BP BHEAD INT S [atlas:bill]

AN ACT Relating to sales and use tax equalization payments for proposed incorporations; amending RCW 35.02.015, 35.02.017, and 82.14.210; and creating a new section.

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

NEW SECTION. Sec. 1. It is not in the interest of the citizens of the state of Washington or the residents of a proposed incorporation area if cities that are not self-supporting are created. The citizens of the state must subsidize the operation of the proposed city through sales tax equalization assistance. Furthermore, residents of the area where such an incorporation is proposed may not receive the range of services or the levels of service normally associated with cities.

Sec. 2. RCW 35.02.015 and 1994 c 216 s 1 are each amended to read as follows:

Any person proposing the incorporation of a city or town shall file a notice of the proposed incorporation with the county legislative authority of the county in which all or the major portion of the proposed city or town is located. The notice shall include the matters required to be included in the incorporation petition under RCW 35.02.030 and be accompanied by both a one hundred dollar filing fee and an affidavit from the person stating that he or she is a registered voter residing in the proposed city or town. The county legislative authority shall immediately forward a copy of the proposed incorporation notice to the state department of revenue for the determination required in RCW 82.14.210.

The county legislative authority shall also promptly notify the boundary review board of the proposed incorporation, which shall hold a public meeting on the proposed incorporation within ((~~thirty~~)) sixty days of the notice being filed where persons favoring and opposing the proposed incorporation may state their views. If a boundary review board does not exist in the county, the county legislative authority shall provide the public meeting. The public meeting shall be held at a location in or near the proposed city or town. Notice of the public meeting shall be published in a newspaper of general circulation in the area proposed to be incorporated at least once ten days prior to the public meeting.

Sec. 3. RCW 35.02.017 and 1994 c 216 s 2 are each amended to read as follows:

Within one working day after the public meeting under RCW 35.02.015, the county auditor shall provide an identification number for the incorporation effort to the person who made the notice of proposing the incorporation only if the department of revenue has determined that the proposed city will not qualify for sales and use tax equalization payments in RCW 82.14.210(8). The identification number shall be included on the petition proposing the incorporation. A petition may not proceed without this number.

The petition proposing the incorporation may retain the proposed boundaries and other matters as described in the notice, or may alter the proposed boundaries and other matters.

Sec. 4. RCW 82.14.210 and 1996 c 64 s 1 are each amended to read as follows:

There is created in the state treasury a special account to be known as the "municipal sales and use tax equalization account." Into this account shall be placed such revenues as are provided under RCW 82.44.110(1)(e). Funds in this account shall be allocated by the state treasurer according to the following procedure:

(1) Prior to January 1st of each year the department of revenue shall determine the total and the per capita levels of revenues for each city and the state-wide weighted average per capita level of revenues for all cities imposing the sales and use tax authorized under RCW 82.14.030(1) for the previous calendar year.

(2) At such times as distributions are made under RCW 82.44.150, the state treasurer shall apportion to each city not imposing the sales and use tax under RCW 82.14.030(2) an amount from the municipal sales and use tax equalization account equal to the amount distributed to the city under RCW 82.44.155, multiplied by forty‑five fifty‑fifths.

(3) Subsequent to the distributions under subsection (2) of this section, and at such times as distributions are made under RCW 82.44.150, the state treasurer shall apportion to each city 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 subsection (1) of this section, an amount from the municipal sales and use tax equalization account sufficient, when added to the per capita level of revenues received the previous calendar year by the city, to equal seventy percent of the state-wide weighted average per capita level of revenues for all cities determined under subsection (1) of this section, subject to reduction under subsection (6) of this section.

(4) Subsequent to the distributions under subsection (3) of this section, and at such times as distributions are made under RCW 82.44.150, the state treasurer 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 (3) of this section, a third distribution from the municipal sales and use tax equalization account. The distribution to each qualifying city shall be equal to the distribution to the city under subsection (3) of this section, subject to the reduction under subsection (6) 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.

(5) For a city with an official incorporation date after January 1, 1990, municipal sales and use tax equalization distributions shall be made according to the procedures in this subsection. Municipal sales and use tax equalization distributions to eligible new cities shall be made at the same time as distributions are made under subsections (3) and (4) of this section. The department of revenue shall follow the estimating procedures outlined in this subsection until the new city has received a full year's worth of revenues under RCW 82.14.030(1) as of the January municipal sales and use tax equalization distribution.

(a) Whether a newly incorporated city determined to receive funds under this subsection receives its first equalization payment at the January, April, July, or October municipal sales and use tax equalization distribution shall depend on the date the city first imposes the tax authorized under RCW 82.14.030(1).

(i) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of January 1st shall be eligible to receive funds under this subsection beginning with the April municipal sales and use tax equalization distribution of that year.

(ii) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of February 1st, March 1st, or April 1st shall be eligible to receive funds under this subsection beginning with the July municipal sales and use tax equalization distribution of that year.

(iii) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of May 1st, June 1st, or July 1st shall be eligible to receive funds under this subsection beginning with the October municipal sales and use tax equalization distribution of that year.

(iv) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of August 1st, September 1st, or October 1st shall be eligible to receive funds under this subsection beginning with the January municipal sales and use tax equalization distribution of the next year.

(v) A newly incorporated city imposing the tax authorized under RCW 82.14.030(1) effective as of November 1st or December 1st shall be eligible to receive funds under this subsection beginning with the April municipal sales and use tax equalization distribution of the next year.

(b) For purposes of calculating the amount of funds the new city should receive under this subsection, the department of revenue shall:

(i) Estimate the per capita amount of revenues from the tax authorized under RCW 82.14.030(1) that the new city would have received had the city received revenues from the tax the entire calendar year;

(ii) Calculate the amount provided under subsection (3) of this section based on the per capita revenues determined under (b)(i) of this subsection;

(iii) Prorate the amount determined under (b)(ii) of this subsection by the number of months the tax authorized under RCW 82.14.030(1) is imposed.

(c) A new city imposing the tax under RCW 82.14.030(2) at the maximum rate and receiving a distribution calculated under (b) of this subsection shall receive another distribution from the municipal sales and use tax equalization account. This distribution shall be equal to the calculation made under (b)(ii) of this subsection, prorated by the number of months the city imposes the tax authorized under RCW 82.14.030(2) at the full rate.

(d) The department of revenue shall advise the state treasurer of the amounts calculated under (b) and (c) of this subsection and the state treasurer shall distribute these amounts to the new city from the municipal sales and use tax equalization account subject to the limitations imposed in subsection (6) of this section.

(e) Revenues estimated under this subsection shall not affect the calculation of the state-wide weighted average per capita level of revenues for all cities made under subsection (1) of this section.

(6) If inadequate revenues exist in the municipal sales and use tax equalization account to make the distributions under subsection (3), (4), or (5) of this section, then the distributions under subsections (3), (4), and (5) of this section shall be reduced ratably among the qualifying cities. At such time during the year as additional funds accrue to the municipal sales and use tax equalization account, additional distributions shall be made under subsections (3), (4), and (5) of this section to the cities.

(7) If the level of revenues in the municipal 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 apportioned among the several cities within the state ratably on the basis of population as last determined by the office of financial management: PROVIDED, That no such distribution shall be made to those cities receiving a distribution under subsection (2) of this section.

(8) If the department receives notice of a proposed incorporation under RCW 35.02.015 it shall make a determination as to whether the proposed city would qualify for municipal sales and use tax equalization under subsection (3) of this section by analyzing the total revenue and per capita revenue for the unincorporated area described in the petition for incorporation. The department shall forward its determination to the county legislative authority within forty-five days of the date the notice of incorporation was filed with the county legislative authority.