BILL REQ. #:  H-0710.1 

Read first time 01/15/2007.   Referred to Committee on Finance.

     AN ACT Relating to excise tax exemptions for water services provided by small water systems; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.16 RCW; and adding a new section to chapter 82.32 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.04 RCW to read as follows:
     (1) This chapter does not apply to amounts received for water services supplied by a:
     (a) Public utility district established under Title 54 RCW, a water-sewer district established under Title 57 RCW, or an irrigation district established under Title 87 RCW that:
     (i) Has less than one thousand five hundred water service connections; and
     (ii) Charges residential water rates that exceed one hundred twenty-five percent of the statewide average residential water rate published on or before July 1st of each year by the department of health; or
     (b) Water system that:
     (i) Is operated or owned by a qualified satellite system management agency under RCW 70.116.134;
     (ii) Has less than two hundred water service connections; and
     (iii) Charges residential water rates that exceed one hundred twenty-five percent of the statewide average residential water rate published on or before July 1st of each year by the department of health.
     (2) To receive an exemption under this section, the water system or irrigation district shall supply to the department of revenue proof that an amount equal to at least ninety percent of the value of the exemption shall be expended to repair, equip, maintain, and upgrade the water system.
     (3) The department of health may use rate information provided in surveys and reports produced by the association of Washington cities, an association of elected officials, or other municipal association to estimate a statewide average residential water rate.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.16 RCW to read as follows:
     (1) This chapter does not apply to amounts received for water services supplied by a:
     (a) Public utility district under Title 54 RCW, a water-sewer district established under Title 57 RCW, or an irrigation district established under Title 87 RCW that:
     (i) Has less than one thousand five hundred water service connections; and
     (ii) Charges residential water rates that exceed one hundred twenty-five percent of the statewide average residential water rate published on or before July 1st of each year by the department of health; or
     (b) Water system that:
     (i) Is operated or owned by a qualified satellite system management agency under RCW 70.116.134;
     (ii) Has less than two hundred water service connections; and
     (iii) Charges residential water rates that exceed one hundred twenty-five percent of the statewide average residential water rate.
     (2) To receive an exemption under this section, the water system or irrigation district shall supply to the department of revenue proof that an amount equal to at least ninety percent of the value of the exemption shall be expended to repair, equip, maintain, and upgrade the water system.
     (3) For the purposes of this section, "statewide average residential water rate" means the statewide average residential water rate published under section 1 of this act.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.32 RCW to read as follows:
     The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources, the legislature needs information to evaluate whether the stated goals of legislation were achieved.
     (1) The goals of the small public water system excise tax exemptions are:
     (a) To provide assistance to small public water systems, that are most in need, to make necessary and immediate repairs to their infrastructural needs; and
     (b) To allow these small systems to comply with state and federal mandates necessary for safe drinking water for citizens served by these systems.
     (2)(a) A person who receives the benefit of a tax exemption under section 1 or 2 of this act shall make an annual report to the department detailing the specific capital improvements that were made to their respective systems by utilizing the money made available by these exemptions. The report is due by March 31st following any year in which a tax exemption under section 1 or 2 of this act is claimed or used. Information in a report under this section is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (b) If a person fails to submit an annual report under (a) of this subsection by the due date of the report, the department shall declare the amount of taxes exempted for that year to be immediately due and payable. Public utility taxes payable under this subsection are subject to interest but not penalties, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 83.32.330 and may be disclosed to the public upon request.
     (3) By December 1, 2011, the fiscal committees of the house of representatives and the senate, in consultation with the department, shall report to the legislature on the effectiveness of the tax exemptions under sections 1 and 2 of this act.