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FIFTY EIGHTH LEGISLATURE - REGULAR SESSION

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EIGHTEENTH DAY

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House Chamber, Olympia, Thursday, January 29, 2004

The House was called to order at 9:55 a.m. by the Speaker (Representative Hatfield presiding).

Reading of the Journal of the previous day was dispensed with and it was ordered to stand approved.

RESOLUTION

HOUSE RESOLUTION NO. 2004-4682, By Representatives Quall, Talcott and Hunter

WHEREAS, In the summer of 1953, the co-founders of Dick's Drive-in Restaurant chain created a partnership to build the first Dick's Drive-in on N.E. 45th in Seattle's Wallingford District; and

WHEREAS, Dick Spady was one of the co-founders of Dick's Drive-in Restaurant; and

WHEREAS, The original Dick's Drive-in Restaurant in Wallingford still operates today; and

WHEREAS, Dick's Drive-in Restaurant now operates five locations throughout Seattle; and

WHEREAS, Dick's Drive-in Restaurant chain is celebrating 50 years of business since its founding on January 28, 1954; and

WHEREAS, The State of Washington is enhanced greatly by the innovative and entrepreneurial spirit that helped to start Dick's Drive-in Restaurant; and

WHEREAS, The success of the co-founders of Dick's Drive-in Restaurant inspires countless others to replicate their success through starting small businesses of their own; and

WHEREAS, Dick's helps to build the Washington economy through providing good jobs that provide employees with health insurance benefits; and

WHEREAS, Dick's invests in the future of Washington State in helping to provide scholarship funds for its employees; and

WHEREAS, Dick's helps to care for some of Washington's most vulnerable residents in contributing matching donations to multiple organizations that provide services to greater Seattle's homeless population; and

WHEREAS, Dick Spady serves as an example to all Washingtonians through his continued civic engagement and involvement efforts;

NOW, THEREFORE, BE IT RESOLVED, That the Washington State House of Representatives does hereby celebrate these achievements, and wishes the "Dick's family" a happy 50th anniversary.

HOUSE RESOLUTION NO. 4682 was adopted.

INTRODUCTION & FIRST READING

HB 3138 by Representative McIntire

AN ACT Relating to audit assessments.

Referred to Committee on Finance.

HB 3139 by Representative McIntire

AN ACT Relating to property taxation.

Referred to Committee on Finance.

HB 3140 by Representatives Linville and Chandler; by request of Governor Locke

AN ACT Relating to the establishment of a water court; amending RCW 2.08.010, 43.03.012, 90.03.110, 90.03.120, 90.03.160, 90.03.180, 90.03.190, 90.03.210, 90.03.230, 34.05.514, 34.05.518, 34.05.570, 34.05.578, and 34.05.588; reenacting and amending RCW 34.05.526; adding a new chapter to Title 2 RCW; creating new sections; and providing a contingent effective date.

Referred to Committee on Judiciary.

HB 3141 by Representative Morris

AN ACT Relating to mitigating carbon dioxide emissions resulting from fossil-fueled electrical generation; and creating a new section.

Referred to Committee on Technology, Telecommunications & Energy.

HB 3142 by Representative Sommers; by request of Office of Financial Management

AN ACT Relating to eliminating selected detail from the governor's budget submittal; and amending RCW 43.88.030.

Referred to Committee on Appropriations.

HB 3143 by Representatives Morris, Nixon, Hudgins, Sullivan and Chase

AN ACT Relating to renewable energy and energy efficiency; and creating a new section.

Referred to Committee on Technology, Telecommunications & Energy.

HB 3144 by Representatives Veloria, Wallace, Morrell, McDonald, McCoy, Chase and Hudgins

AN ACT Relating to business and occupation taxation of small businesses; and adding a new section to chapter 82.04 RCW.

Referred to Committee on Trade & Economic Development.

HB 3145 by Representatives Veloria, Wallace, Morrell, McDonald, McCoy, Chase and Hudgins

AN ACT Relating to tax relief for the construction of manufacturing facilities; amending RCW 82.04.050, 82.04.190, 82.04.280, and 82.04.280; providing an effective date; providing a contingent effective date; and providing a contingent expiration date.

Referred to Committee on Trade & Economic Development.

HB 3146 by Representatives Veloria, Wallace, Morrell, McDonald, McCoy, Chase and Hudgins

AN ACT Relating to a business and occupation tax credit for small business; and adding a new section to chapter 82.04 RCW.

Referred to Committee on Trade & Economic Development.

HB 3147 by Representatives Veloria, Wallace, Morrell, McDonald, McCoy, Chase and Hudgins

AN ACT Relating to a small business tax credit; and adding a new section to chapter 82.04 RCW.

Referred to Committee on Trade & Economic Development.

HB 3148 by Representatives Ruderman, Tom, Hunter and Jarrett

AN ACT Relating to county property tax levies for school purposes; amending RCW 29A.36.210, 84.52.043, and 84.55.005; adding a new section to chapter 84.52 RCW; creating a new section; and providing an effective date.

Referred to Committee on Education.

HB 3149 by Representative Sommers; by request of Governor Locke

AN ACT Relating to governing boards of institutions of higher education; and adding a new section to chapter 28B.10 RCW.

Referred to Committee on Higher Education.

HB 3150 by Representatives Cody, McDermott, Pettigrew, Veloria, Santos, Dickerson, Chase, Skinner and Hudgins

AN ACT Relating to the Americans with Disabilities Act, Section 504 of the Rehabilitation Act of 1973, and the Fair Housing Act Amendments guidelines for compliance in construction, rehabilitation, and substantial alteration of buildings using public funding from any source; amending RCW 43.185.060; and adding a new section to chapter 43.185 RCW.

Referred to Committee on Trade & Economic Development.

HJR 4219 by Representatives Linville and Chandler; by request of Governor Locke

Amending the Constitution to authorize a water court.

Referred to Committee on Judiciary.

There being no objection, the bills and resolution listed on the day's introduction sheet under the fourth order of business were referred to the committees so designated.

REPORTS OF STANDING COMMITTEES

January 26, 2004

ESHB 1960 Prime Sponsor, Committee On Transportation: Governing regional transportation. (REVISED FOR ENGROSSED: Studying regional transportation governance.) Reported by Committee on Transportation

MAJORITY recommendation: The second substitute bill be substituted therefor and the second substitute bill do pass. Signed by Representatives Murray, Chairman; Rockefeller, Vice Chairman; Ericksen, Ranking Minority Member; Jarrett, Assistant Ranking Minority Member; Bailey; Campbell; Clibborn; Cooper; Dickerson; Edwards; Flannigan; Hatfield; Hudgins; Lovick; Morris; Nixon; Rodne; Romero; Shabro; Simpson, G.; Sullivan; Wallace; Wood and Woods.

MINORITY recommendation: Do not pass. Signed by Representatives Armstrong; Hankins; Kristiansen; Mielke and Schindler.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2307 Prime Sponsor, Representative Schoesler: Concerning appointment to a water conservancy board. Reported by Committee on Agriculture & Natural Resources

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Linville, Chairman; Rockefeller, Vice Chairman; Schoesler, Ranking Minority Member; Holmquist, Assistant Ranking Minority Member; Chandler; Eickmeyer; Grant; Hunt; Kristiansen; McDermott; Orcutt and Sump.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2318 Prime Sponsor, Representative Orcutt: Concerning the verification of a landowner as a small forest landowner. Reported by Committee on Agriculture & Natural Resources

MAJORITY recommendation: Do pass. Signed by Representatives Linville, Chairman; Rockefeller, Vice Chairman; Schoesler, Ranking Minority Member; Holmquist, Assistant Ranking Minority Member; Chandler; Eickmeyer; Grant; Hunt; Kristiansen; McDermott; Orcutt and Sump.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2321 Prime Sponsor, Representative Linville: Clarifying the definitions of certain natural resources terms. Reported by Committee on Agriculture & Natural Resources

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2328 Prime Sponsor, Representative Dickerson: Changing provisions relating to registration of sex and kidnapping offenders who are students. Reported by Committee on Juvenile Justice & Family Law

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Dickerson, Chairman; Pettigrew, Vice Chairman; Delvin, Ranking Minority Member; Carrell; Hinkle; Lovick and Upthegrove.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2329 Prime Sponsor, Representative Dickerson: Revising provisions relating to mental health treatment for minors. Reported by Committee on Juvenile Justice & Family Law

MINORITY recommendation: Do not pass. Signed by Representatives Carrell.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2366 Prime Sponsor, Representative Linville: Promoting Washington state agriculture. Reported by Committee on Agriculture & Natural Resources

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2377 Prime Sponsor, Representative Lovick: Reorganizing provisions concerning mental health services for minors. Reported by Committee on Juvenile Justice & Family Law

MAJORITY recommendation: Do pass. Signed by Representatives Dickerson, Chairman; Pettigrew, Vice Chairman; Delvin, Ranking Minority Member; Carrell; Hinkle; Lovick and Upthegrove.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2392 Prime Sponsor, Representative Lantz: Requiring law enforcement agencies to adopt policies concerning domestic violence by sworn employees. Reported by Committee on Juvenile Justice & Family Law

MINORITY recommendation: Do not pass. Signed by Representatives Carrell and Hinkle.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2397 Prime Sponsor, Representative Upthegrove: Imposing penalties against convicted domestic violence offenders to pay for domestic violence programs. Reported by Committee on Juvenile Justice & Family Law

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2398 Prime Sponsor, Representative Upthegrove: Revising provisions relating to providing notice of a modification or termination of a protection order. Reported by Committee on Juvenile Justice & Family Law

MAJORITY recommendation: Do pass. Signed by Representatives Dickerson, Chairman; Pettigrew, Vice Chairman; Delvin, Ranking Minority Member; Carrell; Hinkle; Lovick and Upthegrove.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2420 Prime Sponsor, Representative Hunter: Revising provisions for counting votes on ballots for write-in candidates. Reported by Committee on State Government

MAJORITY recommendation: Do pass. Signed by Representatives Haigh, Chairman; Miloscia, Vice Chairman; Armstrong, Ranking Minority Member; Shabro, Assistant Ranking Minority Member; Hunt; McDermott; Nixon; Tom and Wallace.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2433 Prime Sponsor, Representative Hatfield: Changing provisions relating to a candidate appearing on a ballot for two offices. Reported by Committee on State Government

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Haigh, Chairman; Miloscia, Vice Chairman; Armstrong, Ranking Minority Member; Shabro, Assistant Ranking Minority Member; Hunt; McDermott; Nixon; Tom and Wallace.

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2481 Prime Sponsor, Representative Dickerson: Increasing marriage license fees to fund domestic violence programs. Reported by Committee on Juvenile Justice & Family Law

MINORITY recommendation: Do not pass. Signed by Representatives Carrell and Hinkle.

Referred to Committee on Appropriations.

January 28, 2004

HB 2484 Prime Sponsor, Representative Conway: Modifying the public accountancy act. Reported by Committee on Commerce & Labor

MAJORITY recommendation: Do pass. Signed by Representatives Conway, Chairman; McMorris, Ranking Minority Member; Condotta, Assistant Ranking Minority Member; Crouse; Holmquist; Hudgins; Kenney and McCoy.

Passed to Committee on Rules for second reading.

January 26, 2004

HB 2531 Prime Sponsor, Representative Murray: Expanding authority for regional transportation investment districts. Reported by Committee on Transportation

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Murray, Chairman; Rockefeller, Vice Chairman; Ericksen, Ranking Minority Member; Clibborn; Cooper; Dickerson; Edwards; Flannigan; Hatfield; Hudgins; Lovick; Morris; Romero; Simpson, G.; Sullivan; Wallace and Wood.

MINORITY recommendation: Do not pass. Signed by Representatives Jarrett, Assistant Ranking Minority Member; Armstrong; Bailey; Campbell; Hankins; Kristiansen; Mielke; Nixon; Rodne; Schindler; Shabro and Woods.

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2685 Prime Sponsor, Representative Hudgins: Revising provisions relating to acceptable forms of identification for liquor sales. Reported by Committee on Commerce & Labor

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Conway, Chairman; McMorris, Ranking Minority Member; Condotta, Assistant Ranking Minority Member; Crouse; Holmquist; Hudgins; Kenney and McCoy.

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2686 Prime Sponsor, Representative Hudgins: Authorizing inspection of records regarding transportation of cigarettes. Reported by Committee on Commerce & Labor

Passed to Committee on Rules for second reading.

January 28, 2004

HB 2688 Prime Sponsor, Representative Wood: Authorizing the state lottery to conduct criminal history background checks. Reported by Committee on Commerce & Labor

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2742 Prime Sponsor, Representative Haigh: Incorporating the 2003 changes into Title 29A RCW. Reported by Committee on State Government

Passed to Committee on Rules for second reading.

January 27, 2004

HB 2743 Prime Sponsor, Representative Haigh: Consolidating and clarifying election-related crimes. Reported by Committee on State Government

Passed to Committee on Rules for second reading.

January 27, 2004

HJM 4032 Prime Sponsor, Representative Eickmeyer: Urging Congress to fully restore funding for the manufacturing extension partnership program. Reported by Committee on Trade & Economic Development

MAJORITY recommendation: The substitute bill be substituted therefor and the substitute bill do pass. Signed by Representatives Veloria, Chairman; Eickmeyer, Vice Chairman; Skinner, Ranking Minority Member; McDonald, Assistant Ranking Minority Member; Blake; Chase; Condotta; Kristiansen; McCoy; Ormsby; Priest and Rodne.

Passed to Committee on Rules for second reading.

There being no objection, the bills and memorial listed on the day's committee reports sheet under the fifth order of business were referred to the committees so designated.

The Speaker placed the House at ease.

The House was called to order at 6:00 p.m. by the Speaker (Representative Lovick presiding). The Clerk called the roll and a quorum was present.

The Speaker assumed the chair.

SECOND READING

HOUSE BILL NO. 2044, By Representatives Hunter, Tom, Jarrett, Clibborn, Fromhold and Ruderman

Changing the school district levy base calculation.

The bill was read the second time.

With the consent of the House, amendments (737), (739), (738) and (741) were withdrawn.

Representative Fromhold moved the adoption of the following amendment (752):

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 28A.500.020 and 1999 c 317 s 2 are each amended to read as follows:

(1) Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(a) "Prior tax collection year" means the year immediately preceding the year in which the local effort assistance shall be allocated.

(b) "Statewide average twelve percent levy rate" means twelve percent of the total levy bases as defined in RCW 84.52.0531(3) and (4) summed for all school districts, and divided by the total assessed valuation for excess levy purposes in the prior tax collection year for all districts as adjusted to one hundred percent by the county indicated ratio established in RCW 84.48.075.

(c) The "district's twelve percent levy amount" means the school district's maximum levy authority after transfers determined under RCW 84.52.0531(2) (a) through (c) divided by the district's maximum levy percentage determined under RCW 84.52.0531(((4))) (5) multiplied by twelve percent.

(d) The "district's twelve percent levy rate" means the district's twelve percent levy amount divided by the district's assessed valuation for excess levy purposes for the prior tax collection year as adjusted to one hundred percent by the county indicated ratio.

(e) "Districts eligible for local effort assistance" means those districts with a twelve percent levy rate that exceeds the statewide average twelve percent levy rate.

(2) Unless otherwise stated all rates, percents, and amounts are for the calendar year for which local effort assistance is being calculated under this chapter.

Sec. 2. RCW 84.52.0531 and 1997 c 259 s 2 are each amended to read as follows:

The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of RCW 84.52.053 shall be determined as follows:

(1) For excess levies for collection in calendar year 1997, the maximum dollar amount shall be calculated pursuant to the laws and rules in effect in November 1996.

(2) For excess levies for collection in calendar year 1998 and thereafter, the maximum dollar amount shall be the sum of (a) plus or minus (b) and (c) of this subsection minus (d) of this subsection:

(a) The district's levy base as defined in subsections (3) and (4) of this section multiplied by the district's maximum levy percentage as defined in subsection (((4))) (5) of this section;

(b) For districts in a high/nonhigh relationship, the high school district's maximum levy amount shall be reduced and the nonhigh school district's maximum levy amount shall be increased by an amount equal to the estimated amount of the nonhigh payment due to the high school district under RCW 28A.545.030(3) and 28A.545.050 for the school year commencing the year of the levy;

(c) For districts in an interdistrict cooperative agreement, the nonresident school district's maximum levy amount shall be reduced and the resident school district's maximum levy amount shall be increased by an amount equal to the per pupil basic education allocation included in the nonresident district's levy base under subsection (3) of this section multiplied by:

(i) The number of full-time equivalent students served from the resident district in the prior school year; multiplied by:

(ii) The serving district's maximum levy percentage determined under subsection (((4))) (5) of this section; increased by:

(iii) The percent increase per full-time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year divided by fifty-five percent;

(d) The district's maximum levy amount shall be reduced by the maximum amount of state matching funds for which the district is eligible under RCW 28A.500.010.

(3) For excess levies for collection in calendar year 1998 and thereafter, a district's levy base shall be the sum of allocations in (a) through (c) of this subsection received by the district for the prior school year, including allocations for compensation increases, plus the sum of such allocations multiplied by the percent increase per full time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year and divided by fifty-five percent. A district's levy base shall not include local school district property tax levies or other local revenues, or state and federal allocations not identified in (a) through (c) of this subsection.

(a) The district's basic education allocation as determined pursuant to RCW 28A.150.250, 28A.150.260, and 28A.150.350;

(b) State and federal categorical allocations for the following programs:

(i) Pupil transportation;

(ii) Special education;

(iii) Education of highly capable students;

(iv) Compensatory education, including but not limited to learning assistance, migrant education, Indian education, refugee programs, and bilingual education;

(v) Food services; and

(vi) Statewide block grant programs; and

(c) Any other federal allocations for elementary and secondary school programs, including direct grants, other than federal impact aid funds and allocations in lieu of taxes.

(4) For excess levies for collection in calendar years 2005 through 2008, in addition to the allocations included under subsection (3)(a) through (c) of this section, a district's levy base shall also include the difference between the state allocations under subsection (3)(a) and (b) of this section and the allocations the district would have received if (a) the district's base salary for certificated instructional staff for purposes of determining state basic education allocations had been the same as the highest base salary for that school year on the supporting LEAP salary document referenced in the omnibus appropriations act; and (b) the district's salaries for certificated administrators and classified staff for purposes of determining state basic education allocations had been the same as the highest certificated administrator and classified staff salaries for that school year on the supporting LEAP salary document referenced in the omnibus appropriations act. For calendar year 2005, the additional amounts provided under this subsection shall not be used in the calculation of levy base for the purpose of determining local effort assistance allocations under chapter 28A.500 RCW.

(5) A district's maximum levy percentage shall be twenty-two percent in 1998 and twenty-four percent in 1999 and every year thereafter; plus, for qualifying districts, the grandfathered percentage determined as follows:

(a) For 1997, the difference between the district's 1993 maximum levy percentage and twenty percent; and

(b) For 1998 and thereafter, the percentage calculated as follows:

(i) Multiply the grandfathered percentage for the prior year times the district's levy base determined under subsection (3) of this section;

(ii) Reduce the result of (b)(i) of this subsection by any levy reduction funds as defined in subsection (((5))) (6) of this section that are to be allocated to the district for the current school year;

(iii) Divide the result of (b)(ii) of this subsection by the district's levy base; and

(iv) Take the greater of zero or the percentage calculated in (b)(iii) of this subsection.

(((5))) (6) "Levy reduction funds" shall mean increases in state funds from the prior school year for programs included under subsections (3) and (4) of this section: (a) That are not attributable to enrollment changes, compensation increases, or inflationary adjustments; and (b) that are or were specifically identified as levy reduction funds in the appropriations act. If levy reduction funds are dependent on formula factors which would not be finalized until after the start of the current school year, the superintendent of public instruction shall estimate the total amount of levy reduction funds by using prior school year data in place of current school year data. Levy reduction funds shall not include moneys received by school districts from cities or counties.

(((6))) (7) For the purposes of this section, "prior school year" means the most recent school year completed prior to the year in which the levies are to be collected.

(((7))) (8) For the purposes of this section, "current school year" means the year immediately following the prior school year.

(((8))) (9) Funds collected from transportation vehicle fund tax levies shall not be subject to the levy limitations in this section.

(((9))) (10) The superintendent of public instruction shall develop rules and regulations and inform school districts of the pertinent data necessary to carry out the provisions of this section.

Sec. 3. Section 1 of this act takes effect January 1, 2006."

Correct the title.

Representative Alexander moved the adoption of the following amendment (755) to amendment (752):

On page 4, beginning on line 7 of the striking amendment, strike everything after "act." through "RCW." on line 10.

On page 5, line 16, strike everything after "Sec. 3." and insert "This act takes effect January 1, 2005."

Representatives Alexander, Talcott and Anderson spoke in favor of adoption of the amendment to the amendment.

Representatives Fromhold spoke against the adoption of the amendment to the amendment.

An electronic roll call vote was demanded and the demand was sustained.

ROLL CALL

The Clerk called the roll on adoption of amendment (755) to House Bill No. 2044 and the amendment was not adopted by the following vote: Yeas - 44, Nays - 54, Absent - 0, Excused - 0.

Voting yea: Representatives Ahern, Alexander, Anderson, Armstrong, Bailey, Benson, Boldt, Buck, Bush, Cairnes, Campbell, Carrell, Chandler, Clements, Condotta, Cox, Crouse, DeBolt, Delvin, Ericksen, Hankins, Hinkle, Holmquist, Kristiansen, Mastin, McDonald, McMahan, McMorris, Mielke, Newhouse, Nixon, Orcutt, Pearson, Priest, Roach, Rodne, Schindler, Schoesler, Sehlin, Shabro, Skinner, Sump, Talcott and Woods - 44.

Voting nay: Representatives Blake, Chase, Clibborn, Cody, Conway, Cooper, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hatfield, Hudgins, Hunt, Hunter, Jarrett, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, O'Brien, Ormsby, Pettigrew, Quall, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Tom, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 54.

Representative Anderson moved the adoption of amendment (753):

Strike everything after line 2 of the striking amendment and insert the following:

"Sec. I. RCW 28A.400.205 and 2003 1st sp.s. c 20 s 1 are each amended to read as follows:

(1) School district employees shall be provided an annual salary cost-of-living increase in accordance with this section.

(a) The cost-of-living increase shall be calculated by applying the rate of the yearly increase in the cost-of-living index to any state-funded salary base used in state funding formulas for teachers and other school district employees. Beginning with the 2001-02 school year, and for each subsequent school year, except for the 2003-04 and 2004-05 school years, each school district shall be provided a cost-of-living allocation sufficient to grant this cost-of-living increase, except as provided in subsection (3) of this section.

(b) A school district shall distribute its cost-of-living allocation for salaries and salary-related benefits in accordance with the district's salary schedules, collective bargaining agreements, and compensation policies. No later than the end of the school year, each school district shall certify to the superintendent of public instruction that it has spent funds provided for cost-of-living increases on salaries and salary-related benefits.

(c) Any funded cost-of-living increase shall be included in the salary base used to determine cost-of-living increases for school employees in subsequent years, except as provided in subsection (3) of this section. For teachers and other certificated instructional staff, the rate of the annual cost-of-living increase funded for certificated instructional staff shall be applied to the base salary used with the statewide salary allocation schedule established under RCW 28A.150.410 and to any other salary models used to recognize school district personnel costs.

(2) For the purposes of this section, "cost-of-living index" means, for any school year, the previous calendar year's annual average consumer price index, using the official current base, compiled by the bureau of labor statistics, United States department of labor for the state of Washington. If the bureau of labor statistics develops more than one consumer price index for areas within the state, the index covering the greatest number of people, covering areas exclusively within the boundaries of the state, and including all items shall be used for the cost-of-living index in this section.

(3) For districts that have historically received teacher salary allocations in excess of the statewide salary schedule included in the appropriations act pursuant to RCW 28A.150.410, the legislature shall decline to provide a cost-of-living increase allocation, or shall provide a cost-of-living increase allocation at a lower rate than otherwise required by this section, in order to bring these districts' general apportionment allocations down to or closer to the statewide salary schedule.

Sec. II. RCW 28A.500.020 and 1999 c 317 s 2 are each amended to read as follows:

(1) Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(a) "Prior tax collection year" means the year immediately preceding the year in which the local effort assistance shall be allocated.

(b) "Statewide average ((twelve)) fifteen percent levy rate" means ((twelve)) fifteen percent of the total levy bases as defined in RCW 84.52.0531(3) summed for all school districts, and divided by the total assessed valuation for excess levy purposes in the prior tax collection year for all districts as adjusted to one hundred percent by the county indicated ratio established in RCW 84.48.075.

(c) The "district's ((twelve)) fifteen percent levy amount" means the school district's maximum levy authority after transfers determined under RCW 84.52.0531(2) (a) through (c) divided by ((the district's maximum levy percentage determined under RCW 84.52.0531(4))) thirty percent, multiplied by ((twelve)) fifteen percent.

(d) The "district's ((twelve)) fifteen percent levy rate" means the district's ((twelve)) fifteen percent levy amount divided by the district's assessed valuation for excess levy purposes for the prior tax collection year as adjusted to one hundred percent by the county indicated ratio.

(e) "Districts eligible for local effort assistance" means those districts with a ((twelve)) fifteen percent levy rate that exceeds the statewide average ((twelve)) fifteen percent levy rate.

(2) Unless otherwise stated all rates, percents, and amounts are for the calendar year for which local effort assistance is being calculated under this chapter.

Sec. III. RCW 28A.500.030 and 2003 1st sp.s. c 25 s 912 are each amended to read as follows:

Allocation of state matching funds to eligible districts for local effort assistance shall be determined as follows:

(1) Funds raised by the district through maintenance and operation levies shall be matched with state funds using the following ratio of state funds to levy funds:

(a) The difference between the district's ((twelve)) fifteen percent levy rate and the statewide average ((twelve)) fifteen percent levy rate; to

(b) The statewide average ((twelve)) fifteen percent levy rate.

(2) The maximum amount of state matching funds for districts eligible for local effort assistance shall be the district's ((twelve)) fifteen percent levy amount, multiplied by the following percentage:

(a) The difference between the district's ((twelve)) fifteen percent levy rate and the statewide average ((twelve)) fifteen percent levy rate; divided by

(b) The district's ((twelve)) fifteen percent levy rate.

(3) Calendar year 2003 allocations and maximum eligibility under this chapter shall be multiplied by 0.99.

(4) From January 1, 2004, to June 30, 2005, allocations and maximum eligibility under this chapter shall be multiplied by 0.937.

Sec. IV. RCW 84.52.0531 and 1997 c 259 s 2 are each amended to read as follows:

The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of RCW 84.52.053 shall be determined as follows:

(1) For excess levies for collection in calendar year 1997, the maximum dollar amount shall be calculated pursuant to the laws and rules in effect in November 1996.

(2) For excess levies for collection in calendar year ((1998)) 2005 and thereafter, the maximum dollar amount shall be the sum of (a) plus or minus (b) and (c) of this subsection minus (d) of this subsection:

(a) The district's levy base as defined in subsection (3) of this section multiplied by the district's maximum levy percentage as defined in subsection (4) of this section;

(i) The number of full-time equivalent students served from the resident district in the prior school year; multiplied by:

(ii) The serving district's maximum levy percentage determined under subsection (4) of this section; increased by:

(d) The district's maximum levy amount shall be reduced by the maximum amount of state matching funds for which the district is eligible under RCW 28A.500.010.

(3) For excess levies for collection in calendar year ((1998)) 2005 and thereafter, a district's levy base shall be the sum of allocations in (a) through (c) of this subsection received by the district for the prior school year, including allocations for compensation increases, plus the sum of such allocations multiplied by the percent increase per full time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year and divided by fifty-five percent. A district's levy base shall not include local school district property tax levies or other local revenues, or state and federal allocations not identified in (a) through (c) of this subsection.

(a) The district's basic education allocation as determined pursuant to RCW 28A.150.250, 28A.150.260, and 28A.150.350;

(b) State and federal categorical allocations for the following programs:

(i) Pupil transportation;

(ii) Special education;

(iii) Education of highly capable students;

(iv) Compensatory education, including but not limited to learning assistance, migrant education, Indian education, refugee programs, and bilingual education;

(v) Food services; and

(vi) Statewide block grant programs; and

(c) Any other federal allocations for elementary and secondary school programs, including direct grants, other than federal impact aid funds and allocations in lieu of taxes.

(4) A district's maximum levy percentage shall be ((twenty-two)) thirty percent ((in 1998 and twenty-four percent in 1999 and every year thereafter; plus, for qualifying districts, the grandfathered percentage determined as follows:

(a) For 1997, the difference between the district's 1993 maximum levy percentage and twenty percent; and

(b) For 1998 and thereafter, the percentage calculated as follows:

(i) Multiply the grandfathered percentage for the prior year times the district's levy base determined under subsection (3) of this section;

(ii) Reduce the result of (b)(i) of this subsection by any levy reduction funds as defined in subsection (5) of this section that are to be allocated to the district for the current school year;

(iii) Divide the result of (b)(ii) of this subsection by the district's levy base; and

(iv) Take the greater of zero or the percentage calculated in (b)(iii) of this subsection.

(5) "Levy reduction funds" shall mean increases in state funds from the prior school year for programs included under subsection (3) of this section: (a) That are not attributable to enrollment changes, compensation increases, or inflationary adjustments; and (b) that are or were specifically identified as levy reduction funds in the appropriations act. If levy reduction funds are dependent on formula factors which would not be finalized until after the start of the current school year, the superintendent of public instruction shall estimate the total amount of levy reduction funds by using prior school year data in place of current school year data. Levy reduction funds shall not include moneys received by school districts from cities or counties)).

(((6))) (5) For the purposes of this section, "prior school year" means the most recent school year completed prior to the year in which the levies are to be collected.

(((7))) (6) For the purposes of this section, "current school year" means the year immediately following the prior school year.

(((8))) (7) Funds collected from transportation vehicle fund tax levies shall not be subject to the levy limitations in this section.

(((9))) (8) The superintendent of public instruction shall develop rules and regulations and inform school districts of the pertinent data necessary to carry out the provisions of this section.

NEW SECTION. Sec. V. A new section is added to chapter 84.52 RCW to read as follows:

If the total amount of local effort assistance funds and excess levy revenue received by a district is less under sections 2 through 4 of this act than they would have been had sections 2 through 4 of this act not been enacted, the district shall receive hold harmless allocations. Hold harmless allocations shall be the difference between the amount of levy revenue and local effort assistance allocations the district would have received had sections 2 through 4 of this act not been enacted, and the amount of levy revenue and levy equalization the district will receive under sections 2 through 4 of this act, multiplied by the following:

(1) In calendar year 2005, five-sixths;

(2) In calendar year 2006, four-sixths;

(3) In calendar year 2007, three-sixths;

(4) In calendar year 2008, two-sixths; and

(5) In calendar year 2009, one-sixth.

NEW SECTION. Sec. VI. (1) Section 1 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 takes effect immediately.

(2) Sections 2 through 4 of this act take effect January 1, 2005.

NEW SECTION. Sec. VII. Section 5 of this act expires January 1, 2010."

Correct the title.

POINT OF ORDER

Representative Hunt requested a ruling on scope and object of the amendment (753) to amendment (752) to House Bill No. 2044.

SPEAKER'S RULING

Mr. Speaker: " The title of House Bill No. 2044 is an act relating to 'school district levy based calculations.' The bill increases a school district's levy base by the difference between the amount received and the amount that would have been received by using a higher salary formula. The bill also changes current law by establishing different levy bases for calculating levy lids and levy equalization.

While part of amendment (753) indirectly changes school district levy base calculations for 34 districts, other provisions of the amendment do not relate to school district levy base calculations, but rather with the maximum levy percentage used to calculate levy lids and the percentage used to determine levy equalization.

The Speaker therefore finds that amendment (753) is outside the scope and object of the bill.

Representative Hunt, your point of order is well taken."

Representative Fromhold spoke in favor of the adoption of amendment (752).

The amendment was adopted. The bill was ordered engrossed.

There being no objection, the rules were suspended, the second reading considered the third and the bill was placed on final passage.

Representatives Hunter, Fromhold, Jarrett, Tom, Sommers and Cox spoke in favor of passage of the bill.

Representatives Anderson, Talcott, DeBolt, Mastin, Armstrong, Priest, Ericksen, Anderson (again) and McMahan spoke against the passage of the bill.

The Speaker stated the question before the House to be the final passage of Engrossed House Bill No. 2044.

ROLL CALL

The Clerk called the roll on the final passage of Engrossed House Bill No. 2044 and the bill passed the House by the following vote: Yeas - 55, Nays - 43, Absent - 0, Excused - 0.

Voting yea: Representatives Campbell, Chase, Clibborn, Cody, Conway, Cooper, Cox, Darneille, Dickerson, Dunshee, Edwards, Eickmeyer, Flannigan, Fromhold, Grant, Haigh, Hudgins, Hunt, Hunter, Jarrett, Kagi, Kenney, Kessler, Kirby, Lantz, Linville, Lovick, McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, Nixon, O'Brien, Ormsby, Pettigrew, Quall, Rockefeller, Romero, Ruderman, Santos, Schual-Berke, D. Simpson, G. Simpson, Sommers, Sullivan, Tom, Upthegrove, Veloria, Wallace, Wood and Mr. Speaker - 55.

Voting nay: Representatives Ahern, Alexander, Anderson, Armstrong, Bailey, Benson, Blake, Boldt, Buck, Bush, Cairnes, Carrell, Chandler, Clements, Condotta, Crouse, DeBolt, Delvin, Ericksen, Hankins, Hatfield, Hinkle, Holmquist, Kristiansen, Mastin, McDonald, McMahan, McMorris, Mielke, Newhouse, Orcutt, Pearson, Priest, Roach, Rodne, Schindler, Schoesler, Sehlin, Shabro, Skinner, Sump, Talcott and Woods - 43.

ENGROSSED HOUSE BILL NO. 2044, having received the necessary constitutional majority, was declared passed.

There being no objection, the Rules Committee was relieved of further consideration of HOUSE BILL NO. 2623, and the bill was referred to the Committee on Appropriations.

There being no objection, the House advanced to the eleventh order of business.

There being no objection, the House adjourned until 10:00 a.m., January 30, 2004, the 19th Day of the Regular Session.

FRANK CHOPP, Speaker RICHARD NAFZIGER, Chief Clerk