AN ACT Relating to a fiscal reform; amending RCW 82.16.050, 82.08.020, 82.03.130, 82.03.140, 43.135.030, 43.135.040, 43.135.050, 43.135.060, 43.135.070, 43.88.530, 43.88.030, 43.88A.020, 43.63A.065, 43.88.110, 43.41.110, 35.21.870, 82.46.010, 82.14.200, 82.44.150, 43.84.092, 84.55.010, 84.55.020, 82.36.025, 46.16.060, 46.16.065, 46.16.079, 46.16.080, 46.16.085, 46.16.090, 46.16.121, 46.16.160, 46.16.310, 46.16.315, 46.16.460, 46.16.505, 46.16.630, 46.44.047, 46.44.0941, 46.44.095, 46.68.030, 46.44.096, 39.34.030, 82.36.440, and 82.38.280; reenacting and amending RCW 46.16.070; adding a new section to chapter 82.04 RCW; adding a new Title 82A to the Revised Code of Washington; adding a new section to chapter 43.41 RCW; adding a new section to chapter 43.03 RCW; adding new sections to chapter 43.88 RCW; adding a new section to chapter 44.48 RCW; adding new sections to chapter 82.02 RCW; adding new sections to chapter 35.21 RCW; adding new sections to chapter 82.14 RCW; adding a new chapter to Title 36 RCW; adding a new section to chapter 46.16 RCW; adding a new chapter to Title 81 RCW; creating new sections; repealing RCW 82.04.300; prescribing penalties; providing an expiration date; making appropriations; providing effective dates; providing a contingent effective date; and declaring an emergency.

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

PART I

BUSINESS AND OCCUPATION TAX

NEW SECTION. Sec. 101. A new section is added to chapter 82.04 RCW to read as follows:

(1) In computing the tax imposed under this chapter, there may be deducted from the measure of tax an amount equal to the product of eight thousand dollars multiplied by the number of months in the reporting period (determined under the authority of RCW 82.32.045) reduced by the amount computed in subsection (2) of this section.

(2) In the case of any taxpayer, the amount under subsection (1) of this section shall be reduced, but not below zero, by twenty percent of the amount by which the measure of tax for a reporting period exceeds the product of eight thousand dollars multiplied by the number of months in the reporting period.

(3) For the purpose of this section, the measure of tax is the value of products, gross proceeds of sales, or gross income of the business upon which the business and occupation tax is imposed under this chapter.

(4) If a person engages in more than one business activity and the combined measures of the tax applicable to such businesses equal or exceed eight thousand dollars per month, only a single deduction computed based on the combined measures of tax is allowed by this section.

(5) Any person claiming deduction(s) under the provisions of this section may be required to file returns even though no tax may be due.

NEW SECTION. Sec. 102. Section 82.04.300, chapter 15, Laws of 1961, section 3, chapter 293, Laws of 1961, section 41, chapter 278, Laws of 1975 1st ex. sess., section 4, chapter 196, Laws of 1979 ex. sess., section 213, chapter 3, Laws of 1983 and RCW 82.04.300 are each repealed.

PART II

PUBLIC UTILITY TAX DEDUCTION

Sec. 201. Section 82.16.050, chapter 15, Laws of 1961 as last amended by section 1, chapter 207, Laws of 1987 and RCW 82.16.050 are each amended to read as follows:

In computing tax there may be deducted from the gross income the following items:

(1) Amounts derived by municipally owned or operated public service businesses, directly from taxes levied for the support or maintenance thereof: PROVIDED, That this section shall not be construed to exempt service charges which are spread on the property tax rolls and collected as taxes;

(2) Amounts derived from the sale of commodities to persons in the same public service business as the seller, for resale as such within this state. This deduction is allowed only with respect to water distribution, gas distribution or other public service businesses which furnish water, gas or any other commodity, other than electrical energy, in the performance of public service businesses;

(3) Amounts actually paid by a taxpayer to another person taxable under this chapter as the latter's portion of the consideration due for services furnished jointly by both, if the total amount has been credited to and appears in the gross income reported for tax by the former;

(4) The amount of cash discount actually taken by the purchaser or customer;

(5) The amount of credit losses actually sustained by taxpayers whose regular books of accounts are kept upon an accrual basis;

(6) Amounts derived from business which the state is prohibited from taxing under the Constitution of this state or the Constitution or laws of the United States;

(7) Amounts derived from the distribution of water through an irrigation system, for irrigation purposes;

(8) Amounts derived from the transportation of commodities from points of origin in this state to final destination outside this state, or from points of origin outside this state to final destination in this state, with respect to which the carrier grants to the shipper the privilege of stopping the shipment in transit at some point in this state for the purpose of storing, manufacturing, milling, or other processing, and thereafter forwards the same commodity, or its equivalent, in the same or converted form, under a through freight rate from point of origin to final destination; and amounts derived from the transportation of commodities from points of origin in the state to an export elevator, wharf, dock or ship side on tidewater or navigable tributaries thereto from which such commodities are forwarded, without intervening transportation, by vessel, in their original form, to interstate or foreign destinations: PROVIDED, That no deduction will be allowed when the point of origin and the point of delivery to such an export elevator, wharf, dock, or ship side are located within the corporate limits of the same city or town;

(9) Amounts derived from the distribution of water by a nonprofit water association and used for capital improvements by that nonprofit water association;

(10) Amounts paid by a sewerage collection business taxable under RCW 82.16.020(1)(a) to a person taxable under chapter 82.04 RCW for the treatment or disposal of sewage;

(11) An amount equal to the product of eight thousand dollars times the number of months in the reporting period determined under the authority of RCW 82.32.045, reduced, but not below zero, by twenty percent of the amount that the gross income for the reporting period exceeds the product of eight thousand dollars multiplied by the number of months in the reporting period. If a person engages in more than one business activity and the combined measures of tax applicable to such businesses equal or exceed eight thousand dollars per month, only a single deduction computed based on the combined measures of tax is allowed under this subsection.

Any person claiming a deduction under the provisions of this section may be required to file returns even though no tax may be due.

PART III

RETAIL SALES TAX REDUCTION

Sec. 301. 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 on each retail sale in this state equal to ((~~six and five-tenths~~)) three and nine-tenths percent of the selling price.

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

(3) The rate provided in this section applies to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

PART IV

INCOME TAX‑-GENERAL PROVISIONS

NEW SECTION. Sec. 401. INTENT. It is the intent of the legislature in adopting this title to provide the necessary revenues for the support of vital state services on a more stable and equitable basis.

PART V

INCOME TAX‑-DEFINITIONS

NEW SECTION. Sec. 501. INTRODUCTORY. Unless the context clearly requires otherwise, the definitions in sections 502 through 512 of this act apply throughout this title.

NEW SECTION. Sec. 502. ADJUSTED GROSS INCOME. "Adjusted gross income" means adjusted gross income as determined under the internal revenue code.

NEW SECTION. Sec. 503. DEPARTMENT. "Department" means the state department of revenue.

NEW SECTION. Sec. 504. FEDERAL BASE INCOME. "Federal base income" means:

(1) For individuals, adjusted gross income;

(2) For estates and trusts, taxable income as determined for estates and trusts consistent with subtitle A, chapter I, subchapter J of the internal revenue code.

NEW SECTION. Sec. 505. INDIVIDUAL. "Individual" means a natural person.

NEW SECTION. Sec. 506. INTERNAL REVENUE CODE. "Internal revenue code" means the United States internal revenue code of 1986 and amendments thereto, as existing and in effect on January 1, 1989.

NEW SECTION. Sec. 507. PERSON. "Person" includes individuals, partnerships, firms, companies, fiduciaries, estates, trusts, and corporations.

NEW SECTION. Sec. 508. RESIDENT. "Resident" includes: (1) An individual who:

(a) Has resided in this state for the entire tax year; or

(b) Is domiciled in this state unless the individual:

(i) Maintains no permanent place of abode in this state; and

(ii) Does not maintain a permanent place of abode elsewhere; and

(iii) Spends in the aggregate not more than thirty days in the tax year in this state; or

(c) Is not domiciled in this state, but maintains a permanent place of abode in this state and spends in the aggregate more than one hundred eighty-three days of the tax year in this state unless the individual establishes to the satisfaction of the director of the department of revenue that the individual is in the state only for temporary or transitory purposes; or

(d) Claims the state of Washington as the individual's tax home for federal income tax purposes.

(2) A resident estate means an estate of which a personal representative was appointed by a Washington court, or, an estate administration of which is carried on in this state.

(3) A resident trust means a trust whose situs as determined by RCW 11.96.040 is within the state of Washington.

NEW SECTION. Sec. 509. S CORPORATION. "S corporation" means an S corporation as defined in section 1361 of the internal revenue code.

NEW SECTION. Sec. 510. TAXABLE INCOME. "Taxable income" means federal base income as modified under sections 701 through 710 and 801 through 803 of this act.

NEW SECTION. Sec. 511. TAXABLE YEAR. "Taxable year" means the taxpayer's taxable year as defined under the Internal Revenue Code.

NEW SECTION. Sec. 512. TAXPAYER. "Taxpayer" means a person receiving income subject to tax under this title.

NEW SECTION. Sec. 513. DEFINITION OF TERMS GENERALLY. Except as provided in sections 501 through 512 of this act, any term used in this title has the same meaning as when used in a comparable context in the internal revenue code.

PART VI

INCOME TAX‑-DETERMINATION OF TAX

NEW SECTION. Sec. 601. TAX IMPOSED‑-RATE. A tax is imposed at the rate of three and nine-tenths percent on all taxable income of resident individuals, estates, and trusts and on all individuals, estates, and trusts deriving income from sources in Washington for each taxable year. Taxable income of a taxpayer exempt from taxation by internal revenue code section 501 is exempt from taxation by this title.

NEW SECTION. Sec. 602. CREDIT FOR INCOME TAXES DUE ANOTHER JURISDICTION. (1) A resident individual, estate, or trust is allowed a credit against the tax imposed under this title for the amount of any income tax imposed by another state or foreign country, or political subdivision of the state or foreign country, on income taxed under this title, subject to the following conditions, which shall be imposed separately with respect to each taxing jurisdiction:

(a) The credit is allowed only for taxes imposed by the other jurisdiction on net income from sources within that jurisdiction; and

(b) The amount of the credit shall not exceed the smaller of:

(i) The amount of tax paid to the other jurisdiction on net income from sources within the other jurisdiction; or

(ii) The amount of tax due under this title before application of credits allowable by this title, multiplied by a fraction. The numerator of the fraction is the amount of the taxpayer's adjusted gross income subject to tax in the other jurisdiction. The denominator of the fraction is the taxpayer's total adjusted gross income as modified by this title. The fraction shall never be greater than one.

(2) If, in lieu of a credit similar to the credit allowed under subsection (1) of this section, the laws of the other taxing jurisdiction contain a provision exempting a resident of this state from liability for the payment of income taxes on income earned for personal services performed in such jurisdiction, then the director is authorized to enter into a reciprocal agreement with such jurisdiction providing a similar tax exemption on income earned for personal services performed in this state.

NEW SECTION. Sec. 603. DUAL RESIDENCE. If an individual is regarded as a resident both of this state and another jurisdiction for state personal income tax purposes, the department shall reduce the tax on that portion of the taxpayer's income which is subjected to tax in both jurisdictions solely by virtue of dual residence, if the other taxing jurisdiction allows a similar reduction. The reduction shall equal the lower of the two taxes applicable to the income taxed twice, multiplied by a fraction. The numerator of the fraction is the tax imposed by this state on the income taxed twice. The denominator of the fraction is the tax imposed by both jurisdictions on the income taxed twice. The fraction shall never be greater than one.

NEW SECTION. Sec. 604. BUSINESS AND OCCUPATION TAX CREDIT. (1) There shall be allowed a credit against the tax imposed by this title in the amount of the state of Washington business and occupation tax paid by the taxpayer in the tax year subject to the limitation of subsection (2) of this section.

(2) The credit shall not exceed the smaller of:

(a) The amount of business and occupation tax paid; or

(b) The amount of tax of the taxpayer imposed by this title before the application of credits allowed by this title, multiplied by a fraction:

(i) The numerator is the amount of the taxpayer's adjusted gross income attributable to activities subject to business and occupation tax; and

(ii) The denominator is the taxpayer's adjusted gross income as modified by this title. The fraction shall never be greater than one.

NEW SECTION. Sec. 605. PUBLIC UTILITY TAX CREDIT. (1) There shall be allowed a credit against the tax imposed by this title in the amount of the state of Washington public utility tax paid by the taxpayer in the tax year subject to the limitation of subsection (2) of this section.

(2) The credit shall not exceed the smaller of:

(a) The amount of public utility tax paid; or

(b) The amount of tax of the taxpayer imposed by this title before the application of credits allowed by this title, multiplied by a fraction:

(i) The numerator is the amount of the taxpayer's adjusted gross income attributable to activities subject to public utility tax; and

(ii) The denominator is the taxpayer's adjusted gross income as modified by this title. The fraction shall never be greater than one.

NEW SECTION. Sec. 606. The amount of tax credits received by any taxpayer under sections 602, 604, and 605 of this act shall not exceed the total amount of tax due, and there shall be no carryback or carryforward of any unused excess credits.

PART VII

INCOME TAX‑-TAXABLE INCOME MODIFICATIONS

NEW SECTION. Sec. 701. INTRODUCTORY. In computing taxable income, modifications shall be made to the taxpayer's federal base income as required under sections 601 through 606 and sections 701 through 710 of this act, unless the modification has the effect of duplicating an item of income or deduction.

NEW SECTION. Sec. 702. STATE AND LOCAL OBLIGATIONS. To federal base income, add income which has been excluded under section 103 of the internal revenue code in computing federal base income, except interest on obligations of the state of Washington or political subdivisions of the state of Washington.

NEW SECTION. Sec. 703. STATE AND LOCAL INCOME TAXES‑- BUSINESS AND OCCUPATION, PUBLIC UTILITY TAXES. To federal base income, add:

(1) Taxes on or measured by net income which have been deducted under the internal revenue code in computing federal base income;

(2) The amount of taxes paid or accrued which have been deducted for federal purposes, but for which a business and occupation tax credit or public utility tax credit, or both, is allowed.

NEW SECTION. Sec. 704. NET OPERATING LOSS. There shall be allowed as a deduction from federal base income the amount of net operating loss as allowed in section 172 of the internal revenue code. The calculation of the loss amount shall reflect the modifications to federal base income as provided in this title and a net operating loss deduction may include a loss carried forward to the tax year but shall not include a loss carried back from a future year.

NEW SECTION. Sec. 705. CARRY-OVERS. To federal base income, add amounts which have been deducted in computing federal base income to the extent the amounts have been carried over from taxable years ending before the effective date of this title.

NEW SECTION. Sec. 706. FEDERAL OBLIGATIONS. From federal base income, deduct, to the extent included in federal base income, income derived from obligations of the United States which this state is prohibited by federal law from subjecting to a net income tax. However, the amount deducted under this section shall be reduced by any expense, including amortizable bond premiums, incurred in the production of such income to the extent the expense has been deducted in calculating federal base income.

NEW SECTION. Sec. 707. STANDARD DEDUCTION‑-PERSONAL EXEMPTION. There shall be allowed from adjusted gross income the following standard deductions and personal exemption deduction:

(1) The standard deduction for an individual shall be:

(a) Ten thousand dollars in the case of a joint return or a surviving spouse;

(b) Eight thousand eight hundred dollars in the case of a head of household;

(c) Six thousand dollars in the case of an individual who is not married and who is not a surviving spouse or head of household;

(d) Five thousand dollars in the case of a married individual filing a separate return.

(2) A personal exemption deduction in the amount of two thousand nine hundred dollars shall be allowed for each individual for whom a personal exemption deduction is allowed for federal income tax purposes.

NEW SECTION. Sec. 708. ADJUSTMENT OF DEDUCTIONS‑- EXEMPTIONS FOR NONRESIDENTS. The deductions from adjusted gross income allowed under section 707 of this act for individual taxpayers who are not residents of this state for the entire taxable year shall be reduced by multiplying the amount of the deductions by a fraction. The numerator of the fraction is the taxpayer's adjusted gross income attributable to sources within the state of Washington. The denominator of the fraction is the taxpayer's gross income from all sources. The fraction shall never be greater than one.

NEW SECTION. Sec. 709. TAX RETURNS FOR FRACTIONAL YEAR. (1) If the first taxable year of any taxpayer with respect to which a tax is imposed by this title ends before December 31st of the calendar year in which this title becomes effective, the taxable income for the fractional taxable year shall be the taxpayer's taxable income for the entire taxable year, adjusted by one of the following methods, at the taxpayer's election:

(a) The taxable income shall be multiplied by a fraction. The numerator of the fraction is the number of days in the fractional taxable year. The denominator of the fraction is the number of days in the entire taxable year.

(b) The taxable income shall be adjusted, in accordance with rules of the department, so as to include only such income and be reduced only by such deductions as can be clearly determined from the permanent records of the taxpayer to be attributable to the fractional taxable year.

(2) If an individual taxpayer's taxable income is adjusted under subsection (1) of this section, the deduction amounts allowed under section 707 of this act for the taxpayer shall be reduced by multiplying the amount of the exemption by a fraction. The numerator of the fraction is the number of days in the taxpayer's fractional taxable year. The denominator of the fraction is the number of days in the entire taxable year.

NEW SECTION. Sec. 710. INDEX FOR INFLATION. It is the intent of this chapter that the standard deduction and the personal exemption deduction amounts shall be adjusted by the legislature for inflation for each tax year by multiplying the standard deduction and the personal exemption deduction amount of the previous tax year by the cost-of-living adjustment as determined under internal revenue code section 1(f)(3) (5) for the calendar year in which the tax year begins. The adjustment shall be made by amending section 707 of this act and shall be made only if the adjustment results in an increase in the standard deduction and personal exemption deduction amounts. No adjustment shall be made which decreases the standard deduction and personal exemption deduction amounts. If any adjustment increase is not a multiple of ten dollars, such increase shall be rounded to the next lowest multiple of ten dollars.

PART VIII

INCOME TAX‑-DIVISION OF INCOME, MODIFICATIONS, AND CREDITS

NEW SECTION. Sec. 801. APPORTIONMENT AND ALLOCATION OF INCOME. (1) For resident individuals, estates, and trusts, all income shall be apportioned and allocated to this state.

(2) For nonresident individuals, estates, and trusts, income derived from sources within this state shall be apportioned and allocated to this state. For purposes of this title:

(a) The adjusted gross income of a nonresident derived from sources within this state is the net amount of items of income, gain, loss, and deduction of the nonresident's federal adjusted gross income that are derived from or connected with sources in this state including any distributive share of partnership income and deductions, and any share of estate or trust income and deductions, including any unrelated business income of an otherwise exempt trust or organization.

(b) Items of income, gain, loss, and deduction derived from or connected with sources within this state are those items attributable to the ownership or disposition of any interest in real or tangible personal property in this state, and a business, trade, profession, or occupation carried on within this state. The department shall issue rules to provide consistency of this section with the excise tax provisions.

(c) Deduction with respect to expenses, capital losses, and net operating losses shall be based solely on income, gains, losses, and deductions derived from or connected with sources in this state but shall otherwise be determined in the same manner as the corresponding federal deduction except as provided in this title.

(d) Income from intangible personal property, including annuities, dividends, interest, and gains from the disposition of intangible personal property, constitutes income derived from sources within the state of Washington only to the extent that such income is from property employed in a business, trade, profession, or occupation carried on within this state: PROVIDED, That distributed and undistributed income of an electing S corporation for federal tax purposes derived from or connected with sources within this state is income derived from sources within this state for a nonresident shareholder. A net operating loss of such corporation does constitute a loss or deduction connected with sources within this state for a nonresident shareholder.

(e) Compensation paid by the United States for service in the armed forces of the United States performed in this state by a nonresident does not constitute income derived from sources within this state.

(f) If a business, trade, profession, or occupation is carried on partly within and partly without this state, the determination of net income derived or connected with sources within this state as provided in this section, shall be made by apportionment and allocation of chapter 82.56 RCW.

NEW SECTION. Sec. 802. PARTNERSHIPS AND S CORPORATIONS. (1) Partnerships are not subject to tax under this title. Partners are subject to tax in their separate or individual capacities.

(2) S corporations are not subject to tax under this title. Shareholders of S corporations are subject to tax in their separate or individual capacities.

(3) The taxable incomes of partners shall be computed by including a pro rata share of the modifications under sections 701 through 710 and 801 through 803 of this act and the credits allowed under sections 602, 604, and 605 of this act, if the modification or credit relates to the income of the partnership. Each partner's pro rata share of a modification or credit is the amount of modification or credit multiplied by a fraction. The numerator of the fraction is the partner's distributive share of partnership income. The denominator of the fraction is the total partnership income. The fraction shall never be greater than one.

(4) The taxable incomes of shareholders of S corporations shall be computed by including a share of the modifications under sections 701 through 710 and 801 through 803 of this act and the credits allowed under sections 602, 604, and 605 of this act, if the modification or credit relates to the income of the S corporation. Each shareholder's share of a modification or credit is the amount of modification or credit multiplied by a fraction. The numerator of the fraction is the shareholder's pro rata share of S corporation income. The denominator of the fraction is the total S corporation income. The fraction shall never be greater than one.

(5) As used in this section:

(a) "S corporation income" includes both distributed and undistributed federal taxable income of the S corporation.

(b) "Pro rata share" means pro rata share as determined under section 1366(a) of the internal revenue code.

NEW SECTION. Sec. 803. ESTATES, TRUSTS, AND BENEFICIARIES. (1) The taxable incomes of estates, trusts, and beneficiaries thereof shall be computed by including a share of the modifications under sections 701 through 710 and 801 through 803 of this act and the credits allowed under sections 602, 604, and 605 of this act.

Each taxpayer's share of a modification or credit is the amount of modification or credit multiplied by a fraction. The numerator of the fraction is the taxpayer's share of the distributable net income of the estate or trust. The denominator of the fraction is the total distributable net income of the estate or trust. The fraction shall never be greater than one.

(2) As used in this section, "distributable net income" means distributable net income as defined in the internal revenue code. If an estate or trust has no federal distributable net income, the term means the income of the estate or trust which is distributed or is required to be distributed during the taxable year under local law or the terms of the estate or trust instrument.

(3) Any portion of a modification which is not included in calculating the taxable incomes of the beneficiaries shall be included in calculating the taxable income of the trust or estate.

PART IX

INCOME TAX‑-WITHHOLDING-ESTIMATED TAX

NEW SECTION. Sec. 901. EMPLOYER WITHHOLDING‑-REQUIREMENTS. (1) Every employer making a payment of wages or salaries earned in this state, regardless of the place where the payment is made, and who is required by the internal revenue code to withhold taxes, shall deduct and withhold a tax as prescribed by the department by rule. The rules prescribed shall reasonably reflect the annual tax liability of the employee under this title. Every employer making such a deduction and withholding shall furnish to the employee a record of the amount of tax deducted and withheld from the employee on forms provided by the department.

(2) If the employee is a resident of this state and earns income from personal services entirely performed in another state which imposes an income tax on the income, and the employer withholds income taxes under the laws of the state in which the income is earned, the employer is not required to withhold any tax imposed by this title on the income if the laws of the state in which the income is earned allow a similar exemption for its residents who earn income in this state.

NEW SECTION. Sec. 902. LIABILITY OF EMPLOYER FOR TAX WITHHELD. Any person required to deduct and withhold the tax imposed by this title is liable to the department for the payment of the amount deducted and withheld, and is not liable to any other person for the amount of tax deducted and withheld under this title or for the act of withholding. The amount of tax so deducted and withheld shall be held to be a special fund in trust for this state.

NEW SECTION. Sec. 903. CREDIT FOR TAX WITHHELD‑-HOW CLAIMED. The amount deducted and withheld as tax under sections 601 through 606 of this act during any taxable year shall be allowed as a credit against the tax imposed for the taxable year by this title. If the liability of any individual for taxes, interest, penalties, or other amounts due the state of Washington is less than the total amount of the credit which the individual is entitled to claim under this section, the individual is entitled to a refund from the department in the amount of the excess of the credit over the tax otherwise due. If any individual entitled to claim a credit under this section is not otherwise required by this title to file a return, a refund may be obtained in the amount of the credit by filing a return, with applicable sections completed, to claim the refund. No credit or refund is allowed under this section unless the credit or refund is claimed on a return filed for the taxable year for which the amount was deducted and withheld.

NEW SECTION. Sec. 904. WITHHOLDING‑-EXEMPTION DECLARATIONS. An employee shall be entitled to use and an employer shall use the withholding exemption declaration on file with the employer for federal income tax purposes. The department may redetermine the number of withholding exemptions to which any employee is entitled, and the department may require an additional withholding exemption declaration to be filed on a form prescribed by the department where the department finds that the exemption declaration filed for federal income tax purposes does not properly reflect the number of withholding exemptions to which the employee is entitled.

NEW SECTION. Sec. 905. WITHHOLDING‑-FAILURE TO PAY OR COLLECT‑-PENALTIES. (1) The tax required by this chapter to be collected by the employer shall be deemed to be held in trust by the employer until paid to the department.

(2) In case any employer, or a responsible person within the meaning of internal revenue code section 6672, fails to collect the tax herein imposed or having collected the tax, fails to pay it to the department, the employer or responsible person shall, nevertheless, be personally liable to the state for the amount of the tax. The interest and penalty provisions of chapter 82.32 RCW shall apply to this section.

NEW SECTION. Sec. 906. ESTIMATED TAX IMPOSED‑-DUE DATE OF ESTIMATED TAXES‑-AMOUNT OF ESTIMATED TAX‑-UNDERPAYMENT PENALTY. (1) Each individual, estate, or trust subject to taxation by this title which is required by the internal revenue code to make payment of estimated taxes shall pay to the department on forms prescribed by the department the estimated taxes due under this title.

(2) The provisions of the internal revenue code relating to the determination of reporting periods and due dates of payments of estimated tax applies to the estimated tax payments due under this section.

(3) The amount of the estimated tax shall be the annualized tax divided by the number of months in the reporting period. No estimated tax shall be due if the annualized tax is less than five hundred dollars. The provisions of RCW 82.32.050 and 82.32.090 shall apply to underpayments of estimated tax but shall not apply to underpayments, as defined by the internal revenue code, if the tax remitted to the department is either ninety percent of the tax shown on the return or one hundred percent of the tax shown on the previous year's tax return. (4) For purposes of this section, the annualized tax is the taxpayer's projected tax liability for the tax year as computed pursuant to internal revenue code section 6654 and the regulations thereunder.

PART X

INCOME TAX‑-CRIMES

NEW SECTION. Sec. 1001. CRIMES. (1) Any person who knowingly attempts to evade the tax imposed under this title or payment thereof is guilty of a class C felony as provided in chapter 9A.20 RCW.

(2) Any person required to collect tax imposed under this title who knowingly fails to collect, truthfully account for, or pay over the tax is guilty of a class C felony as provided in chapter 9A.20 RCW.

(3) Any person who knowingly fails to pay tax, pay estimated tax, make returns, keep records, or supply information, as required under this title, is guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.

PART XI

INCOME TAX‑-ADMINISTRATIVE PROVISIONS

NEW SECTION. Sec. 1101. METHOD OF ACCOUNTING. (1) A taxpayer's method of accounting for purposes of the tax imposed under this title shall be the same as the taxpayer's method of accounting for federal income tax purposes. If no method of accounting has been regularly used by a taxpayer for federal income tax purposes or if the method used does not clearly reflect income, tax due under this title shall be computed by a method of accounting which in the opinion of the department fairly reflects income.

(2) If a person's method of accounting is changed for federal income tax purposes, it shall be similarly changed for purposes of this title.

NEW SECTION. Sec. 1102. PERSONS REQUIRED TO FILE RETURNS. (1) All taxpayers shall file with the department, on forms prescribed by the department, an income tax return for each tax year. Each person required to file a return under this title shall, without assessment, notice, or demand, pay any tax due thereon, to the department on or before the date fixed for the filing of the return.

(2) The department may by rule require that certain taxpayers file, on forms prescribed by the department, informational returns for any period. Each person required by rule to file an informational return shall, without assessment, notice, or demand, pay any tax due thereon, to the department on or before the date fixed for the filing of the informational return.

(3) In the event an adjustment to a taxpayer's federal return is made by the taxpayer or the internal revenue service, the taxpayer shall, within ninety days of the final determination of the adjustment by the internal revenue service or within thirty days of the filing of a federal return adjusted by the taxpayer, file with the department on forms prescribed by the department, a corrected return reflecting the adjustments as finally determined. The taxpayer shall pay any additional tax due resulting from the finally determined internal revenue service adjustment or a taxpayer adjustment without notice and assessment. Notwithstanding any provision of this title or any other title to the contrary, the period of limitation for the collection of the additional tax, interest and penalty due as a result of an adjustment by the taxpayer or a finally determined internal revenue service adjustment shall begin at the later of thirty days following the final determination of the adjustment or the date of the filing of the corrected return.

NEW SECTION. Sec. 1103. DUE DATE FOR FILING A RETURN‑- EXTENSIONS‑-INTEREST AND PENALTIES. The due date of a return required to be filed with the department shall be the due date of the federal income tax return or informational return for federal income tax purposes. The department shall have the authority to grant extensions of times by which returns required to be filed by this title may be submitted. The department shall also have the authority to grant extensions of time to pay tax with regard to taxes imposed by this title. Interest at the rate as specified in RCW 82.32.050 shall accrue during any extension period and the interest and penalty provisions of chapter 82.32 RCW shall apply to late payments and deficiencies. Notwithstanding the limitation of RCW 82.32.090, in the case of the late filing of an informational return, there shall be imposed a penalty the amount of which shall be established by the department by rule. The penalty shall not exceed fifty dollars per month for a maximum of ten months. RCW 82.32.105 shall apply to this section.

NEW SECTION. Sec. 1104. JOINT RETURN. (1) If the federal income tax liabilities of both spouses are determined on a joint federal return for the taxable year, they shall file a joint return under this title unless one spouse is a resident and the other is a nonresident.

(2) If neither spouse is required to file a federal income tax return for the taxable year, a joint return may be filed under this title under the same conditions under which a joint return may be filed for purposes of the federal income tax.

(3) If the federal income tax liability of either spouse is determined on a separate federal return for the taxable year, they shall file separate returns under this title.

(4) If one spouse is a resident and the other is a nonresident, they shall file separate returns under this title, unless they elect to determine their tax liabilities under this title on a joint return as if they were both residents, and:

(a) Their federal tax liability for the taxable year was determined on a joint federal return; or

(b) Neither spouse has filed a federal income tax return for the taxable year and they would be permitted to file a joint federal return for the taxable year.

(5) In any case in which a joint return is filed under this section, the liability of the husband and wife is joint and several, unless the spouse is relieved of liability under section 6013 of the internal revenue code.

NEW SECTION. Sec. 1105. RECORDS‑-RETURNS. (1) Every taxpayer and every person required to deduct and withhold the tax imposed under this title shall keep records, render statements, make returns, file reports, and perform other acts as the department requires by rule. Each return shall be made under penalty of perjury and on forms prescribed by the department. The department may require other statements and reports be made under penalty of perjury and on forms prescribed by the department. The department may require any taxpayer and any person required to deduct and withhold the tax imposed under this title to furnish to the department a correct copy of any return or document which the taxpayer has filed with the internal revenue service or received from the internal revenue service.

(2) All books and records and other papers and documents required to be kept under this title are subject to inspection by the department at all times during business hours of the day.

NEW SECTION. Sec. 1106. ESTIMATION AGREEMENTS. The department may reasonably estimate the items of business or nonbusiness income of a taxpayer having an office within the state and one or more other states or foreign countries which may be apportioned or allocated to the state and may enter into estimation agreements with such taxpayers for the determination of their liability for the tax imposed by this title.

NEW SECTION. Sec. 1107. PROVISIONS OF INTERNAL REVENUE CODE CONTROL. (1) To the extent possible without being inconsistent with this title, all of the provisions of the internal revenue code relating to the following subjects apply to the taxes imposed under this title:

(a) Time of payment of tax deducted and withheld under sections 601 through 605 of this act;

(b) Liability of transferees;

(c) Time and manner of making returns, extensions of time for filing returns, verification of returns, and the time when a return is deemed filed.

(2) The department by rule may provide modifications and exceptions to the provisions listed in subsection (1) of this section, if reasonably necessary to facilitate the prompt, efficient, and equitable collection of tax under this title.

NEW SECTION. Sec. 1108. REFUNDS OF OVERPAYMENTS‑-OTHER ADMINISTRATIVE PROVISIONS. (1) The department shall refund all taxes improperly paid or collected.

(2) The following sections shall apply to the administration of taxes imposed under this title: 82.32.020, 82.32.050, 82.32.060, 82.32.070, 82.32.090, 82.32.100, 82.32.105, 82.32.110, 82.32.120, 82.32.130, 82.32.140, 82.32.150, 82.32.160, 82.32.170, 82.32.180, 82.32.190, 82.32.200, 82.32.210, 82.32.220, 82.32.230, 82.32.235, 82.32.237, 82.32.240, 82.32.245, 82.32.265, 82.32.300, 82.32.310, 82.32.320, 82.32.330, 82.32.340, 82.32.350, 82.32.360, and 82.32.380.

NEW SECTION. Sec. 1109. RULES. The department may adopt rules under chapter 34.05 RCW for the administration and enforcement of this title. The rules, to the extent possible without being inconsistent with this title, shall follow the internal revenue code and the regulations and rulings of the United States treasury department with respect to the federal income tax. The department may adopt as a part of these rules any portions of the internal revenue code and treasury department regulations and rulings, in whole or in part.

NEW SECTION. Sec. 1110. Sections 401 through 1109 of this act shall constitute a new title, to be codified as Title 82A RCW.

PART XII

INCOME TAX‑-APPEALS

Sec. 1201. Section 42, chapter 26, Laws of 1967 ex. sess. as last amended by section 6, chapter 46, Laws of 1982 1st ex. sess. and RCW 82.03.130 are each amended to read as follows:

The board shall have jurisdiction to decide the following types of appeals:

(1) Appeals taken pursuant to RCW 82.03.190.

(2) Appeals from a county board of equalization pursuant to RCW 84.08.130.

(3) Appeals by an assessor or landowner from an order of the director of revenue made pursuant to RCW 84.08.010 and 84.08.060, the right to such an appeal being hereby established.

(4) Appeals by an assessor or owner of an intercounty public utility or private car company from determinations by the director of revenue of equalized assessed valuation of property and the apportionment thereof to a county made pursuant to chapter 84.12 RCW and 84.16 RCW, the right to such appeal being hereby established.

(5) Appeals by an assessor, landowner, or owner of an intercounty public utility or private car company from a determination of any county indicated ratio for such county compiled by the department of revenue pursuant to RCW 84.48.075: PROVIDED, That

(a) Said appeal be filed after review of the ratio under RCW 84.48.075(3) and not later than fifteen days after the date of certification as required by RCW 84.48.075; and

(b) The hearing before the board shall be expeditiously held in accordance with rules prescribed by the board and shall take precedence over all matters of the same character.

(6) Appeals relating to income tax deficiencies and refunds including penalties and interest under Title 82A RCW (sections 401 through 1109 of this act).

Sec. 1202. Section 43, chapter 26, Laws of 1967 ex. sess. as last amended by section 4, chapter 222, Laws of 1988 and RCW 82.03.140 are each amended to read as follows:

In all appeals over which the board has jurisdiction under RCW 82.03.130, a party taking an appeal may elect either a formal or an informal hearing, such election to be made according to rules of practice and procedure to be promulgated by the board: PROVIDED, That nothing shall prevent the assessor or taxpayer, as a party to an appeal pursuant to RCW 84.08.130, within twenty days from the date of the receipt of the notice of appeal, from filing with the clerk of the board notice of intention that the hearing be a formal one: PROVIDED, HOWEVER, That nothing herein shall be construed to modify the provisions of RCW 82.03.190: AND PROVIDED FURTHER, That upon an appeal under RCW 82.03.130(5) or (6), the director of revenue may, within ten days from the date of its receipt of the notice of appeal, file with the clerk of the board notice of its ((~~intention that the hearing be held pursuant to chapter 34.04 RCW~~)) election of a formal hearing. In the event that appeals are taken from the same decision, order, or determination, as the case may be, by different parties and only one of such parties elects a formal hearing, a formal hearing shall be granted.

PART XIII

CONTROLS

Sec. 1301. Section 3, chapter 1, Laws of 1980 and RCW 43.135.030 are each amended to read as follows:

(1) The state tax revenue limit for any ((~~fiscal year~~)) biennium shall be ((~~the previous fiscal year's state tax revenue limit~~)) equal to the state tax revenue limit for the immediately preceding biennium multiplied by twice the average state personal income ratio for the ((~~three~~)) five calendar years immediately preceding the beginning of the ((~~fiscal year~~)) biennium for which the limit is being computed.

(2) For purposes of computing the state tax revenue limit for the ((fiscal year beginning July 1, 1980, the phrase "the previous fiscal year's state tax revenue limit" means the state tax revenue collected in the fiscal year beginning July 1, 1978, multiplied by the average state personal income ratio for the calendar years 1976, 1977, and 1978)) 1989-91 biennium the limit shall be the total state tax revenue for the 1987-89 biennium multiplied by twice the average state personal income ratio for the five preceding calendar years 1984, 1985, 1986, 1987, and 1988.

Sec. 1302. Section 4, chapter 1, Laws of 1980 and RCW 43.135.040 are each amended to read as follows:

Except as provided in RCW 43.135.050, taxes, fees, and charges on persons, property, and activities shall be imposed, levied, or set by the legislature in such a manner that the estimated state tax revenue for ((~~each fiscal year of~~)) the ((~~next~~)) biennium will not exceed the state tax revenue limit for that ((~~fiscal year~~)) biennium: PROVIDED, The legislature may at any time adjust such taxes, fees, and charges for the second fiscal year of the biennium.

Sec. 1303. Section 5, chapter 1, Laws of 1980 and RCW 43.135.050 are each amended to read as follows:

(1) The state tax revenue limit for any ((~~fiscal year~~)) biennium may be exceeded in order to meet an emergency as declared by the ((~~legislature by two-thirds vote of each house~~)) governor. The ((~~legislature, by two-thirds vote of each house,~~)) governor shall set forth the circumstances constituting the emergency and the amount of state tax revenue in excess of the applicable state tax revenue limit necessary to meet the emergency. After an emergency has been declared under this section, the revenue limit may be raised to meet such emergency if there is a three-fifths favorable vote in each house of the legislature to exceed the revenue limit.

(2) Any amount of state tax revenue authorized by subsection (1) of this section in excess of the state tax revenue limit ((~~shall~~)) may be authorized only for the fiscal year in which the vote is taken and/or the next succeeding fiscal year, as directed by the legislature.

(3) Except where the emergency results from a court order or where the legislature has specifically authorized an increase in the state revenue limit by a three-fifths favorable vote in each house of the legislature, the amount of state tax revenue authorized under subsection (1) of this section in excess of the limit shall not be used in the revenue base used to compute the state tax revenue limit for subsequent years.

Sec. 1304. Section 6, chapter 1, Laws of 1980 and RCW 43.135.060 are each amended to read as follows:

(1) The legislature shall not impose responsibility for new programs or increased levels of service under existing programs on any taxing district unless the districts are reimbursed for the costs thereof by the state.

(2) That proportion of state tax revenue which consists of direct state appropriations to taxing districts taken as a group shall not be decreased below that proportion appropriated in the biennium immediately preceding January 1, 1980: PROVIDED, This proportion shall be decreased in any ((~~fiscal year~~)) biennium only if: (a) The legislature decreases the state tax revenue limit for that ((~~fiscal year~~)) biennium by an amount equal to the dollar amount of any decrease in direct state appropriations to taxing districts taken as a whole; or (b) the state tax revenue limit has been increased under RCW 43.135.050(3) or 43.135.060(3) and the decrease of the proportion is commensurate with the increase in the state tax revenue limit.

(3) If by order of any court, or legislative enactment, the costs of a federal or taxing district program are transferred to or from the state, the otherwise applicable state tax revenue limit shall be increased or decreased, as the case may be, by the dollar amount of the costs of the program.

(4) The legislature, in consultation with the office of financial management or its successor agency, shall determine the costs of any new programs or increased levels of service under existing programs imposed on any taxing district or transferred to or from the state.

Sec. 1305. Section 7, chapter 1, Laws of 1980 and RCW 43.135.070 are each amended to read as follows:

The legislature shall, prior to any other appropriation, provide for the payment of the principal and interest of the indebtedness of the state. State tax revenue collected in any ((~~fiscal year~~)) biennium in excess of the state tax revenue limit for that ((~~fiscal year~~)) biennium shall be included as part of the state tax revenue for the succeeding ((~~fiscal year~~)) biennium.

Sec. 1306. Section 3, chapter 280, Laws of 1981 as amended by section 2, chapter 36, Laws of 1982 1st ex. sess. and RCW 43.88.530 are each amended to read as follows:

(1) ((The state treasurer, pursuant to an appropriation, shall transfer to the stabilization account a sum equal to the annual growth rate in real personal income minus three percentage points, multiplied by general state revenues for the immediately preceding fiscal year. Unless waived pursuant to RCW 43.88.535, transfers shall be made by the state treasurer during each biennium in eight equal amounts not later than the last day of each quarter commencing September 30, 1983.

~~(2)~~)) The state treasurer ((~~pursuant to appropriation~~)) shall transfer the unobligated cash surplus in the general fund as determined by the ((~~director~~)) office of financial management after the conclusion of each biennium and following the certification of general state revenues by the state treasurer((, provided that such revenues do not exceed the state tax revenue limit. No further deposits shall be made to the stabilization account during a biennium when the amount of the account equals or exceeds eight percent of general state revenues for the biennium)).

(2) The state treasurer shall transfer to the stabilization account a sum equal to any revenue collected in excess of state tax revenue limit.

(3) The balance of the stabilization account at the end of the biennium shall not exceed five percent of the previous biennium's budget. Any amount in excess of that limitation shall be transferred to the revenue accrual account in RCW 82.32.400.

NEW SECTION. Sec. 1307. A new section is added to chapter 43.41 RCW to read as follows:

By October 1, 1990, and by October 1 of each even-numbered year thereafter, the office of financial management shall review each program which has not, to that date, been funded for an entire biennium by the legislature. The purpose of the review shall be to determine whether the program should be reauthorized for the succeeding biennium by the legislature. Any program which is not reviewed by the office of financial management or which is not specifically reauthorized by the legislature shall expire on June 30 of the fiscal year in which the program was scheduled for review by the office of financial management.

NEW SECTION. Sec. 1308. A new section is added to chapter 43.03 RCW to read as follows:

(1) Effective July 1, 1991, all salary increases approved by the legislature for any state employee or official shall become effective on July 1 of each year. No salary increase approved by the legislature shall be permitted to become effective on any other date. For common school employees, the effective date for all legislative increases shall be September 1 of the year in which such increase is approved by the legislature, and all legislative allocations for common school employees shall be applicable for a full school year.

(2) Increases awarded on the basis of an employee or official's anniversary date shall be unaffected by this section.

Sec. 1309. Section 2, chapter 502, Laws of 1987 and RCW 43.88.030 are each amended to read as follows:

(1) The director of financial management shall provide all agencies with a complete set of instructions for submitting biennial budget requests to the director at least three months before agency budget documents are due into the office of financial management. The budget document or documents shall consist of the governor's budget message which shall be explanatory of the budget and shall contain an outline of the proposed financial policies of the state for the ensuing fiscal period and shall describe in connection therewith the important features of the budget. The message shall set forth the reasons for salient changes from the previous fiscal period in expenditure and revenue items and shall explain any major changes in financial policy. Attached to the budget message shall be such supporting schedules, exhibits and other explanatory material in respect to both current operations and capital improvements as the governor shall deem to be useful to the legislature. The budget document or documents shall set forth a proposal for expenditures in the ensuing fiscal period based upon the estimated revenues as approved by the economic and revenue forecast council for such fiscal period from the source and at the rates existing by law at the time of submission of the budget document. However, the estimated revenues for use in the governor's budget document may be adjusted to reflect budgetary revenue transfers and revenue estimates dependent upon budgetary assumptions of enrollments, workloads, and caseloads. All adjustments to the approved estimated revenues must be set forth in the budget document. The governor may additionally submit, as an appendix to each agency budget or to the budget document or documents, a proposal for expenditures in the ensuing fiscal period from revenue sources derived from proposed changes in existing statutes.

The budget document or documents shall also contain:

(a) Revenues classified by fund and source for the immediately past fiscal period, those received or anticipated for the current fiscal period, and those anticipated for the ensuing biennium;

(b) The undesignated fund balance or deficit, by fund;

(c) Such additional information dealing with expenditures, revenues, workload, performance and personnel as the legislature may direct by law or concurrent resolution;

(d) Such additional information dealing with revenues and expenditures as the governor shall deem pertinent and useful to the legislature;

(e) Tabulations showing expenditures classified by fund, function, activity and object; and

(f) A delineation of each agency's activities, including those activities funded from nonbudgeted, nonappropriated sources, including funds maintained outside the state treasury.

(2) The budget document or documents shall include as a separate item a detailed estimate of the expected fiscal impact of each new proposed bill, resolution, program, or item on the budget which will increase or decrease or which tends to increase or decrease state government revenues or expenditures. Additionally, the budget document or documents shall separately include the same detailed fiscal impact forecast information for each of the succeeding four fiscal years and shall separately include the cumulative detailed economic impact fiscal information for each biennium included in the required fiscal-year totals. This information shall also be provided for any bills or resolutions submitted which are intended to support the governor's budget.

(3) The budget document or documents shall include detailed estimates of all anticipated revenues applicable to proposed operating or capital expenditures and shall also include all proposed operating or capital expenditures. The total of beginning undesignated fund balance and estimated revenues less working capital and other reserves shall equal or exceed the total of proposed applicable expenditures. The budget document or documents shall further include:

(a) Interest, amortization and redemption charges on the state debt;

(b) Payments of all reliefs, judgments and claims;

(d) Expenditures incident to the operation for each agency;

(e) Revenues derived from agency operations;

(f) Expenditures and revenues shall be given in comparative form showing those incurred or received for the immediately past fiscal period and those anticipated for the current biennium and next ensuing biennium;

((~~(h)~~)) (g) Common school expenditures on a fiscal-year basis.

((~~(3)~~)) (4) A separate budget document or schedule may be submitted consisting of:

(a) Expenditures incident to current or pending capital projects and to proposed new capital projects, relating the respective amounts proposed to be raised therefor by appropriations in the budget and the respective amounts proposed to be raised therefor by the issuance of bonds during the fiscal period;

(b) A capital program consisting of proposed capital projects for at least the two fiscal periods succeeding the next fiscal period. The capital program shall include for each proposed project a statement of the reason or purpose for the project along with an estimate of its cost;

(d) Such other information relating to capital improvement projects as the legislature may direct by law or concurrent resolution.

((~~(4)~~)) (5) No change affecting the comparability of agency or program information relating to expenditures, revenues, workload, performance and personnel shall be made in the format of any budget document or report presented to the legislature under this section or RCW 43.88.160(1) relative to the format of the budget document or report which was presented to the previous regular session of the legislature during an odd-numbered year without prior legislative concurrence. Prior legislative concurrence shall consist of (a) a favorable majority vote on the proposal by the standing committees on ways and means of both houses if the legislature is in session or (b) a favorable majority vote on the proposal by members of the legislative evaluation and accountability program committee if the legislature is not in session.

Sec. 1310. Section 2, chapter 25, Laws of 1977 ex. sess. as amended by section 146, chapter 151, Laws of 1979 and RCW 43.88A.020 are each amended to read as follows:

The office of financial management shall, in cooperation with appropriate legislative committees and legislative staff, establish a procedure for the provision of fiscal notes on the expected impact of bills and resolutions which increase or decrease or tend to increase or decrease state government revenues or expenditures. Such fiscal notes shall indicate by fiscal year the impact for the remainder of the biennium in which the bill or resolution will first take effect ((~~as well as a cumulative forecast of the fiscal impact for the succeeding four fiscal years~~)) and shall additionally contain such impact forecast information for each of the succeeding four fiscal years and shall separately include the cumulative detailed fiscal impact forecast information for each biennium included in the required fiscal-year totals.

In establishing the fiscal impact called for pursuant to this chapter, the office of financial management shall coordinate the development of fiscal notes with all state agencies affected.

Sec. 1311. Section 5, chapter 125, Laws of 1984 as amended by section 137, chapter 266, Laws of 1986 and RCW 43.63A.065 are each amended to read as follows:

(1) The department shall have the following functions and responsibilities:

((~~(1)~~)) (a) Cooperate with and provide technical and financial assistance to the local governments and to the local agencies serving the communities of the state for the purpose of aiding and encouraging orderly, productive, and coordinated development of the state.

((~~(2)~~)) (b) Administer state and federal grants and programs which are assigned to the department by the governor or the legislature.

((~~(3)~~)) (c) Administer community services programs through private, nonprofit organizations and units of general purpose local government; these programs are directed to the poor and infirm and include community-based efforts to foster self-sufficiency and self-reliance, energy assistance programs, head start, and weatherization.

((~~(4)~~)) (d) Study issues affecting the structure, operation, and financing of local government as well as those state activities which involve relations with local government and report the results and recommendations to the governor, legislature, local government, and citizens of the state.

((~~(5)~~)) (e) Assist the governor in coordinating the activities of state agencies which have an impact on local governments and communities.

((~~(6)~~)) (f) Provide technical assistance to the governor and the legislature on community development policies for the state.

((~~(7)~~)) (g) Assist in the production, development, rehabilitation, and operation of owner-occupied or rental housing for low and moderate income persons, and qualify as a participating state agency for all programs of the Department of Housing and Urban Development or its successor.

((~~(8)~~)) (h) Support and coordinate local efforts to promote volunteer activities throughout the state.

((~~(9)~~)) (i) Participate with other states or subdivisions thereof in interstate programs and assist cities, counties, municipal corporations, governmental conferences or councils, and regional planning commissions to participate with other states or their subdivisions.

((~~(10)~~)) (j) Hold public hearings and meetings to carry out the purposes of this chapter.

((~~(11)~~)) (k) Provide a comprehensive state-level focus for state fire protection services, funding, and policy.

((~~(12)~~)) (l) Administer a program to identify, evaluate, and protect properties which reflect outstanding elements of the state's cultural heritage.

((~~(13)~~)) (m) Coordinate a comprehensive state program for mitigating, preparing for, responding to, and recovering from emergencies and disasters.

(2) In addition to the above responsibilities, the department shall prepare, for each new proposed bill, resolution, program or item, or any amendments to any of these, included in the governor's budget or introduced in the legislature which will increase or decrease or which tend to increase or decrease local government revenues or expenditures, or which will or could impact local governments or communities, fiscal notes which conform with the requirements of RCW 43.88A.020 and 43.88A.030.

Sec. 1312. Section 43.88.110, chapter 8, Laws of 1965 as last amended by section 5, chapter 502, Laws of 1987 and RCW 43.88.110 are each amended to read as follows:

This section sets forth the expenditure programs and the allotment and reserve procedures to be followed by the executive branch for public funds. Allotments of an appropriation for any fiscal period shall conform to the terms, limits, or conditions of the appropriation.

(1) The director of financial management shall provide all agencies with a complete set of instructions for preparing a statement of proposed expenditures at least thirty days before the beginning of a fiscal period. The set of instructions need not include specific appropriation amounts for the agency.

(2) Within forty-five days after the beginning of the fiscal period or within forty-five days after the governor signs the omnibus biennial appropriations act, whichever is later, all agencies shall submit to the governor a statement of proposed expenditures at such times and in such form as may be required by the governor. If at any time during the fiscal period the governor projects a cash deficit as defined by RCW 43.88.050, the governor shall make ((~~across-the-board~~)) reductions in allotments so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods. Except for the legislative and judicial branches and other agencies headed by elective officials, the governor shall review the statement of proposed expenditures for reasonableness and conformance with legislative intent. Once the governor approves the statements of proposed expenditures, further revisions shall be made only at the beginning of the second fiscal year and must be initiated by the governor. However, changes in appropriation level authorized by the legislature, changes required by ((~~across-the-board~~)) the reductions mandated by the governor to prevent a cash deficit, and changes caused by executive increases to spending authority may require additional revisions. Revisions shall not be made retroactively. Revisions caused by executive increases to spending authority shall not be made after June 30, 1987. However, the governor may assign to a reserve status any portion of an agency appropriation withheld as part of ((~~across-the-board~~)) cash deficit reductions made by the governor and any portion of an agency appropriation conditioned on a contingent event by the appropriations act. The governor may remove these amounts from reserve status if the ((~~across-the-board~~)) cash deficit reductions are subsequently modified or if the contingent event occurs. The director of financial management shall enter approved statements of proposed expenditures into the state budgeting, accounting, and reporting system within forty-five days after receipt of the proposed statements from the agencies. If an agency or the director of financial management is unable to meet these requirements, the director of financial management shall provide a timely explanation in writing to the legislative fiscal committees. Reductions in agency allocations by the governor in the event of a projected cash deficit shall not include a reduction in the allocations for basic education.

(3) It is expressly provided that all agencies shall be required to maintain accounting records and to report thereon in the manner prescribed in this chapter and under the regulations issued pursuant to this chapter. Within ninety days of the end of the fiscal year, all agencies shall submit to the director of financial management their final adjustments to close their books for the fiscal year. Prior to submitting fiscal data, written or oral, to committees of the legislature, it is the responsibility of the agency submitting the data to reconcile it with the budget and accounting data reported by the agency to the director of financial management. The director of financial management shall monitor agency expenditures against the approved statement of proposed expenditures and shall provide the legislature with quarterly explanations of major variances.

(4) The director of financial management may exempt certain public funds from the allotment controls established under this chapter if it is not practical or necessary to allot the funds. Allotment control exemptions expire at the end of the fiscal biennium for which they are granted. The director of financial management shall report any exemptions granted under this subsection to the legislative fiscal committees.

NEW SECTION. Sec. 1313. A new section is added to chapter 43.88 RCW to read as follows:

At the time of presentation of the budget document to the legislature for its review as provided in RCW 43.88.060, the governor's proposed budget for each biennium, or for any other fiscal period, shall be accompanied by a governor's budget report which shall be an extensive summary of all appropriations requested and proposals made by the governor for any purpose. This report shall be prepared by the office of financial management as directed by RCW 43.41.110 and shall be published within fifteen days of the date on which the governor presents the budget to the legislature. The report shall be made available upon request to state agencies and the general public. The governor's budget report shall contain:

(1) A budget summary containing an explanation of the governor's proposed budget and recommendations for its funding;

(2) A table outlining the executive budget recommendations by general category;

(3) A report on major executive initiatives;

(4) A general fund summary analyzing the appropriations made and all sources of revenues for these appropriations;

(5) A budget summary by fund showing actual funding for each agency for each fiscal year of the prior biennium and appropriated amounts for each fiscal year of the biennium for which the budget has been proposed;

(6) A budget summary by agency showing the amounts appropriated for each agency for each fiscal year, the total amount appropriated for the biennium, and the source of these funds;

(7) A report on revenue sources and estimates for the biennium;

(8) An economic overview of the variables affecting the state's ability to raise revenues and to meet its obligations;

(9) A report on the general fund revenues by source showing amounts collected by fiscal year for the ten years preceding the current biennium, and showing the percent by which the amounts changed each year as well as the projected collections for the current biennium;

(10) A report on any supplemental appropriations explaining the reasons for and the source of the appropriations;

(11) Any other information the office of financial management believes is important in order to provide a clear and full explanation to the legislature and the general public about how funds are generated and spent.

Sec. 1314. Section 3, chapter 10, Laws of 1979 as amended by section 13, chapter 4, Laws of 1981 2nd ex. sess. and RCW 43.41.110 are each amended to read as follows:

The office of financial management shall:

(1) Provide technical assistance to the governor and the legislature in identifying needs and in planning to meet those needs through state programs and a plan for expenditures.

(2) Perform the comprehensive planning functions and processes necessary or advisable for state program planning and development, preparation of the budget and of the governor's budget report as required by section 1313 of this act, inter-departmental and inter-governmental coordination and cooperation, and determination of state capital improvement requirements.

(3) Provide assistance and coordination to state agencies and departments in their preparation of plans and programs.

(4) Provide general coordination and review of plans in functional areas of state government as may be necessary for receipt of federal or state funds.

(5) Participate with other states or subdivisions thereof in interstate planning.

(6) Encourage educational and research programs that further planning and provide administrative and technical services therefor.

(7) Carry out the provisions of RCW 43.62.010 through 43.62.050 relating to the state census.

(8) Be the official state participant in the federal-state cooperative program for local population estimates and as such certify all city and county special censuses to be considered in the allocation of state and federal revenues.

(9) Be the official state center for processing and dissemination of federal decennial or quinquennial census data in cooperation with other state agencies.

(10) Be the official state agency certifying annexations, incorporations, or disincorporations to the United States bureau of the census.

(11) Review all United States bureau of the census population estimates used for federal revenue sharing purposes and provide a liaison for local governments with the United States bureau of the census in adjusting or correcting revenue sharing population estimates.

(12) Provide fiscal notes depicting the expected fiscal impact of proposed legislation in accordance with chapter 43.88A RCW.

(13) Be the official state agency to estimate and manage the cash flow of all public funds as provided in chapter 43.88 RCW. To this end, the office shall adopt such rules as are necessary to manage the cash flow of public funds.

NEW SECTION. Sec. 1315. A new section is added to chapter 44.48 RCW to read as follows:

Immediately following legislative approval of a budget for spending for each biennium, the legislative evaluation and accountability program committee (LEAP) shall prepare a legislative appropriations report. This report shall be published within forty-five days of the date on which the governor signs the legislature's budget. It shall be made available to the legislature, state agencies, and the general public upon request. The legislative appropriations report shall be a comprehensive accounting of all appropriations requested by the governor for any purposes and an explanation of all changes or alterations made by the legislature prior to approval of the final budget. The report shall contain:

(1) A budget summary containing an explanation of the governor's proposed budget and recommendations for its funding;

(2) A table outlining the executive budget recommendations by general category;

(3) A report on major executive initiatives;

(4) A general fund summary analyzing the appropriations made and all sources of revenues therefor;

(6) A budget summary by agency showing the amounts appropriated for each agency for each fiscal year, the total amount appropriated for the biennium, and the source of such funds;

(7) A report on revenue sources and estimates for the biennium;

(8) An economic overview of the variables affecting the state's ability to raise revenues and to meet its obligations;

(9) A report on the general fund revenues by source showing amounts collected by fiscal year for the ten years preceding the current biennium and showing the percent by which the amounts changed each year as well as the projected collections for the current biennium;

(10) A report on any supplemental appropriations explaining the reasons therefor and the source of the appropriations; and

NEW SECTION. Sec. 1316. A new section is added to chapter 43.88 RCW to read as follows:

Within forty-five days of the date on which the governor signs any adopted budget, the legislative evaluation and accountability program committee shall prepare and publish a legislative appropriations report as required by section 1315 of this act.

NEW SECTION. Sec. 1317. A new section is added to chapter 43.88 RCW to read as follows:

Within fifteen days of the date on which the governor signs any adopted budget of the legislature, the ways and means committees of the house of representatives and the senate shall prepare and submit to the legislative evaluation and accountability program committee a report explaining the nature of and reasons for all changes made in the governor's proposed budget. Such report shall contain information on all appropriations made in the budget submitted for the governor's signature, including any known or possible economic impact of the appropriations.

NEW SECTION. Sec. 1318. A new section is added to chapter 82.02 RCW to read as follows:

It is the intent of the legislature in adopting sections 1319 through 1323 of this act to follow the expressed constitutional intent that the state tax system shall maintain the relative revenue impact among the business privilege taxes, the sales and use taxes, and the individual income tax.

NEW SECTION. Sec. 1319. A new section is added to chapter 82.02 RCW to read as follows:

The state taxing system shall maintain relative revenue share among the following taxes:

(1) Business privilege taxes consisting of business and occupation taxes in chapter 82.04 RCW, and the public utility taxes in chapter 82.16 RCW;

(2) Retail sales taxes in chapter 82.08 RCW, and use taxes in chapter 82.12 RCW; and

(3) Income taxes in chapter 82A.-- RCW.

NEW SECTION. Sec. 1320. A new section is added to chapter 82.02 RCW to read as follows:

The revenue share of the taxes in section 1319 of this act shall be determined by the economic and revenue forecast council. At the end of the 1991-1993 biennium, the economic and revenue forecast council shall determine the relative percentages that each of the types of taxes contribute to the state general fund. This determination of the relative percentages shall be maintained as the base percentage from which future rate relationships shall be determined.

NEW SECTION. Sec. 1321. A new section is added to chapter 82.02 RCW to read as follows:

The relative percentages of contribution to the state general fund that is determined under section 1320 of this act for the new revenue base for each of the taxes shall be maintained constant within three percentage points for the ensuing bienniums. The legislature shall review the forecasts of revenue and make such changes, if necessary, to the taxing system to maintain the relative percentages.

NEW SECTION. Sec. 1322. A new section is added to chapter 82.02 RCW to read as follows:

The economic and revenue forecast council created by RCW 82.01.130 shall make the determinations required by sections 1320 through 1322 of this act and any forecasts necessary to provide the legislature with the necessary information to make such reviews and changes to the taxing system.

NEW SECTION. Sec. 1323. A new section is added to chapter 82.02 RCW to read as follows:

If any operative changes are made to sections 1318 through 1322 of this act, such changes shall not take effect until they are submitted to the people and approved by a majority of all votes cast for and against them at such election.

PART XIV

LOCAL TAX OPTIONS

NEW SECTION. Sec. 1401. The legislature finds that the cities and counties of the state of Washington lack adequate sources of revenue to carry out essential county and municipal purposes. The legislature further finds that, because of the differences between jurisdictions and the need of local jurisdictions to tailor each revenue structure to reflect the particular needs and circumstances of each jurisdiction, the most appropriate method of deriving revenues for such purposes is to vest the authority in cities and counties to decide which taxing options, out of a range of possible taxes, are best suited to the needs and requirements of their constituents. To that end, the legislature has determined to provide a range of taxing options, from which a city or county may choose which tax or combination of taxes to employ. The legislature intends, by enacting this act, to provide a method by which cities and counties can realize their funding requirements while protecting the citizens of the state of Washington from excessive tax burdens.

NEW SECTION. Sec. 1402. The following definitions apply to this chapter:

(1) A tax on the privilege of doing business is defined as a tax on any business activity except public utility activities, as defined in subsection (2) of this section, or a commuter tax, as defined in subsection (3) of this section. "Business" includes all activities engaged in with the object of gain, benefit, or advantage to the taxpayer or to another person or class, directly or indirectly, but does not include the activities of persons acting solely in the capacity of employees; or the activities of any county, city, town, school district, or fire district, regardless of how financed, other than a utility or enterprise activity as defined by the state auditor pursuant to RCW 35.33.111 and 36.40.220.

(2) "Public utility activities" are defined as light and power business, as defined in RCW 82.16.010(5); water distribution business, as defined in RCW 82.16.010(4); gas distribution business, as defined in RCW 82.16.010(7); solid waste disposal; sewer utility, taxable under RCW 82.16.010; telephone services, as defined in RCW 82.04.065, but does not include amounts which represent charges to another telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or charges to any person or business for access to, or charges for, interstate services; and cable television services.

(3) "Commuter tax" is defined as a tax measured by the number of employees of a business within the taxing jurisdiction or a tax measured by the number of hours worked by employees within the taxing jurisdiction.

NEW SECTION. Sec. 1403. (1) Any county legislative authority may establish, by ordinance or resolution, a district for delivery of county services to be known as a service delivery district. No such district shall include any area within the corporate limits of any city or town without the consent of the legislative authority of the city or town and no area or property shall be included in more than one district.

(2) If a service delivery district includes within its boundaries a city or town, then that city or town shall not impose a business, utility, or personal income tax.

(3) The legislative authority of the county in which each service delivery district is formed shall be the governing body of the service delivery district.

(4) If the county legislative authority wishes to change the boundaries of a service delivery district, it may do so, by ordinance or resolution, but any taxes authorized in that district must be reapproved by a majority of the voters living within the new boundaries of the service delivery district before such taxes can be collected.

(5) The revenue raised by any taxes imposed in a service delivery district under the authority of this chapter must be spent within the service delivery district, to pay for the delivery of services by the county within the district.

NEW SECTION. Sec. 1404. Any resolution or ordinance imposing a tax under this chapter must be submitted to the voters of the service delivery district at the next general election, if one is to be held within one hundred eighty days or at a special election held for that purpose not sooner than ninety nor more than one hundred eighty days after the passage of the resolution or ordinance. A simple majority of the voters voting in favor of the resolution or ordinance shall be sufficient to pass it. No resolution or ordinance passed subject to voter approval shall have an effective date that is less than thirty days after the date of voter approval.

NEW SECTION. Sec. 1405. (1) The governing body of a service delivery district, may, by resolution or ordinance for the purposes authorized by this chapter, fix and impose a tax on the privilege of doing business, as defined in section 1402(1) of this act, within a service delivery district.

(2) No tax under this section shall exceed .2 percent of the gross income of a business, as defined in RCW 82.04.080, within the taxing jurisdiction, except as provided in section 1412 of this act.

NEW SECTION. Sec. 1406. (1) The governing body of a service delivery district, may, by resolution or ordinance for the purposes authorized by this chapter, fix and impose an excise tax on retail sales by utilities within the service delivery district. The tax shall be measured by the selling price and shall:

(a) Apply equally at a single rate to these utilities;

(b) Apply uniformly at a single rate within the individual classes throughout the service delivery district;

(d) Allow an exemption from tax for interutility sales of commodities for resale; and

(e) Be additional to payments made under franchises granted by the county.

(2) Each utility shall add the tax so levied to the rates or charges it makes for utility services provided to consumers or users of the utility services, and shall separately state the amount of the tax on consumer or user billings.

(3) Any tax imposed under this section shall be paid by the consumer to the utility, and each utility shall collect from the consumer the full amount of the tax payable in respect to each taxable sale. The tax required to be collected by the utility shall be deemed to be held in trust by the utility until paid to the county. The amount of tax, until paid by the consumer to the utility, shall constitute a debt from the consumer to the utility.

(4) As used in this section, the term "retail sale" means the sale or charge made for electrical energy, gas, network telephone service, water, or sewerage service by a utility. A retail sale occurs at the place to which electrical energy, gas, network telephone service, water, or sewerage service is delivered or provided to the consumer. "Selling price" has the meaning ascribed to it in RCW 82.08.010. "Utility" means those public utility activities defined in section 1402(2) of this act.

NEW SECTION. Sec. 1407. (1) The governing body of a service delivery district may impose a fee on exempt property within the district for the police, fire, and other services provided by the county to the property. The fee shall be calculated on the basis of such services generally received by the property.

(2) Property listed under RCW 84.36.010 shall not be subject to fees under this section.

(3) Property taxed under chapter 82.29A RCW shall not be subject to fees under this section.

(4) Any fees imposed under this section are subject to voter approval.

NEW SECTION. Sec. 1408. The governing body of a service delivery district may, by resolution or ordinance, fix and impose an excise tax within the service delivery district. This excise shall be assessed per housing unit. "Housing unit" is defined as a building or portion of a building designed for or used as the residence or living quarters of one or more persons living together, or of one family. Such tax shall not be deemed to be a benefit assessment, and shall be for the provision of general county services within the district.

NEW SECTION. Sec. 1409. (1) The governing body of a service delivery district, may, by ordinance or resolution, impose a commuter tax, as defined in section 1402(3) of this act, within a service delivery district. The proceeds of such a tax must be dedicated to transportation, except that a city within the service delivery district imposing the tax as of January 1, 1989, is not required to so dedicate the proceeds of its tax imposed as of January 1, 1989. Any increase in the rate of such tax after that date, in a city located within a service delivery district imposing the tax, must be dedicated to transportation.

(2) The incidence of such tax shall be on the employer.

NEW SECTION. Sec. 1410. (1) The legislative authority of a county, may, by ordinance or resolution, impose a commuter tax, as defined in section 1402(3) of this act, under the provisions of a local governance service agreement, as authorized by statute, or by interlocal agreement, as defined in chapter 39.34 RCW, with the majority of the cities and towns within the county. The proceeds of this tax must be dedicated to transportation, except that a city imposing the tax as of January 1, 1989, is not required to so dedicate the proceeds of its tax imposed as of January 1, 1989. Any increase in the rate of tax after that date, in a city located within a county imposing the tax, must be dedicated to transportation.

(2) The incidence of such tax shall be on the employer.

NEW SECTION. Sec. 1411. The governing body of a service delivery district, within its boundaries, may fix and impose a tax on the personal income of residents in the jurisdiction, as defined in Title 82A RCW.

(1) Any tax so imposed shall be calculated as a percentage of the state income tax as set forth in Title 82A RCW. The percentage cannot exceed ten percent of the state income tax imposed by Title 82A RCW (sections 401 through 1109 of this act).

(2) The governing body of a service delivery district imposing a tax under this section shall contract with the department of revenue for the administration and collection of the tax. The state department of revenue shall deduct a percentage amount, as provided by contract, not to exceed one percent of the taxes collected for administration and collection expenses incurred by the department. The remainder of any portion of any tax authorized by this chapter which is collected by the department of revenue shall be deposited by the department of revenue in the local income tax account hereby created in the state treasury.

(3) Moneys in the local income tax account may be spent only for distribution to counties or cities, or both, imposing a local income tax, and the state treasurer shall distribute those amounts collected on behalf of each service delivery district monthly, less the deduction as provided for in subsection (2) of this section. The state treasurer shall make the distribution under this section without appropriation.

(4) Taxes imposed under this section shall comply with all applicable rules, regulations, laws, and court decisions regarding income taxes as imposed by the state under Title 82A RCW (sections 401 through 1109 of this act). The department of revenue is authorized to administer the tax imposed by this section in the manner provided in Title 82A RCW (sections 401 through 1109 of this act).

NEW SECTION. Sec. 1412. (1) The legislature has determined that in order to allow counties maximum flexibility to meet their financial needs, a system of flexible rate limits shall be determined and implemented so that if a jurisdiction is not imposing a tax authorized by either section 1405 or 1406 of this act or RCW 82.14.030 at the maximum rates allowed by law, the jurisdiction may increase the rates of other specified taxes imposed at the maximum rate as of January 1, 1989, under the authority of this section.

(2) If the governing body of a service delivery district is not imposing the business tax authorized in section 1405 of this act at the maximum rate allowed, then the governing body is authorized to increase the rate of utility tax allowed in section 1406 of this act by two percent for every .1 percent not imposed under section 1405 of this act.

(3) If the governing body of a service delivery district is not imposing the utility tax authorized in section 1406 of this act at the maximum rate allowed, then the governing body is authorized to increase the rate of business tax allowed in section 1405 of this act by .1 percent for every two percent not imposed under section 1406 of this act.

(4) If the legislative authority of a county is not imposing the sales tax authorized in RCW 82.14.030 at the maximum rate allowed by law, then the governing body of the service delivery district is authorized to increase the rate of business tax allowed in section 1405 of this act by .1 percent or increase the rate of utility tax allowed by section 1406 of this act by two percent, or both.

(5) If a tax is imposed at less than the maximum rate otherwise allowed by law and the governing body of the service delivery district increases the rate of a different tax beyond the maximum rate otherwise allowed by law under this section, then the increase in the rate of that different tax shall be limited. The limit shall be proportional in that it shall be equal to a percentage of the unused rate of the tax over the maximum rate otherwise allowed for such tax multiplied by the maximum increase allowed by this section for the different tax.

(6) If a tax is imposed under this section at a rate higher than that otherwise authorized by law, then no other business, utility, or sales tax may be increased unless the tax above the maximum rate is lowered to the otherwise authorized maximum.

NEW SECTION. Sec. 1413. A new section is added to chapter 35.21 RCW to read as follows:

(1) The legislative authority of any city may, by resolution or ordinance, fix and impose an excise tax within its corporate limits. This excise shall be assessed per housing unit. "Housing unit" is defined as a building or portion of a building designed for or used as the residence or living quarters of one or more persons living together, or of one family. Such tax shall not be deemed to be a benefit assessment, and shall be for the provision of general city services.

(2) Such excise tax shall be subject to voter approval.

NEW SECTION. Sec. 1414. A new section is added to chapter 35.21 RCW to read as follows:

Any resolution or ordinance passed subject to voter approval must be submitted to the voters of the city at the next general election, if one is to be held within one hundred eighty days or at a special election held for that purpose not sooner than ninety nor more than one hundred eighty days after the passage of the resolution or ordinance. A simple majority of the voters voting in favor of the resolution or ordinance shall be sufficient to pass it. No resolution or ordinance passed subject to voter approval shall have an effective date that is less than thirty days after the date of voter approval.

NEW SECTION. Sec. 1415. A new section is added to chapter 35.21 RCW to read as follows:

(1) The legislative authority of any city, within the corporate limits of the city, may fix and impose a tax on the personal income of residents in the jurisdiction, as defined in Title 82A RCW (sections 401 through 1109 of this act).

(2) Any tax so imposed shall be calculated as a percentage of the state income tax as set forth in Title 82A RCW (sections 401 through 1109 of this act). The percentage cannot exceed ten percent of the state income tax imposed by Title 82A RCW (sections 401 through 1109 of this act).

(3) The legislative authority of any city imposing a tax under this section shall contract with the department of revenue for the administration and collection of the tax. The department of revenue shall deduct a percentage amount, as provided by contract, not to exceed one percent of the taxes collected for administration and collection expenses incurred by the department. The remainder of any portion of any tax authorized by this chapter which is collected by the department of revenue shall be deposited by the department of revenue in the local income tax account.

(4) Moneys in the local income tax account may be spent only for distribution to counties or cities, or both, imposing a local income tax, and the state treasurer shall distribute those amounts collected on behalf of each city or county service district monthly, less the deduction provided for in subsection (3) of this section. The state treasurer shall make the distribution under this section without appropriation.

(5) Taxes imposed under this section shall comply with all applicable rules, regulations, laws, and court decisions regarding income taxes as imposed by the state under Title 82A RCW (sections 401 through 1109 of this act). The department of revenue is authorized to administer the tax imposed by this section in the manner provided in Title 82A RCW (sections 401 through 1109 of this act).

(6) The resolution or ordinance shall be subject to voter approval.

NEW SECTION. Sec. 1416. A new section is added to chapter 35.21 RCW to read as follows:

(1) The legislature has determined that in order to allow cities maximum flexibility to meet their financial needs, a system of flexible rate limits shall be determined and implemented so that if a jurisdiction is not imposing a tax measured by gross proceeds of sales of tangible personal property or RCW 82.14.030 at the maximum rates allowed by law, the jurisdiction may increase the rates of other taxes currently imposed at the maximum rate as of the effective date of this section, as set forth in this section.

(2) If the legislative authority of a city is not imposing a tax measured by gross proceeds of sales of tangible personal property at the maximum rates allowed by law, the jurisdiction is authorized to increase the rate of tax allowed in by RCW 35.21.870 by one percent for every .1 percent not imposed on gross proceeds of sales of tangible personal property.

(3) If the legislative authority of a city is not imposing a tax allowed by RCW 35.21.870 at the maximum rate allowed by law, then the jurisdiction is authorized to increase the rate of tax allowed on gross proceeds of sales of tangible personal property by .1 percent for every two percent not imposed under RCW 35.21.870.

(4) If the legislative authority of a city is not imposing the tax authorized in RCW 82.14.030 at the maximum rate allowed by law, then the city is authorized to increase the rate of tax allowed on gross proceeds of sales of tangible personal property by .1 percent or increase the rate of tax allowed in RCW 35.21.870 by two percent, or both.

(5) If a tax is imposed at less than the maximum rate otherwise allowed by law and the legislative authority of a city increases the rate of a different tax beyond the maximum rate otherwise allowed by law under this section, then the increase in the rate of that different tax shall be limited. The limit shall be proportional in that it shall be equal to a percentage of the unused rate of the tax over the maximum rate otherwise allowed for such tax multiplied by the maximum increase allowed by this section for the different tax.

Sec. 1417. Section 4, chapter 49, Laws of 1982 1st ex. sess. as last amended by section 6, chapter 225, Laws of 1984 and RCW 35.21.870 are each amended to read as follows:

(1) No city or town may impose a tax on the privilege of conducting an electrical energy, natural gas, steam energy, or telephone business at a rate which exceeds six percent unless the rate is first approved by a majority of the voters of the city or town voting on such a proposition or the tax is increased under the authority of section 1416 of this act.

(2) If a city or town is imposing a rate of tax under subsection (1) of this section in excess of six percent on April 20, 1982, the city or town shall decrease the rate to a rate of six percent or less by reducing the rate each year on or before November 1st by ordinances to be effective on January 1st of the succeeding year, by an amount equal to one-tenth the difference between the tax rate on April 20, 1982, and six percent.

Nothing in this subsection prohibits a city or town from reducing its rates by amounts greater than the amounts required in this subsection.

Voter approved rate increases under subsection (1) of this section shall not be included in the computations under this subsection.

NEW SECTION. Sec. 1418. A new section is added to chapter 35.21 RCW to read as follows:

(1) The legislative authority of a city may impose a fee on exempt property within its corporate limits for the police, fire, and other services provided by the city to the property. The fee shall be calculated on the basis of such services generally received by the property.

(2) Property listed under RCW 84.36.010 shall not be subject to fees under this section.

(3) Property taxed under chapter 82.29A RCW shall not be subject to fees under this section.

(4) Any fees imposed under this section are subject to voter approval.

NEW SECTION. Sec. 1419. A new section is added to chapter 82.14 RCW to read as follows:

(1) In the event the tax authorized by RCW 82.14.045 has not been imposed in a jurisdiction, or has not been imposed up to the statutory maximum, then a county, or the city, within its corporate limits, is authorized to impose such tax, by resolution or ordinance, or such portion of the tax that has not been imposed under RCW 82.14.045. Such additional tax shall be collected upon the same taxable events upon which the tax imposed under RCW 82.14.030(1) is levied. In the event a county shall impose a sales and use tax under this subsection at a rate equal to or greater than the rate imposed under this subsection by a city within the county, the county shall receive fifteen percent of the city tax. In the event that the county shall impose a sales and use tax under this subsection at a rate which is less than the rate imposed under this subsection by a city within the county, the county shall receive that amount of revenues from the city tax equal to fifteen percent of the rate of tax imposed by the county under this subsection.

(2) Any county ordinance adopted under subsection (1) of this section shall contain, in addition to all other provisions required to conform to this chapter, a provision allowing a credit against the county tax imposed under subsection (1) of this section for the full amount of any city sales or use tax imposed under subsection (1) of this section upon the same taxable event.

(3) Any tax imposed under this section may be imposed for a period not to exceed four calendar years.

(4) Any resolution or ordinance imposing a tax under this section is subject to voter approval as described in sections 1404 and 1414 of this act.

Sec. 1420. Section 11, chapter 49, Laws of 1982 1st ex. sess. and RCW 82.46.010 are each amended to read as follows:

(1) ((~~Subject to the enactment into law of the 1982 amendment to RCW 82.02.020 by section 5, chapter 49, Laws of 1982 1st ex. sess.,~~)) The governing body of any county or any city may impose an excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the selling price.

(2) ((~~Subject to the enactment into law of the 1982 amendment to RCW 82.02.020 by section 5, chapter 49, Laws of 1982 1st ex. sess., in lieu of imposing the tax authorized in RCW 82.14.030(2),~~)) The governing body of any county or any city may impose an additional excise tax on each sale of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-half of one percent of the selling price.

(3) Taxes imposed under this section shall be collected from persons who are taxable by the state under chapter 82.45 RCW upon the occurrence of any taxable event within the unincorporated areas of the county or within the corporate limits of the city, as the case may be.

(4) Taxes imposed under this section shall comply with all applicable rules, regulations, laws, and court decisions regarding real estate excise taxes as imposed by the state under chapter 82.45 RCW.

(5) As used in this section, "city" means any city or town.

(6) Any resolution or ordinance imposing a tax under subsection (2) of this section is subject to the voter approval as described in sections 1404 and 1414 of this act.

NEW SECTION. Sec. 1421. A new section is added to chapter 82.14 RCW to read as follows:

There is created in the custody of the state treasurer an account to be known as the "targeted fiscal assistance account." Effective July 1, 1991, with the fiscal 1991 earnings, and continuing every July 1 thereafter, an amount representing one-half of the proportionate share of the investment income earned by the moneys in the local sales and use tax account created by RCW 82.14.050, other than those attributable to the sales and use tax distributions to counties under RCW 82.14.030 as determined by the department of revenue, shall be placed into this account, where it shall be held until distributed in accordance with section 1423 of this act during the following calendar year. Effective July 1, 1991, and continuing every July 1 thereafter, an amount representing one-half of the proportionate share of the investment income earned by the moneys in the local sales and use tax account created by RCW 82.14.050, attributable to the sales and use tax distributions to counties under RCW 82.14.030 as determined by the department of revenue, shall be placed in the county sales and use tax equalization account, where it shall be held until distributed in accordance with RCW 82.14.200 during the following calendar year.

Sec. 1422. Section 21, chapter 49, Laws of 1982 1st ex. sess. as last amended by section 82, chapter 57, Laws of 1985 and RCW 82.14.200 are each amended to read as follows:

There is created in the state treasury a special account to be known as the "county sales and use tax equalization account." Into this account shall be placed a portion of all motor vehicle excise tax receipts as provided in RCW 82.44.150(2). Funds in this account shall be ((~~allocated~~)) distributed by the state treasurer, according to allocations determined by the department of revenue under the following procedure:

(1) Prior to April 1st of each year the director of revenue shall inform the state treasurer of the total and the per capita levels of revenues for the unincorporated area of each county and the state-wide weighted average per capita level of revenues for the unincorporated areas of all counties imposing the sales and use tax authorized under RCW 82.14.030(1) for the previous calendar year.

(2) Beginning with January, 1990, distribution, at such times as distributions are made under RCW 82.44.150, as now or hereafter amended, the ((~~state treasurer~~)) department of revenue shall apportion to each county imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than ((~~one~~)) three hundred fifty thousand dollars from the tax for the previous calendar year, an amount from the county sales and use tax equalization account sufficient, when added to the amount of revenues received the previous calendar year by the county, to equal ((~~one~~)) three hundred fifty thousand dollars.

The department of revenue shall establish a governmental price index as provided in this subsection. The base year for the index shall be the end of the third quarter of ((~~1982~~)) 1989. Prior to November 1, ((~~1983~~)) 1990, and prior to each November 1st thereafter, the department of revenue shall establish another index figure for the third quarter of that year. The department of revenue may use the implicit price deflators for state and local government purchases of goods and services calculated by the United States department of commerce to establish the governmental price index. Beginning on January 1, ((~~1984~~)) 1991, and each January 1st thereafter, the ((~~one~~)) three hundred fifty thousand dollar base figure in this subsection shall be adjusted in direct proportion to the percentage change in the governmental price index from ((~~1982~~)) 1989 until the year before the adjustment. Distributions made under this subsection for ((~~1984~~)) 1991 and thereafter shall use this adjusted base amount figure.

(3) Subsequent to the distributions under subsection (2) of this section and at such times as distributions are made under RCW 82.44.150, as now or hereafter amended, the ((~~state treasurer~~)) department of revenue shall apportion to each county imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than seventy percent of the state-wide weighted average per capita level of revenues for the unincorporated areas of all counties as determined by the department of revenue under subsection (1) of this section, an amount from the county sales and use tax equalization account sufficient, when added to the per capita level of revenues for the unincorporated area received the previous calendar year by the county, to equal seventy percent of the state-wide weighted average per capita level of revenues for the unincorporated areas of all counties determined under subsection (1) of this section, subject to reduction under subsections (6) and (7) of this section. When computing distributions under this section, any distribution under subsection (2) of this section shall be considered revenues received from the tax imposed under RCW 82.14.030(1) for the previous calendar year.

(4) Subsequent to the distributions under subsection (3) of this section and at such times as distributions are made under RCW 82.44.150, as now or hereafter amended, the ((~~state treasurer~~)) department of revenue shall apportion to each county imposing the sales and use tax under RCW 82.14.030(2) at the maximum rate and receiving a distribution under subsection (2) of this section, a third distribution from the county sales and use tax equalization account. The distribution to each qualifying county shall be equal to the distribution to the county under subsection (2) of this section, subject to the reduction under subsections (6) and (7) of this section. To qualify for the total distribution under this subsection, the county must impose the tax under RCW 82.14.030(2) for the entire calendar year. Counties imposing the tax for less than the full year shall qualify for prorated allocations under this subsection proportionate to the number of months of the year during which the tax is imposed.

(5) Subsequent to the distributions under subsection (4) of this section and at such times as distributions are made under RCW 82.44.150, as now or hereafter amended, the ((~~state treasurer~~)) department of revenue shall apportion to each county imposing the sales and use tax under RCW 82.14.030(2) at the maximum rate and receiving a distribution under subsection (3) of this section, a fourth distribution from the county sales and use tax equalization account. The distribution to each qualifying county shall be equal to the distribution to the county under subsection (3) of this section, subject to the reduction under subsections (6) and (7) of this section. To qualify for the distributions under this subsection, the county must impose the tax under RCW 82.14.030(2) for the entire calendar year. Counties imposing the tax for less than the full year shall qualify for prorated allocations under this subsection proportionate to the number of months of the year during which the tax is imposed.

(6) Revenues distributed under this section in any calendar year shall not exceed an amount equal to ((seventy percent of the state-wide weighted average per capita level of revenues for the unincorporated areas of all counties during the previous calendar year. If distributions under subsections (3) through (5) of this section cannot be made because of this limitation, then distributions under subsections (3) through (5) of this section shall be reduced ratably among the qualifying counties)): (a) Five hundred thousand dollars for counties with populations below forty thousand; (b) seven hundred fifty thousand dollars for all other counties. The figures in this subsection shall be adjusted on an annual basis in direct proportion to the percentage change in the governmental price index established in subsection (2) of this section.

(7) If inadequate revenues exist in the county sales and use tax equalization account to make the distributions under subsections (3) through (5) of this section, then the distributions under subsections (3) through (5) of this section shall be reduced ratably among the qualifying counties. At such time during the year as additional funds accrue to the county sales and use tax equalization account, additional distributions shall be made under subsections (3) through (5) of this section to the counties.

(8) If the level of revenues in the county sales and use tax equalization account exceeds the amount necessary to make the distributions under subsections (2) through (5) of this section, then the additional revenues shall be credited and transferred to the state general fund.

(9) All earnings of investments of balances in the county sales and use tax equalization account shall be credited to the general fund.

NEW SECTION. Sec. 1423. A new section is added to chapter 82.14 RCW to read as follows:

The funds in the targeted fiscal assistance account are to be allocated by the department of revenue and distributed by the state treasurer in the following manner:

(1) Prior to January 25, 1990, the department of revenue shall determine which cities, if any, shall receive distributions from this account. Cities meeting both the following criteria shall be eligible for distributions from this account: (a) Cities imposing the sales and use tax under RCW 82.14.030(1) at the maximum rate and receiving less than seventy percent of the state-wide weighted average per capita level of revenues for all cities as determined by the department of revenue under RCW 82.14.210(1); and (b) cities that have a per capita assessed valuation of property that is at or below seventy percent of the state-wide average per capita assessed valuation of property for all cities. The department of revenue shall inform the state treasurer of the cities to receive distributions from this fund.

(2) Beginning on January 25, 1990, and continuing every January thereafter, the department of revenue shall apportion to each eligible city an amount from the targeted fiscal assistance account sufficient, when added to the per capita level of revenues received from distributions under RCW 82.14.030(1) the previous calendar year and from the current year's distributions under RCW 82.14.210(3), to equal seventy-five percent of the state-wide weighted average per capita level of revenues for all cities as determined under RCW 82.14.210(1).

(3) At the same time as distributions are made under subsection (2) of this section, the department of revenue shall apportion to each city imposing the sales and use tax under RCW 82.14.030(2) at the maximum rate and receiving a distribution under subsection (2) of this section, a second distribution from the targeted fiscal assistance account. The distribution to each eligible city shall be equal to the distribution to the city under subsection (2) of this section. To qualify for the distributions under this subsection, the city must impose the tax under RCW 82.14.030(2) for the entire calendar year. Cities imposing the tax for less than the full year shall qualify for prorated allocations under this subsection proportionate to the number of months of the year during which the tax is imposed.

(4) If inadequate revenues exist in the targeted fiscal assistance account to make the distribution under subsections (2) and (3) of this section, then such distribution shall be reduced ratably among the eligible cities.

(5) If the level of revenues in the targeted fiscal assistance account exceeds the amount necessary to make the distributions under subsection (2) or (3) of this section, then the additional revenues shall be credited to the general fund.

(6) All earnings of investments of balances in the targeted fiscal assistance account shall be credited to the general fund.

Sec. 1424. Section 1, chapter 18, Laws of 1988 and RCW 82.44.150 are each amended to read as follows:

(1) The director of licensing shall on the twenty-fifth day of February, May, August, and November of each year, commencing with November, 1971, advise the state treasurer of the total amount of motor vehicle excise taxes remitted to the department of licensing during the preceding calendar quarter ending on the last day of March, June, September, and December, respectively, except for those payable under RCW 82.44.020(6) and 82.44.030, from motor vehicle owners residing within each municipality which has levied a tax under RCW 35.58.273, which amount of excise taxes shall be determined by the director as follows:

The total amount of motor vehicle excise taxes remitted to the department, except those payable under RCW 82.44.020(6) and 82.44.030, from each county shall be multiplied by a fraction, the numerator of which is the population of the municipality residing in such county, and the denominator of which is the total population of the county in which such municipality or portion thereof is located. The product of this computation shall be the amount of excise taxes from motor vehicle owners residing within such municipality or portion thereof. Where the municipality levying a tax under RCW 35.58.273 is located in more than one county, the above computation shall be made by county, and the combined products shall provide the total amount of motor vehicle excise taxes from motor vehicle owners residing in the municipality as a whole. Population figures required for these computations shall be supplied to the director by the office of financial management, who shall adjust the fraction annually.

(2) On the first day of the months of January, April, July, and October of each year, the state treasurer based upon information provided by the department of licensing shall make the following apportionment and distribution of motor vehicle excise taxes deposited in the general fund except taxes collected under RCW 82.44.020(6). A sum equal to seventeen percent thereof shall be paid to cities and towns in the proportions and for the purposes hereinafter set forth; a sum equal to two percent ((~~thereof~~)) through June 30, 1991, and three percent thereafter shall be allocable to the county sales and use tax equalization account under RCW 82.14.200; and a sum equal to four and two-tenths percent of the special excise tax levied under RCW 35.58.273 by those municipalities authorized to levy a special excise tax at a rate not exceeding ninety-six one-hundredths of one percent on the fair market value of every motor vehicle owned by a resident of such municipality shall be deposited in the rail development account established in RCW 47.78.010.

(3) The amount payable to cities and towns shall be apportioned among the several cities and towns within the state according to the following formula:

(a) Sixty-five percent of the sum specified in subsection (2) of this section to be paid to cities and towns shall be apportioned ratably on the basis of population as last determined by the office of financial management.

(b) Thirty-five percent of the sum specified in subsection (2) of this section to be paid to cities and towns shall be apportioned to cities and towns under RCW 82.14.210.

(4) When so apportioned, the amount payable to each such city and town shall be transmitted to the city treasurer thereof, and shall be utilized by such city or town for the purposes of police and fire protection and the preservation of the public health therein, and not otherwise. In case it be adjudged that revenue derived from the excise tax imposed by this chapter cannot lawfully be apportioned or distributed to cities or towns, all moneys directed by this section to be apportioned and distributed to cities and towns shall be credited and transferred to the state general fund.

(5) On the first day of the months of January, April, July, and October of each year, the state treasurer, based upon information provided by the department of licensing, shall remit motor vehicle excise tax revenues imposed and collected under RCW 35.58.273 as follows:

(a) The amount required to be remitted by the state treasurer to the treasurer of any municipality levying the tax shall not exceed in any calendar year the amount of locally-generated tax revenues, excluding the excise tax imposed under RCW 35.58.273 for the purposes of this section, which shall have been budgeted by the municipality to be collected in such calendar year for any public transportation purposes including but not limited to operating costs, capital costs, and debt service on general obligation or revenue bonds issued for these purposes; and

(b) In no event may the amount remitted in a single calendar quarter exceed the amount collected on behalf of the municipality under RCW 35.58.273 during the calendar quarter next preceding the immediately preceding quarter.

(6) At the close of each calendar year accounting period, but not later than April 1, each municipality that has received motor vehicle excise taxes under subsection (5) of this section shall transmit to the director of licensing and the state auditor a written report showing by source the previous year's budgeted tax revenues for public transportation purposes as compared to actual collections. Any municipality that has not submitted the report by April 1 shall cease to be eligible to receive motor vehicle excise taxes under subsection (5) of this section until the report is received by the director of licensing. If a municipality has received more or less money under subsection (5) of this section for the period covered by the report than it is entitled to receive by reason of its locally-generated collected tax revenues, the director of licensing shall, during the next ensuing quarter that the municipality is eligible to receive motor vehicle excise tax funds, increase or decrease the amount to be remitted in an amount equal to the difference between the locally-generated budgeted tax revenues and the locally-generated collected tax revenues. In no event may the amount remitted for a calendar year exceed the amount collected on behalf of the municipality under RCW 35.58.273 during that same calendar year. At the time of the next fiscal audit of each municipality, the state auditor shall verify the accuracy of the report submitted and notify the director of licensing of any discrepancies.

(7) The motor vehicle excise taxes imposed under RCW 35.58.273 and required to be remitted under this section shall be remitted without legislative appropriation.

(8) Any municipality levying and collecting a tax under RCW 35.58.273 which does not have an operating, public transit system or a contract for public transportation services in effect within one year from the initial effective date of the tax shall return to the state treasurer all motor vehicle excise taxes received under subsection (5) of this section.

Sec. 1425. Section 51, chapter 57, Laws of 1985 and RCW 43.84.092 are each amended to read as follows:

Except as provided in RCW 43.84.090 and section 1421 of this act, all earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

On or before July 20 of each year, the state treasurer shall distribute all earnings credited to the treasury income account as of June 30 to the funds for the fiscal year in which it was earned. Except as otherwise provided by statute, the state treasurer shall credit the various accounts and funds in the state treasury their proportionate share of earnings based upon each fund's average daily balance for the period: PROVIDED, That earnings on the balances of the forest reserve fund, the federal forest revolving fund, the liquor excise tax fund, the treasury income account, the suspense account, the undistributed receipts account, the state payroll revolving account, the agency vendor payment revolving fund, and the local leasehold excise tax account((~~, and the local sales and use tax account~~)) shall be credited to the state treasurer's service fund: PROVIDED FURTHER, That earnings on the balances of the tort claims revolving fund, the agency payroll revolving fund, the special fund salary and insurance contribution increase revolving fund and special fund semimonthly payroll revolving fund shall be credited to the state general fund.

NEW SECTION. Sec. 1426. There is appropriated from the general fund to the county sales and use tax equalization account created by RCW 82.14.200, for the purposes of sections 1421 through 1425 of this act, the sum of two million dollars for the fiscal year ending June 30, 1990, and one million dollars for the fiscal year ending June 30, 1991.

NEW SECTION. Sec. 1427. There is appropriated from the general fund to the targeted fiscal assistance account created in section 1421 of this act, for the purposes of sections 1421 through 1425 of this act, the sum of five hundred thousand dollars for the fiscal year ending June 30, 1990, and five hundred thousand dollars for the fiscal year ending June 30, 1991.

NEW SECTION. Sec. 1428. There is appropriated from the general fund to Stevens county, for the purposes of sections 1421 through 1425 of this act, the sum of sixty thousand dollars for the fiscal year ending June 30, 1990, and sixty thousand dollars for the fiscal year ending June 30, 1991.

Sec. 1429. Section 20, chapter 288, Laws of 1971 ex. sess. as last amended by section 2, chapter 218, Laws of 1979 ex. sess. and RCW 84.55.010 are each amended to read as follows:

(1) Except as provided in this chapter, the levy for a taxing district in any year shall be set so that the regular property taxes payable in the following year shall not exceed (a) one hundred six percent of the amount of regular property taxes lawfully levied for such district in the highest of the three most recent years in which such taxes were levied for such district plus an additional dollar amount calculated by multiplying the increase in assessed value in that district resulting from new construction, improvements to property, and any increase in the assessed value of state-assessed property by the regular property tax levy rate of that district for the preceding year or (b) one hundred percent of the amount of regular property taxes lawfully levied for such district in the highest of the three most recent years in which such taxes were levied for such district plus an additional dollar amount calculated by multiplying the increase in assessed value in that district resulting from new construction, improvements to property, and any increase in the assessed value of state-assessed property by the regular property tax levy rate of that district for the preceding year plus an amount representing the rate of inflation for the previous year, as determined by the governmental price index established by the department of revenue in RCW 82.14.200.

(2) The state shall not be allowed the adjustment available in subsection (1)(b) of this section.

Sec. 1430. Section 21, chapter 288, Laws of 1971 ex. sess. and RCW 84.55.020 are each amended to read as follows:

(1) Notwithstanding the limitation set forth in RCW 84.55.010, the first levy for a taxing district created from consolidation of similar taxing districts shall be set so that the regular property taxes payable in the following year shall not exceed (a) one hundred six percent of the sum of the amount of regular property taxes lawfully levied for each component taxing district in the highest of the three most recent years in which such taxes were levied for such district plus the additional dollar amount calculated by multiplying the increase in assessed value in each component district resulting from new construction and improvements to property by the regular property tax rate of each component district for the preceding year or (b) one hundred percent of the amount of regular property taxes lawfully levied for each component taxing district in the highest of the three most recent years in which such taxes were levied for such district plus the additional dollar amount calculated by multiplying the increase in assessed value in each component district resulting from new construction and improvements to property by the regular property tax rate of each component district for the preceding year plus an amount representing the rate of inflation for the previous year, as determined by the governmental price index established by the department of revenue in RCW 82.14.200.

(2) The state shall not be allowed the adjustment available in subsection (1)(b) of this section.

NEW SECTION. Sec. 1431. The legislature finds that the respective roles of the counties, cities, and state have become blurred and indistinct over time, with service delivery responsibility shifting from one jurisdiction to another. In order to promote efficient, responsive governmental services to the people of the state of Washington, the legislature finds that the respective roles of the counties, cities, towns, and other jurisdictions need to be more clearly defined. The legislature also recognizes that the more densely populated regions of the state have problems not shared by other regions. Therefore, the legislature intends to provide a process by which the current roles of each jurisdiction can be determined; to determine what services are mandated and which services are discretionary; how services can and should be paid for; and to provide an ongoing process by which the most advantageous service delivery can be accomplished.

NEW SECTION. Sec. 1432. For purposes of sections 1433 through 1435 of this act, "council" means the local government service council created in section 1433 of this act. "Puget Sound service council" means the subcommittee created in section 1433 of this act.

NEW SECTION. Sec. 1433. (1) There is hereby created a local government service council to consist of the following:

Nineteen voting members appointed by the governor, with due consideration of geographical and population distributions, consisting of:

(a) Four members of the state legislature; two from the house of representatives, and two from the senate;

(b) Four representatives from the Washington state association of counties or its successor;

(d) Three representatives from the executive branch;

(e) One representative from the Washington department of community development; and

(f) Three citizens of the state chosen to serve as at-large members.

(2) There is hereby created a Puget Sound service council, which shall be a subcommittee of the local government service council, consisting of the members of the council from the Central Puget Sound, which includes King, Pierce, Snohomish, and Kitsap counties.

(3) The council shall be allowed to augment its membership as it may deem necessary, by the inclusion of no more than ten ex officio members.

(4) The members of both councils shall serve without pay, at the pleasure of the governor. Nonlegislative members shall be paid travel expenses incurred in their travel to and from meetings of the council and while attending all meetings of the council in accordance with RCW 43.03.050 and 43.03.060. Legislative members shall be paid travel expenses incurred in their travel to and from meetings of the council and while attending all meetings of the council in accordance with RCW 44.04.120.

NEW SECTION. Sec. 1434. The council shall:

(1) Determine which local services are mandatory and which are discretionary; which governmental unit has mandated such services; and which mandatory services are most appropriately performed by each level of government, based on criteria that include the necessity of uniformity, efficiency, and cost.

(2) The Puget Sound service council shall determine what unique demands are placed on service delivery in densely populated areas, and how best to resolve those demands. The subcommittee shall submit a report to the full committee October 1, 1990.

(3) Submit to the governor and the legislature a preliminary report by January 1, 1990, and a final report containing the council's findings, conclusions, and recommendations, including recommendations regarding the financing of service delivery and the shifting of taxing responsibilities and abilities, by January 1, 1991.

NEW SECTION. Sec. 1435. The department of community development shall provide the necessary support to both councils to carry out the purposes of sections 1433 and 1434 of this act. The department of community development may employ such staff as is necessary to carry out the purposes of sections 1433 and 1434 of this act. The provisions of chapter 41.06 RCW do not apply to such staff.

NEW SECTION. Sec. 1436. There is appropriated from the general fund to the department of community development for the biennium ending June 30, 1991, the sum of two hundred forty-nine thousand nine hundred ninety-six dollars, or as much thereof as may be necessary, to carry out the purposes of this act.

NEW SECTION. Sec. 1437. Sections 1402 through 1412 of this act shall constitute a new chapter in Title 36 RCW.

NEW SECTION. Sec. 1438. Sections 1430 through 1435 of this act shall expire June 30, 1991.

PART XV

TRANSPORTATION

Sec. 1501. Section 6, chapter 317, Laws of 1977 ex. sess. as last amended by section 27, chapter 49, Laws of 1983 1st ex. sess. and RCW 82.36.025 are each amended to read as follows:

The motor vehicle fuel tax rate shall be computed as the sum of the tax rate provided in subsection (1) of this section and the additional tax rates provided in subsections (2) through (4) of this section.

(1) ((~~Except as required in subsection (5) of this section,~~)) A motor vehicle fuel tax rate of ((~~fifteen cents per gallon shall apply to the sale, distribution, or use of motor vehicle fuel from July 1, 1983, through June 30, 1984, and a motor vehicle fuel tax rate of~~)) seventeen cents per gallon shall apply ((~~thereafter~~)) to the sale, distribution, or use of motor vehicle fuel from July 1, 1984, through June 30, 1989; and a motor vehicle fuel tax rate of twenty cents per gallon shall apply from July 1, 1989, and thereafter. Beginning July 1, 1991, the department of licensing shall adjust the motor vehicle fuel tax rate annually on July 1st of that year and each succeeding year to an amount derived by multiplying twenty-one cents by a percentage developed from dividing (a) the consumer price index for the calendar year ending December 31st of the year before the adjustment is to take effect; by (b) the consumer price index for the calendar year ending December 31, 1988. The consumer price index used in the computation shall be the United States city average for all urban consumers published by the bureau of labor statistics and shall be submitted to the legislature by the department of licensing no later than March 1st of the year in which the new motor vehicle fuel tax rate is to take effect. Any tax computed under the computation above shall be rounded to the nearest one-tenth of one cent.

(2) An additional motor vehicle fuel tax rate of one-third cent per gallon shall apply to the sale, distribution, or use of motor vehicle fuel, and the proceeds from this additional tax rate, reduced by an amount equal to the sum of the payments under RCW 46.68.090 (1) and (2) multiplied by the additional tax rate prescribed by this subsection divided by the motor vehicle fuel tax rate provided in this section, shall be deposited in the rural arterial trust account in the motor vehicle fund for expenditures under RCW 36.79.020.

(3) An additional motor vehicle fuel tax rate of one-third cent per gallon shall apply to the sale, distribution, or use of motor vehicle fuel, and the proceeds from this additional tax rate, reduced by an amount equal to the sum of the payments under RCW 46.68.090 (1) and (2) multiplied by the additional tax rate prescribed by this subsection divided by the motor vehicle fuel tax rate provided in this section, shall be deposited in the urban arterial trust account in the motor vehicle fund.

(4) An additional motor vehicle ((~~full [fuel]~~)) fuel tax rate of one-third cent per gallon shall be applied to the sale, distribution, or use of motor vehicle fuel, and the proceeds from this additional tax rate, reduced by an amount equal to the sum of the payments under RCW 46.68.090 (1) and (2) multiplied by the additional tax rate prescribed by this subsection divided by the motor vehicle fuel tax rate provided in this section, shall be deposited in the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130.

(5) (((a) Before the start of each fiscal year, the department of licensing shall estimate the total aggregate motor vehicle fuel tax revenues and the total of all other revenues that will accrue to the motor vehicle fund during the fiscal year. The estimated total of all other state revenues to accrue to the motor vehicle fund during the fiscal year shall include those revenues (other than the aggregate motor vehicle fuel tax revenues) which the department of transportation with the concurrence of the office of financial management determines will accrue during the fiscal year, assuming that collections of such revenues for the fiscal year shall be at the same level as during the fiscal year just ended, adjusted however for historic variations in collections according to yearly periods and for projected trends, but shall not include the proceeds of the sale of bonds, reimbursements to the motor vehicle fund for services performed by the department of transportation for others, moneys derived from nonfuel tax sources that are deposited directly in the several accounts within the motor vehicle fund, interest deposited directly in the several accounts within the motor vehicle fund, nor federal funds. The estimated total aggregate motor vehicle fuel tax revenues for the fiscal year shall include those revenues that the department of licensing determines will accrue during the fiscal year, assuming the sale, distribution, and use of motor vehicle fuel and special fuel within the state for the fiscal year will be at the same volume as during the fiscal year last ended, adjusted however for the historic variations in sales, distribution, and use according to yearly periods and for projected trends.

(b) If the estimated aggregate motor fuel tax revenues plus all other state revenues that will accrue to the motor vehicle fund during a fiscal year as computed in (a) of this subsection exceed the motor vehicle fund revenue limit in the fiscal year as computed in (c) of this subsection, the rate of motor fuel tax provided in subsection (1) of this section shall be reduced by one-half cent increments for the fiscal year only, commencing at the beginning of the fiscal year, as may be necessary to reduce the estimated total revenues for the fiscal year to within the motor vehicle fund revenue limit.

(c) The motor vehicle fund revenue limit for any fiscal year shall be the previous fiscal year's motor vehicle fund revenue limit multiplied by the average state personal income ratio for the three calendar years immediately preceding the beginning of the fiscal year for which the limit is being computed. For purposes of computing the motor vehicle fund revenue limit for the fiscal year ending June 30, 1981, the phrase "the previous fiscal year's motor vehicle fund revenue limit" means the motor vehicle fund revenue collected in the fiscal year ending June 30, 1979, multiplied by the average state personal income ratio for the calendar years 1976, 1977, and 1978.

~~(6)~~)) The legislative transportation committee shall study and analyze each biennium the financial condition of the motor vehicle fund and accounts thereof with particular emphasis on RCW 82.36.010 and 82.36.025.

(6) The proceeds of any taxes collected under the authority of subsection (1) of this section in excess of seventeen cents per gallon shall be forwarded to the state treasurer to be deposited to the credit of the motor vehicle fund and distributed monthly according to the following method:

(a) Fifteen percent shall be deposited into the transportation improvement account;

(b) The remaining proceeds representing eighty-five percent of the additional fees shall be distributed according to the following formula:

(i) Forty-seven percent in the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130;

(ii) Thirty-four percent to the counties for distribution in accordance with RCW 46.68.120;

(iii) Nineteen percent to the cities and towns, to be distributed in the same proportions and for the same uses as provided for in RCW 46.68.100 (1) and (2).

NEW SECTION. Sec. 1502. A new section is added to chapter 46.16 RCW to read as follows:

(1) The rate of additional fees under RCW 46.16.060(2), 46.16.065(2), 46.16.070(2), 46.16.079(2), 46.16.080(2), 46.16.085(2), 46.16.090(2), 46.16.121(2), 46.16.160(10), 46.16.310(2), 46.16.315(2), 46.16.460(2), 46.16.505(2), 46.16.630(2), 46.44.047(2), 46.16.0941(2), and 46.44.095(2) shall be adjusted annually by the department of licensing on January 1st of each year. The additional fee rate shall equal the percentage resulting from dividing (a) the consumer price index for the calendar year beginning two years before the additional fee rate is adjusted, less the consumer price index for the calendar year beginning January 1, 1989; by (b) the consumer price index for the calendar year beginning January 1, 1989. The consumer price index used in the computation shall be the United States city average for all urban consumers published by the bureau of labor statistics and shall be submitted to the legislature by the department of licensing no later than March 1st of the year before which the adjusted rate is to take effect. Any tax computed under the computation above shall be rounded to the nearest cent and shall not be less than zero.

(2) The disposition of the proceeds from the additional fees under RCW 46.16.060(2), 46.16.065(2), 46.16.070(2), 46.16.079(2), 46.16.080(2), 46.16.085(2), 46.16.090(2), 46.16.121(2), 46.16.160(10), 46.16.310(2), 46.16.315(2), 46.16.460(2), 46.16.505(2), 46.16.630(2), 46.44.047(2), 46.44.0941(2), and 46.44.095(2) shall be forwarded to the state treasurer to be deposited to the credit of the motor vehicle fund and distributed monthly according to the following method:

(a) Fifteen percent shall be deposited into the transportation improvement account;

(b) The remaining proceeds representing eighty-five percent of the additional fees shall be distributed according to the following formula:

(i) Forty-seven percent to the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130;

(ii) Thirty-four percent to the counties for distribution in accordance with RCW 46.68.120;

(iii) Nineteen percent to the cities and towns, to be distributed in the same proportions and for the same uses as provided for in RCW 46.68.100 (1) and (2).

Sec. 1503. Section 46.16.060, chapter 12, Laws of 1961 as last amended by section 3, chapter 9, Laws of 1987 1st ex. sess. and RCW 46.16.060 are each amended to read as follows:

(1) Except for vehicles already so taxed in RCW 46.16.070 and 46.16.085 or as otherwise specifically provided by law for the licensing of vehicles, there shall be paid and collected annually for each registration year or fractional part thereof and upon each vehicle a license fee of ((~~twenty-three dollars, but effective with initial motor vehicle registrations that expire in January, 1989, and thereafter, the license fee shall be~~)) twenty-seven dollars and seventy-five cents; however, if the vehicle was previously licensed in this state and has not been registered in another jurisdiction in the intervening period, the renewal license fee shall be ((~~nineteen dollars, but effective with vehicle license renewals that expire in January, 1989, and thereafter, the renewal license fee shall be~~)) twenty-three dollars and seventy-five cents. The proceeds of such fees shall be distributed in accordance with RCW 46.68.030. The fee for licensing each house-moving dolly which is used exclusively for moving buildings or homes on the highway under special permit as provided for in chapter 46.44 RCW shall be ((~~twenty-five dollars, but effective with licenses that expire in January, 1989, and thereafter, the fee shall be~~)) twenty-nine dollars and seventy-five cents, and no other fee shall be charged for the load carried thereon.

(3) The department of licensing, county auditors, and other authorized agents shall collect for any registration year any increase in the fees authorized by this section for the months of that registration year in which any such increase is effective in the same manner and at the same time as such fees for that registration year would otherwise be collected as provided by law.

Sec. 1504. Section 46.16.065, chapter 12, Laws of 1961 as last amended by section 4, chapter 118, Laws of 1975 1st ex. sess. and RCW 46.16.065 are each amended to read as follows:

(1) In lieu of the fees provided in RCW 46.16.060, private passenger car one or two-wheel trailers of two thousand pounds gross weight or less, may be licensed upon the payment of a license fee in the sum of four dollars and fifty cents or, if the vehicle was previously licensed in this state and has not been registered in another jurisdiction in the intervening period, a renewal license fee in the sum of three dollars and twenty-five cents, but only if such trailers are to be operated upon the public highway by the owners thereof. It is the intention of the legislature that this reduced license shall be issued only as to trailers operated for personal use of the owners and not trailers held for rental to the public.

Sec. 1505. Section 46.16.070, chapter 12, Laws of 1961 as last amended by section 3, chapter 244, Laws of 1987 and by section 4, chapter 9, Laws of 1987 1st ex. sess. and RCW 46.16.070 are each reenacted and amended to read as follows:

(1) In lieu of all other vehicle licensing fees, unless specifically exempt, and in addition to the excise tax prescribed in chapter 82.44 RCW and the mileage fees prescribed for buses and stages in RCW 46.16.125, there shall be paid and collected annually for each motor truck, truck tractor, road tractor, tractor, bus, auto stage, or for hire vehicle with seating capacity of more than six, based upon the declared combined gross weight or declared gross weight thereof pursuant to the provisions of chapter 46.44 RCW, the following licensing fees by such gross weight:

!tp1,1,1,1,1!tr4,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~27.75~~))

!tj3!tr33.00

!tr6,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~32.72~~))

!tj3!tr40.95

!tr8,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~40.30~~))

!tj3!tr53.08

!tr10,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~45.37~~))

!tj3!tr61.19

!tr12,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~52.62~~))

!tj3!tr72.79

!tr14,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~59.86~~))

!tj3!tr84.38

!tr16,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~67.31~~))

!tj3!tr96.30

!tr18,000 lbs.!sc ,1!w×!tj2!tr$!sc ,003((~~99.02~~))

!tj3!tr147.03

!tr20,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~109.94~~))

!tj3!tr164.50

!tr22,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~118.76~~))

!tj3!tr178.62

!tr24,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~127.95~~))

!tj3!tr193.32

!tr26,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~135.08~~))

!tj3!tr204.73

!tr28,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~158.66~~))

!tj3!tr242.46

!tr30,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~182.18~~))

!tj3!tr280.09

!tr32,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~218.78~~))

!tj3!tr338.65

!tr34,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~232.06~~))

!tj3!tr359.90

!tr36,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~251.39~~))

!tj3!tr390.82

!tr38,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~275.51~~))

!tj3!tr429.42

!tr40,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~314.99~~))

!tj3!tr492.58

!tr42,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~327.16~~))

!tj3!tr512.06

!tr44,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~334.02~~))

!tj3!tr523.03

!tr46,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~358.91~~))

!tj3!tr562.86

!tr48,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~374.19~~))

!tj3!tr587.30

!tr50,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~405.36~~))

!tj3!tr637.18

!tr52,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~426.45~~))

!tj3!tr670.92

!tr54,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~460.02~~))

!tj3!tr724.63

!tr56,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~485.21~~))

!tj3!tr764.94

!tr58,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~504.53~~))

!tj3!tr795.85

!tr60,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~537.29~~))

!tj3!tr848.26

!tr62,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~575.50~~))

!tj3!tr909.40

!tr64,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~588.75~~))

!tj3!tr930.60

!tr66,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~655.14~~))

!tj3!tr1036.82

!tr68,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~682.99~~))

!tj3!tr1081.38

!tr70,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~735.14~~))

!tj3!tr1164.82

!tr72,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~785.36~~))

!tj3!tr1245.18

!tr74,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~853.15~~))

!tj3!tr1353.64

!tr76,000 lbs.!sc ,1!w×!tj2!tr$!sc ,002((~~922.05~~))

!tj3!tr1463.88

!tr78,000 lbs.!sc ,1!w×!tj2!tr$!sc ,001((~~1,006.10~~))

!tj3!tr1598.36

!tr80,000 lbs.!sc ,1!w×!tj2!tr$!sc ,001((~~1,085.95~~))

!tj3!tr1726.12!ix!te

((~~The proceeds from such fees shall be distributed in accordance with RCW 46.68.035.~~

Effective with motor vehicle licenses that expire in January, 1989, and thereafter, a surcharge of four dollars and seventy-five cents is added to such fees. The proceeds of this surcharge shall be forwarded to the state treasurer to be deposited into the state patrol highway account of the motor vehicle fund.))

Every motor truck, truck tractor, and tractor exceeding 6,000 pounds empty scale weight registered under chapter 46.16, 46.87, or 46.88 RCW shall be licensed for not less than one hundred fifty percent of its empty weight unless the amount would be in excess of the legal limits prescribed for such a vehicle in RCW 46.44.041 or 46.44.042, in which event the vehicle shall be licensed for the maximum weight authorized for such a vehicle.

The following provisions apply when increasing gross or combined gross weight for a vehicle licensed under this section:

((~~(1)~~)) (a) The new license fee will be one-twelfth of the fee listed above for the new gross weight, multiplied by the number of months remaining in the period for which licensing fees have been paid, including the month in which the new gross weight is effective.

((~~(2)~~)) (b) Upon surrender of the current certificate of registration or cab card, the new licensing fees due shall be reduced by the amount of the licensing fees previously paid for the same period for which new fees are being charged.

(2) There is levied and shall be paid and collected annually as part of the fee under subsection (1) of this section, an additional fee equal to the rate specified in section 1502(1) of this act, multiplied by the fee payable under subsection (1) of this section. The proceeds from the additional fee shall be distributed in accordance with section 1502(2) of this act. This subsection shall take effect January 1, 1992, and the additional fees apply for all motor vehicle registrations that expire January 1, 1993, and thereafter.

(3) The proceeds from the fees collected under subsection (1) of this section shall be distributed as follows:

(a) The rate in subsection (1) of this section less nineteen dollars, or its prorated equivalent, divided by 1.6 plus nineteen dollars, or its prorated equivalent, shall be distributed in accordance with RCW 46.68.035.

(b) The balance shall be forwarded to the state treasurer to be deposited to the credit of the motor vehicle fund and distributed monthly according to the following method:

(i) Fifteen percent shall be deposited into the transportation improvement account;

(ii) The remaining proceeds representing eighty-five percent of the additional fees shall be distributed according to the following formula:

(A) Forty-seven percent in the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130;

(B) Thirty-four percent to the counties for distribution in accordance with RCW 46.68.120;

(C) Nineteen percent to the cities and towns, to be distributed in the same proportions and for the same uses as provided for in RCW 46.68.100 (1) and (2).

(4) A surcharge of four dollars and seventy-five cents is added to the fees in subsection (1) of this section. The proceeds of this surcharge shall be forwarded to the state treasurer to be deposited into the state highway patrol account of the motor vehicle fund.

Sec. 1506. Section 1, chapter 18, Laws of 1963 as last amended by section 5, chapter 18, Laws of 1986 and RCW 46.16.079 are each amended to read as follows:

(1) The licensee of any fixed load motor vehicle equipped for lifting or towing any disabled, impounded, or abandoned vehicle or part thereof, may pay a capacity fee of twenty-five dollars in addition to all other fees required for the annual licensing of motor vehicles in lieu of the licensing fees provided in RCW 46.16.070.

Sec. 1507. Section 46.16.080, chapter 12, Laws of 1961 as last amended by section 6, chapter 18, Laws of 1986 and RCW 46.16.080 are each amended to read as follows:

(1) In lieu of the licensing fee provided for motor vehicles in RCW 46.16.070 there shall be collected, in addition to all other fees required for annual licensing of vehicles:

((~~(1)~~)) (a) A capacity fee of five dollars on any motor truck, truck tractor, tractor, trailer, or semitrailer used only for the purpose of transporting any well drilling machine, air compressor, rock crusher, conveyor, hoist, wrecker, donkey engine, cook house, tool house, bunk house, or similar machine or structure attached to or made a part of such motor truck, truck tractor, tractor, trailer, or semitrailer;

((~~(2)~~)) (b) No fee may be collected under this section or under RCW 46.16.085 on any travel trailer that will be charged fees and taxes under RCW 46.01.140, 46.16.060, 46.16.063 and chapter 82.50 RCW;

((~~(3)~~)) (c) For each vehicle used exclusively in the transportation of circus, carnival, and show equipment and in the transportation of supplies used in conjunction therewith, a capacity fee of ten dollars shall be charged in addition to all other fees required for the annual licensing of these vehicles.

Sec. 1508. Section 16, chapter 380, Laws of 1985 as last amended by section 4, chapter 244, Laws of 1987 and RCW 46.16.085 are each amended to read as follows:

(1) In lieu of all other licensing fees, an annual license fee of thirty-five dollars shall be collected in addition to the excise tax prescribed in chapter 82.44 RCW for: ((~~(1)~~)) (a) Each trailer and semitrailer not subject to the license fee under RCW 46.16.065 or the capacity fees under RCW 46.16.080; ((~~(2)~~)) (b) every pole trailer; ((~~(3)~~)) (c) every converter gear or auxiliary axle not licensed as a combination under the provisions of RCW 46.16.083. The proceeds from this fee shall be distributed in accordance with RCW 46.68.035. This section does not pertain to travel trailers or personal use trailers that are not used for commercial purposes or owned by commercial enterprises.

Sec. 1509. Section 10, chapter 18, Laws of 1986 and RCW 46.16.090 are each amended to read as follows:

(1) Motor trucks, truck tractors, and tractors may be specially licensed based on the declared gross weight thereof for the various amounts set forth in the schedule provided in RCW 46.16.070 less twenty-two dollars; divide the difference by two and add twenty-two dollars, when such vehicles are owned and operated by farmers, but only if the following condition or conditions exist:

((~~(1)~~)) (a) When such vehicles are to be used for the transportation of the farmer's own farm, orchard, or dairy products, or the farmer's own private sector cultured aquatic products as defined in RCW 15.85.020, from point of production to market or warehouse, and of supplies to be used on the farmer's farm. Fish other than those that are such private sector cultured aquatic products and forestry products are not considered as farm products; and/or

((~~(2)~~)) (b) When such vehicles are to be used for the infrequent or seasonal transportation by one farmer for another farmer in the farmer's neighborhood of products of the farm, orchard, dairy, or aquatic farm owned by the other farmer from point of production to market or warehouse, or supplies to be used on the other farm, but only if transportation for another farmer is for compensation other than money. Farmers shall be permitted an allowance of an additional eight thousand pounds, within the legal limits, on such vehicles, when used in the transportation of the farmer's own farm machinery between the farmer's own farm or farms and for a distance of not more than thirty-five miles from the farmer's farm or farms.

The department shall prepare a special form of application to be used by farmers applying for licenses under this section, which form shall contain a statement to the effect that the vehicle concerned will be used subject to the limitations of this section. The department shall prepare special insignia which shall be placed upon all such vehicles to indicate that the vehicle is specially licensed, or may, in its discretion, substitute a special license plate for such vehicle for such designation.

Operation of such a specially licensed vehicle in transportation upon public highways in violation of the limitations of this section is a traffic infraction.

(2) The rate in subsection (1) of this section, less twenty-two dollars or its prorated equivalent divided by 1.6 plus twenty-two dollars or its prorated equivalent, shall be distributed in accordance with RCW 46.68.035. The balance shall be distributed monthly according to the following method:

(a) Fifteen percent shall be deposited into the transportation improvement account;

(b) The remaining proceeds representing eighty-five percent of the additional fees shall be distributed according to the following formula:

(i) Forty-seven percent in the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130;

(ii) Thirty-four percent to the counties for distribution in accordance with RCW 46.68.120;

(iii) Nineteen percent to the cities and towns, to be distributed in the same proportions and for the same uses as provided for in RCW 46.68.100 (1) and (2).

(3) There is levied and shall be paid and collected annually as part of the fee under subsection (1) of this section, an additional fee equal to the rate specified in section 1502(1) of this act, multiplied by the fee payable under subsection (1) of this section. The proceeds from the additional fee shall be distributed in accordance with section 1502(2) of this act.

Sec. 1510. Section 58, chapter 83, Laws of 1967 ex. sess. and RCW 46.16.121 are each amended to read as follows:

(1) In addition to other fees for the licensing of vehicles, there shall be paid and collected annually, for each auto stage and for hire vehicle, except taxicabs, with a seating capacity of six or less the sum of fifteen dollars.

Sec. 1511. Section 46.16.160, chapter 12, Laws of 1961 as last amended by section 6, chapter 244, Laws of 1987 and RCW 46.16.160 are each amended to read as follows:

(1) The owner of a vehicle which under reciprocal relations with another jurisdiction would be required to obtain a license registration in this state or an unlicensed vehicle which would be required to obtain a license registration for operation on public highways of this state may, as an alternative to such license registration, secure and operate such vehicle under authority of a trip permit issued by this state in lieu of a Washington certificate of license registration, and licensed gross weight if applicable. Trip permits may also be issued for movement of mobile homes pursuant to RCW 46.44.170. For the purpose of this section, a vehicle is considered unlicensed if the licensed gross weight currently in effect for the vehicle or combination of vehicles is not adequate for the load being carried. Vehicles registered under RCW 46.16.135 shall not be operated under authority of trip permits in lieu of further registration within the same registration year.

(2) Each trip permit shall authorize the operation of a single vehicle at the maximum legal weight limit for such vehicle for a period of three consecutive days commencing with the day of first use. No more than three such permits may be used for any one vehicle in any period of thirty consecutive days. Every permit shall identify, as the department may require, the vehicle for which it is issued and shall be completed in its entirety and signed by the operator before operation of the vehicle on the public highways of this state. Correction of data on the permit such as dates, license number, or vehicle identification number invalidates the permit. The trip permit shall be displayed on the vehicle to which it is issued as prescribed by the department.

(3) Vehicles operating under authority of trip permits are subject to all laws, rules, and regulations affecting the operation of like vehicles in this state.

(4) Prorate operators operating commercial vehicles on trip permits in Washington shall retain the customer copy of such permit for four years.

(5) Blank trip permits may be obtained from field offices of the department of transportation, Washington state patrol, department of licensing, or other agents appointed by the department. For each permit issued, there shall be collected a filing fee as provided by RCW 46.01.140, an administrative fee of eight dollars, and an excise tax of one dollar. If the filing fee amount of one dollar prescribed by RCW 46.01.140 is increased or decreased after January 1, 1981, the administrative fee shall be adjusted to compensate for such change to insure that the total amount collected for the filing fee, administrative fee, and excise tax remain at ten dollars. These fees and taxes are in lieu of all other vehicle license fees and taxes. No exchange, credits, or refunds may be given for trip permits after they have been purchased.

(6) The department may appoint county auditors or businesses as agents for the purpose of selling trip permits to the public. County auditors or businesses so appointed may retain the filing fee collected for each trip permit to defray expenses incurred in handling and selling the permits.

(7) A violation of or a failure to comply with any provision of this section is a gross misdemeanor.

(8) The department of licensing may adopt rules as it deems necessary to administer this section.

(9) All administrative fees and excise taxes collected under the provisions of this chapter shall be forwarded by the department with proper identifying detailed report to the state treasurer who shall deposit the administrative fees to the credit of the motor vehicle fund and the excise taxes to the credit of the general fund. Filing fees will be forwarded and reported to the state treasurer by the department as prescribed in RCW 46.01.140.

(10) There is levied and shall be paid and collected annually as part of the fee under subsection (5) of this section, an additional fee equal to the rate specified in section 1502(1) of this act, multiplied by the fee payable under subsection (5) of this section. The proceeds from the additional fee shall be distributed in accordance with section 1502(2) of this act.

Sec. 1512. Section 46.16.310, chapter 12, Laws of 1961 as last amended by section 1, chapter 15, Laws of 1988 and RCW 46.16.310 are each amended to read as follows:

(1) Notwithstanding any other provisions of this chapter, any motor vehicle which is not less than forty years old and is owned and operated primarily as a collector's item shall, upon application and acceptance in the manner and at the time prescribed by the department, be issued a special commemorative license plate in lieu of the regular license plates. Any vehicles to be so licensed must be in good running order. In addition to paying all other initial fees required by law, each applicant shall pay a fee of twenty-five dollars, which fee shall entitle him to one permanent license plate valid for the life of the vehicle. The single plate shall be displayed on the rear of the vehicle.

The registration numbers and special license plates assigned to such motor vehicles shall run in a separate numerical series, commencing with "Horseless Carriage No. 1." The plates shall be of a distinguishing color.

In the event of defacement, loss, or destruction of such special plate, the owner shall apply for a replacement plate in the same manner as prescribed by law for the replacement of regular plates.

All fees collected under this section shall be deposited in the state treasury and credited to the motor vehicle fund.

Sec. 1513. Section 3, chapter 114, Laws of 1971 ex. sess. and RCW 46.16.315 are each amended to read as follows:

(1) Notwithstanding any other provisions of law, any motor vehicle, more than thirty years old, and owned and operated primarily as a collector's item, shall, upon application and acceptance in the manner and at the time prescribed by the department, be authorized in lieu of the regular license plates to carry as the correct license for that vehicle a Washington state license plate or pair of duplicate plates designated for use in the year of the manufacturing of said vehicle, and bearing the date thereof. Any vehicles to be so licensed must be in good running order. In addition to paying all other fees required by law, each applicant shall pay a fee of twenty-five dollars, which fee shall entitle him to have said plate or plates certified as the permanent plate or plates of that vehicle, valid for the life of that vehicle.

All fees collected under this section shall be deposited in the state treasury, and credited to the motor vehicle fund.

Sec. 1514. Section 4, chapter 202, Laws of 1967 as amended by section 141, chapter 158, Laws of 1979 and RCW 46.16.460 are each amended to read as follows:

(1) Upon the payment of a fee of ten dollars therefor, the department of licensing shall issue a temporary motor vehicle license for a motor vehicle in this state for a period of forty-five days when such motor vehicle has been or is being purchased by a nonresident member of the armed forces of the United States and an application, accompanied with prepayment of required fees, for out of state registration has been made by the purchaser.

(2) There is levied and shall be collected from every person liable for license fees under this section as part of the fee imposed hereunder, an additional fee equal to the rate specified in section 1502(1) of this act, multiplied by the fee payable under subsection (1) of this section. The proceeds from the additional fee shall be distributed in accordance with section 1502(2) of this act.

Sec. 1515. Section 7, chapter 231, Laws of 1971 ex. sess. as last amended by section 11, chapter 118, Laws of 1975 1st ex. sess. and RCW 46.16.505 are each amended to read as follows:

(1) It shall be unlawful for a person to operate any vehicle equipped with a camper over and along a public highway of this state without first having obtained and having in full force and effect a current and proper camper license and displaying a camper license number plate therefor as required by law: PROVIDED, HOWEVER, That if a camper is part of the inventory of a manufacturer or dealer and is unoccupied at all times, and a dated demonstration permit, valid for no more than seventy-two hours is carried in the motor vehicle at all times it is operated by any such individual, such camper may be demonstrated if carried upon an appropriately licensed vehicle.

Application for an original camper license shall be made on a form furnished for the purpose by the director. Such application shall be made by the owner of the camper or his duly authorized agent over the signature of such owner or agent, and he shall certify that the statements therein are true and to the best of his knowledge. The application must show:

((~~(1)~~)) (a) Name and address of the owner of the camper;

((~~(2)~~)) (b) Trade name of the camper, model, year, and the serial number thereof;

((~~(3)~~)) (c) Such other information as the director requires.

There shall be paid and collected annually for each registration year or fractional part thereof and upon each camper a license fee or, if the camper was previously licensed in this state and has not been registered in another jurisdiction in the intervening period, a renewal license fee. Such license fee shall be in the sum of four dollars and ninety cents, and such renewal license fee shall be in the sum of three dollars and fifty cents.

Except as otherwise provided for in this section, the provisions of chapter 46.16 RCW shall apply to campers in the same manner as they apply to vehicles.

Sec. 1516. Section 5, chapter 213, Laws of 1979 ex. sess. and RCW 46.16.630 are each amended to read as follows:

(1) Application for registration of a moped shall be made to the department of licensing in such manner and upon such forms as the department shall prescribe, and shall state the name and address of each owner of the moped to be registered, the vehicle identification number, and such other information as the department may require, and shall be accompanied by a registration fee of three dollars. Upon receipt of the application and the application fee, the moped shall be registered and a registration number assigned, which shall be affixed to the moped in the manner as provided by rules adopted by the department. The registration provided in this section shall be valid for a period of twelve months.

Every owner of a moped in this state shall renew the registration, in such manner as the department shall prescribe, for an additional period of twelve months, upon payment of a renewal fee of three dollars.

Any person acquiring a moped already validly registered must, within fifteen days of the acquisition or purchase of the moped, make application to the department for transfer of the registration, and the application shall be accompanied by a transfer fee of one dollar.

The registration fees provided in this section shall be in lieu of any personal property tax or the vehicle excise tax imposed by chapter 82.44 RCW.

The department shall, at the time the registration number is assigned, make available a decal or other identifying device to be displayed on the moped. A fee of one dollar and fifty cents shall be charged for the decal or other identifying device.

The provisions of RCW 46.01.130 and 46.01.140 shall apply to applications for the issuance of registration numbers or renewals or transfers thereof for mopeds as they do to the issuance of vehicle licenses, the appointment of agents, and the collection of application fees. Except for the fee collected pursuant to RCW 46.01.140, all fees collected under this section shall be deposited in the motor vehicle fund.

Sec. 1517. Section 46.44.047, chapter 12, Laws of 1961 as last amended by section 74, chapter 136, Laws of 1979 ex. sess. and RCW 46.44.047 are each amended to read as follows:

(1) A three axle truck tractor and a two axle pole trailer combination engaged in the operation of hauling logs may exceed by not more than six thousand eight hundred pounds the legal gross weight of the combination of vehicles when licensed, as permitted by law, for sixty-eight thousand pounds: PROVIDED, That the distance between the first and last axle of the vehicles in combination shall have a total wheelbase of not less than thirty-seven feet, and the weight upon two axles spaced less than seven feet apart shall not exceed thirty-three thousand six hundred pounds.

Such additional allowances shall be permitted by a special permit to be issued by the department of transportation valid only on state primary or secondary highways authorized by the department and under such rules, regulations, terms, and conditions prescribed by the department. The fee for such special permit shall be fifty dollars for a twelve-month period beginning and ending on April 1st of each calendar year. Permits may be issued at any time, but if issued after July 1st of any year the fee shall be thirty-seven dollars and fifty cents. If issued on or after October 1st the fee shall be twenty-five dollars, and if issued on or after January 1st the fee shall be twelve dollars and fifty cents. A copy of such special permit covering the vehicle involved shall be carried in the cab of the vehicle at all times. Upon the third offense within the duration of the permit for violation of the terms and conditions of the special permit, the special permit shall be canceled. The vehicle covered by such canceled special permit shall not be eligible for a new special permit until thirty days after the cancellation of the special permit issued to said vehicle. The fee for such renewal shall be at the same rate as set forth in this section which covers the original issuance of such special permit. Each special permit shall be assigned to a three-axle truck tractor in combination with a two-axle pole trailer. When the department issues a duplicate permit to replace a lost or destroyed permit and where the department transfers a permit, a fee of five dollars shall be charged for each such duplicate issued or each such transfer.

All fees collected hereinabove shall be deposited with the state treasurer and credited to the motor vehicle fund, except as provided in subsection (2) of this section.

Permits involving city streets or county roads or using city streets or county roads to reach or leave state highways, authorized for permit by the department may be issued by the city or county or counties involved. A fee of five dollars for such city or county permit may be assessed by the city or by the county legislative authority which shall be deposited in the city or county road fund. The special permit provided for herein shall be known as a "log tolerance permit" and shall designate the route or routes to be used, which shall first be approved by the city or county engineer involved. Authorization of additional route or routes may be made at the discretion of the city or county by amending the original permit or by issuing a new permit. Said permits shall be issued on a yearly basis expiring on March 31st of each calendar year. Any person, firm, or corporation who uses any city street or county road for the purpose of transporting logs with weights authorized by state highway log tolerance permits, to reach or leave a state highway route, without first obtaining a city or county permit when required by the city or the county legislative authority shall be subject to the penalties prescribed by RCW 46.44.105. For the purpose of determining gross weight the actual scale weight taken by the officer shall be prima facie evidence of such total gross weight. In the event the gross weight is in excess of the weight permitted by law, the officer may, within his discretion, permit the operator to proceed with his vehicles in combination.

The chief of the state patrol, with the advice of the department, may make reasonable rules and regulations to aid in the enforcement of the provisions of this section.

Sec. 1518. Section 2, chapter 137, Laws of 1965 as last amended by section 5, chapter 351, Laws of 1985 and RCW 46.44.0941 are each amended to read as follows:

(1) The following fees, in addition to the regular license and tonnage fees, shall be paid for all movements under special permit made upon state highways. All funds collected shall be forwarded to the state treasury and shall be deposited in the motor vehicle fund:

!tp1@i2

All overlegal loads, except overweight, single trip!w× !tr$!sc ,0025.00

Continuous operation of overlegal loads having either overwidth or overheight features only, for a period not to exceed thirty days!w× !tr$!sc ,00120.00

Continuous operations of overlegal loads having overlength features only, for a period not to exceed thirty days!w× !tr$!sc ,00110.00

Continuous operation of a combination of vehicles having one trailing unit that exceeds forty-eight feet and is not more than fifty-six feet in length, for a period of one year!w×!tr$100.00

Continuous operation of a combination of vehicles having two trailing units which together exceed sixty feet and are not more than sixty-eight feet in length, for a period of one year!w×!tr$100.00

Continuous operation of a three-axle fixed load vehicle having less than 65,000 pounds gross weight, for a period not to exceed thirty days!w× !tr$!sc ,00150.00

Continuous operation of overlegal loads having nonreducible features not to exceed eighty-five feet in length and fourteen feet in width, for a period of one year!w× !tr$150.00

Continuous operation of farm implements under a permit issued as authorized by RCW 46.44.140 by:

@bv!ix!ir10,1!tp1

((~~(1)~~)) (a) !ih*,2Farmers in the course of farming activities, for any three-month period!w× !tr$!sc ,00110.00

((~~(2)~~)) (b) Farmers in the course of farming activities, for a period not to exceed one year!w× !tr$!sc ,00125.00

((~~(3)~~)) (c) Persons engaged in the business of the sale, repair, or maintenance of such farm implements, for any three-month period!w× !tr$!sc ,00125.00

((~~(4)~~)) (d) Persons engaged in the business of the sale, repair, or maintenance of such farm implements, for a period not to exceed one year!w× !tr$100.00

!te

!sbOverweight Fee Schedule

!tp1

Weight over total registered

gross weight plus additional

gross weight purchased under

RCW 46.44.095 or

46.44.047, or any !trFee!sc ,1per

other statute authorizing the state !trmile!sc ,1on

department of transportation to issue !trstate!sc ,002

annual overweight permits. !trhighways

!tb !tp6,7,9,9,5,6!sc ,0051-!sc ,0015,999 pounds!w× !tj4!tl$!tr((~~.05~~))

!tj5!tr.08

!sc ,0016,000-11,999 pounds!w× !tj4!tl$!tr((~~.10~~))

!tj5!tr.16

12,000-17,999 pounds!w× !tj4!tl$!tr((~~.15~~))

!tj5!tr.24

18,000-23,999 pounds!w× !tj4!tl$!tr((~~.25~~))

!tj5!tr.40

24,000-29,999 pounds!w× !tj4!tl$!tr((~~.35~~))

!tj5!tr.56

30,000-35,999 pounds!w× !tj4!tl$!tr((~~.45~~))

!tj5!tr.72

36,000-41,999 pounds!w× !tj4!tl$!tr((~~.60~~))

!tj5!tr.96

42,000-47,999 pounds!w× !tj4!tl$!tr((~~.75~~))

!tj5!tr1.20

48,000-53,999 pounds!w× !tj4!tl$!tr((~~.90~~))

!tj5!tr1.44

54,000-59,999 pounds!w× !tj4!tl$!tr((~~1.05~~))

!tj5!tr1.68

60,000-65,999 pounds!w× !tj4!tl$!tr((~~1.20~~))

!tj5!tr1.92

66,000-71,999 pounds!w× !tj4!tl$!tr((~~1.45~~))

!tj5!tr2.32

72,000-79,999 pounds!w× !tj4!tl$!tr((~~1.70~~))

!tj5!tr2.72

80,000 pounds or more!w× !tj4!tl$!tr((~~2.00~~))

!tj5!tr3.20

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!ixPROVIDED: ((~~(1)~~)) (i) The minimum fee for any overweight permit shall be $5.00, ((~~(2)~~)) (ii) the fee for issuance of a duplicate permit shall be $5.00, ((~~(3)~~)) (iii) when computing overweight fees that result in an amount less than even dollars the fee shall be carried to the next full dollar if fifty cents or over and shall be reduced to the next full dollar if forty-nine cents or under.

(2) There is levied and shall be paid and collected annually as part of the fee under this section, an additional fee equal to the rate specified in section 1502(1) of this act, multiplied by the fee payable under this section. The proceeds from the additional fee shall be distributed in accordance with section 1502(2) of this act. This subsection shall take effect January 1, 1992, and the additional fees apply for all motor vehicle registrations that expire January 1, 1993, and thereafter.

(3) Of the proceeds collected from the overweight schedule under subsection (1) of this section sixty-two and one-half percent of each fee collected shall be deposited in the motor vehicle fund. The balance or thirty-seven and one-half percent shall be forwarded to the state treasurer to be deposited to the credit of the motor vehicle fund and distributed monthly according to the following method:

(a) Fifteen percent shall be deposited into the transportation improvement account;

(b) The remaining proceeds representing eighty-five percent of the additional fees shall be distributed according to the following formula:

(i) Forty-seven percent in the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130;

(ii) Thirty-four percent to the counties for distribution in accordance with RCW 46.68.120;

(iii) Nineteen percent to the cities and towns, to be distributed in the same proportions and for the same uses as provided for in RCW 46.68.100 (1) and (2).

Sec. 1519. Section 46.44.095, chapter 12, Laws of 1961 as last amended by section 1, chapter 55, Laws of 1988 and RCW 46.44.095 are each amended to read as follows:

(1) When a combination of vehicles has been lawfully licensed to a total gross weight of eighty thousand pounds and when a three or more axle single unit vehicle has been lawfully licensed to a total gross weight of forty thousand pounds pursuant to provisions of RCW 46.44.041, a permit for additional gross weight may be issued by the department of transportation upon the payment of ((~~thirty-seven~~)) sixty dollars ((~~and fifty cents~~)) per year for each one thousand pounds or fraction thereof of such additional gross weight: PROVIDED, That the tire limits specified in RCW 46.44.042 shall apply, and the gross weight on any single axle shall not exceed twenty thousand pounds, and the gross load on any group of axles shall not exceed the limits set forth in RCW 46.44.041: PROVIDED FURTHER, That within the tire limits of RCW 46.44.042, and notwithstanding RCW 46.44.041 and 46.44.091, a permit for an additional six thousand pounds may be purchased for the rear axles of a two-axle garbage truck or eight thousand pounds for the tandem axle of a three axle garbage truck at a rate not to exceed ((~~thirty~~)) forty-eight dollars per thousand. Such additional weight in the case of garbage trucks shall not be valid or permitted on any part of the federal interstate highway system.

The annual additional tonnage permits provided for in this section shall be issued upon such terms and conditions as may be prescribed by the department pursuant to general rules adopted by the transportation commission. Such permits shall entitle the permittee to carry such additional load in an amount and upon highways or sections of highways as may be determined by the department of transportation to be capable of withstanding increased gross load without undue injury to the highway: PROVIDED, That the permits shall not be valid on any highway where the use of such permits would deprive this state of federal funds for highway purposes.

For those vehicles registered under chapter 46.87 RCW, the annual additional tonnage permits provided for in this section may be issued to coincide with the registration year of the base jurisdiction. For those vehicles registered under chapter 46.16 RCW and whose registration has staggered renewal dates, the annual additional tonnage permits may be issued to coincide with the expiration date of the registration. The permits may be purchased at any time, and if they are purchased for less than a full year, the fee shall be one-twelfth of the full fee multiplied by the number of months, including any fraction thereof, covered by the permit. When the department issues a duplicate permit to replace a lost or destroyed permit and where the department transfers a permit from one vehicle to another a fee of five dollars shall be charged for each duplicate issued or each transfer. The department of transportation shall issue permits on a temporary basis for periods not less than five days at one dollar per day for each two thousands pounds or fraction thereof.

The fees levied in RCW 46.44.0941 and this section shall not apply to any vehicles owned and operated by the state of Washington, any county within the state, or any city or town or metropolitan municipal corporation within the state, or by the federal government.

In the case of fleets prorating license fees under the provisions of chapter 46.87 RCW, the fees provided for in this section shall be computed by the department of transportation by applying the proportion of the Washington mileage of the fleet in question to the total mileage of the fleet as reported pursuant to chapter 46.87 RCW to the fees that would be required to purchase the additional weight allowance for all eligible vehicles or combinations of vehicles for which the extra weight allowance is requested.

(2) There is levied and shall be collected from every person liable for fees under this section as part of the fee imposed hereunder, an additional fee equal to the rate specified in section 1502(1) of this act, multiplied by the fee payable under subsection (1) of this section. The proceeds from the additional fee shall be distributed in accordance with section 1502(2) of this act. This subsection shall take effect January 1, 1992, and the additional fees apply for all motor vehicle registrations that expire January 1, 1993, and thereafter.

(3) Of the proceeds collected under subsection (1) of this section sixty-two and one-half percent of each fee collected shall be deposited in the motor vehicle fund. The balance or thirty-seven and one-half percent shall be forwarded to the state treasurer to be deposited to the credit of the motor vehicle fund and distributed monthly according to the following method:

(a) Fifteen percent shall be deposited into the transportation improvement account;

(b) The remaining proceeds representing eighty-five percent of the additional fees shall be distributed according to the following formula:

(i) Forty-seven percent in the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130;

(ii) Thirty-four percent to the counties for distribution in accordance with RCW 46.68.120;

(iii) Nineteen percent to the cities and towns, to be distributed in the same proportions and for the same uses as provided for in RCW 46.68.100 (1) and (2).

Sec. 1520. Section 20, chapter 380, Laws of 1985 and RCW 46.68.030 are each amended to read as follows:

Except for proceeds from fees for vehicle licensing for vehicles paying such fees under RCW 46.16.070 and 46.16.085, and as otherwise provided for in chapter 46.16 RCW, all fees received by the director for vehicle licenses under the provisions of chapter 46.16 RCW shall be forwarded to the state treasurer, accompanied by a proper identifying detailed report, and be by him deposited to the credit of the motor vehicle fund, except that the proceeds from the vehicle license fee and renewal license fee shall be deposited by the state treasurer as hereinafter provided. After July 1, 1981, that portion of each vehicle license fee in excess of $7.40 and that portion of each renewal license fee in excess of $3.40 shall be deposited in the state patrol highway account in the motor vehicle fund, hereby created. Vehicle license fees, renewal license fees, and all other funds in the state patrol highway account shall be for the sole use of the Washington state patrol for highway activities of the Washington state patrol, subject to proper appropriations and reappropriations therefor, for any fiscal biennium after June 30, 1981, and twenty-seven and three-tenths percent of the proceeds from $7.40 of each vehicle license fee and $3.40 of each renewal license fee shall be deposited each biennium in the Puget Sound ferry operations account to partially finance, together with other funds in the account, any budgeted state ferry system maintenance and operating deficit for that biennium. The deficit shall be calculated by subtracting from total costs the sum of all unappropriated funds available to the state ferry system, including revenues from tolls that are adjusted by the transportation commission. Any remaining amounts of vehicle license fees and renewal license fees that are not deposited in the Puget Sound ferry operations account shall be deposited in the motor vehicle fund.

Sec. 1521. Section 46.44.096, chapter 12, Laws of 1961 as last amended by section 56, chapter 7, Laws of 1984 and RCW 46.44.096 are each amended to read as follows:

In determining fees according to RCW 46.44.0941, mileage on state primary and secondary highways shall be determined from the planning survey records of the department of transportation, and the gross weight of the vehicle or vehicles, including load, shall be declared by the applicant. Overweight on which fees shall be paid will be gross loadings in excess of loadings authorized by law or axle loadings in excess of loadings authorized by law, whichever is the greater. Loads which are overweight and oversize shall be charged the fee for the overweight permit without additional fees being assessed for the oversize features.

Except as provided in RCW 46.44.0941(2), fees established in RCW 46.44.0941 shall be paid to the political body issuing the permit if the entire movement is to be confined to roads, streets, or highways for which that political body is responsible. When a movement involves a combination of state highways, county roads, and/or city streets the fee shall be paid to the state department of transportation. When a movement is confined within the city limits of a city or town upon city streets, including routes of state highways on city streets, all fees shall be paid to the city or town involved. A permit will not be required from city or town authorities for a move involving a combination of city or town streets and state highways when the move through a city or town is being confined to the route of the state highway. When a move involves a combination of county roads and city streets the fee shall be paid to the county authorities, but the fee shall not be collected nor the county permit issued until valid permits are presented showing the city or town authorities approve of the move in question. When the movement involves only county roads the fees collected shall be paid to the county involved. Fees established shall be paid to the political body issuing the permit if the entire use of the vehicle during the period covered by the permit shall be confined to the roads, streets, or highways for which that political body is responsible.

If, pursuant to RCW 46.44.090, cities or counties issue additional tonnage permits similar to those provided for issuance by the state department of transportation in RCW 46.44.095, the state department of transportation shall authorize the use of the additional tonnage permits on state highways subject to the following conditions:

(1) The owner of the vehicle covered by such permit shall establish to the satisfaction of the state department of transportation that the primary use of the vehicle is on the streets or roads of the city or county issuing the additional tonnage permit;

(2) That the fees paid for the additional tonnage are not less than those established in RCW 46.44.095;

(3) That the city or county issuing the permit shall allow the use of permits issued by the state pursuant to RCW 46.44.095 on the streets or roads under its jurisdiction;

(4) That all of the provisions of RCW 46.44.042 and 46.44.041 shall be observed.

When the department of transportation is satisfied that the above conditions have been met, the department of transportation, by suitable endorsement on the permit, shall authorize its use on such highways as the department has authorized for such permits pursuant to RCW 46.44.095, and all such use of such highways is subject to whatever rules and regulations the state department of transportation has adopted for the permits.

NEW SECTION. Sec. 1522. Section 1501 of this act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1989.

(2) Sections 1505 (1), (3), and (4), 1509 (1) and (2), 1518 (1) and (3), 1519 (1) and (3), and 1521 of this act shall take effect January 1, 1990. The additional fees apply for all motor vehicle registrations that expire January 1, 1991, and thereafter.

(3) Sections 1502, 1503, 1504, 1505(2), 1506, 1507, 1508, 1509(3), 1510, 1511, 1512, 1513, 1514, 1515, 1516, 1517, 1518(2), 1519(2), and 1520 of this act shall take effect January 1, 1992, and the additional fees apply for all motor vehicle registrations that expire January 1993, and thereafter.

(4) The director of licensing may immediately take such steps as are necessary to ensure that the sections of this act are implemented on their effective dates. The department of licensing shall report the motor fuel vehicle tax rate to the legislature as required in section 1502(1) of this act, no later than March 1, 1991.

NEW SECTION. Sec. 1523. The legislature finds that there is an increasing need for transportation and mobility on a regional basis in order to meet both existing and future demands, including traffic congestion, resulting from factors including economic growth and development within the state, including residential, commercial, and industrial development. The legislature finds that the geographical regions of the state have differing transportation problems, with maintenance and upgrading of the system being of concern to the citizens of the entire state, while congestion is a problem for the citizens of some areas of the state.

The legislature finds that the current financing mechanisms are not adequate to meet Washington's transportation needs and that a more coordinated approach to resolving transportation problems on a regional level is desirable. The legislature intends, with this chapter, to enable local governments to jointly plan and fund regional transportation improvements.

The legislature intends that the authority created by this chapter to create and implement regional transportation programs is to be supplemental to the existing authorities and responsibilities of local governments to regulate, develop, and provide public transportation facilities.

The legislature does not intend that the taxing authority created in section 1527 of this act be used as a substitute for funds used for the responsibilities and obligations of the local governments as of the effective date of this section.

NEW SECTION. Sec. 1524. The following definitions apply to this chapter:

(1) "Public agency" shall mean any agency, political subdivision, or unit of local government of this state including, but not limited to, municipal corporations, quasi-municipal corporations, special purpose districts, and local service districts; any agency of the state government; any agency of the United States; any Indian tribe recognized as such by the federal government; and any political subdivision of another state or country.

(2) "Plan" shall mean a plan for a regional transportation program as established in section 1525 of this act.

(3) "Agreement" shall mean either a local governance service agreement, as authorized by statute, or an interlocal agreement, as provided by chapter 39.34 RCW; except that an interlocal agreement, for the purposes of this chapter, does not require that all parties to the agreement have all powers, privileges, or authorities required to implement this agreement.

(4) "Cities," as used in this chapter, means cities and towns.

NEW SECTION. Sec. 1525. (1) Within four years from the effective date of this section, the counties, cities, metropolitan municipal corporations, public transportation benefit authorities, and other interested parties within a region, including but not limited to the governor's office and the department of transportation, may jointly develop and accept a plan in cooperation with each other, for the purpose of establishing, implementing, and administering a regional transportation program. Such a plan shall include the following features:

(a) A statement of the major transportation-related problems facing the area. This statement must include both a problem statement and an explanation of how the plan is intended to deal with the problems and its consistency with other local and regional transportation plans;

(b) Scope of the region, which must include more than one county or include at least one county and one public agency of another state or country;

(d) Land-use considerations of a transportation system, and how land-use considerations affect such a system;

(e) Financing considerations, including what taxes are proposed to finance the program;

(f) Provisions for the administration of the program including the imposition, administration, and collection of any taxes authorized under section 1527 of this act.

(2) Such plan shall be approved within each participating county when the agency principally responsible for public transportation, the legislative authorities of the counties, the governor, the department of transportation, and the legislative authorities of the cities representing eighty percent of the incorporated population within the county have approved it. If it is not approved, it may be resubmitted to the cities.

NEW SECTION. Sec. 1526. (1) The public agencies within a region in which the plan has been approved are authorized to enter into agreements, as defined by section 1524(3) of this act, for the implementation and administration of the plan.

(2) An agreement for the implementation and administration of a regional transportation plan shall include, in addition to the elements required for the plan and listed in section 1525 of this act:

(a) Provision for the administration of the plan.

(b) Financing for the plan. This shall include provision for the imposition, administration, and collection of the taxes authorized by section 1527 of this act;

(d) The method or methods to be employed in accomplishing the partial or complete termination of the agreement and for disposing of property upon such partial or complete termination;

(e) The method or methods by which other public entities, not party to the original agreement, may joint at a later date;

(f) Other such matters as the parties may deem appropriate.

NEW SECTION. Sec. 1527. (1) In order to finance the administration and implementation of the regional plan, the following taxes are authorized to be imposed pursuant to the plan in the region where a plan has been adopted. Any taxes imposed and collected under the authority of this section shall be used only for the purposes defined in the regional transportation plan. The plan shall be adopted when a tax proposal under the authority of this section has received the approval of the voters. To impose taxes under the authority of this section, such tax proposal shall be submitted to the voters of the counties involved for their approval. The tax proposal shall be submitted to the voters of the county at the next general election, if one is to be held within one hundred eighty days or at a special election held for that purpose not less than ninety nor more than one hundred eighty days after the presentation of the tax proposal. A simple majority of those voting county-wide shall be sufficient to approve the proposal.

(2) The following taxes are authorized to be imposed within the region, upon the approval of the voters.

(a) Motor vehicle fuel tax. The legislative authority of a county which has adopted a regional transportation plan may impose a tax of not more than five cents per gallon on motor vehicle fuel, as the term is defined in RCW 82.36.010, on every sale to a consumer within the county. "Consumer" means any person who purchases, acquires, owns, holds, or uses motor vehicle fuel except for the purpose of resale.

(b) License fees. The legislative authority of a county which has adopted a regional transportation plan may impose an additional fee on the licensing of vehicles within the county, subject to license fees under RCW 46.16.060, in an amount not to exceed five dollars per vehicle.

(c) Motor vehicle excise tax. The legislative authority of a county which has adopted a regional transportation plan may impose a motor vehicle excise tax on the privilege of using in the county any vehicle, except those operated under reciprocal agreements, the provisions of RCW 46.16.160, or dealer's licenses. The annual amount of such excise shall be no more than .5 percent. Such tax shall comply with all applicable rules, regulations, laws, and court decisions regarding motor vehicle excise taxes as imposed by the state under chapter 82.44 RCW.

(d) Commuter tax. The legislative authority of a county which has adopted a regional transportation plan to impose a commuter tax, under the provisions of section 1410 of this act. Such tax may not exceed four dollars per full-time employee per month.

(e) Income tax. The legislative authority of a county which has adopted a regional transportation plan may impose a tax on the personal income of residents in the county, as defined in Title 82A RCW (sections 401 through 1109 of this act).

(i) Any tax so imposed shall be calculated as a percentage of the state income tax as set forth in Title 82A RCW (sections 401 through 1109 of this act). The percentage cannot exceed twenty-five percent of the state income tax imposed by Title 82A RCW (sections 401 through 1109 of this act).

(ii) The legislative authority of a county imposing a tax under this section shall contract with the state department of revenue for the administration and collection of the tax. The department of revenue shall deduct a percentage amount, as provided by contract, not to exceed one percent of the taxes collected for administration and collection expenses incurred by the department. The remainder of any portion of any tax authorized by this chapter which is collected by the department of revenue shall be deposited by the state department of revenue in the local income tax account hereby created in the state treasury.

(iii) Moneys in the local income tax account may be spent only for distribution to counties and/or cities imposing a local income tax, and the state treasurer shall distribute those amounts collected on behalf of each county monthly, less the deduction provided for in subsection (ii) of this subsection. The state treasurer shall make the distribution under this section without appropriation.

(iv) Taxes imposed under this section shall comply with all applicable rules, regulations, laws, and court decisions regarding income taxes as imposed by the state under Title 82A RCW (sections 401 through 1109 of this act). The department of revenue is authorized to administer the tax imposed by this section in the manner provided in Title 82A RCW (sections 401 through 1109 of this act).

(3) The legislative authority of a county which has adopted a regional transportation plan is authorized to receive private contributions for the financing of the regional transportation plan.

(4) (a) Any taxes imposed under the authority of this section shall be administered, collected, and distributed according to the agreement specified in section 1526 of this act, unless otherwise specified in this section.

(b) The taxes authorized in subsection (2)(a) and (b) of this section shall not be collected by the state of Washington.

(5) The taxes authorized by this section may only be submitted to the voters if the total amount authorized under this section does not exceed eighty percent of the proceeds of all taxes if authorized and imposed at the allowed maximums.

NEW SECTION. Sec. 1528. The governor may create a regional transportation authority for any county or group of counties that has not either submitted a proposal to the voters or has not had such proposal approved within four years of the effective date of this section. Such authority shall consist of eleven members, appointed by the governor, selected from both elected officials and citizens of the region. This authority shall be authorized to develop a regional plan. The tax proposal required to finance the plan shall be presented to the voters as required by section 1527 of this act. Such plan shall contain all of the components required in section 1526 of this act. If the tax proposal receives the approval of a majority of the voters in such counties or county, it shall be implemented with the authorities provided in sections 1526 and 1527 of this act.

NEW SECTION. Sec. 1529. (1) Any county may, by ordinance or resolution, authorize the taxes listed in section 1527 of this act to be imposed by that county for a period of not more than four years following the effective date of this section: PROVIDED, That all tax authority under this section shall expire upon the adoption of a regional transportation plan. Any taxes or fees imposed under this section authorized by the county must be submitted to the voters of the county at the next general election, if one is to be held within one hundred eighty days or at a special election held for that purpose not less than ninety nor more than one hundred eighty days after the presentation of the plan. A simple majority of those voting county-wide shall be sufficient to approve the tax. No such resolution or ordinance may take effect less than thirty days after the date of such election.

(2) The legislative authority of a county may form local improvement districts within the county, under the provisions of RCW 36.94.230, for transportation purposes.

(3) The taxes authorized by this section may only be submitted to the voters if the amount authorized under this section for each tax does not exceed forty percent of the allowed maximum rate under section 1527 of this act.

NEW SECTION. Sec. 1530. Sections 1523 through 1529 of this act shall constitute a new chapter in Title 81 RCW.

Sec. 1531. Section 4, chapter 239, Laws of 1967 as last amended by section 2, chapter 308, Laws of 1981 and RCW 39.34.030 are each amended to read as follows:

(1) Any power or powers, privileges or authority exercised or capable of exercise by a public agency of this state may be exercised and enjoyed jointly with any other public agency of this state having the power or powers, privilege or authority, and jointly with any public agency of any other state or of the United States to the extent that laws of such other state or of the United States permit such joint exercise or enjoyment. Any agency of the state government when acting jointly with any public agency may exercise and enjoy all of the powers, privileges and authority conferred by this chapter upon a public agency. Any agreement made pursuant to this chapter for the purposes of section 1523 of this act does not require that all parties to the agreement be able to exercise all powers encompassed within the agreement, and such powers are not granted to parties not otherwise possessing them by virtue of such agreement.

(2) Any two or more public agencies may enter into agreements with one another for joint or cooperative action pursuant to the provisions of this chapter: PROVIDED, That any such joint or cooperative action by public agencies which are educational service districts and/or school districts shall comply with the provisions of RCW 28A.58.107, as now or hereafter amended. Appropriate action by ordinance, resolution or otherwise pursuant to law of the governing bodies of the participating public agencies shall be necessary before any such agreement may enter into force.

(3) Any such agreement shall specify the following:

(a) Its duration;

(b) The precise organization, composition and nature of any separate legal or administrative entity created thereby together with the powers delegated thereto, provided such entity may be legally created. Such entity may include a nonprofit corporation whose membership is limited solely to the participating public agencies and the funds of any such corporation shall be subject to audit in the manner provided by law for the auditing of public funds;

(d) The manner of financing the joint or cooperative undertaking and of establishing and maintaining a budget therefor;

(e) The permissible method or methods to be employed in accomplishing the partial or complete termination of the agreement and for disposing of property upon such partial or complete termination;

(f) Any other necessary and proper matters.

(4) In the event that the agreement does not establish a separate legal entity to conduct the joint or cooperative undertaking, the agreement shall, in addition to items (a), (c), (d), (e) and (f) enumerated in subdivision (3) hereof, contain the following:

(a) Provision for an administrator or a joint board responsible for administering the joint or cooperative undertaking. In the case of a joint board, public agencies party to the agreement shall be represented;

(b) The manner of acquiring, holding and disposing of real and personal property used in the joint or cooperative undertaking. Any joint board is authorized to establish a special fund with a state, county, city, or district treasurer servicing an involved public agency designated "Operating fund of .......... joint board".

(5) No agreement made pursuant to this chapter shall relieve any public agency of any obligation or responsibility imposed upon it by law except that to the extent of actual and timely performance thereof by a joint board or other legal or administrative entity created by an agreement made hereunder, said performance may be offered in satisfaction of the obligation or responsibility.

(6) Financing of joint projects by agreement shall be as provided by law.

Sec. 1532. Section 82.36.440, chapter 15, Laws of 1961 as amended by section 5, chapter 181, Laws of 1979 ex. sess. and RCW 82.36.440 are each amended to read as follows:

The tax herein levied is in lieu of any excise, privilege, or occupational tax upon the business of manufacturing, selling, or distributing motor vehicle fuel, and no city, town, county, township or other subdivision or municipal corporation of the state shall levy or collect any excise tax upon or measured by the sale, receipt, distribution, or use of motor vehicle fuel, except as provided in sections 1527 and 1529 of this act: PROVIDED, That nothing in this section or chapter 82.36 RCW shall be construed to prohibit in any manner the imposition of a city tax upon motor vehicle fuel pursuant to RCW 82.39.010.

Sec. 1533. Section 29, chapter 175, Laws of 1971 ex. sess. as amended by section 6, chapter 181, Laws of 1979 ex. sess. and RCW 82.38.280 are each amended to read as follows:

The tax herein levied is in lieu of any excise, privilege, or occupational tax upon the business of manufacturing, selling, or distributing special fuel, and no city, town, county, township or other subdivision or municipal corporation of the state shall levy or collect any excise tax upon or measured by the sale, receipt, distribution, or use of special fuel, except as provided in sections 1527 and 1529 of this act: PROVIDED, That nothing in this section or chapter 82.38 RCW shall be construed to prohibit in any manner the imposition of a city tax upon special fuel pursuant to RCW 82.39.010.

NEW SECTION. Sec. 1534. 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. 1535. Captions as used in this act constitute no part of the law.

NEW SECTION. Sec. 1536. This act, with the exception of section 1501 of this act, shall take effect on January 1, 1990, if the proposed amendment to Article VII of the state Constitution authorizing an income tax and requiring a balanced tax system (HJR ...) is validly submitted and is approved and ratified by the voters at a general election held in November 1989. If the proposed amendment is not so approved and ratified, this act shall be null and void in its entirety.