BILL REQ. #:  S-1698.2 

Read first time 02/28/2003.   Referred to Committee on Ways & Means.

     AN ACT Relating to providing financial assistance to counties and cities; amending RCW 35.21.870, 35.58.560, 84.52.043, 84.52.065, and 29.30.111; reenacting and amending RCW 84.52.010; adding a new section to chapter 36.01 RCW; adding a new section to chapter 82.14 RCW; adding a new section to chapter 84.52 RCW; adding a new chapter to Title 36 RCW; creating new sections; making an appropriation; and declaring an emergency.

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

NEW SECTION.  Sec. 101   It is the intent of the legislature to provide local communities more tools to choose their level of public services and taxes. The legislature recognizes that communities around the state have different economic environments and one method of financing local services does not work for all communities. It further recognizes that in some cases short-term or long-term economic changes have left communities unable to fund minimum required services by taxing the local economic base. It also recognizes that some communities have public safety, human service, or economic development priorities that are not shared by other communities. It is the intent of the legislature to provide voters in counties and cities across the state the tools to shape the destinies of their own communities and to provide for local priorities. It is further the intent of the legislature to provide direct financial assistance to counties and cities that cannot provide basic governmental services without state assistance.

NEW SECTION.  Sec. 201   A new section is added to chapter 36.01 RCW to read as follows:
     The legislative authority of a county may exercise within the unincorporated areas within the territorial boundaries of the county the same authority authorized by general law for any class of city to fix and collect a license tax for the purposes of revenue and regulation, upon all occupations and trades, and all and every kind of business authorized by law. However, this authority does not include solid waste collection businesses operating under a contract with a city or town in effect as of the effective date of this act, and for the duration of that contract.

Sec. 202   RCW 35.21.870 and 1984 c 225 s 6 are each amended to read as follows:
     (((1))) No county, city, or town may impose a tax on the privilege of conducting an electrical energy, natural gas, steam energy, or telephone business at a rate which exceeds ((six)) eight percent unless the rate is first approved by a majority of the voters of the county, city, or town voting on such a proposition.
     (((2) If a city or town is imposing a rate of tax under subsection (1) of this section in excess of six percent on April 20, 1982, the city or town shall decrease the rate to a rate of six percent or less by reducing the rate each year on or before November 1st by ordinances to be effective on January 1st of the succeeding year, by an amount equal to one-tenth the difference between the tax rate on April 20, 1982, and six percent.
     Nothing in this subsection prohibits a city or town from reducing its rates by amounts greater than the amounts required in this subsection.
     Voter approved rate increases under subsection (1) of this section shall not be included in the computations under this subsection.))

Sec. 203   RCW 35.58.560 and 1971 ex.s. c 303 s 10 are each amended to read as follows:
     No ((county or)) city shall have the right to impose a tax upon the gross revenues derived by a metropolitan municipal corporation from the operation of a metropolitan sewage disposal, water supply, garbage disposal or public transportation system.
     A metropolitan municipal corporation may credit or offset against the amount of any tax which is levied by the state during any calendar year upon the gross revenues derived by such metropolitan municipal corporation from the performance of any authorized function, the amount of any expenditures made from such gross revenues by such metropolitan municipal corporation during the same calendar year or any year prior to May 21, 1971 in planning for or performing the function of metropolitan public transportation and including interest on any moneys advanced for such purpose from other funds and to the extent of such credit a metropolitan municipal corporation may expend such revenues for such purposes.
     A metropolitan municipal corporation authorized to perform the function of metropolitan public transportation and engaged in the operation of an urban passenger transportation system shall receive a refund of the amount of the motor vehicle fuel tax levied by the state and paid on each gallon of motor vehicle fuel used, whether such vehicle fuel tax has been paid either directly to the vendor from whom the motor vehicle fuel was purchased or indirectly by adding the amount of such tax to the price of such fuel: PROVIDED, That no refunds authorized by this section shall be granted on fuel used by any urban transportation vehicle on any trip where any portion of said trip is more than six road miles beyond the corporate limits of the metropolitan municipal corporation in which said trip originated.

NEW SECTION.  Sec. 301   A new section is added to chapter 82.14 RCW to read as follows:
     (1) A county may, subject to voter approval, set and impose a sales and use tax not to exceed two-tenths of one percent of the selling price in the case of a sales tax, or the value of the article used in the case of a use tax. The tax authorized in this section shall be in addition to any 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 such county.
     (2) Money received from a countywide sales and use tax imposed under this section shall be distributed between the county and the cities according to the following formula unless otherwise agreed to by the county and the cities in an interlocal agreement:
     (a) Forty percent to the county;
     (b) Forty percent to the cities within the county based ratably on population; and
     (c) Twenty percent to the county to be expended exclusively for unincorporated services.
     (3) If a county does not impose a sales and use tax under this section, any city within the county may, subject to voter approval, set and impose the local option sales and use tax authorized under this section within the boundaries of the city. In the event that the county later imposes a countywide local option sales and use tax under this section, the tax imposed by the city shall be reduced such that the combined rate of the tax imposed by the city and county shall not exceed two-tenths of one percent.

NEW SECTION.  Sec. 302   A new section is added to chapter 84.52 RCW to read as follows:
     (1) A county or city may impose additional regular property tax levies when specifically authorized to do so by a majority of the voters of the taxing district voting on a ballot proposition authorizing the levies. A ballot proposition authorizing a levy under this section must conform with RCW 29.30.111. A proposition authorizing the tax levies under this section shall not be submitted by a county or city more than twice in any twelve-month period.
     (2) The levies may be imposed for an amount up to:
     (a) Twenty-five cents per thousand dollars of assessed value of property in the city in the case of a levy by a city; and
     (b) Ten cents per thousand dollars of assessed value of property in the county in the case of a levy by a county.
     (3) A county unincorporated service area may impose regular annual property tax levies in an amount equal to twenty-five cents per thousand dollars of assessed value of property in the county unincorporated service area when specifically authorized to do so by a majority of the voters of the service area voting on a ballot proposition authorizing the levies. A ballot proposition authorizing a levy under this section must conform with RCW 29.30.111. A proposition authorizing the tax levies under this section shall not be submitted by a county unincorporated service area more than twice in any twelve-month period.
     (4) A levy under this section may be imposed for a specific number of years or permanently. The duration of the levy shall be specified in the ballot proposition. If the duration of a levy is not specified in the ballot proposition, the levy shall be imposed for one year.
     (5) A ballot proposition authorizing a levy under this section may be submitted to voters by a county, county unincorporated service area, and city at the same election.
     (6) In the event a county, county unincorporated service area, or city levying property taxes, which in combination with property taxes levied by other taxing districts subject to the limitations provided in RCW 84.52.043 and 84.52.050, exceeds these limitations, the levy of the county, county unincorporated service area, or city shall be reduced or eliminated consistent with RCW 84.52.010.
     (7) If a ballot proposition approved under subsection (1) or (3) of this section did not impose the maximum allowable levy amount authorized for the taxing district under this section, any future increase up to the maximum allowable levy amount must be specifically authorized by the voters in accordance with subsection (1) or (3) of this section at a general or special election.
     (8) If a ballot proposition approved under subsection (1) or (3) of this section provided that the levy would be for a specific number of years, the taxing district may replace the levy with a permanent levy when authorized by the voters in accordance with subsection (1) or (3) of this section at a general or special election.
     (9) The limitation in RCW 84.55.010 does not apply to the first levy imposed under this section by a county, county unincorporated service area, or city following the approval of the levies by the voters under subsections (1) and (3) of this section.

Sec. 303   RCW 84.52.043 and 1995 c 99 s 3 are each amended to read as follows:
     Within and subject to the limitations imposed by RCW 84.52.050 as amended, the regular ad valorem tax levies upon real and personal property by the taxing districts hereafter named shall be as follows:
     (1) Levies of the senior taxing districts shall be as follows: (a) The levy by the state shall not exceed three dollars and ((sixty)) twenty-five cents per thousand dollars of assessed value adjusted to the state equalized value in accordance with the indicated ratio fixed by the state department of revenue to be used exclusively for the support of the common schools; (b) the levy by any county shall not exceed one dollar and eighty cents per thousand dollars of assessed value, or one dollar and ninety cents per thousand dollars of assessed value if the county imposes a levy under section 302 of this act; (c) the levy by any road district shall not exceed two dollars and twenty-five cents per thousand dollars of assessed value; ((and)) (d) the regular voted levy by any county unincorporated service area shall not exceed twenty-five cents per thousand dollars of assessed value; (e) the levy by any city ((or town)) shall not exceed three dollars and thirty-seven and one-half cents per thousand dollars of assessed value, or three dollars and sixty-two and one-half cents per thousand dollars of assessed value if the city imposes a levy under section 302 of this act; and (f) the levy by any town shall not exceed three dollars and thirty-seven and one-half cents per thousand dollars of assessed value. However any county is hereby authorized to increase its levy from one dollar and eighty cents to a rate not to exceed two dollars and forty-seven and one-half cents per thousand dollars of assessed value for general county purposes if the total levies for both the county and any road district within the county do not exceed four dollars and five cents per thousand dollars of assessed value, and no other taxing district has its levy reduced as a result of the increased county levy. Any county imposing a levy under section 302 of this act is authorized to increase its levy from one dollar and ninety cents to a rate not to exceed two dollars and fifty-seven and one-half cents per thousand dollars of assessed value for general county purposes if the total levies for both the county and any road district within the county do not exceed four dollars and fifteen cents per thousand dollars of assessed value, and no other taxing district has its levy reduced as a result of the increased county levy.
     (2) The aggregate levies of junior taxing districts and senior taxing districts, other than the state, shall not exceed ((five)) six dollars and ((ninety)) twenty-five cents per thousand dollars of assessed valuation. The term "junior taxing districts" includes all taxing districts other than the state, counties, county unincorporated service areas, road districts, cities, towns, port districts, and public utility districts. The limitations provided in this subsection shall not apply to: (a) Levies at the rates provided by existing law by or for any port or public utility district; (b) excess property tax levies authorized in Article VII, section 2 of the state Constitution; (c) levies for acquiring conservation futures as authorized under RCW 84.34.230; (d) levies for emergency medical care or emergency medical services imposed under RCW 84.52.069; (e) levies to finance affordable housing for very low-income housing imposed under RCW 84.52.105; and (f) the portions of levies by metropolitan park districts that are protected under RCW 84.52.120.

Sec. 304   RCW 84.52.010 and 2002 c 248 s 15 and 2002 c 88 s 7 are each reenacted and amended to read as follows:
     Except as is permitted under RCW 84.55.050, all taxes shall be levied or voted in specific amounts.
     The rate percent of all taxes for state and county purposes, and purposes of taxing districts coextensive with the county, shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the county, as shown by the completed tax rolls of the county, and the rate percent of all taxes levied for purposes of taxing districts within any county shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the taxing districts respectively.
     When a county assessor finds that the aggregate rate of tax levy on any property, that is subject to the limitations set forth in RCW 84.52.043 or 84.52.050, exceeds the limitations provided in either of these sections, the assessor shall recompute and establish a consolidated levy in the following manner:
     (1) The full certified rates of tax levy for state, county, county unincorporated service area, county road district, and city or town purposes shall be extended on the tax rolls in amounts not exceeding the limitations established by law; however any state levy shall take precedence over all other levies and shall not be reduced for any purpose other than that required by RCW 84.55.010. If, as a result of the levies imposed under RCW 84.52.069, 84.34.230, the portion of the levy by a metropolitan park district that was protected under RCW 84.52.120, and 84.52.105, the combined rate of regular property tax levies that are subject to the one percent limitation exceeds one percent of the true and fair value of any property, then these levies shall be reduced as follows: (a) The portion of the levy by a metropolitan park district that is protected under RCW 84.52.120 shall be reduced until the combined rate no longer exceeds one percent of the true and fair value of any property or shall be eliminated; (b) if the combined rate of regular property tax levies that are subject to the one percent limitation still exceeds one percent of the true and fair value of any property, then the levies imposed under RCW 84.34.230, 84.52.105, and any portion of the levy imposed under RCW 84.52.069 that is in excess of thirty cents per thousand dollars of assessed value, shall be reduced on a pro rata basis until the combined rate no longer exceeds one percent of the true and fair value of any property or shall be eliminated; and (c) if the combined rate of regular property tax levies that are subject to the one percent limitation still exceeds one percent of the true and fair value of any property, then the thirty cents per thousand dollars of assessed value of tax levy imposed under RCW 84.52.069 shall be reduced until the combined rate no longer exceeds one percent of the true and fair value of any property or eliminated.
     (2) The certified rates of tax levy subject to these limitations by all junior taxing districts imposing taxes on such property shall be reduced or eliminated as follows to bring the consolidated levy of taxes on such property within the provisions of these limitations:
     (a) First, the certified property tax levy rates of those junior taxing districts authorized under RCW 36.68.525, 36.69.145, 35.95A.100, and 67.38.130 shall be reduced on a pro rata basis or eliminated;
     (b) Second, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of flood control zone districts shall be reduced on a pro rata basis or eliminated;
     (c) Third, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of all other junior taxing districts, other than fire protection districts, library districts, the first fifty cent per thousand dollars of assessed valuation levies for metropolitan park districts, and the first fifty cent per thousand dollars of assessed valuation levies for public hospital districts, shall be reduced on a pro rata basis or eliminated;
     (d) Fourth, if the consolidated tax levy rate still exceeds these limitations, the first fifty cent per thousand dollars of assessed valuation levies for metropolitan park districts created on or after January 1, 2002, shall be reduced on a pro rata basis or eliminated;
     (e) Fifth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized to fire protection districts under RCW 52.16.140 and 52.16.160 shall be reduced on a pro rata basis or eliminated; and
     (f) Sixth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized for fire protection districts under RCW 52.16.130, library districts, metropolitan park districts created before January 1, 2002, under their first fifty cent per thousand dollars of assessed valuation levy, and public hospital districts under their first fifty cent per thousand dollars of assessed valuation levy, shall be reduced on a pro rata basis or eliminated.
     In determining whether the aggregate rate of tax levy on any property, that is subject to the limitations set forth in RCW 84.52.050, exceeds the limitations provided in that section, the assessor shall use the hypothetical state levy, as apportioned to the county under RCW 84.48.080, that was computed under RCW 84.48.080 without regard to the reduction under RCW 84.55.012.

Sec. 305   RCW 84.52.065 and 1991 sp.s. c 31 s 16 are each amended to read as follows:
     Subject to the limitations in RCW 84.55.010, in each year the state shall levy for collection in the following year for the support of common schools of the state a tax of three dollars and ((sixty)) twenty-five cents per thousand dollars of assessed value upon the assessed valuation of all taxable property within the state adjusted to the state equalized value in accordance with the indicated ratio fixed by the state department of revenue.
     As used in this section, "the support of common schools" includes the payment of the principal and interest on bonds issued for capital construction projects for the common schools.

Sec. 306   RCW 29.30.111 and 1999 c 224 s 2 are each amended to read as follows:
     (1) The ballot proposition authorizing a taxing district to impose the regular property tax levies authorized in RCW 36.69.145, 67.38.130, ((or)) 84.52.069, or section 302 of this act shall contain in substance the following:
     "Shall the . . . . . . (insert the name of the taxing district) be authorized to impose regular property tax levies of . . . . . . (insert the maximum rate) or less per thousand dollars of assessed valuation for each of . . . . . . (insert the maximum number of years allowable) consecutive years?
     Yes. . . . . . . . . . . . □
     No . . . . . . . . . . . . □"
     Each voter shall indicate either "Yes" or "No" on his or her ballot in accordance with the procedures established under this title.
     (2) The ballot proposition authorizing a taxing district to impose a permanent regular tax levy under RCW 84.52.069 or section 302 of this act shall contain the following:
     "Shall the . . . . . (insert the name of the taxing district) be authorized to impose a PERMANENT regular property levy of . . . . . (insert the maximum rate) or less per thousand dollars of assessed valuation?
     Yes. . . . . . . . . . . . □
     No . . . . . . . . . . . . □"

NEW SECTION.  Sec. 401   (1) Any county shall have the power to create a county unincorporated service area for any purpose specified in the county ordinance or resolution. The county legislative authority shall, by resolution, order an election of the voters of the proposed county unincorporated service area to determine if the service area shall be formed. The county legislative authority shall in their resolution direct the county auditor to set the election to be held at the next general election or at a special election held for such purpose; describe the purposes of the proposed service area; and order that notice of the election be published in a newspaper of general circulation in the county at least twice prior to the election date.
     (2) A county unincorporated service area shall be a quasi-municipal corporation, an independent taxing "authority" within the meaning of Article VII, section 1 of the state Constitution, and a "taxing district" within the meaning of Article VII, section 2 of the state Constitution.
     (3) A county unincorporated service area shall constitute a body corporate and shall possess all the usual powers of a corporation for public purposes including, but not limited to, the authority to hire employees, staff, and services, to enter into contracts, to accept and expend or use gifts, grants, and donations, and to sue and be sued as well as all other powers that may now or hereafter be specifically conferred by statute.
     (4) The county legislative authority shall be the governing body of a county unincorporated service area. The county treasurer shall act as the ex officio treasurer of the county unincorporated service area. The electors of a county unincorporated service area are all registered voters residing within the service area.
     (5) A county unincorporated service area shall consist solely of all the unincorporated areas of the county.

NEW SECTION.  Sec. 402   A proposition to form a county unincorporated service area shall be submitted to the voters of the proposed service area. Upon approval by a majority of the voters voting on the proposition, a county unincorporated service area shall be established. The proposition submitted to the voters by the county auditor on the ballot shall be in substantially the following form:

Shall a county unincorporated service area be established in the unincorporated area of the county for the purpose of . . . . . . .

NEW SECTION.  Sec. 501   The sum of twenty-five million dollars is appropriated for the biennium ending June 30, 2005, from the general fund to the department of community, trade, and economic development to provide direct financial assistance to counties and cities that cannot provide basic governmental services without state assistance.

NEW SECTION.  Sec. 601   Sections 401 and 402 of this act constitute a new chapter in Title 36 RCW.

NEW SECTION.  Sec. 602   Section 302 of this act applies to taxes levied for collection in 2004 and thereafter.

NEW SECTION.  Sec. 603   Part headings used in this act are not any part of the law.

NEW SECTION.  Sec. 604   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.

NEW SECTION.  Sec. 605   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.