BILL REQ. #: H-2332.2
State of Washington | 58th Legislature | 2003 Regular Session |
READ FIRST TIME 03/10/03.
AN ACT Relating to performance audits of tax preferences; adding new sections to chapter 43.136 RCW; and repealing RCW 43.136.010, 43.136.020, 43.136.030, 43.136.040, 43.136.050, and 43.136.070.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 The legislature recognizes that tax
preferences are enacted to meet objectives which are determined to be
in the public interest. However, some tax preferences may not be
efficient or equitable tools for the achievement of current public
policy objectives. Given the changing nature of the economy and tax
structures of other states, the legislature finds that periodic
performance audits of tax preferences are needed to determine if their
continued existence will serve the public interest.
NEW SECTION. Sec. 2 As used in this chapter, "tax preference"
means an exemption, exclusion, or deduction from the base of a state
tax; a credit against a state tax; a deferral of a state tax; or a
preferential state tax rate.
NEW SECTION. Sec. 3 (1) The citizen commission for performance
measurement of tax preferences is created.
(2) The commission has nine voting members, appointed by the
governor as follows:
(a) Two persons representing labor;
(b) Two persons representing business;
(c) Three persons representing the general public;
(d) Two tax specialists from the state university system, one from
western Washington and one from eastern Washington.
(3) The commission has five nonvoting members, one appointed by the
governor, and one appointed by each chair of the two largest caucuses
of the senate and the two largest caucuses of the house of
representatives.
(4)(a) Appointees representing labor must be filled from lists of
nominees submitted by statewide labor organizations representing a
cross-section of industries.
(b) Appointees representing business must be filled from lists of
nominees submitted by statewide business organizations representing a
cross-section of industries.
(c) Appointees representing the general public must be filled from
lists of nominees submitted by the chairs of each of the two largest
caucuses of the senate and the two largest caucuses of the house of
representatives. These appointees should be individuals who represent
a balance of perspectives and constituencies, and have a basic
understanding of state tax policy, government operations, and public
services. These appointees should have knowledge and expertise in
performance management, fiscal analysis, strategic planning, economic
development, performance assessments, or closely related fields. Not
more than two of these appointees may be members of the same political
party. This requirement does not imply that any person must declare a
political affiliation to be eligible for appointment.
(5) The commission shall elect a chair from among its voting or
nonvoting members. Decisions of the commission must be made using the
sufficient consensus model. For the purposes of this subsection,
"sufficient consensus" means the point at which the vast majority of
the commission favors taking a particular action. If the commission
determines that sufficient consensus cannot be reached, a vote must be
taken. The commission must allow a minority report to be included with
a decision of the commission, if requested by a member of the
commission.
(6) Members serve for terms of four years, with the terms expiring
on June 30th on the fourth year of the term. However, in the case of
the initial members, three members shall serve four-year terms, three
members shall serve three-year terms, and three members shall serve a
two-year term, with each of the terms expiring on June 30th of the
applicable year. Appointees may be reappointed to serve more than one
term.
(7) The joint legislative audit and review committee shall provide
clerical, technical, and management personnel to the commission to
serve as the commission's staff. The department of revenue shall
provide necessary support and information to the joint legislative
audit and review committee.
(8) The commission shall meet at least once a quarter and may hold
additional meetings at the call of the chair or by a majority vote of
the members of the commission. The members of the commission shall be
compensated in accordance with RCW 43.03.220 and reimbursed for travel
expenses in accordance with RCW 43.03.050 and 43.03.060.
NEW SECTION. Sec. 4 (1) The citizen commission for performance
measurement of tax preferences shall develop a schedule to accomplish
an orderly review of tax preferences at least once every ten years.
The commission shall schedule tax preferences for review in the order
the tax preferences were enacted into law, except that the commission
may elect to include, anywhere in the schedule, a tax preference that
has a statutory expiration date. The commission shall omit from the
schedule tax preferences that are required by constitutional law, and
may omit any tax preference that the commission determines is a
critical part of the structure of the tax system. As an alternative to
the process under section 5 of this act, the commission may recommend
to the joint legislative audit and review committee an expedited review
process for any tax preference that has an estimated biennial fiscal
impact of ten million dollars or less.
(2) The commission shall revise the schedule as needed each year,
taking into account newly enacted or terminated tax preferences. The
commission shall deliver the schedule to the joint legislative audit
and review committee by September 1st of each year.
(3) The commission shall provide a process for effective citizen
input during its deliberations.
NEW SECTION. Sec. 5 (1) The joint legislative audit and review
committee shall review tax preferences according to the schedule
developed under section 4 of this act. The committee shall consider,
but not be limited to, the following factors in the review:
(a) The classes of individuals, types of organizations, or types of
industries whose state tax liabilities are directly affected by the tax
preference;
(b) Public policy objectives that might provide a justification for
the tax preference, including but not limited to the legislative
history, any legislative intent, or the extent to which the tax
preference encourages business growth or relocation into this state,
promotes growth or retention of high wage jobs, or helps stabilize
communities;
(c) Evidence that the existence of the tax preference has
contributed to the achievement of any of the public policy objectives;
(d) The extent to which continuation of the tax preference might
contribute to any of the public policy objectives;
(e) The feasibility of modifying the tax preference to provide for
adjustment or recapture of the tax benefits of the tax preference if
the objectives are not fulfilled;
(f) Fiscal impacts of the tax preference, including past impacts
and expected future impacts if it is continued. For the purposes of
this subsection, "fiscal impact" includes an analysis of the general
effects of the tax preference on the overall state economy, including,
but not limited to, the effects of the tax preference on the
consumption and expenditures of persons and businesses within the
state;
(g) The extent to which termination of the tax preference would
affect the distribution of liability for payment of state taxes.
(2) For each tax preference, the committee shall provide a
recommendation as to whether the tax preference should be continued
without modification, modified, scheduled for sunset review at a future
date, or terminated immediately. The committee may recommend
accountability standards for the future review of a tax preference.
NEW SECTION. Sec. 6 (1) The joint legislative audit and review
committee shall report its findings and recommendations for scheduled
tax preferences to the citizen commission for performance measurement
of tax preferences by August 30th of each year. The commission may
review and comment on the report of the committee. The committee may
revise its report based on the comments of the commission. The
committee shall prepare a final report that includes the comments of
the commission and submit the final report to the finance committee of
the house of representatives and the ways and means committee of the
senate by December 30th.
(2) The joint legislative audit and review committee shall submit
a special report reviewing all tax preferences that have statutory
expiration dates between June 30, 2003, and January 1, 2005. For the
special report, the committee shall complete a review under section 5
of this act, and obtain comments of the citizen commission for
performance measurement of tax preferences under subsection (1) of this
section, to the extent possible. The committee shall submit the
special report to the finance committee of the house of representatives
and the ways and means committee of the senate by January 12, 2004.
(3) Following receipt of a report under this section, the finance
committee of the house of representatives and the ways and means
committee of the senate shall jointly hold a public hearing to consider
the final report and any related data.
NEW SECTION. Sec. 7 Upon request of the citizen commission for
performance measurement of tax preferences or the joint legislative
audit and review committee, the department of revenue and the
department of employment security shall provide information needed by
the commission or committee to meet its responsibilities under this
chapter.
NEW SECTION. Sec. 8 The following acts or parts of acts are each
repealed:
(1) RCW 43.136.010 (Legislative findings -- Intent) and 1982 1st
ex.s. c 35 s 39;
(2) RCW 43.136.020 ("Tax preference" defined) and 1982 1st ex.s. c
35 s 40;
(3) RCW 43.136.030 (Legislative budget committee and department of
revenue -- Review of tax preferences -- Reports) and 1982 1st ex.s. c 35 s
41;
(4) RCW 43.136.040 (Legislative budget committee review of tax
preferences -- Factors for consideration) and 1982 1st ex.s. c 35 s 42;
(5) RCW 43.136.050 (Powers and duties of ways and means committees)
and 1982 1st ex.s. c 35 s 43; and
(6) RCW 43.136.070 (Report on existing tax preferences to be
provided -- Additional information to be provided) and 1982 1st ex.s. c
35 s 45.
NEW SECTION. Sec. 9 Sections 1 through 7 of this act are each
added to chapter