BILL REQ. #:  S-5100.2 

Read first time 02/07/08.   Referred to Committee on Ways & Means.

     AN ACT Relating to reallocation of existing lodging taxes for support of heritage and arts programs, establishing the first priorities fund, and care for the vulnerable, including children with developmental disabilities, the mentally ill, and homeless people, in a county with a population of one million or more; amending RCW 67.28.180, 67.28.1815, 82.14.049, and 82.14.360; adding a new chapter to Title 36 RCW; creating a new section; and providing an effective date.

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

NEW SECTION.  Sec. 1   The legislature finds that it is government's first priority to care for the vulnerable. The legislature further finds that locally funded heritage and arts programs build vital communities and preserve community history and culture. It further finds that within existing revenue sources, local jurisdictions should have the capability to preserve these programs in the future.
     Revenue streams have been developed to pay for sports stadiums and convention facilities. Once those obligations are met, those revenues should be used to care for the most vulnerable in society, which include children with developmental disabilities, the mentally ill, and the homeless. A portion of the hotel-motel tax revenue has been provided to the local heritage and arts programs since 1989 and those commitments should continue.
     This act will provide a stable and predictable flow of funds to these programs, provide for inflation and an expanding population, and assure the future viability of the programs within existing revenue flows.

Sec. 2   RCW 67.28.180 and 2007 c 189 s 1 are each amended to read as follows:
     (1) Subject to the conditions set forth in subsections (2) and (3) of this section, the legislative body of any county or any city, is authorized to levy and collect a special excise tax of not to exceed two percent on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW.
     (2) Any levy authorized by this section shall be subject to the following:
     (a) Any county ordinance or resolution adopted pursuant to this section shall contain, in addition to all other provisions required to conform to this chapter, a provision allowing a credit against the county tax for the full amount of any city tax imposed pursuant to this section upon the same taxable event.
     (b) In the event that any county has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such county shall be exempt from the provisions of (a) of this subsection, to the extent that the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160: PROVIDED, That so much of such pledged tax revenues, together with any investment earnings thereon, not immediately necessary for actual payment of principal and interest on such bonds may be used: (i) In any county with a population of one million or more, for repayment either of limited tax levy general obligation bonds or of any county fund or account from which a loan was made, the proceeds from the bonds or loan being used to pay for constructing, installing, improving, and equipping stadium capital improvement projects, and to pay for any engineering, planning, financial, legal and professional services incident to the development of such stadium capital improvement projects, regardless of the date the debt for such capital improvement projects was or may be incurred; (ii) in any county with a population of one million or more, for repayment or refinancing of bonded indebtedness incurred prior to January 1, 1997, for any purpose authorized by this section or relating to stadium repairs or rehabilitation, including but not limited to the cost of settling legal claims, reimbursing operating funds, interest payments on short-term loans, and any other purpose for which such debt has been incurred if the county has created a public stadium authority to develop a stadium and exhibition center under RCW 36.102.030; or (iii) in other counties, for county-owned facilities for agricultural promotion until January 1, 2009, and thereafter for any purpose authorized in this chapter.
     A county is exempt under this subsection with respect to city revenue or general obligation bonds issued after April 1, 1991, only if such bonds mature before January 1, 2013. If any county located east of the crest of the Cascade mountains has levied the tax authorized by this section and has, prior to June 26, 1975, pledged the tax revenue for payment of principal and interest on city revenue or general obligation bonds, the county is exempt under this subsection with respect to revenue or general obligation bonds issued after January 1, 2007, only if the bonds mature before January 1, 2021. Such a county may only use funds under this subsection (2)(b) for constructing or improving facilities authorized under this chapter, including county-owned facilities for agricultural promotion, and must perform an annual financial audit of organizations receiving funding on the use of the funds.
     As used in this subsection (2)(b), "capital improvement projects" may include, but not be limited to a stadium restaurant facility, restroom facilities, artificial turf system, seating facilities, parking facilities and scoreboard and information system adjacent to or within a county owned stadium, together with equipment, utilities, accessories and appurtenances necessary thereto. The stadium restaurant authorized by this subsection (2)(b) shall be operated by a private concessionaire under a contract with the county.
     (c)(i) No city within a county exempt under subsection (2)(b) of this section may levy the tax authorized by this section so long as said county is so exempt.
     (ii) ((If bonds have been issued under RCW 43.99N.020 and any necessary property transfers have been made under RCW 36.102.100,)) No city within a county with a population of one million or more may levy the tax authorized by this section ((before January 1, 2021)).
     (iii) However, in the event that any city in a county described in (c)(i) or (ii) of this subsection (2)(((c))) has levied the tax authorized by this section and has, prior to June 26, 1975, authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such city may levy the tax so long as the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160.
     (3) Any levy authorized by this section by a county that has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160 shall be subject to the following:
     (a) Taxes collected under this section in any calendar year before 2013 in excess of five million three hundred thousand dollars shall only be used as follows:
     (i) Seventy-five percent from January 1, 1992, through December 31, 2000, and seventy percent from January 1, 2001, through December 31, 2012, for art museums, cultural museums, heritage museums, heritage and preservation programs, the arts, and the performing arts. Moneys spent under this subsection (3)(a)(i) shall be used for the purposes of this subsection (3)(a)(i) in all parts of the county.
     (ii) Twenty-five percent from January 1, 1992, through December 31, 2000, and thirty percent from January 1, 2001, through December 31, 2012, for the following purposes and in a manner reflecting the following order of priority: Stadium purposes as authorized under subsection (2)(b) of this section; acquisition of open space lands; youth sports activities; and tourism promotion. If all or part of the debt on the stadium is refinanced, all revenues under this subsection (3)(a)(ii) shall be used to retire the debt.
     (b) From January 1, 2013, through December 31, 2015, in a county with a population of one million or more, all revenues under this section shall be used to retire the debt on the stadium, ((or deposited in the stadium and exhibition center account under RCW 43.99N.060 after)) until the debt on the stadium is retired. On and after the date the debt on the stadium is retired, and through December 31, 2015, all revenues under this section in a county of one million or more shall be deposited in the account under (n) of this subsection.
     (c) From January 1, 2016, through December 31, 2020, in a county with a population of one million or more, all revenues under this section shall be deposited in the stadium and exhibition center account under RCW 43.99N.060.
     (d) On and after January 1, 2021, at least fifty percent of revenues under this section in a county of one million or more shall be deposited in the account under (f) of this subsection, the remaining fifty percent shall be deposited in the first priorities account under (n) of this subsection.
     (e) At least seventy percent of moneys spent under (a)(i) of this subsection for the period January 1, 1992, through December 31, 2000, shall be used only for the purchase, design, construction, and remodeling of performing arts, visual arts, heritage, and cultural facilities, and for the purchase of fixed assets that will benefit art, heritage, and cultural organizations. For purposes of this subsection, fixed assets are tangible objects such as machinery and other equipment intended to be held or used for ten years or more. Moneys received under this subsection (3)(((d))) (e) may be used for payment of principal and interest on bonds issued for capital projects. Qualifying organizations receiving moneys under this subsection (3)(((d))) (e) must be financially stable and have at least the following:
     (i) A legally constituted and working board of directors;
     (ii) A record of artistic, heritage, or cultural accomplishments;
     (iii) Been in existence and operating for at least two years;
     (iv) Demonstrated ability to maintain net current liabilities at less than thirty percent of general operating expenses;
     (v) Demonstrated ability to sustain operational capacity subsequent to completion of projects or purchase of machinery and equipment; and
     (vi) Evidence that there has been independent financial review of the organization.
     (((e))) (f) At least forty percent of the revenues distributed pursuant to (a)(i) of this subsection for the period January 1, 2001, through ((December 31, 2012,)) the effective date of this section shall be deposited in ((an)) a special account ((and shall be used to establish an endowment. Principal in the account shall remain permanent and irreducible)). The ((earnings from investments of balances in the)) account may only be used for the purposes of (a)(i) of this subsection.
     (((f))) (g) School districts and schools shall not receive revenues distributed pursuant to (a)(i) of this subsection.
     (((g))) (h) Moneys distributed to art museums, cultural museums, heritage museums, heritage and preservation programs, programs for the developmentally disabled, mental health, or the homeless, the arts, and the performing arts, and moneys distributed for tourism promotion shall be in addition to and may not be used to replace or supplant any other funding by the legislative body of the county.
     (((h))) (i) As used in this section, "tourism promotion" includes activities intended to attract visitors for overnight stays, arts, heritage, and cultural events, and recreational, professional, and amateur sports events. Moneys allocated to tourism promotion in a class AA county shall be allocated to nonprofit organizations formed for the express purpose of tourism promotion in the county. Such organizations shall use moneys from the taxes to promote events in all parts of the class AA county.
     (((i))) (j) No taxes collected under this section may be used for the operation or maintenance of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged. Expenditures for operation or maintenance include all expenditures other than expenditures that directly result in new fixed assets or that directly increase the capacity, life span, or operating economy of existing fixed assets.
     (((j))) (k) No ad valorem property taxes may be used for debt service on bonds issued for a public stadium that is financed by bonds to which the tax is pledged, unless the taxes collected under this section are or are projected to be insufficient to meet debt service requirements on such bonds.
     (((k))) (l) If a substantial part of the operation and management of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged is performed by a nonpublic entity or if a public stadium is sold that is financed directly or indirectly by bonds to which the tax is pledged, any bonds to which the tax is pledged shall be retired. This subsection (3)(((k))) (l) does not apply in respect to a public stadium under chapter 36.102 RCW transferred to, owned by, or constructed by a public facilities district under chapter 36.100 RCW or a stadium and exhibition center.
     (((l))) (m) The county shall not lease a public stadium that is financed directly or indirectly by bonds to which the tax is pledged to, or authorize the use of the public stadium by, a professional major league sports franchise unless the sports franchise gives the right of first refusal to purchase the sports franchise, upon its sale, to local government. This subsection (3)(((l))) (m) does not apply to contracts in existence on April 1, 1986.
     (n) The first priorities account is established to fund programs for the developmentally disabled, mental health, and the homeless in a county of over one million population. Funds in the account may be used only for the purposes listed in section 6 of this act.
     If a court of competent jurisdiction declares any provision of this subsection (3) invalid, then that invalid provision shall be null and void and the remainder of this section is not affected.
     (4) "Programs for the developmentally disabled," "mental health programs," and "programs for the homeless" have the same meanings as in section 6 of this act.

Sec. 3   RCW 67.28.1815 and 1997 c 452 s 4 are each amended to read as follows:
     Except as provided in RCW 67.28.180, all revenue from taxes imposed under this chapter shall be credited to a special fund in the treasury of the municipality imposing such tax and used solely for the purpose of paying all or any part of the cost of tourism promotion, acquisition of tourism-related facilities, or operation of tourism-related facilities. Municipalities may, under chapter 39.34 RCW, agree to the utilization of revenue from taxes imposed under this chapter for the purposes of funding a multijurisdictional tourism-related facility.

Sec. 4   RCW 82.14.049 and 1997 c 220 s 502 are each amended to read as follows:
     The legislative authority of any county may impose a sales and use tax, in addition to the tax authorized by RCW 82.14.030, upon retail car rentals within the county that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of tax shall be one percent of the selling price in the case of a sales tax or rental value of the vehicle in the case of a use tax. Proceeds of the tax shall not be used to subsidize any professional sports team and shall be used solely for the following purposes:
     (1) Acquiring, constructing, maintaining, or operating public sports stadium facilities;
     (2) Engineering, planning, financial, legal, or professional services incidental to public sports stadium facilities;
     (3) Youth or amateur sport activities or facilities; ((or))
     (4) Debt or refinancing debt issued for the purposes of subsection (1) of this section; or
     (5) Programs for the developmentally disabled, mentally ill, and homeless. For the purposes of this subsection, "programs for the developmentally disabled," "mental health programs," and "programs for the homeless" have the same meanings as in section 6 of this act.
     At least seventy-five percent of the tax imposed under this section shall be used for the purposes of subsections (1), (2), and (4) of this section. In a county of one million or more, at least seventy-five percent of the tax imposed under this section shall be used to retire the debt on the stadium under RCW 67.28.180(2)(b)(ii), until that debt is fully retired; then the funds must be used for the purposes of subsection (5) of this section.

Sec. 5   RCW 82.14.360 and 2000 c 103 s 10 are each amended to read as follows:
     (1) The legislative authority of a county with a population of one million or more may impose a special stadium sales and use tax upon the retail sale or use within the county by restaurants, taverns, and bars of food and beverages that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of the tax shall not exceed five-tenths of one percent of the selling price in the case of a sales tax, or value of the article used in the case of a use tax. The tax imposed under this subsection is in addition to any other taxes authorized by law and shall not be credited against any other tax imposed upon the same taxable event. As used in this section, "restaurant" does not include grocery stores, mini-markets, or convenience stores.
     (2) The legislative authority of a county with a population of one million or more may impose a special stadium sales and use tax upon retail car rentals within the county that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of the tax shall not exceed two percent of the selling price in the case of a sales tax, or rental value of the vehicle in the case of a use tax. The tax imposed under this subsection is in addition to any other taxes authorized by law and shall not be credited against any other tax imposed upon the same taxable event.
     (3) Until the date that is the earlier of the date on which bonds issued for the construction of a baseball stadium are retired or defeased or twenty years after the taxes in this section are first collected, the revenue from the taxes imposed under this section shall be used for the purpose of principal and interest payments on bonds, issued by the county, to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium. Revenues from the taxes authorized in this section may be used for design and other preconstruction costs of the baseball stadium until bonds are issued for the baseball stadium. The county shall issue bonds, in an amount determined to be necessary by the public facilities district, for the district to acquire, construct, own, and equip the baseball stadium. The county shall have no obligation to issue bonds in an amount greater than that which would be supported by the tax revenues under this section, RCW 82.14.0485, and 36.38.010(4) (a) and (b).
     (4) Until the date that is the earlier of the date on which bonds issued for the construction of a baseball stadium are retired or defeased or twenty years after the taxes in this section are first collected, if the revenue from the taxes imposed under this section exceeds the amount needed for such principal and interest payments in any year, the excess shall be used solely:
     (a) For early retirement or defeasance of the bonds issued for the baseball stadium; and
     (b) If the revenue from the taxes imposed under this section exceeds the amount needed for the purposes in (a) of this subsection in any year, the excess shall be placed in a contingency fund which may only be used to pay unanticipated capital costs on the baseball stadium, excluding any cost overruns on initial construction.
     (((4))) (5) The taxes authorized under this section shall not be collected after June 30, 1997, unless the county executive has certified to the department of revenue that a professional major league baseball team has made a binding and legally enforceable contractual commitment to:
     (a) Play at least ninety percent of its home games in the stadium for a period of time not shorter than the term of the bonds issued to finance the initial construction of the stadium;
     (b) Contribute forty-five million dollars toward the reasonably necessary preconstruction costs including, but not limited to architectural, engineering, environmental, and legal services, and the cost of construction of the stadium, or to any associated public purpose separate from bond-financed property, including without limitation land acquisition, parking facilities, equipment, infrastructure, or other similar costs associated with the project, which contribution shall be made during a term not to exceed the term of the bonds issued to finance the initial construction of the stadium. If all or part of the contribution is made after the date of issuance of the bonds, the team shall contribute an additional amount equal to the accruing interest on the deferred portion of the contribution, calculated at the interest rate on the bonds maturing in the year in which the deferred contribution is made. No part of the contribution may be made without the consent of the county until a public facilities district is created under chapter 36.100 RCW to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium. To the extent possible, contributions shall be structured in a manner that would allow for the issuance of bonds to construct the stadium that are exempt from federal income taxes; and
     (c) Share a portion of the profits generated by the baseball team from the operation of the professional franchise for a period of time equal to the term of the bonds issued to finance the initial construction of the stadium, after offsetting any losses incurred by the baseball team after ((the effective date of chapter 14, Laws of 1995 1st sp. sess.)) June 14, 1995. Such profits and the portion to be shared shall be defined by agreement between the public facilities district and the baseball team. The shared profits shall be used to retire or defease the bonds issued to finance the initial construction of the stadium. If the bonds are retired or defeased before the expiration of their term, the shared profits shall be paid to the public facilities district.
     (((5))) (6) If a county with a population of one million or more has established the first priorities account under section 2 of this act, the following condition applies: After the earlier of the date the bonds issued for the construction of a baseball stadium are retired or defeased or twenty years after the taxes in this section are first collected, money collected under subsections (1) and (2) of this section shall be used for, and may be pledged to, the first priorities account.
     (7) No tax may be collected under this section before January 1, 1996. Before collecting the taxes under this section or issuing bonds for a baseball stadium, the county shall create a public facilities district under chapter 36.100 RCW to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium.
     (((6))) (8) The county shall assemble such real property as the district determines to be necessary as a site for the baseball stadium. Property which is necessary for this purpose that is owned by the county on October 17, 1995, shall be contributed to the district, and property which is necessary for this purpose that is acquired by the county on or after October 17, 1995, shall be conveyed to the district.
     (((7))) (9) The proceeds of any bonds issued for ((the)) a baseball stadium shall be provided to the public facilities district that owns the baseball stadium.
     (((8))) (10) As used in this section, "baseball stadium" means "baseball stadium" as defined in RCW 82.14.0485.
     (((9))) (11) The taxes imposed under this section ((shall)) expire ((when)) the earlier of the date on which the bonds issued for the construction of the baseball stadium are retired or defeased, but not later than twenty years after the taxes are first collected.

NEW SECTION.  Sec. 6   A new chapter is added to Title 36 RCW to read as follows:
     (1) A county with a population of one million or more is granted the authority, and it is hereby declared to be a public purpose for such county, to establish and administer programs for the developmentally disabled, mentally ill, and homeless either directly or by creating public corporations or authorities to carry out the programs and to expend their own funds, including the funds provided in this act, for such purposes, as well as to expend federal, state, or private funds that are made available for such purposes. These funds are to be deposited into an account entitled the first priorities account in the treasury. Funds provided to this account must be used to expand or enrich programs, and may not supplant existing county funding.
     (2) Distribution of funds in the first priorities account is as follows:
     (a) Fifty percent of the funds derived from the hotel-motel tax deposited in this account under RCW 67.28.180(3)(b), must be used for programs for the developmentally disabled, and sixty percent of the balance must be used for programs for the mentally ill, with the remaining forty percent of the balance used for programs to provide transient housing for the homeless. Funds obtained under this provision may be placed in trust to fund future benefits or to purchase assets to be used to provide the programs.
     (b) Funds derived from the hotel-motel tax deposited in this account under RCW 67.28.180(3)(d) must be used to fund programs for the developmentally disabled.
     (c) Fifty percent of the funds derived from the rental car tax deposited in this account under RCW 82.14.049 must be used for programs for the developmentally disabled, and sixty percent of the balance must be used for programs for the mentally ill, with the remaining forty percent of the balance used to fund programs to provide transient housing for the homeless.
     (d) Sixty percent of the funds derived from the food and beverage tax deposited in this account under RCW 82.14.360 must be used for programs for the mentally ill, and the balance must be used for the purchase of transient housing for the homeless.
     (3) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Programs for the developmentally disabled" means early childhood programs, including infant-toddler early intervention, high school transition and employment programs, and community access programs.
     (b) "Mental health programs" means any programs for the mentally ill, including but not limited to treatment and shelter programs.
     (c) "Programs for the homeless" means the provision, acquisition, maintenance, and operations of transient housing for the homeless.

NEW SECTION.  Sec. 7   This act takes effect July 1, 2008.