AN
ACT Relating to tax incentives in rural counties; amending RCW 82.14.370 and
82.14.380; adding new sections to chapter 82.04 RCW; adding a new section to
chapter 82.62 RCW; adding a new section to chapter 82.16 RCW; adding a new
section to chapter 82.08 RCW; creating new sections; repealing RCW 82.60.045
and 82.60.047; providing an effective date; providing expiration dates; and
declaring an emergency.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. The
legislature finds that while Washington's economy is currently prospering,
economic growth continues to be uneven, particularly as between metropolitan
and rural areas. This has created in effect two Washingtons: One afflicted by
inadequate infrastructure to support and attract investment, another suffering
from congestion and soaring housing prices. In order to address these
problems, the legislature intends to use resources strategically to build on
our state's strengths while addressing threats to our prosperity.
PART
I
LOCAL
OPTION SALES AND USE TAX
Sec.
101. RCW
82.14.370 and 1998 c 55 s 6 are each amended to read as follows:
(1)
The legislative authority of a ((distressed)) rural county may
impose a sales and use tax in accordance with the terms of this chapter. The
tax is in addition to other taxes authorized by law and shall be collected from
those persons who are taxable by the state under chapters 82.08 and 82.12 RCW
upon the occurrence of any taxable event within the county. The rate of tax
shall not exceed ((0.04)) 0.08 percent of the selling price in
the case of a sales tax or value of the article used in the case of a use tax,
except that for rural counties with population densities between sixty and one
hundred persons per square mile, the rate shall not exceed 0.04 percent before
January 1, 2000.
(2)
The tax imposed under subsection (1) of this section shall be deducted from the
amount of tax otherwise required to be collected or paid over to the department
of revenue under chapter 82.08 or 82.12 RCW. The department of revenue shall
perform the collection of such taxes on behalf of the county at no cost to the
county.
(3)
Moneys collected under this section shall only be used for the purpose of
financing public facilities in rural counties. The public facility must be
listed as an item in the officially adopted county overall economic development
plan, or the economic development section of the county's comprehensive plan,
or the comprehensive plan of a city or town located within the county for those
counties planning under RCW 36.70A.040. For those counties that do not have an
adopted overall economic development plan and do not plan under the growth
management act, the public facility must be listed in the county's capital
facilities plan or the capital facilities plan of a city or town located within
the county. In implementing this section, the county shall consult with
cities, towns, and port districts located within the county. For the purposes
of this section, "public facilities" means bridges, roads, domestic
and industrial water facilities, sanitary sewer facilities, earth
stabilization, storm sewer facilities, railroad, electricity, natural gas,
buildings, structures, telecommunications infrastructure, transportation
infrastructure, or commercial infrastructure, and port facilities in the state
of Washington.
(4)
No tax may be collected under this section before July 1, 1998. No tax may be
collected under this section by a county more than twenty-five years after the
date that a tax is first imposed under this section.
(5)
For purposes of this section, "((distressed)) rural
county" means a county ((in which the average level of unemployment for
the three years before the year in which a tax is first imposed under this
section exceeds the average state unemployment for those years by twenty
percent)) with a population density of less than one hundred persons per
square mile as determined by the office of financial management and published
each year by the department for the period July 1st to June 30th.
PART
II
DISTRESSED
COUNTY ASSISTANCE ACCOUNT
Sec.
201. RCW
82.14.380 and 1998 c 321 s 10 (Referendum Bill No. 49) are each amended to read
as follows:
(1)
The distressed county assistance account is created in the state treasury.
Into this account shall be placed a portion of all motor vehicle excise tax
receipts as provided in RCW 82.44.110. At such times as distributions are made
under RCW 82.44.150, the state treasurer shall distribute the funds in the
distressed county assistance account to each county imposing the sales and use
tax authorized under RCW 82.14.370 as of January 1, 1999, in the same
proportions as distributions of the tax imposed under RCW 82.14.370 for
these counties for the previous quarter.
(2)
Funds distributed from the distressed county assistance account shall be
expended by the counties for criminal justice and other purposes.
PART
III
TECHNOLOGY-BASED
BUSINESSES
Software
NEW
SECTION. Sec. 301. It is
the intent of the legislature to attract and retain technology-based businesses
in rural counties. Section 302 of this act provides a tax incentive to those
businesses that develop or manufacture software and hardware in rural
counties. Section 303 of this act provides a tax incentive to those businesses
that are engaged in the business of providing technical support services from
rural counties. Encouragement of these types of business will stimulate the
information technology industry and be of benefit to the state economy in
general. To further the impact and benefit of this program, this incentive is
limited to those counties of the state that are characterized by unemployment
or low income. The legislature finds that providing this targeted incentive
will both increase its effectiveness and create a high technology work force in
rural counties.
NEW
SECTION. Sec. 302. A
new section is added to chapter 82.04 RCW to read as follows:
(1)
Subject to the limits and provisions of this section, a credit is authorized
against the tax otherwise due under this chapter for persons engaged in a rural
county in the business of manufacturing software or programming, as those terms
are defined in this section.
(2)
A person who partially or totally relocates a business from one rural county to
another rural county is eligible for any qualifying new jobs created as a
result of the relocation but is not eligible to receive credit for the jobs
moved from one county to the other.
(3)(a)
To qualify for the credit, the qualifying activity of the person must be
conducted in a rural county and the qualified employment position must be
located in the rural county.
(b)
If an activity is conducted both from a rural county and outside of a rural
county, the credit is available if at least ninety percent of the qualifying
activity takes place within a rural county. If the qualifying activity is a
service taxable activity, the place where the work is performed is the place at
which the activity is conducted.
(4)(a)
The credit under this section shall equal one thousand dollars for each
qualified employment position created after July 1, 1999, in an eligible area.
A credit is earned for the calendar year the person is hired to fill the
position. Additionally a credit is earned for each year the position is
maintained over the subsequent consecutive years, up to four years. The county
must meet the definition of a rural county at the time the position is filled.
If the county does not have a rural county status the following year or years,
the position is still eligible for the remaining years if all other conditions
are met.
(b)
Credit may not be taken for hiring of persons into positions that exist before
July 1, 1999. Credit is authorized for new employees hired for new positions
created on or after July 1, 1999. New positions filled by existing employees
are eligible for the credit under this section only if the position vacated by
the existing employee is filled by a new hire. A business that is a sole
proprietorship without any employees is equivalent to one employee position and
this type of business is eligible to receive credit for one position.
(c)
If a position is filled before July 1st, this position is eligible for the full
yearly credit. If it is filled after June 30th, this position is eligible for
half of the credit.
(d)
A person that has engaged in qualifying activities in the rural county before
the effective date of this section qualifies for the credit under this section
for positions created and filled after the effective date of this section.
(5)
No application is necessary for the tax credit. The person must keep records
necessary for the department to verify eligibility under this section. This
information includes information relating to description of qualifying activity
engaged in the rural county and outside the rural county by the person as well
as detailed records on positions and employees. The department shall, in consultation
with a representative group of affected taxpayers, develop a method of
segregating activity and related income so that those persons who engage in
multiple activities can determine eligibility for credit under this section.
(6)
If at any time the department finds that a person is not eligible for tax
credit under this section, the amount of taxes for which a credit has been
claimed shall be immediately due. The department shall assess interest, but
not penalties, on the taxes for which the person is not eligible. The interest
shall be assessed at the rate provided for delinquent excise taxes under
chapter 82.32 RCW, shall be assessed retroactively to the date the tax credit
was taken, and shall accrue until the taxes for which a credit has been used
are repaid.
(7)
The credit under this section may be used against any tax due under this
chapter, but in no case may a credit earned during one calendar year be carried
over to be credited against taxes incurred in a subsequent calendar year. A
person is not eligible to receive a credit under this section if the person is
receiving credit for the same position under chapter 82.62 RCW or RCW
82.04.44525 or is taking the credit under section 303 of this act. No refunds
may be granted for credits under this section.
(8)
A person taking tax credits under this section shall make an annual report to
the department. The report shall be in a letter form and shall include the
following information: Number of positions for which credit is being claimed,
type of position for which credit is being claimed, type of activity in which
the person is engaged in the county, and how long the person has been located
in the county. The report must be filed by January 30th of each year for which
credit was claimed during the previous year.
(9)
Transfer of ownership does not affect credit eligibility; however, the credit
is available to the successor for remaining periods in the five years only if
the eligibility conditions of this section are met.
(10)
As used in this section:
(a)
"Manufacturing" means the same as "to manufacture" under
RCW 82.04.120. Manufacturing includes the activities of both manufacturers and
processors for hire.
(b)
"Programming" means the activities that involve the creation or
modification of software, as that term is defined in this chapter, and that are
taxable as a service under RCW 82.04.290(2) or as a retail sale under RCW
82.04.050.
(c)
"Qualifying activity" means manufacturing of software or programming.
(d)
"Qualified employment position" means a permanent full-time position
doing programming of software or manufacturing of software. This excludes
administrative, professional, service, executive, and other similar positions.
If an employee is either voluntarily or involuntarily separated from
employment, the employment position is considered filled on a full-time basis
if the employer is either training or actively recruiting a replacement
employee. Full-time means a position for at least thirty-five hours a week.
(e)
"Rural county" means a county with a population density of less than
one hundred persons per square mile as determined by the office of financial
management and published each year by the department for the period July 1st to
June 30th.
(f)
"Software" has the same meaning as defined in RCW 82.04.215.
(11)
No credit may be taken or accrued under this section on or after January 1,
2004.
(12)
This section expires December 31, 2003.
Help
Desk Services
NEW
SECTION. Sec. 303. A
new section is added to chapter 82.04 RCW to read as follows:
(1)
Subject to the limits and provisions of this section, a credit is authorized
against the tax otherwise due under this chapter for persons engaged in a rural
county in the business of providing information technology help desk services
to third parties.
(2)
To qualify for the credit, the help desk services must be conducted from a
rural county.
(3)
The amount of the tax credit for persons engaged in the activity of providing
information technology help desk services in rural counties shall be equal to
one hundred percent of the amount of tax due under this chapter that is
attributable to providing the services from the rural county. In order to
qualify for the credit under this subsection, the county must meet the
definition of rural county at the time the person begins to conduct qualifying
business in the county.
(4)
No application is necessary for the tax credit. The person must keep records
necessary for the department to verify eligibility under this section. These
records include information relating to description of activity engaged in a
rural county by the person.
(5)
If at any time the department finds that a person is not eligible for tax
credit under this section, the amount of taxes for which a credit has been used
is immediately due. The department shall assess interest, but not penalties,
on the credited taxes for which the person is not eligible. The interest shall
be assessed at the rate provided for delinquent excise taxes under chapter
82.32 RCW, shall be assessed retroactively to the date the tax credit was
taken, and shall accrue until the taxes for which a credit has been used are
repaid.
(6)
The credit under this section may be used against any tax due under this
chapter, but in no case may a credit earned during one calendar year be carried
over to be credited against taxes incurred in a subsequent calendar year. No
refunds may be granted for credits under this section.
(7)
A person taking tax credits under this section shall make an annual report to
the department. The report shall be in a letter form and shall include the
following information: Type of activity in which the person is engaged in the
county, number of employees in the rural county, and how long the person has
been located in the county. The report must be filed by January 30th of each
year for which credit was claimed during the previous year.
(8)
Transfer of ownership does not affect credit eligibility; however, the credit
is available to the successor only if the eligibility conditions of this
section are met.
(9)
As used in this section:
(a)
"Information technology help desk services" means the following
services performed using electronic and telephonic communication:
(i)
Software and hardware maintenance;
(ii)
Software and hardware diagnostics and troubleshooting;
(iii)
Software and hardware installation;
(iv)
Software and hardware repair;
(v)
Software and hardware information and training; and
(vi)
Software and hardware upgrade.
(b)
"Rural county" means a county with a population density of less than
one hundred persons per square mile, as determined by the office of financial
management and published each year by the department for the period July 1st to
June 30th.
(10)
This section expires December 31, 2003.
NEW
SECTION. Sec. 304. A
new section is added to chapter 82.62 RCW to read as follows:
(1)
A person is not eligible to receive a credit under this chapter if the person
is receiving credit for the same position under section 303 of this act or RCW
82.04.44525.
(2)
This section expires December 31, 2003.
NEW
SECTION. Sec. 305. The
following acts or parts of acts are each repealed:
(1) RCW
82.60.045 (Eligible projects--Additional requirements) and 1995
1st sp.s. c 3 s 7 & 1994 sp.s. c 1 s 4; and
(2) RCW 82.60.047
(Governor designation of county as eligible area‑-Natural disaster,
business closure, military base closure, mass layoff) and 1994 sp.s. c 1 s 9.
PART
IV
ELECTRIC
UTILITIES
NEW
SECTION. Sec. 401. The
legislature finds that it is necessary to employ multiple approaches to
revitalize the economy of Washington state's rural areas. The legislature also
finds that where possible, Washington state should develop programs which can
complement other private, state, and federal programs. It is the intent of
section 402 of this act to complement such rural economic development efforts
by creating a public utility tax offset program to help establish locally based
electric utility revolving fund programs to be used for economic development
and job creation.
NEW
SECTION. Sec. 402. A
new section is added to chapter 82.16 RCW to read as follows:
(1)
The following definitions apply to this section:
(a)
"Qualifying project" means a project designed to achieve job creation
or business retention, to add or upgrade nonelectrical infrastructure, to add
or upgrade health and safety facilities, to accomplish energy and water use
efficiency improvements, including renewable energy development, or to add or
upgrade emergency services in any designated qualifying rural area.
(b)
"Qualifying rural area" means:
(i)
A rural county, which is a county with a population density of less than one
hundred persons per square mile as determined by the office of financial
management and published each year by the department for the period July 1st to
June 30th; or
(ii)
Any geographic area in the state that receives electricity from a light and
power business with twelve thousand or fewer customers and with fewer than
twenty-six meters per mile of distribution line as determined and published by
the department of revenue effective July 1st of each year. The department
shall use current data provided by the electricity industry.
(c)
"Electric utility rural economic development revolving fund" means a
fund devoted exclusively to funding qualifying projects in qualifying rural
areas.
(d)
"Local board" is a board of directors with at least, but not limited
to, three members representing local businesses and community groups who have
been appointed by the sponsoring electric utility to oversee and direct the
activities of the electric utility rural economic development revolving fund.
(2)
A light and power business with fewer than twenty-six active meters per mile of
distribution line in any geographic area in the state shall be allowed a credit
against taxes due under this chapter in an amount equal to fifty percent of
contributions made in any calendar year directly to an electric utility rural
economic development revolving fund. The credit shall be taken in a form and
manner as required by the department. The credit under this section shall not
exceed twenty-five thousand dollars per calendar year per light and power
business. The credit may not exceed the tax that would otherwise be due under
this chapter. Refunds shall not be granted in the place of credits.
Expenditures not used to earn a credit in one calendar year may not be used to
earn a credit in subsequent years.
(3)
The right to earn tax credits under this section expires December 31, 2005.
(4)
To qualify for the credit in subsection (2) of this section, the light and
power business shall establish an electric utility rural economic development
revolving fund which is governed by a local board whose members shall reside in
the qualifying rural area served by the light and power business. The local
board shall have authority to determine all criteria and conditions for the
expenditure of funds from the electric utility rural economic development fund,
and for the terms and conditions of repayment.
(5)
Any funds repaid to the electric utility rural economic development fund by
recipients shall be made available for additional qualifying projects.
(6)
If at any time the electric utility rural economic development fund is
dissolved, any moneys claimed as a tax credit under this section shall either
be granted to a qualifying project or refunded to the state within two years of
termination.
(7)
The total amount of credits that may be used in any fiscal year shall not
exceed three hundred fifty thousand dollars in any fiscal year. The department
shall allow the use of earned credits on a first-come, first-served basis.
Unused earned credits may be carried over to subsequent years.
PART
V
DISASTER
VICTIMS' RELIEF
NEW
SECTION. Sec. 501. A
new section is added to chapter 82.08 RCW to read as follows:
(1)
The tax levied by RCW 82.08.020 shall not apply to sales of labor and services
rendered in respect to:
(a)
The moving of houses out of any landslide area that has been declared as a
federal disaster area;
(b)
The demolition of houses located in a landslide area that has been declared as
a federal disaster area; or
(c)
The removal of debris from a landslide area that has been declared as a federal
disaster area.
(2)
This section expires July 1, 2000.
PART
VI
MISCELLANEOUS
NEW
SECTION. Sec. 601. Part
headings and subheadings used in this act are not any part of the law.
NEW
SECTION. Sec. 602.
Section 501 of this act applies retroactively to March 1, 1998.
NEW
SECTION. Sec. 603.
Section 501 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.
NEW
SECTION. Sec. 604.
Sections 1, 101, 201, 301 through 305, 401, 402, 601, and 605 of this act take
effect August 1, 1999.
NEW
SECTION. Sec. 605.
Section 305 of this act does not affect any existing right acquired or
liability or obligation under the sections repealed in section 305 of this act
or any rule or order adopted under those sections, nor does it affect any
proceeding instituted under those sections.
NEW SECTION. Sec. 606. 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.
