BILL REQ. #:  H-1381.5 

Read first time 02/21/2007.   Referred to Committee on Finance.

     AN ACT Relating to authorizing regular property tax increases in excess of one percent growth for limited purposes including the funding of infrastructure and the reduction of impact fees; amending RCW 84.55.005 and 84.55.0101; adding a new section to chapter 82.02 RCW; adding new sections to chapter 43.31 RCW; and providing an expiration date.

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

Sec. 1   RCW 84.55.005 and 2002 c 1 s 2 are each amended to read as follows:
     As used in this chapter:
     (1) "Incremental property tax revenue" means the regular property taxes payable in excess of the amount that would otherwise be payable using a limit factor of one hundred one percent;
     (2) "Inflation" means the percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent twelve-month period by the bureau of economic analysis of the federal department of commerce in September of the year before the taxes are payable;
     (((2))) (3) "Limit factor" means:
     (a) ((For taxing districts with a population of less than ten thousand in the calendar year prior to the assessment year, one hundred one percent;
     (b))) For taxing districts for which a limit factor is authorized under RCW 84.55.0101, the lesser of the limit factor under that section or one hundred ((one)) percent plus inflation; or
     (((c))) (b) For all other districts, ((the lesser of one hundred one percent or)) one hundred percent plus inflation; ((and
     (3))) (4) "Regular property taxes" has the meaning given it in RCW 84.04.140; and
     (5) "System improvement" has the meaning provided in RCW 82.02.090.

Sec. 2   RCW 84.55.0101 and 2002 c 1 s 3 are each amended to read as follows:
     (1) Upon a finding of substantial need, the legislative authority of a taxing district other than the state may provide for the use of a limit factor under this chapter of one hundred ((one)) percent plus inflation or less unless an increase greater than this limit is approved by the voters at an election as provided in RCW 84.55.050. In districts with legislative authorities of four members or less, two-thirds of the members must approve an ordinance or resolution under this section. In districts with more than four members, a majority plus one vote must approve an ordinance or resolution under this section. The new limit factor shall be effective for taxes collected in the following year only.
     (2) A taxing district, other than the state, shall use incremental property tax revenue for system improvements before the revenue is used for any other purpose.
     (3) The state shall use incremental property tax revenue for the support of high growth school districts as provided in section 4 of this act.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.02 RCW to read as follows:
     Counties, cities, and towns may not impose impact fees authorized under RCW 82.02.050, except with respect to school facilities, in the calendar year following the calendar year in which the county, city, or town adopts a limit factor under RCW 84.55.0101 in excess of one hundred one percent.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.31 RCW to read as follows:
     (1) Incremental property tax revenue authorized by the state under RCW 84.55.0101 shall be deposited into the high growth school district mitigation account hereby created in the state treasury. Money in the account may be spent only after appropriation. Expenditures from the account must be used in accordance with subsection (2) of this section.
     (2) The department shall conduct a grant process to award funds to school districts for the construction, modernization, or remodeling of school facilities in high growth school districts. Grant applications must be submitted to the department. The application must be in a form and manner prescribed by the department. The application must include a description of the capital facility or facilities that will be constructed, modernized, or remodeled with funds distributed under this section and the estimated costs of the constructing, modernizing, or remodeling activity. A distribution to a school district under this section may not exceed the amount appropriated to the high growth school district mitigation account for the fiscal year multiplied by the school district's student enrollment in the school year as a percentage of total student enrollment for all high growth school districts for that year that have applied for funding under this section. A school district must apply every calendar year to receive funding under this section. The state treasurer shall distribute funds to qualifying high growth school districts on the last business day of June and December, as directed by the department in accordance with the requirements in section 5 of this act.
     (3) The definitions in this subsection apply to this section and section 5 of this act.
     (a) "Department" means the department of community, trade, and economic development.
     (b) "Growth" means the percentage change from the prior year in student enrollment.
     (c) "High growth school district" means a school district with growth for the school year at least one hundred fifty percent of the statewide average growth.
     (d) "School year" means the school year that includes the calendar year in which the state approves a limit factor under RCW 84.55.0101.
     (e) "Student enrollment" means annual average full-time equivalent student enrollment.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.31 RCW to read as follows:
     The department shall direct the state treasurer to give first priority in distributing funds under section 4 of this act to qualifying high school districts that are located within taxing jurisdictions in which the jurisdiction: (1) Imposes impact fees for the purposes of school facilities, as of January 1, 2007; and (2) has approved an ordinance or resolution that reduces the impact fees received by a school district by the amount of any grant funding such school district receives under section 4 of this act.

NEW SECTION.  Sec. 6   Section 5 of this act expires three years after the effective date of this act.