5967-S.E AMH **** MADS 1

ESSB 5967 - H AMDS TO REV COMM AMD (H2487.6) 000550 LOST 4-16-93

By Representative Mielke

On page 61, after line 34, insert the following:

"Part VIII

Limiting State Revenue

NEW SECTION. Sec. 801. FINDINGS AND DECLARATIONS. The legislature of the state of Washington finds and declares that:

(1) The continued growth in the burden of tax levies and other revenue generating assessments imposed on the citizens and businesses of the state of Washington and the corresponding growth in state government is contrary to the interests of the people of the state of Washington.

(2) It is necessary to reaffirm the people's will to limit the rate of growth of state government while assuring adequate funding of essential services, including basic education as required by Article IX, section 1 of the state Constitution.

(3) During periods of severe economic downturns or fiscal emergencies, receipts of state revenue collections may decline below the state revenue collection limit established in this chapter and, therefore, it is necessary and vital for the state of Washington to maintain an adequate reserve of state revenue collections to provide a resource for the stable financing of essential state services during such periods.

(4) A state tax limitation was passed by a vote of the people at the November 6, 1979, state general election. However, because of a high base calculation, that state tax limitation has not been effective in carrying out the intent of the people to limit revenues and the growth of state government.

NEW SECTION. Sec. 802. INTENT. It is the intent of the legislature of the state of Washington to:

(1) Establish a limitation that will assure that the growth rate of state revenue collections does not exceed an established percentage of the economy as represented by total state personal income;

(2) Reaffirm that the state shall not impose upon any political subdivision of the state the responsibility for new programs, programs previously offered by the state, or increased levels of service unless the costs of these programs or services are paid or reimbursed by the state;

(3) Provide for adjustment of the state revenue collection limit when the costs of a federal, state, or political subdivision program, service, project, facility, or activity are transferred in such a manner that the result is an increase or decrease in state revenue collections;

(4) Establish a responsible and fiscally sound revenue reserve fund for use in severe economic downturns or fiscal emergencies;

(5) Establish procedures for the disposition of amounts collected in excess of this limit;

(6) Establish procedures for use when estimated state revenues collections fall below the state revenue collection limit; and

(7) Establish procedures for exceeding this limit in emergency situations.

NEW SECTION. Sec. 803. DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Estimated state revenue collections" means the estimated state revenue collections as published in the most recent official economic and revenue forecast prepared under RCW 82.33.020.

(2) "Fiscal year" means the year beginning July 1st and ending the following June 30th.

(3) "General obligation debt reduction account" means the general obligation debt reduction account created by this chapter.

(4) "Political subdivision" means any division of the state made by proper authorities thereof, acting within their constitutional or legislatively authorized powers, for the purpose of carrying out the administration of governmental powers of a subordinate or local nature.

(5) "Revenue measure" means any tax, fee, license, charge, assessment, tariff, toll, duty, or other encumbrance levied, set, imposed, or exacted on persons, income, property, or activities or any expansion of the base of any existing tax, fee, license, charge, assessment, tariff, toll, duty, or other encumbrance levied, set, imposed, or exacted on persons, income, property, or activities.

(6) "Revenue reserve fund" means the revenue reserve fund created by this chapter.

(7) "State revenue collections" means all moneys received, collected, or owed from each and every source as required by law or rule, whether or not such funds are otherwise subject to legislative appropriation, including funds maintained or deposited outside the state treasury. Unless otherwise stated to the contrary, the following shall not be included in this definition:

(a) Moneys received as a gift, grant, donation, aid, or assistance from any person, firm, or corporation, public or private, when the terms and conditions of such gift, grant, donation, aid, or assistance require the application and disbursement of such moneys otherwise than for the general purposes of the state of Washington;

(b) Moneys received as a gift, grant, donation, aid, or assistance from the United States or any department, agency, bureau, or corporation of the United States;

(c) Moneys derived from the investment of funds under the authority of the state investment board pursuant to chapter 43.33A RCW;

(d) Moneys received from performance bonds and deposits;

(e) Moneys paid into or received from the accident fund established under RCW 51.44.010, the medical aid fund established under RCW 51.44.020, the reserve fund established under RCW 51.44.030, the supplemental pension fund established under RCW 51.44.033, and the second injury fund established under RCW 51.44.040, for the purposes authorized as of December 31, 1992;

(f) Moneys paid into or received from trust funds that were created or established prior to December 31, 1992;

(g) Moneys paid into or received from a permanent and irreducible fund of the state that was created or established prior to December 31, 1992;

(h) Moneys received from the sale of bonds or other evidences of indebtedness;

(i) Moneys paid into or deposited to funds or accounts by the state for disbursement to political subdivisions of the state. However, these funds or accounts must have been created or established prior to December 31, 1992;

(j) Moneys dedicated under Article 2, section 40 of the state Constitution;

(k) Moneys paid into or received from the revenue reserve fund; or

(l) Moneys paid into or received from the general obligation debt reduction account.

(8) "State revenue collection limit" or "limit" means the limitation created by this chapter.

(9) "Limitation factor" means the percentage created by dividing the sum of total state revenue collections for the fiscal years 1988 through 1992 by the sum of total state personal income for the fiscal years 1988 through 1992.

(10) "Total state personal income" means the estimated total personal income for the state during a fiscal year as published by the United States department of commerce, bureau of economic analysis, or its successor, and as reported in the most recent official economic and revenue forecast prepared under RCW 82.33.020.

(11) "Undesignated fund balance" means any unreserved and undesignated current assets or other resources available for expenditure over and above any current liabilities that are expected to be incurred by the close of a fiscal year.

NEW SECTION. Sec. 804. Within thirty days after the effective date of sections 801 through 816 and 819 of this act, the economic and revenue forecast supervisor, as defined in RCW 82.33.010(2), shall compute the limitation factor defined under section 803 of this act. Upon computing the limitation factor, the economic and revenue forecast supervisor shall make and file with the secretary of state, a certificate containing the results of the computation and any amendment or adjustment thereof. Copies of the certificate shall be sent to each elected official of the state and each member of the legislature.

NEW SECTION. Sec. 805. STATE REVENUE COLLECTION LIMIT--CALCULATION. (1) Unless otherwise provided for in this chapter, the state revenue collection limit for the fiscal year beginning July 1, 1993, and for each fiscal year thereafter, shall be the limitation factor multiplied by the total state personal income for the fiscal year for which the limit is being calculated.

(2) To establish the revenue collection limit for the fiscal year beginning July 1, 1993, the economic and revenue forecast supervisor shall use total state personal income as published by the United States department of commerce, bureau of economic analysis, or its successor, and as reported in the November 1992 official economic and revenue forecast prepared under RCW 82.33.020. For each fiscal year thereafter, the state revenue collection limit shall be established by the economic and revenue forecast supervisor on November 20 of the year immediately preceding the fiscal year for which the limit is being calculated.

NEW SECTION. Sec. 806. REVENUE MEASURES--ESTIMATED STATE REVENUE COLLECTIONS TO BE WITHIN LIMIT. Except as otherwise provided for in this chapter, all state revenue measures from which state revenue collections are derived shall be imposed, levied, or set by law or rule in such a manner that estimated state revenue collections for each fiscal year will not exceed the state revenue collection limit established for the corresponding fiscal year.

NEW SECTION. Sec. 807. EXPENDITURE REQUIREMENTS. (1) The state shall not expend funds derived from state revenue collections for any fiscal year in excess of the state revenue collection limit established for the corresponding fiscal year.

(2) Except pursuant to an appropriation provided for a declaration of emergency under section 810 of this act, the state treasurer shall not issue or redeem any check, warrant, or voucher from funds derived from state revenue collections that would result in an expenditure for any fiscal year in excess of the state revenue collection limit for the corresponding fiscal year. A violation of this subsection constitutes a violation of RCW 43.88.290.

(3) In addition to the penalties provided in RCW 43.88.300 for a judgment against the state treasurer for violating RCW 43.88.290, the attorney general may take civil action for such violations.

NEW SECTION. Sec. 808. REVENUE RESERVE FUND. (1) A revenue reserve fund is created in the custody of the state treasurer. Only the state treasurer may transfer moneys to or from the fund as provided in this chapter. On the effective date of sections 801 through 816 and section 819 of this section, all funds currently contained, or on deposit, in the budget stabilization account created under RCW 43.88.525 shall be transferred into the revenue reserve fund.

(2) The state treasurer is authorized to and shall transfer to the revenue reserve fund a sum equal to the amount of any state revenue collections in excess of the state revenue collection limit. Deposits authorized under this subsection shall be made on the last day of each fiscal year based on estimated state revenue collections for that fiscal year.

(3) Upon the completion of any fiscal year for which there is an undesignated fund balance, the state treasurer is hereby authorized to and shall transfer to the revenue reserve fund a sum equal to the amount of any undesignated fund balance.

(4) The state treasurer is authorized to and shall transfer to the revenue reserve fund any other amounts the legislature may from time to time direct to be deposited or transferred into the fund.

(5) The balance of the revenue reserve fund at the end of a fiscal year shall not exceed two and one-half percent of the immediately preceding fiscal year's state revenue collection limit. Any amount in excess of this two and one-half percent limit shall be transferred by the state treasurer to the general obligation debt reduction account.

NEW SECTION. Sec. 809. ESTIMATED STATE REVENUE COLLECTIONS BELOW LIMIT--PROCEDURES FOR IMPOSITION OF REVENUE MEASURES. (1) If, at the time the state revenue collection limit is established as required by section 805(2) of this act, the estimated state revenue collections for the corresponding fiscal year are projected to be below the state revenue collection limit, the state treasurer shall immediately transfer to the state general fund from amounts available in the revenue reserve fund a sum equal to the difference between estimated state revenue collections and the state revenue collection limit for use during such fiscal year.

(2) If the procedure required under subsection (1) of this section has been implemented and there remains a difference between the state revenue collection limit and estimated revenue collections, the legislature may, by an affirmative vote of sixty percent of each house, enact revenue measures necessary to generate any sum that is equal to or below the state revenue collection limit less the state revenue collections.

(3) Any revenue measure enacted pursuant to subsection (2) of this section may be imposed, levied, or set by law or rule for a period not to exceed twenty-four months from the effective date of such revenue measure.

NEW SECTION. Sec. 810. WHEN STATE REVENUE COLLECTION LIMIT MAY BE EXCEEDED--CONDITIONS. (1) The state revenue collection limit may be exceeded upon declaration of an emergency by the governor and a law approved by an affirmative vote of seventy-five percent of each house of the legislature. The declaration of emergency shall set forth the circumstances constituting the emergency and the amount of state revenue collections in excess of the applicable state revenue collection limit necessary to meet the emergency.

(2) A declaration of emergency for the purposes of exceeding the state revenue collection limit shall not exceed twenty-four months.

(3) The state revenue collection limit may be exceeded by an amount no greater than that indicated by the governor in his or her emergency declaration.

(4) The amount of state revenue collections authorized under this section in excess of the state revenue collection limit is not subject to the provisions of section 808(2) of this act.

(5) Revenue measures enacted to meet the costs of an emergency under this section may be imposed, levied, or set by law or rule for a period not to exceed twenty-four months from the effective date of the revenue measures. However, all revenue measures enacted to meet the cost of an emergency under this section shall expire immediately upon the expiration of the declaration of emergency.

NEW SECTION. Sec. 811. STATE REVENUE COLLECTION LIMIT--ADJUSTMENTS. (1) If by order of any court, the costs of a federal, state, or political subdivision program, service, project, facility, or activity are transferred in such a manner that the result is an increase or decrease in state revenue collections, the limitation factor shall be adjusted and the state revenue collection limit recalculated as provided in this section. The office of financial management shall determine the total dollar amount of any increase or decrease in state revenue collections caused by such a transfer.

(2) For the purpose of this section, "adjusted limitation factor" means the total dollar amount of any such increase or decrease in state revenue collections for the fiscal year in which the increase or decrease is effective divided by the corresponding fiscal year's total state personal income plus or minus the limitation factor or the most recent adjusted limitation factor.

(3) For the fiscal year in which any such increase or decrease is effective and for each fiscal year thereafter, the state revenue collection limit shall be the adjusted limitation factor multiplied by total state personal income for the fiscal year for which the limit is being recalculated or calculated.

(4) For the fiscal year in which any state revenue collections increase or decrease required by subsection (1) of this section become effective, the state revenue collection limit as adjusted in this section shall be recalculated by the economic and revenue forecast supervisor prior to the beginning of that fiscal year. For the fiscal years thereafter, the state revenue collection limit shall be established by the economic and revenue forecast supervisor on November 20 of the year immediately preceding the fiscal year for which the state revenue collection limit is being calculated.

NEW SECTION. Sec. 812. GENERAL OBLIGATION DEBT REDUCTION ACCOUNT. The general obligation debt reduction account is created in the state treasury. Moneys in the account may be spent only following appropriation by law and shall be used solely for the purposes of reducing the outstanding principle and interest of the general obligation indebtedness of the state of Washington.

Sec. 813. RCW 43.135.060 and 1990 2nd ex.s. c 1 s 601 are each amended to read as follows:

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

(2) The amount of increased local revenue and state appropriations and distributions that are received or could be received by a ((~~taxing district~~)) political subdivision of the state as a result of legislative enactments after 1979 shall be included as reimbursement under subsection (1) of this section. This subsection does not affect litigation pending on January 1, 1990.

(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.

~~(5)~~)) Subsection (1) of this section does not apply to the costs incurred for voting devices or machines under RCW 29.04.200.

(4) No portion of the reimbursement provided under subsection (1) of this section by the state to a political subdivision may be in the form of authorization for a new or increased revenue measure.

NEW SECTION. Sec. 814. A new section is added to chapter 82.33 RCW to read as follows:

The official, optimistic, and pessimistic revenue forecasts prepared under RCW 82.33.020 shall include revenue estimates for all state revenue collections as defined in chapter 43.135 RCW.

Sec. 815. RCW 43.84.092 and 1992 c 235 s 4 are each amended to read as follows:

(1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

(2) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:

(a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the Eastern Washington University capital projects account, the federal forest revolving account, the general obligation debt reduction account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local sales and use tax account, the medical aid account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the perpetual surveillance and maintenance account, the public employees' retirement system plan I account, the public employees' retirement system plan II account, the Puyallup tribal settlement account, the resource management cost account, the revenue reserve fund, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the teachers' retirement system plan I account, the teachers' retirement system plan II account, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' relief and pension principal account, the volunteer fire fighters' relief and pension administrative account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan I retirement account, the Washington law enforcement officers' and fire fighters' system plan II retirement account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (2)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The central Puget Sound public transportation account, the city hardship assistance account, the county arterial preservation account, the economic development account, the essential rail assistance account, the essential rail banking account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway construction stabilization account, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the special category C account, the state patrol highway account, the transfer relief account, the transportation capital facilities account, the transportation equipment fund, the transportation fund, the transportation improvement account, and the urban arterial trust account.

(3) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION. Sec. 816. A new section is added to chapter 43.88 RCW to read as follows:

The budget document submitted by the governor to the legislature under RCW 43.88.030 shall reflect the state revenue collection limit established under chapter 43.135 RCW and shall not propose expenditures from funds derived from state revenue collections in excess of the state revenue collection limit established for the fiscal year or years to which the budget pertains.

NEW SECTION. Sec. 817. REVENUE MEASURES REPEAL. (1) Upon the effective date of this section, all actions or combinations of actions by the state relating to state revenue measures that increase revenue over those in effect on December 31, 1992, revert to those in effect on December 31, 1992, except for those under sections 809 and 810 of this act.

(2) The code reviser, in cooperation with the fiscal committees of the house of representatives and the senate, shall develop a correction bill to reflect the changes required by subsection (1) of this section. The correction bill shall be introduced during the legislative session immediately following the effective date of this section.

(3) Prior to the adoption of the correction bill required under this section, the governor may utilize any means provided by law to ensure that the expenditure of funds derived from state revenue collections does not exceed the state revenue collection limit.

NEW SECTION. Sec. 818. Section 817 of this act shall be submitted to the people for their adoption and ratification, or rejection, at the next succeeding general election to be held in this state, in accordance with Article II, section 1 of the state Constitution, as amended, and the laws adopted to facilitate the operation thereof.

NEW SECTION. Sec. 819. REPEALER. The following acts or parts of acts are each repealed:

(1) RCW 43.88.520 and 1981 c 280 s 1;

(2) RCW 43.88.525 and 1991 sp.s. c 13 s 13, 1985 c 57 s 52, & 1981 c 280 s 2;

(3) RCW 43.88.530 and 1982 1st ex.s. c 36 s 2 & 1981 c 280 s 3;

(4) RCW 43.88.535 and 1982 1st ex.s. c 36 s 3 & 1981 c 280 s 4;

(5) RCW 43.88.540 and 1984 c 138 s 11 & 1981 c 280 s 5;

(6) RCW 43.135.010 and 1980 c 1 s 1;

(7) RCW 43.135.020 and 1980 c 1 s 2;

(8) RCW 43.135.030 and 1980 c 1 s 3;

(9) RCW 43.135.040 and 1980 c 1 s 4;

(10) RCW 43.135.050 and 1980 c 1 s 5;

(11) RCW 43.135.070 and 1980 c 1 s 7;

(12) RCW 43.135.900 and 1980 c 1 s 8; and

(13) RCW 43.135.901 and 1980 c 1 s 9.

NEW SECTION. Sec. 820. CODIFICATION INSTRUCTIONS. Sections 801 through 812 of this act are each added to chapter 43.135 RCW."

Renumber remaining sections consecutively and correct internal references accordingly.

On page 62, line 8 of the amendment, after "institutions," insert "except sections 817 and 818 of this act,"

On page 62, line 11, strike "and 501 through 601" and insert "501 through 601, 801 through 816 and 819"