BILL REQ. #:  H-3828.2 

Read first time 01/27/12.   Referred to Committee on Ways & Means.

     AN ACT Relating to increasing flexibility and diversity of local government revenue; amending RCW 36.73.065, 82.80.140, 82.14.450, 84.55.005, and 82.02.020; adding a new section to chapter 35.21 RCW; adding a new section to chapter 35A.21 RCW; adding a new chapter to Title 82 RCW; creating new sections; and repealing RCW 84.55.0101.

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

Sec. 1   RCW 36.73.065 and 2007 c 329 s 1 are each amended to read as follows:
     (1) Except as provided in subsection (4) of this section, taxes, fees, charges, and tolls may not be imposed by a district without approval of a majority of the voters in the district voting on a proposition at a general or special election. The proposition must include a specific description of the transportation improvement or improvements proposed by the district and the proposed taxes, fees, charges, and the range of tolls imposed by the district to raise revenue to fund the improvement or improvements.
     (2) Voter approval under this section ((shall)) must be accorded substantial weight regarding the validity of a transportation improvement as defined in RCW 36.73.015.
     (3) A district may not increase any taxes, fees, charges, or range of tolls imposed under this chapter once the taxes, fees, charges, or tolls take effect, unless authorized by the district voters pursuant to RCW 36.73.160.
     (4)(a) A district that includes all the territory within the boundaries of the jurisdiction, or jurisdictions, establishing the district may impose by a majority vote of the governing board of the district the following fees and charges:
     (i) Up to ((twenty)) forty dollars of the vehicle fee authorized in RCW 82.80.140; or
     (ii) A fee or charge in accordance with RCW 36.73.120.
     (b) The vehicle fee authorized in (a) of this subsection may only be imposed for a passenger-only ferry transportation improvement if the vehicle fee is first approved by a majority of the voters within the jurisdiction of the district.
     (c)(i) A district solely comprised of a city or cities ((shall)) may not impose the fees or charges identified in (a) of this subsection within one hundred eighty days after July 22, 2007, unless the county in which the city or cities reside, by resolution, declares that it will not impose the fees or charges identified in (a) of this subsection within the one hundred eighty-day period; or
     (ii) A district solely comprised of a city or cities identified in RCW 36.73.020(6)(b) ((shall)) may not impose the fees or charges until after May 22, 2008, unless the county in which the city or cities reside, by resolution, declares that it will not impose the fees or charges identified in (a) of this subsection through May 22, 2008.
     (5) If the interlocal agreement in RCW 82.80.140(2)(a) cannot be reached, a district that includes only the unincorporated territory of a county may impose by a majority vote of the governing body of the district up to ((twenty)) forty dollars of the vehicle fee authorized in RCW 82.80.140.

Sec. 2   RCW 82.80.140 and 2010 c 161 s 917 are each amended to read as follows:
     (1) Subject to the provisions of RCW 36.73.065, a transportation benefit district under chapter 36.73 RCW may fix and impose an annual vehicle fee, not to exceed one hundred dollars per vehicle registered in the district, for each vehicle subject to vehicle license fees under RCW 46.17.350(1) (a), (c), (d), (e), (g), (h), (j), or (n) through (q) and for each vehicle subject to gross weight license fees under RCW 46.17.355 with a scale weight of six thousand pounds or less.
     (2)(a) A district that includes all the territory within the boundaries of the jurisdiction, or jurisdictions, establishing the district may impose by a majority vote of the governing board of the district up to ((twenty)) forty dollars of the vehicle fee authorized in subsection (1) of this section. If the district is countywide, the revenues of the fee ((shall)) must be distributed to each city within the county by interlocal agreement. The interlocal agreement is effective when approved by the county and sixty percent of the cities representing seventy-five percent of the population of the cities within the county in which the countywide fee is collected.
     (b) A district may not impose a fee under this subsection (2):
     (i) For a passenger-only ferry transportation improvement unless the vehicle fee is first approved by a majority of the voters within the jurisdiction of the district; or
     (ii) That, if combined with the fees previously imposed by another district within its boundaries under RCW 36.73.065(4)(a)(i), exceeds ((twenty)) forty dollars.
     (c) If a district imposes or increases a fee under this subsection (2) that, if combined with the fees previously imposed by another district within its boundaries, exceeds ((twenty)) forty dollars, the district ((shall)) must provide a credit for the previously imposed fees so that the combined vehicle fee does not exceed ((twenty)) forty dollars.
     (3) The department of licensing ((shall)) must administer and collect the fee. The department shall deduct a percentage amount, as provided by contract, not to exceed one percent of the fees collected, for administration and collection expenses incurred by it. The department ((shall)) must remit remaining proceeds to the custody of the state treasurer. The state treasurer ((shall)) must distribute the proceeds to the district on a monthly basis.
     (4) No fee under this section may be collected until six months after approval under RCW 36.73.065.
     (5) The vehicle fee under this section applies only when renewing a vehicle registration, and is effective upon the registration renewal date as provided by the department of licensing.
     (6) The following vehicles are exempt from the fee under this section:
     (a) Campers, as defined in RCW 46.04.085;
     (b) Farm tractors or farm vehicles, as defined in RCW 46.04.180 and 46.04.181;
     (c) Mopeds, as defined in RCW 46.04.304;
     (d) Off-road and nonhighway vehicles, as defined in RCW 46.04.365;
     (e) Private use single-axle trailer, as defined in RCW 46.04.422;
     (f) Snowmobiles, as defined in RCW 46.04.546; and
     (g) Vehicles registered under chapter 46.87 RCW and the international registration plan.

Sec. 3   RCW 82.14.450 and 2010 c 127 s 1 are each amended to read as follows:
     (1) A county legislative authority may ((submit an authorizing proposition to the county voters at a primary or general election and, if the proposition is approved by a majority of persons voting, impose a sales and use tax in accordance with the terms of this chapter. The title of each ballot measure must clearly state the purposes for which the proposed sales and use tax will be used)) impose a sales and use tax in accordance with this chapter. The rate of tax under this section may not exceed three-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.
     (2)(a) A city legislative authority may ((submit an authorizing proposition to the city voters at a primary or general election and, if the proposition is approved by a majority of persons voting,)) impose a sales and use tax in accordance with the terms of this chapter. ((The title of each ballot measure must clearly state the purposes for which the proposed sales and use tax will be used.)) The rate of tax under this subsection may not exceed one-tenth 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. ((A city may not begin imposing a tax approved by the voters under this subsection prior to January 1, 2011.))
     (b) If a county ((adopts an ordinance or resolution to submit a ballot proposition to the voters to)) imposes the sales and use tax under subsection (1) of this section prior to a city within the county ((adopting an ordinance or resolution to submit a ballot proposition to the voters to impose)) imposing the tax under this subsection, the rate of tax by the city under this subsection may not exceed an amount that would cause the total county and city tax rate under this section to exceed three-tenths of one percent. This subsection (2)(b) also applies if the county and city adopt an ordinance or resolution to impose sales and use taxes under this section on the same date.
     (c) If the city ((adopts an ordinance or resolution to submit a ballot proposition to the voters to)) imposes the sales and use tax under this subsection prior to the county in which the city is located, the county must provide a credit against its tax under subsection (1) of this section for the city tax under this subsection to the extent the total county and city tax rate under this section would exceed three-tenths of one percent.
     (3) The tax authorized in this section is in addition to any other taxes authorized by law and must 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 the county.
     (4) The retail sale or use of motor vehicles, and the lease of motor vehicles for up to the first thirty-six months of the lease, are exempt from tax imposed under this section.
     (5) One-third of all money received under this section must be used solely for criminal justice purposes, fire protection purposes, or both. For the purposes of this subsection, "criminal justice purposes" has the same meaning as provided in RCW 82.14.340.
     (6) Money received by a county under subsection (1) of this section must be shared between the county and the cities as follows: Sixty percent must be retained by the county and forty percent must be distributed on a per capita basis to cities in the county.
     (7) Tax proceeds received by a city imposing a tax under this section must be shared between the county and city as follows: Fifteen percent must be distributed to the county and eighty-five percent is retained by the city.

NEW SECTION.  Sec. 4   The legislature recognizes counties have limited revenue options and their capacity has been further limited over the past decade. The legislature also recognizes the counties' reliance on the limited revenue authorities makes it difficult for counties to provide the necessary and required services to their residents. The legislature also recognizes that cities have diverse revenue options and the differences between cities and counties can be confusing for both residents and businesses within a county. The legislature also finds that a majority of citizens and businesses are already paying a utility tax. The legislature intends to provide counties with a utility tax option in order to help diversify revenue options in order to provide necessary and required services.

NEW SECTION.  Sec. 5   (1) Subject to the conditions and requirements of this section, a county may impose an excise tax on the privilege of engaging in business as a utility. The tax is equal to the gross income of the utility derived from providing service to consumers within the county multiplied by the rate provided in subsection (3) of this section. A county may submit a ballot proposition to the voters to seek voter approval to impose the tax authorized under this section, but is not required to do so.
     (2) A county with a population of one million five hundred thousand persons or less may not impose an excise tax on the privilege of engaging in business as a gas utility.
     (3) A county may not impose a rate of tax that exceeds six percent.
     (4) A county must use taxes collected under the authority of this section only for public safety, infrastructure, capital projects, and other services.
     (5) A utility subject to tax under this section must add the tax to the rates or charges it makes for utility services and separately state the amount of tax on billings.
     (6) A county may initially impose the tax authorized under this section only on the first day of a calendar quarter and no sooner than seventy-five days from the date the county adopts the ordinance or resolution imposing the tax.
     (7) A county may provide exemptions for sales by utilities to business customers, such as manufacturing facilities, aircraft repair facilities, industrial parks, industrial facilities, farm businesses, and computer data centers. A county may not provide a general exemption for sales by utilities to residential customers unless business customers are also exempt.
     (8) A county must allow a credit against the cable service utility tax for any franchise fee paid by the cable service utility to the county.
     (9) A county must allow a credit against the tax imposed under the authority of this section for the amount of any similar utility tax imposed by a city or town on the same taxable event. The credit required by this subsection may not exceed the amount of tax otherwise due.
     (10) The definitions in this subsection apply throughout this section.
     (a) "Cable service utility" means a person providing cable service as defined in the federal telecommunications act of 1996.
     (b) "Electrical power utility" has the same meaning as light and power business as defined in RCW 82.16.010.
     (c) "Gas utility" has the same meaning as gas distribution business as defined in RCW 82.16.010.
     (d) "Gross income" is defined as provided in RCW 82.16.010.
     (e) "Sewer utility" means a sewerage collection business as that term is used in chapter 82.16 RCW.
     (f) "Solid waste utility" means a solid waste collection business as defined in RCW 82.18.010.
     (g) "Telephone utility" means a person providing telecommunications service as defined in RCW 82.04.065.
     (h) "Utility" means an electrical power utility, gas utility, telephone utility, water utility, sewer utility, solid waste utility, or cable service utility.
     (i) "Water utility" means a water distribution business as defined in RCW 82.16.010.

Sec. 6   RCW 84.55.005 and 2007 sp.s. c 1 s 1 are each amended to read as follows:
     As used in this chapter:
     (1) "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) "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 authorized under that section or one hundred one percent;
     (c) For all other districts,)) other than the state, the greater of one hundred one percent or one hundred percent plus inflation;
     (b) For the state, the lesser of one hundred one percent or one hundred percent plus inflation; and
     (3) "Regular property taxes" has the meaning given it in RCW 84.04.140.

NEW SECTION.  Sec. 7   RCW 84.55.0101 (Limit factor -- Authorization for taxing district to use one hundred one percent or less -- Ordinance or resolution) and 2007 sp.s. c 1 s 2 & 1997 c 3 s 204 are each repealed.

Sec. 8   RCW 82.02.020 and 2010 c 153 s 3 are each amended to read as follows:
     (1) Except only as expressly provided in chapters 67.28, 81.104, and 82.14 RCW, the state preempts the field of imposing retail sales and use taxes and taxes upon parimutuel wagering authorized pursuant to RCW 67.16.060, conveyances, and cigarettes, and no county, town, or other municipal subdivision ((shall have)) has the right to impose taxes of that nature. Except as provided in RCW 64.34.440 and 82.02.050 through 82.02.090, no county, city, town, or other municipal corporation ((shall)) may impose any tax, fee, or charge, either direct or indirect, on the construction or reconstruction of residential buildings, commercial buildings, industrial buildings, or on any other building or building space or appurtenance thereto, or on the development, subdivision, classification, or reclassification of land. However, this section does not preclude dedications of land or easements within the proposed development or plat which the county, city, town, or other municipal corporation can demonstrate are reasonably necessary as a direct result of the proposed development or plat to which the dedication of land or easement is to apply.
     (2) This section does not prohibit voluntary agreements with counties, cities, towns, or other municipal corporations that allow a payment in lieu of a dedication of land or to mitigate a direct impact that has been identified as a consequence of a proposed development, subdivision, or plat. A local government ((shall)) may not use such voluntary agreements for local off-site transportation improvements within the geographic boundaries of the area or areas covered by an adopted transportation program authorized by chapter 39.92 RCW. Any such voluntary agreement is subject to the following provisions:
     (((1))) (a) The payment ((shall)) must be held in a reserve account and may only be expended to fund a capital improvement agreed upon by the parties to mitigate the identified, direct impact;
     (((2))) (b) The payment ((shall)) must be expended in all cases within five years of collection; and
     (((3))) (c) Any payment not so expended ((shall)) must be refunded with interest to be calculated from the original date the deposit was received by the county and at the same rate applied to tax refunds pursuant to RCW 84.69.100; however, if the payment is not expended within five years due to delay attributable to the developer, the payment ((shall)) must be refunded without interest.
     (3) No county, city, town, or other municipal corporation ((shall)) may require any payment as part of such a voluntary agreement which the county, city, town, or other municipal corporation cannot establish is reasonably necessary as a direct result of the proposed development or plat.
     (4) Nothing in this section prohibits cities, towns, counties, or other municipal corporations from collecting reasonable fees from an applicant for a permit or other governmental approval to cover the cost to the city, town, county, or other municipal corporation of processing applications, including proportionate staffing, administrative, and facility costs associated with the processing of applications, inspecting and reviewing plans, or preparing detailed statements required by chapter 43.21C RCW, including reasonable fees that are consistent with RCW 43.21C.420(6).
     (5) This section does not limit the existing authority of any county, city, town, or other municipal corporation to impose special assessments on property specifically benefited thereby in the manner prescribed by law.
     (6) Nothing in this section prohibits counties, cities, or towns from imposing or permits counties, cities, or towns to impose water, sewer, natural gas, drainage utility, and drainage system charges. However, no such charge shall exceed the proportionate share of such utility or system's capital costs which the county, city, or town can demonstrate are attributable to the property being charged. Furthermore, these provisions may not be interpreted to expand or contract any existing authority of counties, cities, or towns to impose such charges.
     (7) Nothing in this section prohibits a transportation benefit district from imposing fees or charges authorized in RCW 36.73.120 nor prohibits the legislative authority of a county, city, or town from approving the imposition of such fees within a transportation benefit district.
     (8) Nothing in this section prohibits counties, cities, or towns from imposing transportation impact fees authorized pursuant to chapter 39.92 RCW.
     (9) Nothing in this section prohibits counties, cities, or towns from requiring property owners to provide relocation assistance to tenants under RCW 59.18.440 and 59.18.450.
     (10) Nothing in this section limits the authority of counties, cities, or towns to implement programs consistent with RCW 36.70A.540, nor to enforce agreements made pursuant to such programs.
     (11) This section does not apply to special purpose districts formed and acting pursuant to Title 54, 57, or 87 RCW, nor is the authority conferred by these titles affected.

NEW SECTION.  Sec. 9   A new section is added to chapter 35.21 RCW to read as follows:
     Cities are authorized to accept credit cards, charge cards, debit cards, smart cards, stored value cards, federal wire, and automatic clearinghouse system transactions, or other electronic communication, for any payment of any kind including, but not limited to, taxes, fines, interest, penalties, special assessments, fees, rates, charges, or moneys due cities. A payer desiring to pay by a credit card, charge card, debit card, smart card, stored value card, federal wire, automatic clearinghouse system, or other electronic communication must bear the cost of processing the transaction in an amount determined by the city, unless the city legislative authority finds that it is in the best interests of the city to not charge transaction processing costs for all payment transactions made for a specific category of payments. The city's cost determination must be based upon costs incurred by the city and may not, in any event, exceed the additional direct costs incurred by the city to accept the specific form of payment utilized by the payer.

NEW SECTION.  Sec. 10   A new section is added to chapter 35A.21 RCW to read as follows:
     Code cities are authorized to accept credit cards, charge cards, debit cards, smart cards, stored value cards, federal wire, and automatic clearinghouse system transactions, or other electronic communication, for any payment of any kind including, but not limited to, taxes, fines, interest, penalties, special assessments, fees, rates, charges, or moneys due cities. A payer desiring to pay by a credit card, charge card, debit card, smart card, stored value card, federal wire, automatic clearinghouse system, or other electronic communication shall bear the cost of processing the transaction in an amount determined by the city, unless the city legislative authority finds that it is in the best interests of the city to not charge transaction processing costs for all payment transactions made for a specific category of payments. The city's cost determination must be based upon costs incurred by the city and may not, in any event, exceed the additional direct costs incurred by the city to accept the specific form of payment utilized by the payer.

NEW SECTION.  Sec. 11   This act does not affect any existing right acquired or liability or obligation incurred under the sections amended or repealed in this act or under any rule or order adopted under those sections, nor does it affect any proceeding instituted under those sections.

NEW SECTION.  Sec. 12   Sections 4 and 5 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 13   Sections 5 and 6 of this act apply to taxes levied for collection in 2013 and thereafter.