AN ACT Relating to excise taxation; amending RCW 82.36.025, 46.68.090, 82.44.020, 82.02.030, 82.44.110, 46.68.030, 46.68.110, 46.68.120, 35.77.010, 36.79.110, 36.81.121, 43.03.028, 44.40.070, 47.01.031, 47.01.240, 47.26.040, 47.26.080, 47.26.100, 47.26.130, 47.26.140, 47.26.160, 47.26.170, 47.26.180, 47.26.185, 47.26.190, 47.26.220, 47.26.230, 47.26.240, 47.26.260, 47.26.270, 47.26.305, 47.26.310, 47.26.4254, 47.26.430, 47.26.440, 47.26.450, and 47.26.460; reenacting and amending RCW 82.44.150, 47.26.090, and 47.26.150; adding a new section to chapter 46.68 RCW; adding new sections to chapter 47.26 RCW; adding a new chapter to Title 47 RCW; creating new sections; repealing RCW 47.26.085, 47.26.120, 47.26.183, 47.26.281, and 47.26.290; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. The legislature recognizes that a strong, balanced transportation system is vital to citizens of the state of Washington and its economic growth and social well-being.

The legislature further recognizes that the revenues currently available to the state and to counties and cities for highway, road, and street construction fall far short of the identified need. The 1983 Washington state public works report identified a $1.4 billion shortfall for the period 1984-1988. The gap between identified needs and available revenues continues to increase.

Finally, the legislature recognizes that by 1991 the federal interstate highway funding program is scheduled to terminate. This will likely result in significant shifts in traditional highway funding patterns and a need to adjust state funding formulae.

In order to address serious traffic congestion problems throughout the state on state highways, county roads, and city streets, to meet rural small community road and street needs, and to construct vital, high-cost state highway projects that otherwise will not be funded, the legislature intends to provide additional fuel tax revenues. It is intended that these new revenues be targeted to the most urgently needed construction projects throughout the state, rather than to ongoing maintenance of the existing system. It is further intended that allocation of the new revenues to these construction programs, other than for the high-cost projects, be for only four years' duration. By 1991, this will allow those revenues to be reallocated among the three jurisdictional levels to better reflect the findings of relative need currently being assessed by the road jurisdiction study and to accommodate changes in federal funding expected to occur.

Sec. 2. Section 6, chapter 317, Laws of 1977 ex. sess. as last amended by section 27, chapter 49, Laws of 1983 1st ex. sess. and RCW 82.36.025 are each amended to read as follows:

The motor vehicle fuel tax rate shall be computed as the sum of the tax rate provided in subsection (1) of this section and the additional tax rates provided in subsections (2) through ((~~(4)~~)) (5) of this section.

(1) ((~~Except as required in subsection (5) of this section,~~)) A motor vehicle fuel tax rate of ((~~fifteen~~)) seventeen cents per gallon shall apply to the sale, distribution, or use of motor vehicle fuel ((~~from July 1, 1983, through June 30, 1984, and a motor vehicle fuel tax rate of seventeen cents per gallon shall apply thereafter~~)).

(2) An additional motor vehicle fuel tax rate of one-third cent per gallon shall apply to the sale, distribution, or use of motor vehicle fuel, and the proceeds from this additional tax rate, reduced by an amount equal to the sum of the payments under RCW 46.68.090 (1) and (2) multiplied by the additional tax rate prescribed by this subsection divided by the motor vehicle fuel tax rate provided in this section, shall be deposited in the rural arterial trust account in the motor vehicle fund for expenditures under RCW 36.79.020.

(3) An additional motor vehicle fuel tax rate of one-third cent per gallon shall apply to the sale, distribution, or use of motor vehicle fuel, and the proceeds from this additional tax rate, reduced by an amount equal to the sum of the payments under RCW 46.68.090 (1) and (2) multiplied by the additional tax rate prescribed by this subsection divided by the motor vehicle fuel tax rate provided in this section, shall be deposited in the urban arterial trust account in the motor vehicle fund.

(4) An additional motor vehicle ((~~full [fuel]~~)) fuel tax rate of one-third cent per gallon shall be applied to the sale, distribution, or use of motor vehicle fuel, and the proceeds from this additional tax rate, reduced by an amount equal to the sum of the payments under RCW 46.68.090 (1) and (2) multiplied by the additional tax rate prescribed by this subsection divided by the motor vehicle fuel tax rate provided in this section, shall be deposited in the motor vehicle fund to be expended for highway purposes of the state as defined in RCW 46.68.130.

(5) (((a) Before the start of each fiscal year, the department of licensing shall estimate the total aggregate motor vehicle fuel tax revenues and the total of all other revenues that will accrue to the motor vehicle fund during the fiscal year. The estimated total of all other state revenues to accrue to the motor vehicle fund during the fiscal year shall include those revenues (other than the aggregate motor vehicle fuel tax revenues) which the department of transportation with the concurrence of the office of financial management determines will accrue during the fiscal year, assuming that collections of such revenues for the fiscal year shall be at the same level as during the fiscal year just ended, adjusted however for historic variations in collections according to yearly periods and for projected trends, but shall not include the proceeds of the sale of bonds, reimbursements to the motor vehicle fund for services performed by the department of transportation for others, moneys derived from nonfuel tax sources that are deposited directly in the several accounts within the motor vehicle fund, interest deposited directly in the several accounts within the motor vehicle fund, nor federal funds. The estimated total aggregate motor vehicle fuel tax revenues for the fiscal year shall include those revenues that the department of licensing determines will accrue during the fiscal year, assuming the sale, distribution, and use of motor vehicle fuel and special fuel within the state for the fiscal year will be at the same volume as during the fiscal year last ended, adjusted however for the historic variations in sales, distribution, and use according to yearly periods and for projected trends.

(b) If the estimated aggregate motor fuel tax revenues plus all other state revenues that will accrue to the motor vehicle fund during a fiscal year as computed in (a) of this subsection exceed the motor vehicle fund revenue limit in the fiscal year as computed in (c) of this subsection, the rate of motor fuel tax provided in subsection (1) of this section shall be reduced by one-half cent increments for the fiscal year only, commencing at the beginning of the fiscal year, as may be necessary to reduce the estimated total revenues for the fiscal year to within the motor vehicle fund revenue limit.

(c) The motor vehicle fund revenue limit for any fiscal year shall be the previous fiscal year's motor vehicle fund revenue limit multiplied by the average state personal income ratio for the three calendar years immediately preceding the beginning of the fiscal year for which the limit is being computed. For purposes of computing the motor vehicle fund revenue limit for the fiscal year ending June 30, 1981, the phrase "the previous fiscal year's motor vehicle fund revenue limit" means the motor vehicle fund revenue collected in the fiscal year ending June 30, 1979, multiplied by the average state personal income ratio for the calendar years 1976, 1977, and 1978.

(6) The legislative transportation committee shall study and analyze each biennium the financial condition of the motor vehicle fund and accounts thereof with particular emphasis on RCW 82.36.010 and 82.36.025)) An additional motor vehicle fuel tax rate of three and one-third cents per gallon from July 1, 1987, through June 30, 1988, and five cents per gallon from July 1, 1988, shall apply to the sale, distribution, or use of motor vehicle fuel. The proceeds from the additional tax rates under this subsection, reduced by an amount equal to the sum of the payments under RCW 46.68.090 (1) and (2) multiplied by the additional tax rate prescribed by this subsection divided by the motor fuel tax rate provided in this section, shall be deposited in the motor vehicle fund and shall be distributed by the state treasurer according to section 4 of this 1987 act.

Sec. 3. Section 46.68.090, chapter 12, Laws of 1961 as last amended by section 21, chapter 49, Laws of 1983 1st ex. sess. and RCW 46.68.090 are each amended to read as follows:

All moneys that have accrued or may accrue to the motor vehicle fund from the motor vehicle fuel tax and special fuel tax shall be first expended for the following purposes:

(1) For payment of refunds of motor vehicle fuel tax and special fuel tax that has been paid and is refundable as provided by law;

(2) For payment of amounts to be expended pursuant to appropriations for the administrative expenses of the offices of state treasurer, state auditor, and the department of licensing of the state of Washington in the administration of the motor vehicle fuel tax and the special fuel tax, which sums shall be distributed monthly;

(3) For ((~~payments~~)) distribution to the rural arterial trust account in the motor vehicle fund, an amount as provided in RCW 82.36.025(2) and section 4(1) of this 1987 act;

(4) For ((~~payments~~)) distribution to the urban arterial trust account in the motor vehicle fund, an amount as provided in RCW 82.36.025(3); ((~~and~~))

(5) For expenditure for highway purposes of the state as defined in RCW 46.68.130, an amount as provided in RCW 82.36.025(4);

(6) For distribution to the transportation improvement account in the motor vehicle fund, an amount as provided in section 4(2) of this 1987 act;

(7) For distribution to the local interest state transportation account in the motor vehicle fund, an amount as provided in section 4(4) of this 1987 act; and

(8) For expenditure under section 4(3) of this 1987 act.

The amount accruing to the motor vehicle fund by virtue of the motor vehicle fuel tax and the special fuel tax and remaining after payments, distributions, and expenditures as provided in subsections (1)((~~, (2), (3), (4), and (5)~~)) through (8) of this section shall, for the purposes of this chapter, be referred to as the "net tax amount."

NEW SECTION. Sec. 4. A new section is added to chapter 46.68 RCW to read as follows:

All moneys that have accrued or may accrue to the motor vehicle fund from the motor vehicle fuel tax and special fuel tax imposed by RCW 82.36.025(5) shall be distributed monthly by the state treasurer in the following manner:

(1) From July 1, 1987, through June 30, 1988, one-sixth cent and from July 1, 1988, through June 30, 1991, one-third cent shall be deposited in the rural arterial trust account in the motor vehicle fund.

(2) From July 1, 1987, through June 30, 1988, one and one-sixth cents and from July 1, 1988, through June 30, 1991, one and one-half cents shall be deposited in the transportation improvement account hereby created in the motor vehicle fund.

(3) From July 1, 1987, through June 30, 1988, one cent and from July 1, 1988, through June 30, 1991, one and one-half cents shall be deposited in the motor vehicle fund and shall be expended solely for highway purposes of the state, subject to the conditions imposed by chapter 47.05 RCW.

(4) From July 1, 1987, through June 30, 1988, one cent and from July 1, 1988, one and two-thirds cents shall be deposited in the local interest state transportation account hereby created in the motor vehicle fund for local interest state transportation projects as proposed by the Washington state transportation commission and approved by the legislature.

NEW SECTION. Sec. 5. A new section is added to chapter 47.26 RCW to read as follows:

(1) There is hereby created a transportation improvement board of fifteen members, six of whom shall be county members and six of whom shall be city members. The remaining members shall be: (a) The secretary of transportation; (b) the assistant secretary for highways of the department of transportation; and (c) the state aid engineer of the department of transportation.

(2) Of the county members of the board, one member shall be a county engineer from a county of the first class or larger; one member shall be a county engineer from a county of the second class or smaller; one member shall be an engineer occupying the position of county road administration engineer, created by RCW 36.78.060; two members shall be county executives, council members, or commissioners from counties of the first class or larger; one member shall be a county executive, council member, or commissioner from a county of the second class or smaller. All county members of the board, except the county road administration engineer, shall be appointed. Not more than one county member of the board shall be from one county. For the purposes of this subsection, the term county engineer shall mean the director of public works in any county in which such a position exists.

(3) Of the city members of the board two shall be chief city engineers, public works directors, or other city employees with responsibility for public works activities, of cities over twenty thousand population; one shall be a chief city engineer, public works director, or other city employee with responsibility for public works activities, of a city of less than twenty thousand population; two shall be mayors, commissioners, or city council members of cities of more than twenty thousand population; and one shall be a mayor, commissioner, or council member of a city of less than twenty thousand population. All of the city members shall be appointed. Not more than one city member of the board shall be from one city.

(4) Appointments of county and city representatives shall be made by the governor, with initial appointments to be made by July 1, 1987. Appointees shall be chosen from a list of two persons for each position nominated by the Washington state association of counties for county members and the association of Washington cities for city members. Except as provided in subsection (5) of this section, terms of appointment are four years. In the case of a vacancy, the appointment shall be only for the remainder of the unexpired term in which the vacancy has occurred. A vacancy shall be deemed to have occurred on the board when any member elected to public office completes that term of office or is removed therefrom for any reason or when any member employed by a political subdivision terminates such employment for whatsoever reason.

(5) The initial appointment to the board for three county representatives and three city representatives shall be for terms of two years and the remainder of the appointments shall be for terms of four years. Terms of all appointed members shall expire on June 30th of odd-numbered years.

(6) The board shall elect a chair from among its members for a two-year term.

(7) Expenses of the board, including administration of the transportation improvement program, shall be paid from the transportation improvement account.

NEW SECTION. Sec. 6. A new section is added to chapter 47.26 RCW to read as follows:

Funds in the transportation improvement account of the motor vehicle fund, created in section 4 of this act, shall be expended by the transportation improvement board for improvement projects and for expenses of the board associated with the administration of the transportation improvement program set forth in this section. The board shall adopt rules and procedures for allocation of funds in the transportation improvement account.

The board shall allocate funds from the account by June 30 of each year for the ensuing fiscal year and shall endeavor to provide geographical diversity in selecting improvement projects to be funded from the account.

Of the amount available in the transportation improvement account for improvement projects:

(1) Eighty-seven percent shall be allocated to counties, to cities over five thousand population, and to transportation benefit districts, for county, city, and multi-agency arterial improvement projects.

To be eligible to receive these funds, a project must be (a) consistent with state, regional, and local transportation plans, (b) necessitated by existing or reasonably foreseeable congestion levels attributable to economic development or growth, and (c) partially funded by local government or private developer contributions, or a combination of such contributions.

Within one year after board approval of an application for funding, a county, city, or transportation benefit district shall provide written certification to the board of the pledged local and/or private funding. Funds allocated to an applicant which does not certify its funding within one year after approval may be reallocated by the board.

(2) Thirteen percent shall be allocated by the board to cities under five thousand population for street improvement projects in a manner determined by the board.

NEW SECTION. Sec. 7. A new section is added to chapter 47.26 RCW to read as follows:

Any county, city, or transportation benefit district constructing a project using transportation improvement account funds shall submit to the board its voucher for payment of the transportation improvement account share of the cost. The chair of the board or the chair's designee shall approve the voucher, when proper to do so, for payment from the account.

The board may adopt rules providing for the approval of payments of funds in the account for costs of construction of an approved project for work in progress and when the project is complete. These payments shall at no time exceed the account share of the costs of construction incurred to the date of the voucher covering the payment.

NEW SECTION. Sec. 8. In addition to any other reports required by law, by January 15, 1988, the transportation improvement board shall submit to the legislative transportation committee a report setting forth its plans for implementing the provisions of this act. The report shall include the criteria intended to be applied in allocating funds in the transportation improvement account, the local and/or private contribution requirements, and the procedures to be followed by applicants.

NEW SECTION. Sec. 9. A new section is added to chapter 47.26 RCW to read as follows:

In addition to any other reports required by law, beginning July 1, 1988, and annually thereafter, the board shall submit a report to the legislative transportation committee covering board activities and expenditures for the previous fiscal year and planned activities and expenditures for the ensuing fiscal year. Each report shall include information on administrative expenditures as well as expenditures for improvement projects.

NEW SECTION. Sec. 10. Before October 1 of each year, the department shall develop and submit to the transportation commission, the governor, and the executive committee of the legislative transportation committee for review, a prioritized list of local interest state transportation projects which are recommended for funding by the legislature from the revenues allocated for that purpose in section 4(4) of this act. For each project recommended, an analysis shall be done to include, but not be limited to, a description of the project scope, anticipated development schedule, and specific cost projections.

The projects submitted shall have demonstrated support by the public in the affected area. Where feasible, local government and/or private contributions toward the cost of these projects is encouraged.

Sec. 11. Section 82.44.020, chapter 15, Laws of 1961 as last amended by section 19, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.44.020 are each amended to read as follows:

(1) An excise tax is imposed for the privilege of using in the state any motor vehicle, except those operated under reciprocal agreements, the provisions of RCW 46.16.160 as now or hereafter amended, or dealer's licenses. The annual amount of such excise tax shall be two percent of the fair market value of such vehicle.

(2) ((~~From and after August 1, 1978, and until August 1, 2008,~~)) An additional excise tax is imposed, in addition to any other tax imposed by this section, for the privilege of using in the state any such motor vehicle, and the annual amount of such additional excise shall be two-tenths of one percent of the fair market value of such vehicle.

(3) Effective with January, 1989, motor vehicle license expirations, an additional excise tax is imposed, in addition to any other tax imposed by this section, for the privilege of using in the state any such motor vehicle, and the annual amount of such additional excise tax shall be two-tenths of one percent of the fair market value of such vehicle.

(4) The department of licensing and county auditors shall collect the additional tax imposed by subsections (2) and (3) of this section for any registration year for the months of that registration year in which such additional tax is effective, and in the same manner and at the same time as the tax imposed by subsection (1) of this section.

((~~(4)~~)) (5) In no case shall the total tax be less than two dollars except for proportionally registered vehicles.

((~~(5)~~)) (6) An additional tax is imposed equal to the taxes payable under subsections (1) and (2) of this section multiplied by the rate specified in RCW 82.02.030.

Sec. 12. Section 31, chapter 35, Laws of 1982 1st ex. sess. as last amended by section 5, chapter 296, Laws of 1986 and RCW 82.02.030 are each amended to read as follows:

(1) The rate of the additional taxes under RCW 54.28.020(2), 54.28.025(2), 66.24.210(2), 66.24.290(2), 82.04.2901, 82.16.020(2), 82.26.020(2), 82.27.020(5), 82.29A.030(2), 82.44.020((~~(5)~~))(6), and 82.45.060(2) shall be seven percent;

(2) The rate of the additional taxes under RCW 82.08.150(4) shall be fourteen percent; and

(3) The rate of the additional taxes under RCW 82.24.020(2) shall be fifteen percent.

Sec. 13. Section 82.44.110, chapter 15, Laws of 1961 as last amended by section 12, chapter 35, Laws of 1982 1st ex. sess. and RCW 82.44.110 are each amended to read as follows:

The county auditor shall regularly, when remitting license fee receipts, pay over and account to the director of licensing for the excise taxes collected under the provisions of this chapter. The director shall forthwith transmit the excise taxes to the state treasurer, ninety-eight percent of which excise tax revenue shall upon receipt thereof be credited by the state treasurer to the general fund, and two percent of which excise tax revenue shall be credited by the state treasurer to the motor vehicle fund to defray administrative and other expenses incurred by the state department of licensing in the collection of the excise tax: PROVIDED, That:

(1) One hundred percent of the proceeds of the additional ((~~two-tenths of one percent excise~~)) tax imposed by RCW 82.44.020(2)((~~, as now or hereafter amended,~~)) shall be credited by the state treasurer to the Puget Sound capital construction account in the motor vehicle fund((~~: PROVIDED FURTHER, That~~));

(2) Fifty percent of the proceeds of the additional tax imposed by RCW 82.44.020(3) shall be credited by the state treasurer to the Puget Sound ferry operations account in the motor vehicle fund;

(3) Fifty percent of the proceeds of the additional tax imposed by RCW 82.44.020(3) shall be credited by the state treasurer to the state patrol highway account in the motor vehicle fund; and

(4) All revenues collected under RCW 82.44.020((~~(5)~~))(6) shall be credited by the state treasurer to the general fund.

Sec. 14. Section 1, chapter 87, Laws of 1972 ex. sess. as last amended by section 13, chapter 35, Laws of 1982 1st ex. sess. and by section 20, chapter 49, Laws of 1982 1st ex. sess. and RCW 82.44.150 are each reenacted and amended to read as follows:

(1) The director of licensing shall on the twenty-fifth day of February, May, August and November of each year, commencing with November, 1971, advise the state treasurer of the total amount of motor vehicle excise taxes remitted to the department of licensing during the preceding calendar quarter ending on the last day of March, June, September and December, respectively, except for those payable under RCW 82.44.020((~~(5),~~))(6) and 82.44.030((~~, and 82.44.070~~)), from motor vehicle owners residing within each municipality which has levied a tax under RCW 35.58.273, which amount of excise taxes shall be determined by the director as follows:

The total amount of motor vehicle excise taxes remitted to the department, except those payable under RCW 82.44.020((~~(5),~~))(6) and 82.44.030((~~, and 82.44.070~~)), from each county shall be multiplied by a fraction, the numerator of which is the population of the municipality residing in such county, and the denominator of which is the total population of the county in which such municipality or portion thereof is located. The product of this computation shall be the amount of excise taxes from motor vehicle owners residing within such municipality or portion thereof. Where the municipality levying a tax under RCW 35.58.273 is located in more than one county, the above computation shall be made by county, and the combined products shall provide the total amount of motor vehicle excise taxes from motor vehicle owners residing in the municipality as a whole. Population figures required for these computations shall be supplied to the director by the office of financial management, who shall adjust the fraction annually.

(2) On the first day of the months of January, April, July, and October of each year, the state treasurer based upon information provided by the department of licensing shall make the following apportionment and distribution of motor vehicle excise taxes deposited in the general fund except taxes collected under RCW 82.44.020((~~(5)~~))(6). A sum equal to seventeen percent thereof shall be paid to cities and towns in the proportions and for the purposes hereinafter set forth; and a sum equal to two percent ((~~of all motor vehicle excise tax receipts~~)) thereof shall be allocable to the county sales and use tax equalization account under RCW 82.14.200((; and a sum equal to seventy percent of all motor vehicle excise tax receipts, except taxes collected under RCW 82.44.020(5), shall be allocable to the state school equalization fund and credited and transferred each year in the following order of priority:

(a) The amount required and certified by the state finance committee each year as being necessary for payment of principal of and interest on bonds authorized by RCW 28A.47.760 through 28A.47.774 in the ensuing twelve months and any additional amounts required by the covenants of such bonds shall be transferred from the state school equalization fund to the 1963 public school building bond retirement fund.

(b) Any remaining amounts in the state school equalization fund from the motor vehicle excise taxes not required for debt service on the above bond issues shall be transferred and credited to the general fund)).

(3) The amount payable to cities and towns shall be apportioned among the several cities and towns within the state according to the following formula:

(a) Sixty-five percent of the sum specified in subsection (2) of this section to be paid to cities and towns shall be apportioned ratably on the basis of population as last determined by the office of financial management.

(b) Thirty-five percent of the sum specified in subsection (2) of this section to be paid to cities and towns shall be apportioned to cities and towns under RCW 82.14.210.

(4) When so apportioned, the amount payable to each such city and town shall be transmitted to the city treasurer thereof, and shall be utilized by such city or town for the purposes of police and fire protection and the preservation of the public health therein, and not otherwise. In case it be adjudged that revenue derived from the excise tax imposed by this chapter cannot lawfully be apportioned or distributed to cities or towns, all moneys directed by this section to be apportioned and distributed to cities and towns shall be credited and transferred to the state general fund.

(5) On the first day of the months of January, April, July, and October of each year, the state treasurer, based upon information provided by the department of licensing, shall remit motor vehicle excise tax revenues imposed and collected under RCW 35.58.273 as follows:

(a) The amount required to be remitted by the state treasurer to the treasurer of any municipality levying the tax shall not exceed in any calendar year the amount of locally-generated tax revenues, excluding the excise tax imposed under RCW 35.58.273 for the purposes of this section, which shall have been budgeted by the municipality to be collected in such calendar year for any public transportation purposes including but not limited to operating costs, capital costs, and debt service on general obligation or revenue bonds issued for these purposes; and

(b) In no event may the amount remitted in a single calendar quarter exceed the amount collected on behalf of the municipality under RCW 35.58.273 during the calendar quarter next preceding the immediately preceding quarter.

(6) At the close of each calendar year accounting period, but not later than April 1, each municipality that has received motor vehicle excise taxes under subsection (5) of this section shall transmit to the director of licensing and the state auditor a written report showing by source the previous year's budgeted tax revenues for public transportation purposes as compared to actual collections. Any municipality that has not submitted the report by April 1 shall cease to be eligible to receive motor vehicle excise taxes under subsection (5) of this section until the report is received by the director of licensing. If a municipality has received more or less money under subsection (5) of this section for the period covered by the report than it is entitled to receive by reason of its locally-generated collected tax revenues, the director of licensing shall, during the next ensuing quarter that the municipality is eligible to receive motor vehicle excise tax funds, increase or decrease the amount to be remitted in an amount equal to the difference between the locally-generated budgeted tax revenues and the locally-generated collected tax revenues. In no event may the amount remitted for a calendar year exceed the amount collected on behalf of the municipality under RCW 35.58.273 during that same calendar year. At the time of the next fiscal audit of each municipality, the state auditor shall verify the accuracy of the report submitted and notify the director of licensing of any discrepancies.

(7) The motor vehicle excise taxes imposed under RCW 35.58.273 and required to be remitted under this section shall be remitted without legislative appropriation.

(8) Any municipality levying and collecting a tax under RCW 35.58.273 which does not have an operating, public transit system or a contract for public transportation services in effect within one year from the initial effective date of the tax shall return to the state treasurer all motor vehicle excise taxes received under subsection (5) of this section.

Sec. 15. Section 20, chapter 380, Laws of 1985 and RCW 46.68.030 are each amended to read as follows:

Except for proceeds from fees for vehicle licensing for vehicles paying such fees under RCW 46.16.070 and 46.16.085, all fees received by the director for vehicle licenses under the provisions of chapter 46.16 RCW shall be forwarded to the state treasurer, accompanied by a proper identifying detailed report, and be by him deposited to the credit of the motor vehicle fund, except that the proceeds from the vehicle license fee and renewal license fee shall be deposited by the state treasurer as hereinafter provided. After July 1, 1981, that portion of each vehicle license fee in excess of $7.40 and that portion of each renewal license fee in excess of $3.40 shall be deposited in the state patrol highway account in the motor vehicle fund, hereby created. Vehicle license fees, renewal license fees, and all other funds in the state patrol highway account shall be for the sole use of the Washington state patrol for highway activities of the Washington state patrol, subject to proper appropriations and reappropriations therefor, for any fiscal biennium after June 30, 1981, and twenty-seven and three-tenths percent of the proceeds from $7.40 of each vehicle license fee and $3.40 of each renewal license fee shall be deposited each biennium in the Puget Sound ferry operations account to partially finance, together with other funds in the account, any budgeted state ferry system maintenance and operating deficit for that biennium. ((The deficit shall be calculated by subtracting from total costs the sum of all unappropriated funds available to the state ferry system, including revenues from tolls that are adjusted by the transportation commission.)) Any remaining amounts of vehicle license fees and renewal license fees that are not deposited in the Puget Sound ferry operations account shall be deposited in the motor vehicle fund.

Sec. 16. Section 46.68.110, chapter 12, Laws of 1961 as last amended by section 32, chapter 460, Laws of 1985 and RCW 46.68.110 are each amended to read as follows:

Funds credited to the incorporated cities and towns of the state as set forth in subdivision (1) of RCW 46.68.100 shall be subject to deduction and distribution as follows:

(1) One and one-half percent of such sums shall be deducted monthly as such sums are credited and set aside for the use of the department of transportation for the supervision of work and expenditures of such incorporated cities and towns on the city and town streets thereof, including the supervision and administration of federal-aid programs for which the department of transportation has responsibility: PROVIDED, That any moneys so retained and not expended shall be credited in the succeeding biennium to the incorporated cities and towns in proportion to deductions herein made;

(2) From July 1, ((~~1985~~)) 1987, through June 30, ((~~1987~~)) 1989, ((~~twenty-four~~)) thirty-three one-hundredths of one percent of such funds shall be deducted monthly, as such funds accrue, and set aside for the use of the department of transportation for the purpose of funding the cities' share of the costs of highway jurisdiction studies and ((~~related~~)) other studies. Any funds so retained and not expended shall be credited in the succeeding biennium to the cities in proportion to the deductions made;

(3) The balance remaining to the credit of incorporated cities and towns after such deduction shall be apportioned monthly as such funds accrue among the several cities and towns within the state ratably on the basis of the population last determined by the office of financial management.

Sec. 17. Section 46.68.120, chapter 12, Laws of 1961 as last amended by section 33, chapter 460, Laws of 1985 and RCW 46.68.120 are each amended to read as follows:

Funds to be paid to the counties of the state shall be subject to deduction and distribution as follows:

(1) One and one-half percent of such funds shall be deducted monthly as such funds accrue and set aside for the use of the department of transportation and the county road administration board for the supervision of work and expenditures of such counties on the county roads thereof, including the supervision and administration of federal-aid programs for which the department of transportation has responsibility: PROVIDED, That any funds so retained and not expended shall be credited in the succeeding biennium to the counties in proportion to deductions herein made;

(2) All sums required to be repaid to counties composed entirely of islands shall be deducted;

(3) From July 1, ((~~1985~~)) 1987, through June 30, ((~~1987~~)) 1989, ((~~twenty-four~~)) thirty-three one-hundredths of one percent of such funds shall be deducted monthly, as such funds accrue, and set aside for the use of the department of transportation for the purpose of funding the counties' share of the costs of highway jurisdiction studies and ((~~related~~)) other studies. Any funds so retained and not expended shall be credited in the succeeding biennium to the counties in proportion to the deductions made;

(4) The balance of such funds remaining to the credit of counties after such deductions shall be paid to the several counties monthly, as such funds accrue, in accordance with RCW 46.68.122 and 46.68.124.

Sec. 18. Section 35.77.010, chapter 7, Laws of 1965 as last amended by section 23, chapter 7, Laws of 1984 and RCW 35.77.010 are each amended to read as follows:

(1) The legislative body of each city and town, pursuant to one or more public hearings thereon, shall prepare and adopt a comprehensive street program for the ensuing six calendar years and shall file the program with the secretary of transportation not more than thirty days after its adoption. Annually thereafter the legislative body of each city and town shall review the work accomplished under the program and determine current city street needs. Based on these findings each such legislative body shall prepare and after public hearings thereon adopt a revised and extended comprehensive street program before July 1st of each year, and each one-year extension and revision shall be filed with the secretary of transportation not more than thirty days after its adoption. The purpose of this section is to assure that each city and town shall perpetually have available advanced plans looking to the future for not less than six years as a guide in carrying out a coordinated street construction program. The program may at any time be revised by a majority of the legislative body of a city or town, but only after a public hearing.

The six-year program of each city lying within an urban area shall contain a separate section setting forth the six-year program for arterial street construction based upon its long range construction plan and formulated in accordance with rules of the ((~~urban arterial~~)) transportation improvement board. The six-year program for arterial street construction shall be submitted to the ((~~urban arterial~~)) transportation improvement board forthwith after its annual revision and adoption by the legislative body of the city. The six-year program for arterial street construction shall be based upon estimated revenues available for such construction together with such additional sums as the legislative authority may request for urban arterials ((~~only~~)) from the urban arterial trust account or the transportation improvement account for the six-year period. The arterial street construction program shall provide for a more rapid rate of completion of the long-range construction needs of ((~~major~~)) principal arterial streets than for ((~~secondary~~)) minor and collector arterial streets, pursuant to rules of the ((~~urban arterial~~)) transportation improvement board: PROVIDED, That urban arterial trust funds made available to the group of incorporated cities lying outside the boundaries of federally approved urban areas within each region need not be divided between functional classes of arterials but shall be available for any designated arterial street.

(2) ((~~On and after July 1, 1976,~~)) Each six-year program forwarded to the secretary in compliance with subsection (1) of this section shall contain information as to how a city or town will expend its moneys, including funds made available pursuant to chapter 47.30 RCW, for bicycle, pedestrian, and equestrian purposes.

Sec. 19. Section 11, chapter 49, Laws of 1983 1st ex. sess. and RCW 36.79.110 are each amended to read as follows:

The county road administration board and the ((~~urban arterial~~)) transportation improvement board shall jointly adopt rules to assure coordination of their respective programs especially with respect to projects proposed by the group of incorporated cities outside the boundaries of federally approved urban areas, and to encourage the system development of county-city arterials in rural areas.

Sec. 20. Section 20, chapter 49, Laws of 1983 1st ex. sess. and RCW 36.81.121 are each amended to read as follows:

(1) Before July 1st of each year, the legislative authority of each county with the advice and assistance of the county road engineer, and pursuant to one or more public hearings thereon, shall prepare and adopt a comprehensive road program for the ensuing six calendar years. The program shall include proposed road and bridge construction work, and for those counties operating ferries shall also include a separate section showing proposed capital expenditures for ferries, docks, and related facilities. Copies of the program shall be filed with the county road administration board and with the state secretary of transportation not more than thirty days after its adoption by the legislative authority. The purpose of this section is to assure that each county shall perpetually have available advanced plans looking to the future for not less than six years as a guide in carrying out a coordinated road construction program. The program may at any time be revised by a majority of the legislative authority but only after a public hearing thereon.

(2) The six-year program of each county having an urban area within its boundaries shall contain a separate section setting forth the six-year program for arterial road construction based upon its long-range construction plan and formulated in accordance with regulations of the ((~~urban arterial~~)) transportation improvement board. The six-year program for arterial road construction shall be submitted to the ((~~urban arterial~~)) transportation improvement board forthwith after its annual revision and adoption by the legislative authority of each county. The six-year program for arterial road construction shall be based upon estimated revenues available for such construction together with such additional sums as the legislative authority of each county may request for urban arterials ((~~only~~)) from the urban arterial trust account or the transportation improvement account for the six-year period. The arterial road construction program shall provide for a more rapid rate of completion of the long-range construction needs of ((~~major~~)) principal arterial roads than for ((~~secondary~~)) minor and collector arterial roads, pursuant to regulations of the ((~~urban arterial~~)) transportation improvement board.

(3) Each six-year program forwarded to the secretary in compliance with subsection (1) of this section shall contain information as to how a county will expend its moneys, including funds made available pursuant to chapter 47.30 RCW, for bicycles, pedestrians, and equestrian purposes.

Sec. 21. Section 20, chapter 87, Laws of 1980 as last amended by section 9, chapter 155, Laws of 1986 and RCW 43.03.028 are each amended to read as follows:

(1) There is hereby created a state committee on agency officials' salaries to consist of seven members, or their designees, as follows: The president of the University of Puget Sound; the chairperson of the council of presidents of the state's four-year institutions of higher education; the chairperson of the State Personnel Board; the president of the Association of Washington Business; the president of the Pacific Northwest Personnel Managers' Association; the president of the Washington State Bar Association; and the president of the Washington State Labor Council. If any of the titles or positions mentioned in this subsection are changed or abolished, any person occupying an equivalent or like position shall be qualified for appointment by the governor to membership upon the committee.

(2) The committee shall study the duties and salaries of the directors of the several departments and the members of the several boards and commissions of state government, who are subject to appointment by the governor or whose salaries are fixed by the governor, and of the chief executive officers of the following agencies of state government:

The arts commission; the human rights commission; the board of accountancy; the board of pharmacy; the capitol historical association and museum; the eastern Washington historical society; the Washington state historical society; the interagency committee for outdoor recreation; the criminal justice training commission; the department of personnel; the state finance committee; the state library; the traffic safety commission; the horse racing commission; the commission for vocational education; the advisory council on vocational education; the public disclosure commission; the hospital commission; the state conservation commission; the commission on Mexican-American affairs; the commission on Asian-American affairs; the state board for volunteer firemen; the ((~~urban arterial~~)) transportation improvement board; the data processing authority; the public employees relations commission; the forest practices appeals board; and the energy facilities site evaluation council.

The committee shall report to the governor or the chairperson of the appropriate salary fixing authority at least once in each fiscal biennium on such date as the governor may designate, but not later than seventy-five days prior to the convening of each regular session of the legislature during an odd-numbered year, its recommendations for the salaries to be fixed for each position.

(3) Committee members shall be reimbursed by the department of personnel for travel expenses under RCW 43.03.050 and 43.03.060.

Sec. 22. Section 1, chapter 201, Laws of 1973 1st ex. sess. as last amended by section 3, chapter 192, Laws of 1979 ex. sess. and RCW 44.40.070 are each amended to read as follows:

Prior to October 1st of each even-numbered year all state agencies whose major programs consist of transportation activities, including the department of transportation, the utilities and transportation commission, the ((~~urban arterial~~)) transportation improvement board, the Washington state patrol, the department of licensing, the traffic safety commission, the county road administration board, and the board of pilotage commissioners, shall adopt or revise, after consultation with the legislative transportation committee, a comprehensive six-year program and financial plan for all transportation activities under each agency's jurisdiction.

The comprehensive six-year program and financial plan shall state the general objectives and needs of each agency's major transportation programs, including workload and performance estimates.

Sec. 23. Section 3, chapter 151, Laws of 1977 ex. sess. and RCW 47.01.031 are each amended to read as follows:

(1) There is created a department of state government to be known as the department of transportation.

(2) All powers, duties, and functions vested by law in the department of highways, the state highway commission, the director of highways, the Washington toll bridge authority, the aeronautics commission, the director of aeronautics, and the canal commission, and the transportation related powers, duties, and functions of the planning and community affairs agency, are transferred to the jurisdiction of the department, except those powers, duties, and functions which are expressly directed elsewhere in this or in any other act of the 1977 legislature.

(3) The ((~~urban arterial board and the~~)) board of pilotage commissioners ((~~are~~)) is transferred to the jurisdiction of the department for ((~~their~~)) its staff support and administration: PROVIDED, That nothing in this section shall be construed as transferring any policy making powers of the ((~~urban arterial board or the~~)) board of pilotage commissioners to the transportation commission or the department of transportation.

Sec. 24. Section 10, chapter 195, Laws of 1971 ex. sess. as amended by section 82, chapter 7, Laws of 1984 and RCW 47.01.240 are each amended to read as follows:

The department and the ((~~urban arterial~~)) transportation improvement board shall coordinate their activities relative to long-range needs studies, in accordance with the provisions of chapter 47.05 RCW and RCW 47.26.170, respectively, in order that long-range needs data may be developed and maintained on an integrated and comparable basis. Needs data for county roads and city streets in nonurban areas shall be provided by the counties and cities to the department in such form and extent as requested by the department, after consultation with the county road administration board and the association of Washington cities, in order that needs data may be obtained on a comparable basis for all highways, roads, and streets in Washington.

Sec. 25. Section 10, chapter 83, Laws of 1967 ex. sess. as last amended by section 153, chapter 7, Laws of 1984 and RCW 47.26.040 are each amended to read as follows:

The term "urban area" means every area of this state designated as an urban area by the department with the approval of the federal secretary of transportation in accordance with federal law, hereafter referred to as federally approved urban areas((~~, or areas within incorporated cities~~)).

Sec. 26. Section 14, chapter 83, Laws of 1967 ex. sess. as last amended by section 2, chapter 315, Laws of 1981 and RCW 47.26.080 are each amended to read as follows:

There is hereby created in the motor vehicle fund the urban arterial trust account. All moneys deposited in the motor vehicle fund to be credited to the urban arterial trust account shall be expended for the construction and improvement of city arterial streets and county arterial roads within urban areas((~~, for expenses of the urban arterial board,~~)) or for the payment of principal or interest on bonds issued for the purpose of constructing or improving city arterial streets and county arterial roads within urban areas, or for reimbursement to the state, counties, cities, and towns in accordance with RCW 47.26.4252 and 47.26.4254, the amount of any payments made on principal or interest on urban arterial trust account bonds from motor vehicle or special fuel tax revenues which were distributable to the state, counties, cities, and towns.

Sec. 27. Section 15, chapter 83, Laws of 1967 ex. sess. and RCW 47.26.090 are each reenacted and amended to read as follows:

The term "arterial" as used in ((~~RCW 47.26.080 through 47.26.290 and 47.26.420 through 47.26.440, 35.77.010 and 36.81.121~~)) this chapter means any state highway, county road, or city street ((~~so designated in accordance with criteria established by regulations of the urban arterial board~~)), in an urban area, that is functionally classified by the federal highway administration as a principal arterial, minor arterial, or collector street.

Sec. 28. Section 16, chapter 83, Laws of 1967 ex. sess. and RCW 47.26.100 are each amended to read as follows:

The term "city" as used in this chapter relative to the urban arterial trust account shall include cities and incorporated towns having a population in excess of five thousand.

Sec. 29. Section 19, chapter 83, Laws of 1967 ex. sess. as last amended by section 139, chapter 34, Laws of 1975-'76 2nd ex. sess. and RCW 47.26.130 are each amended to read as follows:

Members of the ((~~urban arterial~~)) transportation improvement board shall receive no compensation for their services on the board, but shall be reimbursed for travel expenses incurred while attending meetings of the board or while engaged on other business of the board when authorized by the board in accordance with RCW 43.03.050 and 43.03.060 as now existing or hereafter amended.

Sec. 30. Section 20, chapter 83, Laws of 1967 ex. sess. as last amended by section 58, chapter 151, Laws of 1977 ex. sess. and RCW 47.26.140 are each amended to read as follows:

((The department of transportation shall furnish necessary staff services and facilities required by the urban arterial board. The cost of such services, together with travel expenses in accordance with RCW 43.03.050 and 43.03.060 as now existing or hereafter amended, of the members and all other lawful expenses of the board, shall be paid from the urban arterial trust account in the motor vehicle fund.)) The ((~~urban arterial~~)) transportation improvement board ((~~may~~)) shall appoint an executive ((~~secretary~~)) director, who shall serve at its pleasure and whose salary shall be set by the board ((~~and~~)), and may employ additional staff as it deems appropriate. All costs associated with staff, together with travel expenses in accordance with RCW 43.03.050 and 43.03.060, shall be paid from the ((~~urban arterial trust~~)) transportation improvement account in the motor vehicle fund.

Sec. 31. Section 21, chapter 83, Laws of 1967 ex. sess. and RCW 47.26.150 are each reenacted and amended to read as follows:

The ((~~urban arterial~~)) transportation improvement board shall ((~~first meet during the first week of July, 1967. Thereafter the board shall~~)) meet at least once quarterly and upon the call of its chairman and shall from time to time adopt rules and regulations for its own government and as may be necessary for it to discharge its duties and exercise its powers under this chapter.

Sec. 32. Section 22, chapter 83, Laws of 1967 ex. sess. as last amended by section 155, chapter 7, Laws of 1984 and RCW 47.26.160 are each amended to read as follows:

The ((~~urban arterial~~)) transportation improvement board shall:

(1) Adopt rules necessary to implement the provisions of this chapter relating to the allocation of funds ((~~in the urban arterial trust account of the motor vehicle fund~~)) to counties and cities;

(2) Adopt reasonably uniform design standards for city and county arterials that meet the requirements for urban development;

(3) Report biennially on the first day of November of the even-numbered years to the department, the legislative transportation committee, and the house and senate transportation committees regarding progress of cities and counties in developing long-range plans for their urban arterial construction ((~~and~~)), programming ((or)) of urban arterial construction work, and the allocation of ((~~urban arterial trust~~)) funds to the cities and counties.

Sec. 33. Section 23, chapter 83, Laws of 1967 ex. sess. as last amended by section 156, chapter 7, Laws of 1984 and RCW 47.26.170 are each amended to read as follows:

The legislative authority of each county or city lying within or having within its boundaries an urban area shall prepare, adopt, and submit to the ((~~urban arterial~~)) transportation improvement board a long-range plan for arterial construction, taking into account the comprehensive land use plan of each such jurisdiction and setting forth arterial construction needs through a ((~~fourteen-year~~)) six-year advance planning period. The long-range arterial construction plans shall be revised by the counties and cities every two years to show the current arterial construction needs through ((~~a fourteen-year~~)) the advanced planning period, and as revised shall be submitted to the ((~~urban arterial~~)) transportation improvement board during the first week of January of every even-numbered year. The long-range plans shall be prepared pursuant to guidelines established by the ((~~urban arterial~~)) transportation improvement board ((~~and with the assistance of the board and the department~~)). Upon receipt of the long-range arterial construction plans of the several counties and cities, the ((~~urban arterial~~)) transportation improvement board shall revise the construction needs for urban arterials set forth in the plans as necessary to conform with its uniform standards for establishing construction needs of the counties and cities.

Sec. 34. Section 24, chapter 83, Laws of 1967 ex. sess. as last amended by section 8, chapter 122, Laws of 1979 ex. sess. and RCW 47.26.180 are each amended to read as follows:

Arterial designation and classification, as provided for by this chapter, shall be required to be an integral and coordinated portion of its planning process as authorized by chapters 35.63 or 36.70 RCW. The legislative authority of each county and city lying within or having within its boundaries an urban area shall with the advice and assistance of its chief engineer and its planning office divide all of its roads or streets into arterial roads or streets and access roads or streets and shall further subdivide the arterials into three functional classes to be known as principal arterials, minor arterials, and collector arterials: PROVIDED, That incorporated cities lying outside federally approved urban areas shall not be required to subdivide arterials into functional classes. Upon receipt of the classification plans of the several counties and cities, the ((~~urban arterial~~)) transportation improvement board shall review and revise the classification for the urban arterials as necessary to conform with (1) existing designated federal route classifications, or (2) uniform classification standards established by the ((~~urban arterial~~)) transportation improvement board.

Sec. 35. Section 4, chapter 253, Laws of 1975 1st ex. sess. as amended by section 157, chapter 7, Laws of 1984 and RCW 47.26.185 are each amended to read as follows:

The ((~~urban arterial~~)) transportation improvement board may adopt rules establishing qualifications for cities and counties administering and supervising the design and construction of ((~~urban arterial~~)) projects financed in part from the urban arterial trust account or the transportation improvement account. The rules establishing qualification shall take into account the resources and population of the city or county, its permanent engineering staff, its design and construction supervision experience, and other factors the board deems appropriate. Any city or county failing to meet the qualifications established by the board for administering and supervising ((~~an urban arterial~~)) a project shall contract with a qualified city or county or the department for the administration and supervision of the design and construction of any approved ((~~urban arterial~~)) project as a condition for receiving ((~~urban arterial trust~~)) account funds for the project.

Sec. 36. Section 25, chapter 83, Laws of 1967 ex. sess. as last amended by section 4, chapter 315, Laws of 1981 and RCW 47.26.190 are each amended to read as follows:

(1) At the beginning of each biennium for the urban arterial trust account, the transportation improvement board shall establish apportionment percentages for the five regions defined in RCW 47.26.050 in the following manner ((prescribed in RCW 47.26.060 for that biennium, except calculations of needs shall be based upon a projection of category A needs for the ensuing six year period as determined by the department of transportation)):

(a) One-third in the ratio which the population of the urban areas of each region bears to the total population of all of the urban areas of the state as last determined by the office of financial management;

(b) One-third in the ratio which the vehicle to mile ratio traveled on the classified arterial system prescribed in RCW 47.26.180, within the urban areas of each region bears to the total vehicle to mile ratio traveled on all classified urban arterials; and

(c) One-third in the ratio which the city and county urban arterial needs within the urban areas of each region bears to the total urban arterial needs on city and county urban arterials within all urban areas of the state as last revised by the transportation improvement board.

Except as otherwise provided in subsection (3) of this section, such apportionment percentages shall be used once each calendar quarter by the ((~~urban arterial~~)) transportation improvement board to apportion funds credited to the urban arterial trust account which are available for expenditure for urban arterial projects((~~: PROVIDED, That~~)). Any funds ((apportioned to a region and expended for a project which was initially authorized by the urban arterial board in a biennium prior to the 1981-1983 biennium will be apportioned in accordance with apportionment percentages for the five regions which were established in the prior biennium)) credited to the urban arterial trust account subsequent to July 1, 1987, resulting from bond sales in accordance with RCW 47.26.420 through 47.26.427 shall be apportioned according to the percentages for the five regions established for the biennium when the bonding authority was obligated to projects by the urban arterial board.

(2) All amounts credited to the urban arterial trust account resulting from series III bond sales in accordance with RCW 47.26.420 through 47.26.427, ((except those provided for in subsection (3) of this section and except proceeds from the sale of first authorization bonds and any excise tax revenues that may be required to repay the three series of urban arterial bonds or the interest thereon when due,)) after apportionment to each region, shall be divided on the basis of relative population established at the beginning of each biennium by the office of financial management between (a) the group of cities and that portion of those counties within federally approved urban areas and (b) the group of incorporated cities outside the boundaries of federally approved urban areas: PROVIDED, That funds credited to the urban arterial trust account subsequent to July 1, 1987, resulting from the sale of bonds in accordance with RCW 47.26.420 through 47.26.427 shall be divided on the basis of relative population percentages established for the biennium when the bonding authority was obligated to projects by the urban arterial board. Within each region, funds divided between the groups identified under (a) and (b) ((~~above~~)) of this subsection shall then be allocated by the ((~~urban arterial~~)) transportation improvement board to incorporated cities and counties, as the case may be, for the construction of specific urban arterial projects in accordance with the procedures set forth in RCW 47.26.240.

(((3) At the beginning of each biennium the urban arterial board shall establish apportionment percentages for each of the five regions for the apportionment of the proceeds from the sale of fifteen million dollars of series II bonds and sixteen million dollars of series III bonds authorized by RCW 47.26.420, as now or hereafter amended, in the ratio which the population of the incorporated cities and towns lying outside the boundaries of federally approved urban areas of each region bears to the total population of all incorporated cities and towns of the state lying outside the boundaries of federally approved urban areas, as such populations are determined at the beginning of each biennium by the office of financial management. Such apportionment percentages shall be used once each calendar quarter by the urban arterial board to apportion funds credited to the urban arterial trust account which are available for expenditure for urban arterial projects under this subsection: PROVIDED, That any funds apportioned to a region and expended for a project which was initially authorized by the urban arterial board in a biennium prior to the 1981-1983 biennium will be apportioned in accordance with apportionment percentages for the five regions which were established in the prior biennium. Funds apportioned to each region shall be allocated by the urban arterial board to incorporated cities lying outside the boundaries of federally approved urban areas, for the construction of specific urban arterial projects in accordance with the procedures set forth in RCW 47.26.240.))

Sec. 37. Section 28, chapter 83, Laws of 1967 ex. sess. and RCW 47.26.220 are each amended to read as follows:

Counties and cities, in preparing their respective six year programs relating to urban arterial improvements to be funded by the urban arterial trust account, shall select specific priority improvement projects for each functional class of arterial based on the rating of each arterial section proposed to be improved in relation to other arterial sections within the same functional class, taking into account the following:

(1) Its structural ability to carry loads imposed upon it;

(2) Its capacity to move traffic at reasonable speeds without undue congestion;

(3) Its adequacy of alignment and related geometrics;

(4) Its accident experience; and

(5) Its fatal accident experience.

The six year construction programs shall remain flexible and subject to annual revision as provided in RCW 36.81.121 and 35.77.010.

Sec. 38. Section 29, chapter 83, Laws of 1967 ex. sess. as amended by section 158, chapter 7, Laws of 1984 and RCW 47.26.230 are each amended to read as follows:

Whenever an urban arterial in a city crosses into an unincorporated urban area or into an adjacent city, the proper city and county officials shall jointly plan the development of the arterial in their respective long-range plans, arterial classification plans, and six-year construction programs. Whenever an urban arterial connects with and will be substantially affected by a programmed construction project on a state highway, the proper county or city officials shall jointly plan the development of the connecting arterial with the appropriate department of transportation district administrator. The ((~~urban arterial~~)) transportation improvement board shall adopt rules providing for the system development of county-city arterials and urban arterials with state highways.

Sec. 39. Section 30, chapter 83, Laws of 1967 ex. sess. as amended by section 15, chapter 317, Laws of 1977 ex. sess. and RCW 47.26.240 are each amended to read as follows:

Upon receipt of a county's or city's revised six year program, the ((~~urban arterial~~)) transportation improvement board as soon as practicable shall review and may revise the construction program as it relates to urban arterials for which urban arterial trust account moneys are requested as necessary to conform to (1) the priority rating of the proposed project, based upon the factors in RCW 47.26.220, in relation to proposed projects in all other urban arterial construction programs submitted by the cities and counties((, and within each region, projects proposed by the group of cities and counties within federally approved urban areas shall be evaluated separately from the projects proposed by the group of incorporated cities outside the boundaries of federally approved urban areas)) in the same region; and (2) the amount of urban arterial trust account funds which the ((~~urban arterial~~)) transportation improvement board estimates will be apportioned to the region, and further divided between the group of cities and counties within federally approved urban areas and the group of incorporated cities outside the boundaries of federally approved urban areas, in the ensuing six year period.

Sec. 40. Section 32, chapter 83, Laws of 1967 ex. sess. as amended by section 1, chapter 126, Laws of 1973 1st ex. sess. and RCW 47.26.260 are each amended to read as follows:

(1) Upon completion of a preliminary proposal, the county or city submitting said proposal shall submit to the ((~~urban arterial~~)) transportation improvement board its voucher for payment of the urban arterial trust account or transportation improvement account, both hereinafter referred to in this section as account, share of the cost. Upon the completion of an approved ((~~urban arterial~~)) construction project, the county or city constructing the project shall submit to the ((~~urban arterial~~)) transportation improvement board its voucher for the payment of the ((~~trust~~)) appropriate account share of the cost. The chairman of the ((~~urban arterial~~)) transportation improvement board or his designated agent shall approve such voucher when proper to do so, for payment from the ((~~urban arterial trust~~)) appropriate account to the county or city submitting the voucher.

(2) The ((~~urban arterial~~)) transportation improvement board may adopt regulations providing for the approval of payments of funds in the ((~~urban arterial trust~~)) account to a county or city for costs of preliminary proposal, and costs of construction of an approved project from time to time as work progresses. These payments shall at no time exceed the ((~~urban arterial trust~~)) account share of the costs of construction incurred to the date of the voucher covering such payment.

Sec. 41. Section 33, chapter 83, Laws of 1967 ex. sess. as last amended by section 22, chapter 49, Laws of 1983 1st ex. sess. and RCW 47.26.270 are each amended to read as follows:

Counties and cities receiving funds from the urban arterial trust account for construction of arterials shall provide such matching funds as shall be established by regulations ((~~recommended~~)) adopted by the ((~~urban arterial~~)) transportation improvement board ((~~subject to review, revision, and final approval by the state transportation commission~~)). Matching requirements shall be established after appropriate studies by the board taking into account (1) financial resources available to counties and cities to meet arterial needs, (2) the amounts and percentages of funds available for road or street construction traditionally expended by counties and cities on arterials, (3) in the case of counties, the relative needs of arterials lying outside urban areas, and (4) the requirements necessary to avoid diversion of funds traditionally expended for arterial construction to other street or road purposes or to nonhighway purposes: PROVIDED HOWEVER, That for projects funded subsequent to July 1, 1977, cities and counties may use as matching funds any moneys received from any source, except such moneys which by law may not be used for the purposes set forth in this chapter.

Sec. 42. Section 2, chapter 141, Laws of 1974 ex. sess. and RCW 47.26.305 are each amended to read as follows:

Each city and county eligible for receipt of urban arterial trust funds is hereby authorized and directed to establish a system of bicycle routes throughout its jurisdiction. Such routes shall, when established in accordance with standards adopted by the ((~~urban arterial~~)) transportation improvement board, be eligible for establishment, improvement, and upgrading with urban arterial trust funds when accomplished in connection with an arterial project.

Sec. 43. Section 3, chapter 141, Laws of 1974 ex. sess. as amended by section 160, chapter 7, Laws of 1984 and RCW 47.26.310 are each amended to read as follows:

((~~Prior to July 1, 1974,~~)) The ((~~urban arterial~~)) transportation improvement board shall adopt:

(1) Standards for the designation of a bicycle route system which shall include, but need not be limited to, consideration of:

(a) Existing and potential bicycle traffic generating activities, including but not limited to places of employment, schools, colleges, shopping areas, and recreational areas;

(b) Directness of travel and distance between potential bicycle traffic generating activities; and

(c) Safety for bicyclists and avoidance of conflict with vehicular traffic which shall include, wherever feasible, designation of bicycle routes on streets parallel but adjacent to existing designated urban arterial routes.

(2) Insofar as is practicable to achieve reasonable uniformity, design standards for bicycle routes shall take into consideration the construction standards and signing system devised by the department pursuant to RCW 47.30.060.

Sec. 44. Section 10, chapter 315, Laws of 1981 as amended by section 24, chapter 49, Laws of 1983 1st ex. sess. and RCW 47.26.4254 are each amended to read as follows:

(1) Any funds required to repay series III bonds authorized by RCW 47.26.420, or the interest thereon, when due shall first be taken from that portion of the motor vehicle fund that results from the imposition of excise taxes on motor vehicle and special fuels imposed by chapters 82.36, 82.37, and 82.38 RCW and that is distributed to the urban arterial trust account in the motor vehicle fund, subject, however, to the prior lien of the first authorization of bonds authorized by RCW 47.26.420. If the moneys so distributed to the urban arterial trust account, after first being applied to administrative expenses of the ((~~urban arterial~~)) transportation improvement board and to the requirements of bond retirement and payment of interest on first authorization bonds and series II bonds as provided in RCW 47.26.425 and 47.26.4252, are insufficient to meet the requirements for bond retirement or interest on any series III bonds, the amount required to make such payments on series III bonds or interest thereon shall next be taken from that portion of the motor vehicle fund that results from the imposition of excise taxes on motor vehicle and special fuels and that is distributed to the state, counties, cities, and towns pursuant to RCW 46.68.100, subject, however, to subsection (2) of this section.

(2) To the extent that moneys so distributed to the urban arterial trust account are insufficient to meet the requirements for bond retirement or interest on any series III bonds, sixty percent of the amount required to make such payments when due shall first be taken from that portion of the motor vehicle fund that results from the imposition of excise taxes on motor vehicle and special fuels and that is distributed to the state. The remaining forty percent shall first be taken from that portion of the motor vehicle fund that results from the imposition of excise taxes on motor vehicle and special fuels and that is distributed to the cities and towns pursuant to RCW 46.68.100(1) and to the counties pursuant to RCW 46.68.100(2). Of the counties', cities', and towns' share of any additional amounts required in the fiscal year ending June 30, 1984, fifteen percent shall be taken from the counties' distributive share and eighty-five percent from the cities' and towns' distributive share. Of the counties', cities', and towns' share of any additional amounts required in each fiscal year thereafter, the percentage thereof to be taken from the counties' distributive share and from the cities' and towns' distributive share shall correspond to the percentage of funds authorized for specific county projects and for specific city and town projects, respectively, from the proceeds of series III bonds, for the period through the first eleven months of the prior fiscal year as determined by the chairman of the ((~~urban arterial~~)) transportation improvement board and reported to the state finance committee and the state treasurer not later than the first working day of June.

(3) Any payments on such bonds or interest thereon taken from motor vehicle or special fuel tax revenues that are distributable to the state, counties, cities, and towns shall be repaid from the first moneys distributed to the urban arterial trust account not required for redemption of the first authorization bonds, series II bonds, or series III bonds or interest on these bonds.

Sec. 45. Section 53, chapter 83, Laws of 1967 ex. sess. as amended by section 12, chapter 315, Laws of 1981 and RCW 47.26.430 are each amended to read as follows:

Notwithstanding the provisions of RCW 47.26.190 and 47.26.240, the ((~~urban arterial~~)) transportation improvement board may, in any biennium, subject to proper appropriations, approve expenditures from the urban arterial trust account for construction of projects on urban arterials within a region, the total amount of which including bond proceeds, exceeds the amount apportionable during the biennium to the region. The total amounts apportioned to each region through ((~~1990~~)) 1995 shall meet the apportionment requirements of RCW 47.26.190 and 47.26.240 for such period.

Sec. 46. Section 54, chapter 83, Laws of 1967 ex. sess. as amended by section 163, chapter 7, Laws of 1984 and RCW 47.26.440 are each amended to read as follows:

Not later than November 1st of each even-numbered year the ((~~urban arterial~~)) transportation improvement board shall prepare and present to the commission ((~~a recommended~~)) an adopted budget for expenditures from the urban arterial trust account and the transportation improvement account during the ensuing biennium. The budget shall contain an estimate of the revenues to be credited to the urban arterial trust account and the transportation improvement account and the amount, if any, of bond proceeds which the board determines should be made available to the urban arterial trust account through the sale of bonds in the ensuing biennium.

The commission shall ((~~review the budget as recommended, revise the budget as it deems proper, and~~)) include the budget for the ((~~urban arterial~~)) transportation improvement board ((~~as revised~~)) as a separate section of the transportation budget which it shall submit to the governor and the legislature at the time of its convening.

Sec. 47. Section 6, chapter 171, Laws of 1969 ex. sess. as amended by section 3, chapter 126, Laws of 1973 1st ex. sess. and RCW 47.26.450 are each amended to read as follows:

At the time the ((~~urban arterial~~)) transportation improvement board reviews the six-year program of each county and city each even-numbered year, it shall consider and shall approve for inclusion in its recommended budget, as required by RCW 47.26.440, the portion of the urban arterial construction program scheduled to be performed during the biennial period beginning the following July 1st. Subject to the appropriations actually approved by the legislature, the board shall as soon as feasible approve urban arterial trust account funds to be spent during the ensuing biennium for preliminary proposals in priority sequence as established pursuant to RCW 47.26.240. The board shall authorize urban arterial trust account funds for the construction project portion of a project previously authorized for a preliminary proposal in the sequence in which the preliminary proposal has been completed and the construction project is to be placed under contract. At such time the board may reserve urban arterial trust account funds for expenditure in future years as may be necessary for completion of preliminary proposals and construction projects to be commenced in the ensuing biennium.

The ((~~urban arterial~~)) transportation improvement board may, within the constraints of available urban arterial trust funds, consider additional projects for authorization upon a clear and conclusive showing by the submitting local government that the proposed project is of an emergent nature and that its need was unable to be anticipated at the time the six-year program of the local government was developed. Such proposed projects shall be evaluated on the basis of the priority rating factors specified in RCW 47.26.220.

Sec. 48. Section 7, chapter 171, Laws of 1969 ex. sess. and RCW 47.26.460 are each amended to read as follows:

Whenever the board approves ((~~an urban arterial~~)) a project it shall determine the amount of ((~~urban arterial trust account~~)) funds to be allocated for such project. The allocation shall be based upon information contained in the six-year plan submitted by the county or city seeking approval of the project and upon such further investigation as the board deems necessary. The board shall adopt reasonable regulations pursuant to which urban arterial trust account funds allocated to a project may be increased upon a subsequent application of the county or city constructing the project. The regulations adopted by the board shall take into account, but shall not be limited to, the following factors: (1) The financial effect of increasing the original allocation for the project upon other ((~~urban arterial~~)) projects either approved or requested; (2) whether the project for which an additional allocation is requested can be reduced in scope while retaining a usable segment; (3) whether the original cost of the project shown in the applicant's six-year program was based upon reasonable engineering estimates; and (4) whether the requested additional allocation is to pay for an expansion in the scope of work originally approved.

NEW SECTION. Sec. 49. The following acts or parts of acts are each repealed:

(1) Section 2, chapter 5, Laws of 1979 and RCW 47.26.085;

(2) Section 18, chapter 83, Laws of 1967 ex. sess., section 1, chapter 171, Laws of 1969 ex. sess., section 8, chapter 85, Laws of 1971 ex. sess., section 3, chapter 315, Laws of 1981, section 1, chapter 209, Laws of 1982 and RCW 47.26.120;

(3) Section 3, chapter 253, Laws of 1975 1st ex. sess. and RCW 47.26.183;

(4) Section 4, chapter 267, Laws of 1975 1st ex. sess., section 1, chapter 214, Laws of 1977 ex. sess., section 163, chapter 151, Laws of 1979 and RCW 47.26.281; and

(5) Section 35, chapter 83, Laws of 1967 ex. sess., section 159, chapter 7, Laws of 1984 and RCW 47.26.290.

NEW SECTION. Sec. 50. References in the Revised Code of Washington to the urban arterial board shall be construed to mean the transportation improvement board.

NEW SECTION. Sec. 51. All rules and all pending business before the urban arterial board shall be continued and acted upon by the transportation improvement board. All existing contracts and obligations of the urban arterial board shall remain in full force and shall be performed by the transportation improvement board.

NEW SECTION. Sec. 52. 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. 53. Section 10 of this act shall constitute a new chapter in Title 47 RCW.

NEW SECTION. Sec. 54. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect July 1, 1987.