AN ACT Relating to the calculation and distribution of liquor revenues; amending RCW 15.88.010, 28B.30.068, 35A.66.020, 66.08.026, 66.08.190, 66.08.200, 66.08.210, 66.24.210, 66.24.290, 68.50.107, and 70.94.390; reenacting and amending RCW 82.02.030; adding a new section to chapter 66.24 RCW; creating a new section; repealing RCW 66.08.180, 66.08.195, 66.08.220, 66.08.230, 82.08.150, 82.08.160, 82.08.170, and 82.08.171; and providing an effective date.

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

NEW SECTION. Sec. 1. The legislature finds that the present method of calculating liquor taxes using a base tax and surcharges is unnecessarily complicated and that simplification of liquor tax rates would more clearly illustrate the level of taxation placed on liquor. The legislature also finds that revenue, including revenue from liquor taxes and license fees, is frequently earmarked to support particular state programs. The intent of the legislature in removing the earmarking of liquor taxes and license fees for specific programs is not in any way intended to indicate legislative dissatisfaction with the program receiving the funds, but is to have the programs compete through the budget process with other programs for general fund money.

Sec. 2. Section 1, chapter 452, Laws of 1987 and RCW 15.88.010 are each amended to read as follows:

The legislature declares that:

(1) Marketing is a dynamic and changing part of Washington agriculture and a vital element in expanding the state economy.

(2) The sale in the state and export to other states and abroad of wine made in the state contribute substantial benefits to the economy of the state, provide a large number of jobs and sizeable tax revenues, and have an important stabilizing effect on prices received by agricultural producers. Development of exports of these commodities abroad will contribute favorably to the balance of trade of the United States and of the state. The sale and export are therefore affected with the public interest.

(3) The production of wine grapes in the state is a new and important segment of Washington agriculture which has potential for greater contribution to the economy of the state if it undergoes healthy development.

(4) The general welfare of the people of the state will be served by healthy development of the activities of growing and processing wine grapes, which development will improve the tax bases of local communities in which agricultural land and processing facilities are located, and obviate the need for state and federal funding of local services. The industries are therefore affected with the public interest.

(5) Creation of a commission for the public purpose of administering the revenue of the commission ((~~under RCW 66.24.210(3)~~)) for the enhancement of production of wine grapes and wine and the marketing of Washington wine will materially advance the industries of growing and processing wine grapes and thereby the interests of the citizens of the state.

Sec. 3. Section 7, chapter 5, Laws of 1981 1st ex. sess. and RCW 28B.30.068 are each amended to read as follows:

Revenues ((~~received from RCW 66.08.180~~)) appropriated for wine and wine grape research, extension programs related to wine and wine grape research, and resident instruction in both wine grape production and the processing aspects of the wine industry by Washington State University shall be administered by the College of Agriculture. When formulating or changing plans for programs and research, the College of Agriculture shall confer with representatives of the Washington Wine Society.

Sec. 4. Section 35A.66.020, chapter 119, Laws of 1967 ex. sess. and RCW 35A.66.020 are each amended to read as follows:

The qualified electors of any code city may petition for an election upon the question of whether the sale of liquor shall be permitted within the boundaries of such city as provided by chapter 66.40 RCW, and shall be governed by the procedure therein, and may regulate music, dancing and entertainment as authorized by RCW 66.28.080: PROVIDED, That every code city shall enforce state laws relating to the investigation and prosecution of all violations of Title 66 RCW relating to control of alcoholic beverages and shall be entitled to retain the fines collected therefrom as therein provided. Every code city shall also share in the allocation and distribution of ((~~liquor profits and excise~~)) excess funds as provided in RCW ((~~82.08.170,~~)) 66.08.190((,)) and 66.08.210, and make reports of seizure as required by RCW 66.32.090, and otherwise regulate by ordinances not in conflict with state law or liquor board regulations.

Sec. 5. Section 4, chapter 6, Laws of 1961 ex. sess. as last amended by section 2, chapter 160, Laws of 1983 and RCW 66.08.026 are each amended to read as follows:

All administrative expenses of the board incurred on and after April 1, 1963 shall be appropriated and paid from the liquor revolving fund. These administrative expenses shall include, but not be limited to: The salaries and expenses of the board and its employees, the cost of establishing, leasing, maintaining, and operating state liquor stores and warehouses, legal services, annual or other audits, and other general costs of conducting the business of the board. The administrative expenses shall not, however, be deemed to include costs of liquor and lottery tickets purchased, the cost of transportation and delivery to the point of distribution, other costs pertaining to the acquisition and receipt of liquor and lottery tickets, packaging and repackaging of liquor, sales tax, and those amounts distributed pursuant to RCW ((~~66.08.180,~~)) 66.08.190, 66.08.200, and 66.08.210 ((~~and 66.08.220~~)).

Sec. 6. Section 6, chapter 175, Laws of 1957 as amended by section 4, chapter 229, Laws of 1988 and RCW 66.08.190 are each amended to read as follows:

((~~When excess funds are distributed, all moneys subject to distribution shall be disbursed as follows:~~

~~(1) Three-tenths of one percent to the department of community development to be allocated to border areas under RCW 66.08.195; and~~

~~(2) From the amount remaining after distribution under subsection (1) of this section, fifty~~)) Excess funds in the liquor revolving fund shall be distributed by the board at least once every three months in accordance with RCW 66.08.200, 66.08.210, and this section as follows:

Seventy-six and four-tenths percent to the general fund of the state, ((~~ten~~)) four and seven hundred twenty-five one-thousandths percent to the counties of the state, and ((~~forty~~)) eighteen and eight hundred seventy-five one-thousandths percent to the incorporated cities and towns of the state.

Sec. 7. Section 7, chapter 175, Laws of 1957 as last amended by section 167, chapter 151, Laws of 1979 and RCW 66.08.200 are each amended to read as follows:

With respect to the ((~~ten~~)) four and seven hundred twenty-five one-thousandths percent share coming to the counties, the computations for distribution shall be made by the state agency responsible for collecting the same as follows:

The share coming to each eligible county shall be determined by a division among the eligible counties according to the relation which the population of the unincorporated area of such eligible county, as last determined by the office of financial management, bears to the population of the total combined unincorporated areas of all eligible counties, as determined by the office of financial management: PROVIDED, That no county in which the sale of liquor is forbidden in the unincorporated area thereof as the result of an election shall be entitled to share in such distribution. "Unincorporated area" means all that portion of any county not included within the limits of incorporated cities and towns.

When a special county census has been conducted for the purpose of determining the population base of a county's unincorporated area for use in the distribution of liquor funds, the census figure shall become effective for the purpose of distributing funds as of the official census date once the census results have been certified by the office of financial management and officially submitted to the office of the secretary of state.

Sec. 8. Section 8, chapter 175, Laws of 1957 as last amended by section 168, chapter 151, Laws of 1979 and RCW 66.08.210 are each amended to read as follows:

With respect to the ((~~forty~~)) eighteen and eight hundred seventy-five one-thousandths percent share coming to the incorporated cities and towns, the computations for distribution shall be made by the state agency responsible for collecting the same as follows:

The share coming to each eligible city or town shall be determined by a division among the eligible cities and towns within the state ratably on the basis of population as last determined by the office of financial management: AND PROVIDED, That no city or town in which the sale of liquor is forbidden as the result of an election shall be entitled to any share in such distribution.

Sec. 9. Section 3, chapter 158, Laws of 1935 as last amended by section 11, chapter 452, Laws of 1987 and RCW 66.24.210 are each amended to read as follows:

(1) There is hereby imposed upon all wines sold to wine wholesalers and the Washington state liquor control board, within the state a tax at the rate of twenty ((~~and one-fourth~~))-one and sixty-seven one-hundredths cents per liter: PROVIDED, HOWEVER, That wine sold or shipped in bulk from one winery to another winery shall not be subject to such tax. The tax provided for in this section may, if so prescribed by the board, be collected by means of stamps to be furnished by the board, or by direct payments based on wine purchased by wine wholesalers. Every person purchasing wine under the provisions of this section shall on or before the twentieth day of each month report to the board all purchases during the preceding calendar month in such manner and upon such forms as may be prescribed by the board, and with such report shall pay the tax due from the purchases covered by such report unless the same has previously been paid. Any such purchaser of wine whose applicable tax payment is not postmarked by the twentieth day following the month of purchase will be assessed a penalty at the rate of two percent a month or fraction thereof. If this tax be collected by means of stamps, every such person shall procure from the board revenue stamps representing the tax in such form as the board shall prescribe and shall affix the same to the package or container in such manner and in such denomination as required by the board and shall cancel the same prior to the delivery of the package or container containing the wine to the purchaser. If the tax is not collected by means of stamps, the board may require that every such person shall execute to and file with the board a bond to be approved by the board, in such amount as the board may fix, securing the payment of the tax. If any such person fails to pay the tax when due, the board may forthwith suspend or cancel the license until all taxes are paid.

(2) ((An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section. All revenues collected during any month from this additional tax shall be transferred to the state general fund by the twenty-fifth day of the following month.

~~(3)~~)) An additional tax is imposed on wines subject to tax under subsection (1) of this section, at the rate of one-fourth of one cent per liter for wine sold after June 30, 1987. Such additional tax shall cease to be imposed on July 1, 1993. ((~~All revenues collected under this subsection (3) shall be disbursed quarterly to the Washington wine commission for use in carrying out the purposes of chapter 15.88 RCW.~~))

Sec. 10. Section 24, chapter 62, Laws of 1933 ex. sess. as last amended by section 11, chapter 3, Laws of 1983 2nd ex. sess. and RCW 66.24.290 are each amended to read as follows:

(1) Any brewer or beer wholesaler licensed under this title may sell and deliver beer to holders of authorized licenses direct, but to no other person, other than the board; and every such brewer or beer wholesaler shall report all sales to the board monthly, pursuant to the regulations, and shall pay to the board as an added tax for the privilege of manufacturing and selling the beer within the state a tax of two dollars and ((~~sixty~~)) seven hundred eighty-two one-thousandths cents per barrel of thirty-one gallons on sales to licensees within the state and on sales to licensees within the state of bottled and canned beer shall pay a tax computed in gallons at the rate of two dollars and ((~~sixty~~)) seven hundred eighty-two one-thousandths cents per barrel of thirty-one gallons. Any brewer or beer wholesaler whose applicable tax payment is not postmarked by the twentieth day following the month of sale will be assessed a penalty at the rate of two percent per month or fraction thereof. Each such brewer or wholesaler shall procure from the board revenue stamps representing such tax in form prescribed by the board and shall affix the same to the barrel or package in such manner and in such denominations as required by the board, and shall cancel the same prior to commencing delivery from his place of business or warehouse of such barrels or packages. Beer shall be sold by brewers and wholesalers in sealed barrels or packages. The revenue stamps herein provided for need not be affixed and canceled in the making of resales of barrels or packages already taxed by the affixation and cancellation of stamps as provided in this section.

~~(3)~~)) The tax imposed under this section shall not apply to "strong beer" as defined in this title.

Sec. 11. Section 13, chapter 188, Laws of 1953 as last amended by section 2, chapter 87, Laws of 1986 and RCW 68.50.107 are each amended to read as follows:

There shall be established at the University of Washington Medical School a state toxicological laboratory under the direction of the state toxicologist whose duty it will be to perform all necessary toxicologic procedures requested by all coroners, medical examiners, and prosecuting attorneys. Annually the president of the University of Washington, with the consent of the state death investigations council, shall appoint a competent toxicologist as state toxicologist who shall serve a one year term. The state toxicologist may be reappointed to as many additional one year terms as the president of the university and the death investigations council deem proper. The facilities of the police school of the Washington State University and the services of its professional staff shall be made available to coroners, medical examiners, and prosecuting attorneys in their investigations under this chapter. ((~~This laboratory shall be funded by disbursement from the class H license fees as provided in RCW 66.08.180.~~))

Sec. 12. Section 52, chapter 238, Laws of 1967 as last amended by section 42, chapter 109, Laws of 1987 and RCW 70.94.390 are each amended to read as follows:

The department may, at any time and on its own motion, hold a hearing to determine if the activation of an authority is necessary for the prevention, abatement and control of air pollution which exists or is likely to exist in any area of the state. Notice of such hearing shall be conducted in accordance with chapter 42.30 RCW and chapter ((~~34.04~~)) 34.05 RCW. If at such hearing the department finds that air pollution exists or is likely to occur in a particular area, and that the purposes of this chapter and the public interest will be best served by the activation of an authority it shall designate the boundaries of such area and set forth in a report to the appropriate county or counties recommendations for the activation of an authority: PROVIDED, That if at such hearing the department determines that the activation of an authority is not practical or feasible for the reason that a local or regional air pollution control program cannot be successfully established or operated due to unusual circumstances and conditions, but that the control and/or prevention of air pollution is necessary for the purposes of this chapter and the public interest, it may assume jurisdiction and so declare by order. Such order shall designate the geographic area in which, and the effective date upon which, the department will exercise jurisdiction for the control and/or prevention of air pollution. The department shall exercise its powers and duties in the same manner as if it had assumed authority under RCW 70.94.410.

All expenses incurred by the department in the control and prevention of air pollution in any county pursuant to the provisions of RCW 70.94.390 and 70.94.410 shall constitute a claim against such county. The department shall certify the expenses to the auditor of the county, who promptly shall issue his warrant on the county treasurer payable out of the current expense fund of the county. In the event that the amount in the current expense fund of the county is not adequate to meet the expenses incurred by the department, the department shall certify to the state treasurer that they have a prior claim ((on any money in the "liquor excise tax fund" that is to be apportioned to that county by the state treasurer as provided in RCW 82.08.170. In the event that the amount in the "liquor excise tax fund" that is to be apportioned to that county by the state treasurer is not adequate to meet the expenses incurred by the department, the department shall certify to the state treasurer that they have a prior claim)) on any excess funds from the liquor revolving fund that are to be distributed to that county as provided in RCW 66.08.190 through ((~~66.08.220~~)) 66.08.210. All moneys that are collected as provided in this section shall be placed in the general fund in the account of the office of air programs of the department.

Sec. 13. Section 31, chapter 35, Laws of 1982 1st ex. sess. as last amended by section 4, chapter 80, Laws of 1987, section 15, chapter 472, Laws of 1987, and by section 6, chapter 9, Laws of 1987 1st ex. sess. and RCW 82.02.030 are each reenacted and amended to read as follows:

((~~(1)~~)) The rate of the additional taxes under RCW 54.28.020(2), 54.28.025(2), ((~~66.24.210(2), 66.24.290(2),~~)) 82.04.2901, 82.16.020(2), 82.26.020(2), 82.27.020(5), 82.29A.030(2), and 82.44.020(6) shall be seven percent((~~; and~~

~~(2) The rate of the additional taxes under RCW 82.08.150(4) shall be fourteen percent~~)).

NEW SECTION. Sec. 14. A new section is added to chapter 66.24 RCW to read as follows:

(1) There is levied and shall be collected a tax upon each retail sale of spirits, or strong beer in the original package at the rate of seventeen and one-tenth percent of the selling price. The tax imposed in this subsection shall apply to all such sales including sales by the Washington state liquor stores and agencies, but excluding sales to class H licensees.

(2) There is levied and shall be collected a tax upon each sale of spirits, or strong beer in the original package at the rate of eleven and four-tenths percent of the selling price on sales by Washington state liquor stores and agencies to class H licensees.

(3) There is levied and shall be collected an additional tax upon each retail sale of spirits in the original package at the rate of one dollar and nine thousand six hundred eight ten-thousandths cents per liter. The additional tax imposed in this subsection shall apply to all such sales including sales by Washington state liquor stores and agencies, and including sales to class H licensees.

(4) The tax imposed in RCW 82.08.020, as now or hereafter amended, shall not apply to sales of spirits or strong beer in the original package.

(5) The taxes imposed in this section shall be paid by the buyer to the seller, and each seller shall collect from the buyer the full amount of the tax payable in respect to each taxable sale under this section. The taxes required by this section to be collected by the seller shall be stated separately from the selling price and for purposes of determining the tax due from the buyer to the seller, it shall be conclusively presumed that the selling price quoted in any price list does not include the taxes imposed by this section.

(6) As used in this section, the terms "sale," "retail sale," "buyer," "seller," and "selling price" shall have the meaning ascribed to them in chapter 82.08 RCW.

(7) All taxes collected under this section shall be deposited each day in a depository approved by the state treasurer and transferred to the state treasurer to be credited to the liquor revolving fund.

NEW SECTION. Sec. 15. The following acts or parts of acts are each repealed:

(1) Section 77, chapter 62, Laws of 1933 ex. sess., section 2, chapter 13, Laws of 1935, section 10, chapter 5, Laws of 1949, section 2, chapter 143, Laws of 1965 ex. sess., section 1, chapter 75, Laws of 1967 ex. sess., section 166, chapter 151, Laws of 1979, section 6, chapter 5, Laws of 1981 1st ex. sess., section 1, chapter 87, Laws of 1986, section 10, chapter 458, Laws of 1987 and RCW 66.08.180;

(2) Section 3, chapter 229, Laws of 1988 and RCW 66.08.195;

(3) Section 11, chapter 5, Laws of 1949 and RCW 66.08.220;

(4) Section 12, chapter 452, Laws of 1987 and RCW 66.08.230;

(5) Section 82.08.150, chapter 15, Laws of 1961, section 2, chapter 24, Laws of 1961 ex. sess., section 1, chapter 42, Laws of 1965, section 16, chapter 173, Laws of 1965 ex. sess., section 11, chapter 21, Laws of 1969 ex. sess., section 9, chapter 299, Laws of 1971 ex. sess., section 1, chapter 204, Laws of 1973 1st ex. sess., section 25, chapter 5, Laws of 1981 1st ex. sess., section 3, chapter 35, Laws of 1982 1st ex. sess., section 12, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.08.150;

(6) Section 82.08.160, chapter 15, Laws of 1961, section 12, chapter 21, Laws of 1969 ex. sess., section 26, chapter 5, Laws of 1981 1st ex. sess., section 4, chapter 35, Laws of 1982 1st ex. sess. and RCW 82.08.160;

(7) Section 82.08.170, chapter 15, Laws of 1961, section 215, chapter 3, Laws of 1983 and RCW 82.08.170; and

(8) Section 1, chapter 16, Laws of 1987 and RCW 82.08.171.

NEW SECTION. Sec. 16. This act shall take effect January 1, 1990.