after the date of notification. A managed health care system may contest the denial of payment for coverage of an enrollee through a hearing under chapters 34.04 and 34.12 RCW.

NEW SECTION. Sec. 13. Managed health care systems participating in the plan shall do so by contract with the board and shall provide, directly or by contract with other health care providers, covered basic health care services to each enrollee as long as payments from the board on behalf of the enrollee are current. A participating managed health care system may offer, but not require acceptance of, additional health care benefits or services not included in the schedule of covered services under the project, that will be the sole responsibility of the enrollee. A participating managed health care system shall not give preference in enrollment to enrollees who accept such additional health care benefits or services. Managed health care systems participating in the plan shall not discriminate against any potential or current enrollee based upon health status, sex, race, ethnicity, or religion. The board may receive and act upon complaints from enrollees regarding failure to provide covered services or efforts to obtain payment, other than authorized copayments, for covered services directly from enrollees, but nothing in this chapter empowers the board to impose any sanctions under Title 18 RCW or any other professional or facility licensing statute.

The plan shall allow, at least annually, an opportunity for enrollees to transfer their enrollments among participating managed health care systems serving their respective areas. The board shall establish a period of at least twenty days in a given year when this opportunity is afforded enrollees, and in those areas served by more than one participating managed health care system the board shall endeavor to establish a uniform period for such opportunity. The plan shall allow enrollees to transfer their enrollment to another participating managed health care system at any time upon a showing of good cause for the transfer.

Prior to negotiating with any managed health care system, the board shall determine, on an actuarially sound basis, the reasonable cost of providing the schedule of basic health care services, expressed in terms of upper and lower limits, and recognizing variations in the cost of providing the services through the various systems and in different areas of the state. In negotiating with managed health care systems for participation in the plan, the board shall adopt a uniform procedure that includes at least the following:

(1) The board shall issue a request for proposals, including standards regarding the quality of services to be provided; financial integrity of the responding systems; and responsiveness to the unmet health care needs of the local communities or populations that may be served;

(2) The board shall then review responsive proposals and may negotiate with respondents to the extent necessary to refine any proposals;

(3) The board may then select one or more systems to provide the covered services within a local area; and

(4) The board may adopt a policy that gives preference to systems that have a history of providing quality health care services to low-income persons.

NEW SECTION. Sec. 14. The department of social and health services shall make periodic payments to the board as an agent for the participating managed health care systems on behalf of any enrollee who is a recipient of medical assistance, medical care-limited casualty program, or medical care services under chapter 74.09 RCW, at the maximum rate allowable for federal matching purposes under Title XIX of the social security act, but not to exceed the rate negotiated by the board with the participating managed health care system for the services covered by the plan, and no premium or copayment may be charged to such an enrollee. Any enrollee on whose behalf the department of social and health services makes payments to the board under this section and chapter 74.09 RCW may continue as an enrollee, making premium payments based on the enrollee's own income as determined under the sliding scale, after eligibility for coverage under chapter 74.09 RCW has ended, as long as the enrollee remains eligible under this chapter. Nothing in this section affects the right of any person eligible for coverage under chapter 74.09 RCW to receive the services offered to other persons under that chapter but not included in the schedule of basic health care services covered by the plan. The board and the department of social and health services shall cooperatively adopt procedures to facilitate the transition of plan enrollees and payments on their behalf between the plan and the programs established under chapter 74.09 RCW.

NEW SECTION. Sec. 15. In addition to the powers and duties specified in sections 7 and 9 of this act, the board has the power to enter into contracts for the following functions and services:

(1) With public or private agencies, to assist the board in its duties to design or revise the schedule of covered basic health care services, and/or to monitor or evaluate the performance of participating managed health care systems.

(2) With public or private agencies, to provide technical or professional assistance to health care providers, particularly public or private nonprofit organizations and providers serving rural areas, who show serious intent and apparent capability to participate in the plan as managed health care systems.

(3) With public or private agencies, including health care service contractors registered under RCW 48.44.015, and doing business in the state, for marketing and administrative services in connection with participation of managed health care systems, enrollment of enrollees, billing and collection services to the board, and other administrative functions ordinarily performed by health care service contractors, other than insurance. Any activities of a health care service contractor pursuant to a contract with the board under this section shall be exempt from the provisions and requirements of Title 48 RCW.

NEW SECTION. Sec. 16. The activities and operations of the Washington basic health plan under this chapter, including those of managed health care systems to the extent of their participation in the plan, are exempt from the provisions and requirements of Title 48 RCW, except as provided in section 10 of this act.

NEW SECTION. Sec. 17. The legislature reserves the right to amend or repeal all or any part of this chapter at any time and there shall be no vested private right of any kind against such amendment or repeal. All the rights, privileges, or immunities conferred by this chapter or any acts done pursuant thereto shall exist subject to the power of the legislature to amend or repeal this chapter at any time.

NEW SECTION. Sec. 18. (1) Contributions shall accrue and become payable by each employer for each calendar year in which the employer is subject to this chapter at a rate of two percent.

(2) For rate year 1989, the amount of wages subject to tax for each individual shall be eighteen thousand dollars. For each subsequent rate year, the amount of wages subject to tax shall be determined by multiplying the amount in effect for the preceding rate year by the ratio obtained by dividing the average annual wage for the second preceding rate year by the average annual wage for the third preceding rate year. The ratio shall be carried to the third decimal place, with the remaining fraction, if any, disregarded. The amounts used for average annual wage shall be those determined in RCW 50.04.355. The amount of wages subject to tax shall be the calculated amount rounded to the next lower one hundred dollars.

(3) Contributions shall become due and be paid by each employer to the board in accordance with such rules as the board may prescribe, and shall not be deducted, in whole or in part, from the remuneration of individuals in employment of the employer. Any deduction in violation of this section is unlawful.

(4) In the payment of any contributions, a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to one cent.

(5) The board may contract with the employment security department for the collection of the tax imposed by this section.

(6) It is the intent of the legislature that the application and collection of the tax imposed by this section shall be identical, insofar as possible, to employer contributions under the unemployment compensation laws of the state, Title 50 RCW. The definitions in chapter 50.04 RCW apply to this section and section 19 of this act. The rules adopted by the board shall incorporate, to the extent possible, the provisions of chapter 50.24 RCW.

NEW SECTION. Sec. 19. (1) An employer may deduct from the tax owing under this section any amounts actually expended by the employer for health care, including amounts expended for:

(a) Health care insurance premiums or similar fees; and

(b) Direct health care services provided by the employer.

(2) If the amount deductible under subsection (1) of this section exceeds the tax due for any period, the excess deduction may be applied to the tax due in any future period.

Sec. 20. Section 1, chapter 32, Laws of 1985 and RCW 82.08.020 are each amended to read as follows:

(1) There is levied and there shall be collected a tax (a) on each retail sale in this state of tangible personal property equal to six and five-tenths percent of the selling price and (b) on each retail sale in this state of services equal to 1.25 percent of the selling price.

(2) The tax imposed under this chapter shall apply to successive retail sales of the same property or services.

(3) The rates provided in this section ((~~applies~~)) apply to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020 and section 27 of this 1987 act.

Sec. 21. Section 1, chapter 8, Laws of 1970 ex. sess. as last amended by section 1, chapter 231, Laws of 1986 and RCW 82.04.050 are each amended to read as follows:

(1) "Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of their business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than a sale to a person who (a) purchases for the purpose of resale as tangible personal property in the regular course of business without intervening use by such person, or (b) installs, repairs, cleans, alters, imprints, improves, constructs, or decorates real or personal property of or for consumers, if such tangible personal property becomes an ingredient or component of such real or personal property without intervening use by such person, or (c) purchases for the purpose of consuming the property purchased in producing for sale a new article of tangible personal property or substance, of which such property becomes an ingredient or component or is a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale, or !se (d) purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon, or (e) purchases for the purpose of providing the property to consumers as part of ((~~competitive telephone service, as defined in RCW 82.04.065~~)) the retail sale of a service. The term shall include every sale of tangible personal property which is used or consumed or to be used or consumed in the performance of any activity classified as a "sale at retail" or "retail sale" even though such property is resold or utilized as provided in (a), (b), (c), (d), or (e) above following such use. The term also means every sale of tangible personal property to persons engaged in any business which is taxable under RCW 82.04.280, subsections (2) and (7) and RCW 82.04.290.

(2) The term "sale at retail" or "retail sale" shall include the sale of or charge made for tangible personal property consumed and/or for labor and services rendered in respect to the following: (a) The installing, repairing, cleaning, altering, imprinting, or improving of tangible personal property of or for consumers, including charges made for the mere use of facilities in respect thereto, but excluding charges made for the use of coin operated laundry facilities when such facilities are situated in an apartment house, hotel, motel, rooming house, trailer camp or tourist camp for the exclusive use of the tenants thereof, and also excluding sales of laundry service to members by nonprofit associations composed exclusively of nonprofit hospitals((~~, and excluding services rendered in respect to live animals, birds and insects~~)); (b) the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for consumers, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, and shall also include the sale of services or charges made for the clearing of land and the moving of earth excepting the mere leveling of land used in commercial farming or agriculture; (c) the sale of or charge made for labor and services rendered in respect to the cleaning, fumigating, razing or moving of existing buildings or structures((, but shall not include the charge made for janitorial services; and for purposes of this section the term "janitorial services" shall mean those cleaning and caretaking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery. The term "janitorial services" does not include painting, papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting)); (d) the sale of or charge made for labor and services rendered in respect to automobile towing and similar automotive transportation services, but not in respect to those required to report and pay taxes under chapter 82.16 RCW; (e) the sale of and charge made for the furnishing of lodging and all other services by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same; (f) the sale of or charge made for tangible personal property, labor and services to persons taxable under (a), (b), (c), (d), and (e) above when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property, labor and services may be resold after such use or consumption. Nothing contained in this paragraph shall be construed to modify the first paragraph of this section and nothing contained in the first paragraph of this section shall be construed to modify this paragraph.

(3) The term "sale at retail" or "retail sale" shall include the sale of or charge made ((~~for personal business or professional services~~)), including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, ((~~received~~)) for services rendered to consumers by persons engaging in ((~~the following~~)) all business activities except: (((a) Amusement and recreation businesses including but not limited to golf, pool, billiards, skating, bowling, ski lifts and tows and others; (b) abstract, title insurance and escrow businesses; (c) credit bureau businesses; (d) automobile parking and storage garage businesses.))

(a) Activities included within S.I.C. major group no. 60 (banking);

(b) Activities included within S.I.C. major group no. 61 (credit agencies other than banks);

(d) Activities included within S.I.C. major group no. 82 (educational services);

(e) Activities included within S.I.C. major group no. 88 (private households); and

(f) Activities exempt from tax under RCW 82.04.310 (public utilities), 82.04.315 (insurance business), or 82.04.360 (employees).

(4) The term shall also include the renting or leasing of tangible personal property to consumers.

(5) ((~~The term shall also include the providing of telephone service, as defined in RCW 82.04.065, to consumers.~~

~~(6)~~)) The term shall not include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind, nor shall it include sales of feed, seed, fertilizer, and spray materials to persons for the purpose of producing for sale any agricultural product whatsoever, including milk, eggs, wool, fur, meat, honey, or other substances obtained from animals, birds, or insects but only when such production and subsequent sale are exempt from tax under RCW 82.04.330, nor shall it include sales of chemical sprays or washes to persons for the purpose of post-harvest treatment of fruit for the prevention of scald, fungus, mold, or decay.

((~~(7)~~)) (6) The term shall not include the sale of or charge made for labor and services rendered in respect to the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation. Nor shall the term include the sale of services or charges made for the clearing of land and the moving of earth of or for the United States, any instrumentality thereof, or a county or city housing authority.

(7) As used in this section:

(a) "Activity included within S.I.C." refers to the correct classification of each taxpayer's actual activities, regardless of how those activities may have been previously classified by the department; and

(b) "S.I.C." means the standard industrial classification published by the federal office of management and budget, as in effect on January 1, 1987.

Sec. 22. Section 82.04.190, chapter 15, Laws of 1961 as last amended by section 2, chapter 231, Laws of 1986 and RCW 82.04.190 are each amended to read as follows:

"Consumer" means the following:

(1) Any person who purchases, acquires, owns, holds, or uses any article of tangible personal property irrespective of the nature of the person's business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than for the purpose (a) of resale as tangible personal property in the regular course of business or (b) of incorporating such property as an ingredient or component of real or personal property when installing, repairing, cleaning, altering, imprinting, improving, constructing, or decorating such real or personal property of or for consumers or (c) of consuming such property in producing for sale a new article of tangible personal property or a new substance, of which such property becomes an ingredient or component or as a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale or (d) purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon;

(2) Any person engaged in any business activity taxable under RCW 82.04.290 and any person who purchases, acquires, or uses any ((~~telephone~~)) service ((~~as defined in RCW 82.04.065~~)), other than for resale in the regular course of business. Resale of a service means a separately stated charge to another person for the service by a person who has paid or is obligated to pay for the service to one who rendered the service;

(3) Any person engaged in the business of contracting for the building, repairing or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state of Washington or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind as defined in RCW 82.04.280, in respect to tangible personal property when such person incorporates such property as an ingredient or component of such publicly owned street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle by installing, placing or spreading the property in or upon the right of way of such street, place, road, highway, easement, bridge, tunnel, or trestle or in or upon the site of such mass public transportation terminal or parking facility;

(4) Any person who is an owner, lessee or has the right of possession to or an easement in real property which is being constructed, repaired, decorated, improved, or otherwise altered by a person engaged in business, excluding only (a) municipal corporations or political subdivisions of the state in respect to labor and services rendered to their real property which is used or held for public road purposes, and (b) the United States, instrumentalities thereof, and county and city housing authorities created pursuant to chapter 35.82 RCW in respect to labor and services rendered to their real property. Nothing contained in this or any other subsection of this definition shall be construed to modify any other definition of "consumer";

(5) Any person who is an owner, lessee, or has the right of possession to personal property which is being constructed, repaired, improved, cleaned, imprinted, or otherwise altered by a person engaged in business;

(6) Any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation; also, any person engaged in the business of clearing land and moving earth of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW. Any such person shall be a consumer within the meaning of this subsection in respect to services used and tangible personal property incorporated into, installed in, or attached to such building or other structure by such person.

Sec. 23. Section 82.04.460, chapter 15, Laws of 1961 as last amended by section 154, chapter 7, Laws of 1985 and RCW 82.04.460 are each amended to read as follows:

((~~(1)~~)) Any person rendering services taxable under RCW 82.04.250, 82.04.270, or 82.04.290 and maintaining places of business both within and without this state which contribute to the rendition of such services shall, for the purpose of computing tax liability under RCW 82.04.250, 82.04.270, or 82.04.290, apportion to this state that portion of his gross income which is derived from services rendered within this state. ((~~Where~~)) When such apportionment cannot be accurately made by separate accounting methods or when such apportionment does not fairly represent the extent of the taxpayer's income attributable to this state, the taxpayer shall apportion ((~~to this state that proportion of his total income which the cost of doing business within the state bears to the total cost of doing business both within and without the state~~)) income according to rules of the department. The rules shall be, as far as feasible, consistent with uniform rules for apportionment or allocation developed by the states and shall require the consideration of those facts, circumstances, and apportionment factors as will result in an equitable and constitutionally permissible division of the services.

(((2) Notwithstanding the provision of subsection (1) of this section, persons doing business both within and without the state who receive gross income from service charges, as defined in RCW 63.14.010 (relating to amounts charged for granting the right or privilege to make deferred or installment payments) or who receive gross income from engaging in business as financial institutions within the scope of chapter 82.14A RCW (relating to city taxes on financial institutions) shall apportion or allocate gross income taxable under RCW 82.04.290 to this state pursuant to rules promulgated by the department consistent with uniform rules for apportionment or allocation developed by the states.

(3) The department shall by rule provide a method or methods of apportioning or allocating gross income derived from sales of telephone services taxed under this chapter, if the gross proceeds of sales subject to tax under this chapter do not fairly represent the extent of the taxpayer's income attributable to this state. The rules shall be, so far as feasible, consistent with the methods of apportionment contained in this section and shall require the consideration of those facts, circumstances, and apportionment factors as will result in an equitable and constitutionally permissible division of the services.))

Sec. 24. Section 39, chapter 37, Laws of 1980 as amended by section 1, chapter 5, Laws of 1982 1st ex. sess. and RCW 82.08.0273 are each amended to read as follows:

The tax levied by RCW 82.08.020 shall not apply to sales to nonresidents of this state of tangible personal property or services for use outside this state when the purchaser has applied for and received from the department of revenue a permit certifying (1) that he is a bona fide resident of a state or possession or Province of Canada other than the state of Washington, (2) that such state, possession, or Province of Canada does not impose a retail sales tax or use tax of three percent or more or, if imposing such a tax, permits Washington residents exemption from otherwise taxable sales by reason of their residence, and (3) that he does agree, when requested, to grant the department of revenue access to such records and other forms of verification at his place of residence to assure that such purchases are not first used substantially in the state of Washington.

Any person claiming exemption from retail sales tax under the provisions of this section must display a nonresident permit as herein provided, and any vendor making a sale to a nonresident without collecting the tax must examine such permit, identify the purchaser as the person to whom the nonresident permit was issued, and maintain records which shall show the permit number attributable to each nontaxable sale.

Permits shall be personal and nontransferable, shall be renewable annually, and shall be issued by the department of revenue upon payment of a fee of five dollars. The department may in its discretion designate independent agents for the issuance of permits, according to such standards and qualifications as the department may prescribe. Such agents shall pay over and account to the department for all permit fees collected, after deducting as a collection fee the sum of one dollar for each permit issued.

Any person making fraudulent statements in order to secure a permit shall be guilty of perjury. Any person making tax exempt purchases by displaying a permit not his own, or a counterfeit permit, with intent to violate the provisions of this section shall be guilty of a misdemeanor and, in addition, may be subject to a penalty not to exceed the amount of the tax due on such purchases. Any vendor who makes sales without collecting the tax to a person who does not hold a valid permit, and any vendor who fails to maintain records of permit numbers as provided in this section shall be personally liable for the amount of tax due.

NEW SECTION. Sec. 25. A new section is added to chapter 82.08 RCW to read as follows:

Any person rendering services taxable under RCW 82.04.250, 82.04.270, or 82.04.290 and maintaining places of business both within and without this state which contribute to the rendition of such services shall apportion the selling price for purposes of this chapter in the manner provided by RCW 82.04.460.

Sec. 26. Section 82.12.010, chapter 15, Laws of 1961 as last amended by section 1, chapter 132, Laws of 1985 and by section 1, chapter 222, Laws of 1985 and RCW 82.12.010 are each reenacted and amended to read as follows:

For the purposes of this chapter:

(1) "Value of the article used" shall mean the consideration, whether money, credit, rights, or other property except trade-in property of like kind, expressed in terms of money, paid or given or contracted to be paid or given by the purchaser to the seller for the article of tangible personal property, the use of which is taxable under this chapter. The term includes, in addition to the consideration paid or given or contracted to be paid or given, the amount of any tariff or duty paid with respect to the importation of the article used. In case the article used is acquired by lease or by gift or is extracted, produced, or manufactured by the person using the same or is sold under conditions wherein the purchase price does not represent the true value thereof, the value of the article used shall be determined as nearly as possible according to the retail selling price at place of use of similar products of like quality and character under such rules and regulations as the department of revenue may prescribe.

In case the articles used are acquired by bailment, the value of the use of the articles so used shall be in an amount representing a reasonable rental for the use of the articles so bailed, determined as nearly as possible according to the value of such use at the places of use of similar products of like quality and character under such rules and regulations as the department of revenue may prescribe: PROVIDED, That in case any such articles of tangible personal property are used in respect to the construction, repairing, decorating, or improving of, and which become or are to become an ingredient or component of, new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing or attaching of any such articles therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, then the value of the use of such articles so used shall be determined according to the retail selling price of such articles, or in the absence of such a selling price, as nearly as possible according to the retail selling price at place of use of similar products of like quality and character or, in the absence of either of these selling price measures, such value may be determined upon a cost basis, in any event under such rules and regulations as the department of revenue may prescribe.

In the case of articles owned by a user engaged in business outside the state which are brought into the state for no more than ninety days in any period of three hundred sixty-five consecutive days and which are temporarily used for business purposes by the person in this state, the value of the article used shall be an amount representing a reasonable rental for the use of the articles, unless the person has paid tax under this chapter or chapter 82.08 RCW upon the full value of the article used, as defined in the first paragraph of this subsection.

In the case of articles manufactured or produced by the user and used in the manufacture or production of products sold or to be sold to the department of defense of the United States, the value of the articles used shall be determined according to the value of the ingredients of such articles.

In the case of an article manufactured or produced for purposes of serving as a prototype for the development of a new or improved product, the value of the article used shall be determined by: (a) The retail selling price of such new or improved product when first offered for sale; or (b) the value of materials incorporated into the prototype in cases in which the new or improved product is not offered for sale.

(2) "Value of the service used" shall mean the consideration, whether money, credit, rights, or other property, expressed in terms of money, paid or given or contracted to be paid or given by the purchaser to the seller for the service, the use of which is taxable under this chapter. If the service is received by gift or under conditions wherein the purchase price does not represent the true value of the service, the value of the services used shall be determined as nearly as possible according to the retail selling price at the place of use of similar services of like quality and character under rules prescribed by the department of revenue;

(3) "Use," "used," "using," or "put to use" shall have their ordinary meaning, and shall mean:

(a) With respect to personal property, the first act within this state by which the taxpayer takes or assumes dominion or control over the article of tangible personal property (as a consumer), and include installation, storage, withdrawal from storage, or any other act preparatory to subsequent actual use or consumption within this state; and

(b) With respect to a service which affords a benefit or is otherwise capable of utilization within this state, the utilization within this state of the service, regardless of the place of performance;

((~~(3)~~)) (4) "Taxpayer" and "purchaser" include all persons included within the meaning of the word "buyer" and the word "consumer" as defined in chapters 82.04 and 82.08 RCW;

((~~(4)~~)) (5) "Retailer" means every seller as defined in RCW 82.08.010 and every person engaged in the business of selling tangible personal property or services at retail and every person required to collect from purchasers the tax imposed under this chapter;

((~~(5)~~)) (6) The meaning ascribed to words and phrases in chapters 82.04 and 82.08 RCW, insofar as applicable, shall have full force and effect with respect to taxes imposed under the provisions of this chapter. "Consumer," in addition to the meaning ascribed to it in chapters 82.04 and 82.08 RCW insofar as applicable, shall also mean any person who distributes or displays, or causes to be distributed or displayed, any article of tangible personal property, except newspapers, the primary purpose of which is to promote the sale of products or services.

NEW SECTION. Sec. 27. A new section is added to chapter 82.12 RCW to read as follows:

An excise tax is imposed on each person engaging in business in this state for the privilege of putting to use within this state as a consumer, and in the performance of such business, any service of a type which is expressly defined as a retail sale by RCW 82.04.050 when rendered to or for consumers. The excise tax shall be collected in an amount equal to the value of the services used by the consumer multiplied by the rate in effect for the retail sales tax on sales of services under RCW 82.08.020.

NEW SECTION. Sec. 28. A new section is added to chapter 82.12 RCW to read as follows:

The tax imposed under section 27 of this act does not apply in respect to the use of services if the sale thereof to, or the use thereof by, the present user has already been subjected to the tax under chapter 82.08 or 82.12 RCW and that tax has been paid by the present user.

NEW SECTION. Sec. 29. A new section is added to chapter 82.12 RCW to read as follows:

The tax imposed under section 27 of this act does not apply in respect to the use of services by the same taxpayer that rendered the services.

Sec. 30. Section 3, chapter 94, Laws of 1970 ex. sess. as last amended by section 31, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.14.020 are each amended to read as follows:

For purposes of this chapter:

(1) A retail sale consisting solely of the sale of tangible personal property shall be deemed to have occurred at the retail outlet at or from which delivery is made to the consumer;

(2) A retail sale consisting essentially of the performance of ((~~personal business or professional~~)) services shall be deemed to have occurred at the place at which such services were primarily performed, except as provided in subsection (5) of this section;

(3) A retail sale consisting of the rental of tangible personal property shall be deemed to have occurred (a) in the case of a rental involving periodic rental payments, at the primary place of use by the lessee during the period covered by each payment, or (b) in all other cases, at the place of first use by the lessee;

(4) A retail sale within the scope of the second paragraph of RCW 82.04.050, and a retail sale of taxable personal property to be installed by the seller shall be deemed to have occurred at the place where the labor and services involved were primarily performed;

(5) A retail sale consisting of the providing to a consumer of telephone service, as defined in RCW 82.04.065, other than a sale of tangible personal property under subsection (1) of this section or a rental of tangible personal property under subsection (3) of this section, shall be deemed to have occurred at the situs of the telephone or other instrument through which the telephone service is rendered;

(6) "City" means a city or town;

(7) The meaning ascribed to words and phrases in chapters 82.04, 82.08 and 82.12 RCW, as now or hereafter amended, insofar as applicable, shall have full force and effect with respect to taxes imposed under authority of this chapter;

(8) "Taxable event" shall mean any retail sale, or any use of an article of tangible personal property or service, upon which a state tax is imposed pursuant to chapter 82.08 or 82.12 RCW, as they now exist or may hereafter be amended: PROVIDED, HOWEVER, That the term shall not include a retail sale taxable pursuant to RCW 82.08.150, as now or hereafter amended;

(9) "Treasurer or other legal depository" shall mean the treasurer or legal depository of a county or city.

Sec. 31. Section 6, chapter 134, Laws of 1972 ex. sess. as last amended by section 33, chapter 3, Laws of 1983 2nd ex. sess. and RCW 35.21.710 are each amended to read as follows:

Any city which imposes a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property or services which are measured by gross receipts or gross income from such sales, shall impose such tax at a single uniform rate upon all such business activities. The taxing authority granted to cities for taxes upon business activities measured by gross receipts or gross income from sales shall not exceed a rate of .0020; except that any city with an adopted ordinance at a higher rate, as of January 1, 1982 shall be limited to a maximum increase of ten percent of the January 1982 rate, not to exceed an annual incremental increase of two percent of current rate: PROVIDED, That any adopted ordinance which classifies according to different types of business or services shall be subject to both the ten percent and the two percent annual incremental increase limitation on each tax rate: PROVIDED FURTHER, That all surtaxes on business and occupation classifications in effect as of January 1, 1982, shall expire no later than December 31, 1982, or by expiration date established by local ordinance. Cities which impose a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property or services which are measured by gross receipts or gross income from such sales shall be required to submit an annual report to the state auditor identifying the rate established and the revenues received from each fee or tax. This section shall not apply to any business activities subject to the tax imposed by chapter 82.16 RCW. ((~~For purposes of this section, the providing to consumers of competitive telephone service, as defined in RCW 82.04.065, shall be deemed to be the retail sale of tangible personal property.~~))

Sec. 32. Section 7, chapter 134, Laws of 1972 ex. sess. as last amended by section 34, chapter 3, Laws of 1983 2nd ex. sess. and RCW 35A.82.050 are each amended to read as follows:

Any code city which imposes a license fee or tax upon business activities consisting of the making of retail sales of tangible personal property or services which are measured by gross receipts or gross income from such sales, shall impose such tax at a single uniform rate upon all such business activities. This section shall not apply to any business activities subject to the tax imposed by chapter 82.16 RCW. ((~~For purposes of this section, the providing to consumers of competitive telephone service, as defined in RCW 82.04.065, shall be deemed to be the retail sale of tangible personal property.~~))

Sec. 33. Section 21, chapter 190, Laws of 1949 and RCW 48.14.080 are each amended to read as follows:

As to insurers other than title insurers, the taxes imposed by this title shall be in lieu of all other taxes, except taxes on real and tangible personal property and services and excise taxes on the sale, purchase or use of such property and services.

Sec. 34. Section 82.02.020, chapter 15, Laws of 1961 as last amended by section 5, chapter 49, Laws of 1982 1st ex. sess. and RCW 82.02.020 are each amended to read as follows:

Except only as expressly provided in RCW 67.28.180 and 67.28.190 and the provisions of chapter 82.14 RCW, the state preempts the field of imposing taxes upon retail sales of tangible personal property and services, the use of tangible personal property and services, parimutuel wagering authorized pursuant to RCW 67.16.060, conveyances, and cigarettes, and no county, town, or other municipal subdivision shall have the right to impose taxes of that nature. No county, city, town, or other municipal corporation shall impose any tax, fee, or charge, either direct or indirect, on the construction or reconstruction of residential buildings, commercial buildings, industrial buildings, or on any other building or building space or appurtenance thereto, or on the development, subdivision, classification, or reclassification of land. However, this section does not preclude dedications of land or easements pursuant to RCW 58.17.110 within the proposed development or plat which the county, city, town, or other municipal corporation can demonstrate are reasonably necessary as a direct result of the proposed development or plat to which the dedication of land or easement is to apply.

This section does not prohibit voluntary agreements with counties, cities, towns, or other municipal corporations that allow a payment in lieu of a dedication of land or to mitigate a direct impact that has been identified as a consequence of a proposed development, subdivision, or plat: PROVIDED, That any such voluntary agreement shall be subject to the following provisions:

(1) The payment shall be held in a reserve account and may only be expended to fund a capital improvement agreed upon by the parties to mitigate the identified, direct impact;

(2) The payment shall be expended in all cases within five years of collection; and

(3) Any payment not so expended shall be refunded with interest at the rate applied to judgments to the property owners of record at the time of the refund; however, if the payment is not expended within five years due to delay attributable to the developer, the payment shall be refunded without interest.

No county, city, town, or other municipal corporation shall require any payment as part of such a voluntary agreement which the county, city, town, or other municipal corporation cannot establish is reasonably necessary as a direct result of the proposed development or plat.

Nothing in this section prohibits cities, towns, counties, or other municipal corporations from collecting reasonable fees from an applicant for a permit or other governmental approval to cover the cost to the city, town, county, or other municipal corporation of processing applications, inspecting and reviewing plans, or preparing detailed statements required by chapter 43.21C RCW.

This section does not limit the existing authority of any county, city, town, or other municipal corporation to impose special assessments on property specifically benefitted thereby in the manner prescribed by law.

Nothing in this section prohibits counties, cities, or towns from imposing or permits counties, cities, or towns to impose water, sewer, natural gas, drainage utility, and drainage system charges: PROVIDED, That no such charge shall exceed the proportionate share of such utility or system's capital costs which the county, city, or town can demonstrate are attributable to the property being charged: PROVIDED FURTHER, That these provisions shall not be interpreted to expand or contract any existing authority of counties, cities, or towns to impose such charges.

This section does not apply to special purpose districts formed and acting pursuant to Titles 54, 56, 57, or 87 RCW, nor is the authority conferred by these titles affected.

Sec. 35. Section 82.04.060, chapter 15, Laws of 1961 as amended by section 26, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.04.060 are each amended to read as follows:

"Sale at wholesale" or "wholesale sale" means any sale of tangible personal property((~~, or any sale of telephone service as defined in RCW 82.04.065,~~)) which is not a sale at retail and means any sale of or charge made for labor and services rendered for persons who are not consumers, ((~~in respect to real or personal property,~~)) if such sale or charge is expressly defined as a retail sale by RCW 82.04.050 when rendered to or for consumers: PROVIDED, That the term "real or personal property" as used in this section shall not include any natural products named in RCW 82.04.100.

Sec. 36. Section 3, chapter 37, Laws of 1980 and RCW 82.04.4282 are each amended to read as follows:

In computing tax there may be deducted from the measure of tax amounts derived from bona fide initiation fees, dues, contributions, donations, tuition fees, charges made for operation of privately operated kindergartens, and endowment funds. This paragraph shall not be construed to exempt any person, association, or society from tax liability upon selling tangible personal property or services or upon providing facilities or services for which a special charge is made to members or others. If dues are in exchange for any significant amount of goods or services rendered by the recipient thereof to members without any additional charge to the member, or if the dues are graduated upon the amount of goods or services rendered, the value of such goods or services shall not be considered as a deduction hereunder.

Sec. 37. Section 82.04.470, chapter 15, Laws of 1961 as last amended by section 29, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.04.470 are each amended to read as follows:

Unless a seller has taken from the purchaser a resale certificate signed by, and bearing the name and address and registration number of the purchaser to the effect that the property or service was purchased for resale, or unless the nature of the transaction is clearly shown as a sale at wholesale by the books and records of the taxpayer in such other manner as the department of revenue shall by regulation provide, the burden of proving that a sale of tangible personal property, or of ((~~telephone service as defined in RCW 82.04.065~~)) a service expressly defined as a retail sale by RCW 82.04.050 when rendered to or for consumers, was not a sale at retail shall be upon the person who made it.

Sec. 38. Section 82.04.480, chapter 15, Laws of 1961 as amended by section 44, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.04.480 are each amended to read as follows:

Every consignee, bailee, factor, or auctioneer having either actual or constructive possession of tangible personal property, or having possession of the documents of title thereto, with power to sell such tangible personal property in his or its own name and actually so selling, and every agent with power to sell services in his or its own name and actually so selling, shall be deemed the seller of such tangible personal property or services within the meaning of this chapter; and further, the consignor, bailor, principal, or owner shall be deemed a seller of such property or services to the consignee, bailee, factor, ((or)) auctioneer, or agent.

The burden shall be upon the taxpayer in every case to establish the fact that he is not engaged in the business of selling tangible personal property or services but is acting merely as broker or agent in promoting sales for a principal. Such claim will be allowed only when the taxpayer's accounting records are kept in such manner as the department of revenue shall by general regulation provide.

Sec. 39. Section 39, chapter 37, Laws of 1980 as amended by section 1, chapter 5, Laws of 1982 1st ex. sess. and RCW 82.08.0273 are each amended to read as follows:

Sec. 40. Section 82.08.080, chapter 15, Laws of 1961 as last amended by section 2, chapter 36, Laws of 1986 and RCW 82.08.080 are each amended to read as follows:

The department of revenue may authorize a seller to pay the tax levied under this chapter upon retail sales of tangible personal property or services made under conditions of business such as to render impracticable the collection of the tax as a separate item and waive collection of the tax from the customer. Where sales are made by receipt of a coin or coins dropped into a receptacle that results in delivery of the merchandise in single purchases of smaller value than the minimum sale upon which a one cent tax may be collected from the purchaser, according to the schedule provided by the department under authority of RCW 82.08.060, and where the design of the sales device is such that multiple sales of items are not possible or cannot be detected so as practically to assess a tax, in such a case the selling price for the purposes of the tax imposed under RCW 82.08.020 shall be sixty percent of the gross receipts of the vending machine through which such sales are made. No such authority shall be granted except upon application to the department and unless the department, after hearing, finds that the conditions of the applicant's business are such as to render impracticable the collection of the tax in the manner otherwise provided. The department, by regulation, may provide that the applicant, under this section, furnish a proper bond sufficient to secure the payment of the tax.

Sec. 41. Section 82.08.090, chapter 15, Laws of 1961 as amended by section 49, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.08.090 are each amended to read as follows:

In the case of installment sales and leases of personal property or services, the department of revenue, by regulation, may provide for the collection of taxes upon the installments of the purchase price, or amount of rental, as of the time the same fall due.

Sec. 42. Section 52, chapter 37, Laws of 1980 and RCW 82.12.0252 are each amended to read as follows:

The provisions of this chapter shall not apply in respect to the use of any article of tangible personal property or any service purchased at retail or acquired by lease, gift or bailment if the sale thereof to, or the use thereof by, the present user or his bailor or donor has already been subjected to the tax under chapter 82.08 or 82.12 RCW and such tax has been paid by the present user or by his bailor or donor; or in respect to the use of property acquired by bailment and such tax has once been paid based on reasonable rental as determined by RCW 82.12.060 measured by the value of the article at time of first use multiplied by the tax rate imposed by chapter 82.08 or 82.12 RCW as of the time of first use; or in respect to the use of any article of tangible personal property acquired by bailment, if the property was acquired by a previous bailee from the same bailor for use in the same general activity and such original bailment was prior to June 9, 1961.

Sec. 43. Section 53, chapter 37, Laws of 1980 and RCW 82.12.0253 are each amended to read as follows:

The provisions of this chapter shall not apply in respect to the use of any article of tangible personal property or service the sale of which is specifically taxable under chapter 82.16 RCW.

Sec. 44. Section 54, chapter 37, Laws of 1980 and RCW 82.12.0254 are each amended to read as follows:

The provisions of this chapter shall not apply in respect to the use of any airplane, locomotive, railroad car, or watercraft used primarily in conducting interstate or foreign commerce by transporting therein or therewith property and persons for hire or used primarily in commercial deep sea fishing operations outside the territorial waters of the state, and in respect to use of tangible personal property which becomes a component part of any such airplane, locomotive, railroad car, or watercraft, and any labor or services rendered in installing such part, and in respect to the use by a nonresident of this state of any motor vehicle or trailer used exclusively in transporting persons or property across the boundaries of this state and in intrastate operations incidental thereto when such motor vehicle or trailer is registered and licensed in a foreign state and in respect to the use by a nonresident of this state of any motor vehicle or trailer so registered and licensed and used within this state for a period not exceeding fifteen consecutive days under such rules as the department of revenue shall adopt: PROVIDED, That under circumstances determined to be justifiable by the department of revenue a second fifteen day period may be authorized consecutive with the first fifteen day period; and for the purposes of this exemption the term "nonresident" as used herein, shall include a user who has one or more places of business in this state as well as in one or more other states, but the exemption for nonresidents shall apply only to those vehicles which are most frequently dispatched, garaged, serviced, maintained, and operated from the user's place of business in another state; and in respect to the use by the holder of a carrier permit issued by the Interstate Commerce Commission of any motor vehicle or trailer whether owned by or leased with or without driver to the permit holder and used in substantial part in the normal and ordinary course of the user's business for transporting therein persons or property for hire across the boundaries of this state if the first use of which within this state is actual use in conducting interstate or foreign commerce; and in respect to the use of any motor vehicle or trailer while being operated under the authority of a one-transit permit issued by the director of licensing pursuant to RCW 46.16.160 and moving upon the highways from the point of delivery in this state to a point outside this state; and in respect to the use of tangible personal property which becomes a component part of any motor vehicle or trailer, and any labor or services rendered in installing such part, used by the holder of a carrier permit issued by the Interstate Commerce Commission authorizing transportation by motor vehicle across the boundaries of this state whether such motor vehicle or trailer is owned by or leased with or without driver to the permit holder.

Sec. 45. Section 55, chapter 37, Laws of 1980 and RCW 82.12.0255 are each amended to read as follows:

The provisions of this chapter shall not apply in respect to the use of any article of tangible personal property or any service which the state is prohibited from taxing under the Constitution of the state or under the Constitution or laws of the United States.

Sec. 46. Section 59, chapter 37, Laws of 1980 and RCW 82.12.0259 are each amended to read as follows:

The provisions of this chapter shall not apply in respect to the use of tangible personal property or services by corporations which have been incorporated under any act of the congress of the United States and whose principal purposes are to furnish volunteer aid to members of the armed forces of the United States and also to carry on a system of national and international relief and to apply the same in mitigating the sufferings caused by pestilence, famine, fire, flood, and other national calamities and to devise and carry on measures for preventing the same.

Sec. 47. Section 77, chapter 37, Laws of 1980 and RCW 82.12.0279 are each amended to read as follows:

The provisions of this chapter shall not apply in respect to the use of ferry vessels of the state of Washington or of local governmental units in the state of Washington in transporting pedestrian or vehicular traffic within and outside the territorial waters of the state and in respect to the use of tangible personal property which becomes a component part of any such ferry vessel and the use of any service in installing such part.

Sec. 48. Section 5, chapter 89, Laws of 1967 ex. sess. and RCW 82.12.035 are each amended to read as follows:

A credit shall be allowed against the taxes imposed by this chapter upon the use of tangible personal property or services in this state in the amount that the present user thereof or his bailor or donor has paid a retail sales or use tax with respect to such property or services to any other state, political subdivision thereof, or the District of Columbia, prior to the use of such property or services in this state.

Sec. 49. Section 82.12.040, chapter 15, Laws of 1961 as last amended by section 1, chapter 48, Laws of 1986 and RCW 82.12.040 are each amended to read as follows:

(1) Every person who maintains in this state a place of business or a stock of goods, or engages in business activities within this state, shall obtain from the department a certificate of registration, and shall, at the time of making sales, or making transfers of either possession or title or both, of tangible personal property or services for use in this state, collect from the purchasers or transferees the tax imposed under this chapter. For the purposes of this chapter, the phrase "maintains in this state a place of business" shall include the solicitation of sales and/or taking of orders by sales agents or traveling representatives. For the purposes of this chapter, "engages in business activity within this state" includes every activity which is sufficient under the Constitution of the United States for this state to require collection of tax under this chapter. The department shall in rules specify activities which constitute engaging in business activity within this state, and shall keep the rules current with future court interpretations of the Constitution of the United States.

(2) Every person who engages in this state in the business of acting as an independent selling agent for persons who do not hold a valid certificate of registration, and who receives compensation by reason of sales of tangible personal property or services of his or her principals ((~~made~~)) for use in this state, shall, at the time such sales are made, collect from the purchasers the tax imposed under this chapter, and for that purpose shall be deemed a retailer as defined in this chapter.

(3) The tax required to be collected by this chapter shall be deemed to be held in trust by the retailer until paid to the department and any retailer who appropriates or converts the tax collected to his or her own use or to any use other than the payment of the tax provided herein to the extent that the money required to be collected is not available for payment on the due date as prescribed shall be guilty of a misdemeanor. In case any seller fails to collect the tax herein imposed or having collected the tax, fails to pay the same to the department in the manner prescribed, whether such failure is the result of ((~~his~~)) the seller's own acts or the result of acts or conditions beyond his or her control, ((he)) the seller shall nevertheless((,)) be personally liable to the state for the amount of such tax.

(4) Any retailer who refunds, remits, or rebates to a purchaser, or transferee, either directly or indirectly, and by whatever means, all or any part of the tax levied by this chapter shall be guilty of a misdemeanor.

Sec. 50. Section 82.12.060, chapter 15, Laws of 1961 as last amended by section 54, chapter 278, Laws of 1975 1st ex. sess. and RCW 82.12.060 are each amended to read as follows:

(1) In the case of installment sales and leases of personal property or services, the department, by regulation, may provide for the collection of taxes upon the installments of the purchase price, or amount of rental, as of the time the same fall due.

(2) In the case of property acquired by bailment, the department, by regulation, may provide for payment of the tax due in installments based on the reasonable rental for the property as determined under RCW 82.12.010(1).

NEW SECTION. Sec. 51. A new section is added to chapter 50.20 RCW to read as follows:

The commissioner shall notify in writing any person filing a claim under this chapter who resides in a local area served by the Washington basic health plan of the availability of basic health care coverage to qualified enrollees in the Washington basic health plan under chapter 70.-- RCW (sections 1 through 19 of this act), unless the Washington basic health plan board has notified the commissioner of a closure of enrollment in the area. The commissioner shall maintain a supply of Washington basic health plan enrollment application forms, which shall be provided in reasonably necessary quantities by the board, in each appropriate employment service office for the use of persons wishing to apply for enrollment in the Washington basic health plan.

NEW SECTION. Sec. 52. A new section is added to chapter 51.28 RCW to read as follows:

The director shall notify in writing any person filing a claim under this chapter who may reasonably be expected to have lost health care insurance or coverage for any dependents of such person and who resides in a local area served by the Washington basic health plan of the availability of basic health care coverage to qualified enrollees under chapter 70.-- RCW (sections 1 through 19 of this act), unless the Washington basic health plan board has notified the director of a closure of enrollment in the area. The director shall maintain a supply of Washington basic health plan enrollment application forms, which shall be provided in reasonably necessary quantities by the board, for the use of persons wishing to apply for enrollment in the Washington basic health plan.

NEW SECTION. Sec. 53. A new section is added to chapter 74.08 RCW to read as follows:

The department shall notify in writing any applicant for public assistance who resides in a local area served by the Washington basic health plan and is under sixty-five years of age of the availability of basic health care coverage to qualified enrollees in the Washington basic health plan under chapter 70.-- RCW (sections 1 through 19 of this act), unless the Washington basic health plan board has notified the department of a closure of enrollment in the area. The department shall maintain a supply of Washington basic health plan enrollment application forms, which shall be provided in reasonably necessary quantities by the board, in each appropriate community service office for the use of persons wishing to apply for enrollment in the Washington basic health plan.

NEW SECTION. Sec. 54. The Washington basic health plan board shall be appointed and commence operations as promptly as practicable after the effective date of this section. Not later than January 1, 1988, the board shall submit to the legislature a progress report including:

(1) The schedule of covered basic health care services adopted under section 9 of this act;

(2) A descriptive listing of managed health care systems expected to participate in the Washington basic health plan, along with an identification of prospective local areas for initial participation in the plan;

(3) The approximate amount of funds estimated to be on deposit in the basic health plan trust account as of March 31 and June 30, 1988;

(4) A description of the sliding fee schedule for enrollee premium payments adopted by the board under section 9 of this act;

(5) Any proposals for statutory changes which the board deems necessary to implement the purposes of this chapter; and

(6) Any other information which the board deems appropriate.

Not later than January 1, 1989, the board shall submit to the legislature a further progress report, updating its 1988 report, and covering the same items provided for therein, with projections based upon implementation of the plan to date. Further, the report shall include a description of the performance of the first managed health care systems included as eligible providers as provided in section 11 of this act. The board shall submit an annual report to the legislature by January 1 of each year thereafter.

NEW SECTION. Sec. 55. Sections 1 through 19 of this act shall constitute a new chapter in Title 70 RCW.

NEW SECTION. Sec. 56. (1) There is appropriated from the general fund to the basic health plan trust account, for the biennium ending June 30, 1989, the sum of six hundred thousand dollars, to carry out the purposes of this act. Such appropriation shall be repaid to the general fund as soon as practicable, but not later than June 30, 1989, from the revenue accruing to the basic health plan trust account.

(2) There is appropriated from the basic health plan trust account of the state treasury to the Washington basic health plan board, for the biennium ending June 30, 1989, the sum of twenty-eight million dollars, or as much thereof as shall be necessary, not exceeding funds deposited in the account, to carry out the purposes of chapter 70.-- RCW (sections 1 through 19 of this act).

(3) There is appropriated from the basic health plan trust account of the state treasury to the department of social and health services, for the biennium ending June 30, 1989, the sum of thirty-eight million, sixty-four thousand dollars, or as much thereof as may be necessary, not exceeding funds deposited in the account, for the purposes of (a) increasing the medically needy income level under RCW 74.09.700 to the maximum rate allowable for federal financial participation under Title XIX of the federal social security act, and (b) creating a new optional categorically needy group consisting of pregnant women and, on a phased-in basis, children up to age five whose household income does not exceed one hundred percent of the federal poverty level, whose resources do not exceed reasonable standards established by the department of social and health services, and whose coverage qualifies for federal financial participation under Title XIX of the federal social security act. Not more than nine hundred seven thousand dollars of this appropriation may be spent for administration. The department shall endeavor to enroll persons whose coverage is provided under the limited casualty program for the medically needy in the basic health plan, to the maximum extent allowable under federal law, including waiver authority.

NEW SECTION. Sec. 57. 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. 58. (1) Sections 18 and 19 of this act shall take effect January 1, 1989.

(2) Sections 20 through 50 of this act shall take effect July 1, 1988.

(3) The remainder of this act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.