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FIRST SPECIAL SESSION
TWENTY-NINTH DAY
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MORNING SESSION
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Senate Chamber, Olympia, Monday, May 22, 1995
The Senate was called to order at 9:00 a.m. by President Pro Tempore Wojahn. No roll call was taken.
MOTION
On motion of Senator Spanel, the reading of the Journal of the previous day was dispensed with and it was approved.
MESSAGES FROM THE HOUSE
May 18, 1995
MR. PRESIDENT:
The House has passed SUBSTITUTE HOUSE BILL NO. 1110, notwithstanding the Governor's veto, and the same are herewith transmitted.
TIMOTHY A. MARTIN, Chief Clerk
May 18, 1995
MR. PRESIDENT:
The House has passed Section 110 of SUBSTITUTE HOUSE BILL NO. 1010, notwithstanding the Governor's veto, and the same are herewith transmitted.
TIMOTHY A. MARTIN, Chief Clerk
May 18, 1995
MR. PRESIDENT:
The House has passed Section 112 of SUBSTITUTE HOUSE BILL NO. 1010, notwithstanding the Governor's veto, and the same are herewith transmitted.
TIMOTHY A. MARTIN, Chief Clerk
May 18, 1995
MR. PRESIDENT:
The House has passed Section 113 of SUBSTITUTE HOUSE BILL NO. 1010, notwithstanding the Governor's veto, and the same are herewith transmitted.
TIMOTHY A. MARTIN, Chief Clerk
May 18, 1995
MR. PRESIDENT:
The House has passed Section 504 of SUBSTITUTE HOUSE BILL NO. 1010, notwithstanding the Governor's veto, and the same are herewith transmitted.
TIMOTHY A. MARTIN, Chief Clerk
MOTION
On motion of Senator Spanel, the Messages from the House on Substitute House Bill No. 1110, notwithstanding the Governor's veto and Sections 110, 112, 113 and 504 of Substitute House Bill No. 1010, notwithstanding the Governor's partial veto, were held on the desk.
INTRODUCTION AND FIRST READING
SB 6080 by Senator Fairley
AN ACT Relating to the unorganized militia; and repealing RCW 38.08.050.
Referred to Committee on Government Operations.
MOTION
At 9:08 a.m., on motion of Senator Spanel, the Senate was declared to be at ease.
The Senate was called to order at 2:42 p.m. by President Pro Tempore Wojahn.
INTRODUCTION AND FIRST READING
SB 6081 by Senators Swecker and Oke
AN ACT Relating to watershed planning; creating a new section; and making an appropriation.
Referred to Committee on Senate Select Committee on Water Policy.
SB 6082 by Senators Swecker and Winsley
AN ACT Relating to limiting taxes on real property; amending RCW 84.52.065, 84.52.043, 84.52.050, 36.58.150, 36.60.040, 36.69.145, 36.73.060, 36.83.030, 36.100.050, 67.38.130, 84.52.010, and 84.69.020; adding a new section to chapter 84.55 RCW; adding a new chapter to Title 84 RCW; creating a new section; and providing a contingent effective date.
Referred to Committee on Ways and Means.
SJR 8218 by Senators Swecker and Winsley
Amending the Constitution to limit property taxation.
Referred to Committee on Ways and Means.
SECOND READING
GUBERNATORIAL APPOINTMENT
MOTION
On motion of Senator Pelz, Gubernatorial Appointment No. 9141, Bruce F. Brennan, as a member of the Apprenticeship and Training Council, was confirmed.
MOTIONS
On motion of Senator Loveland, Senator Cal Anderson was excused.
On motion of Senator Wood, Senators McCaslin, Moyer, Oke and Schow were excused.
APPOINTMENT OF BRUCE F. BRENNAN
The Secretary called the roll. The appointment was confirmed by the following vote: Yeas, 42; Nays, 0; Absent, 2; Excused, 5.
Voting yea: Senators Anderson, A., Bauer, Cantu, Drew, Fairley, Finkbeiner, Franklin, Fraser, Gaspard, Hale, Haugen, Heavey, Hochstatter, Johnson, Kohl, Long, Loveland, McAuliffe, McDonald, Morton, Newhouse, Owen, Palmer, Pelz, Prentice, Prince, Quigley, Rasmussen, Rinehart, Roach, Sellar, Sheldon, Smith, Snyder, Spanel, Strannigan, Sutherland, Swecker, West, Winsley, Wojahn and Wood - 42.
Absent: Senators Deccio and Hargrove - 2.
Excused: Senators Anderson, C., McCaslin, Moyer, Oke and Schow - 5.
MOTION
At 2:50 p.m., on motion of Senator Spanel, the Senate was declared to be at ease.
The Senate was called to order at 3:44 p.m. by President Pritchard.
MOTION
On motion of Senator Ann Anderson, Senator Deccio was excused.
SECOND READING
GUBERNATORIAL APPOINTMENT
MOTION
On motion of Senator Sheldon, Gubernatorial Appointment No. 9048, Wanda Mosbarger, as a member of the Gambling Commission, was confirmed.
APPOINTMENT OF WANDA MOSBARGER
The Secretary called the roll. The appointment was confirmed by the following vote: Yeas, 42; Nays, 0; Absent, 1; Excused, 6.
Voting yea: Senators Anderson, A., Bauer, Cantu, Drew, Fairley, Finkbeiner, Franklin, Fraser, Gaspard, Hale, Hargrove, Haugen, Heavey, Hochstatter, Johnson, Kohl, Long, Loveland, McAuliffe, McDonald, Morton, Newhouse, Owen, Palmer, Pelz, Prentice, Prince, Quigley, Rasmussen, Rinehart, Roach, Sellar, Sheldon, Smith, Snyder, Spanel, Strannigan, Sutherland, Swecker, West, Winsley and Wood - 42.
Absent: Senator Wojahn - 1.
Excused: Senators Anderson, C., Deccio, McCaslin, Moyer, Oke and Schow - 6.
STATEMENT FOR THE JOURNAL
I would have voted 'yes' on Engrossed Second Substitute House Bill No. 1908.
SENATOR JEANNETTE WOOD, 21st District
SECOND READING
ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 1908, by House Committee on Transportation (originally sponsored by Representatives Dyer, Cooke, Ballasiotes, Stevens, Elliot, Talcott, Cairnes, Lambert, Pelesky, Hymes, Robertson, Mielke, Carrell, Backlund, L. Thomas, and Koster)
Modifying long-term care provisions.
The bill was read the second time.
MOTION
On motion of Senator Rinehart, the rules were suspended, Engrossed Second Substitute House Bill No. 1908 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.
POINT OF INQUIRY
Senator Loveland: "Senator Rinehart, in section 8, the Department of Social and Health Services is authorized to provide assessment and case management services to nursing home residents who may become eligible for medicaid within one hundred and eighty days. Is it your understanding that the department must wait for the resident or family to request these services before offering them?"
Senator Rinehart: "No, our intent is that the department may tell residents and their families about the services which are available to them without waiting for the resident to ask. Residents and families can't be expected to ask for services they don't even know exist."
Senator Loveland: "Section 8 also requires nursing homes to notify the Department of Social and Health Services if a resident is likely to become financially eligible for medicaid benefits within one hundred and eighty days. Does this require residents or families to disclose their personal financial information to the nursing home?"
Senator Rinehart: "No, this bill does not require residents or families to share financial information with the nursing home. However, it does require nursing homes to notify the department if they have reason to know that a resident is likely to become eligible for state-funded care within one hundred and eighty days, so the department may begin informing the resident and their family of the options which are available to them."
Senator Loveland: "Sections 94 and 116 of the bill authorize DSHS to establish in rule a procedure for nursing homes to appeal administrative decisions on payment rates and audits. Is it the intent of this section that the appeal be heard by the Office of Administrative Hearings?"
Senator Rinehart: "No, the intent is that there be a full and fair hearing process which enables DSHS to render a final administrative decision in a prompt and timely manner."
Senator Loveland: "Thank you, Senator Rinehart."
POINT OF INQUIRY
Senator McDonald: "Senator Rinehart, I'm sorry to get this at the last moment, but it was brought to my attention at the last moment. On page fourteen of the bill, there is a subsection 7, which is on line 15. It modifies what this new commission will do. It says, 'Provide for a sufficient supply of quality institutional and noninstitutional residential alternatives,' and it goes on. 'Institutional and' was added. There was some concern that this would modify the intent of Senate Bill No. 5800, which made a commitment to long-term care and to those people who were not in institutions. Does this, in any way, do that?"
Senator Rinehart: "No."
Senator McDonald: "Thank you very much."
The President declared the question before the Senate to be the roll call on the final passage of Engrossed Second Substitute House Bill No. 1908.
ROLL CALL
The Secretary called the roll on the final passage of Engrossed Second Substitute House Bill No. 1908 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 1; Excused, 3.
Voting yea: Senators Anderson, A., Bauer, Cantu, Deccio, Drew, Fairley, Finkbeiner, Franklin, Fraser, Gaspard, Hale, Hargrove, Haugen, Heavey, Hochstatter, Johnson, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Owen, Palmer, Pelz, Prentice, Prince, Quigley, Rasmussen, Rinehart, Roach, Sellar, Sheldon, Smith, Snyder, Spanel, Strannigan, Sutherland, Swecker, West, Winsley and Wojahn - 45.
Absent: Senator Wood - 1.
Excused: Senators Anderson, C., Moyer and Schow - 3.
ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 1908, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.
There being no objection, the President advanced the Senate to the seventh order of business.
THIRD READING
ENGROSSED SUBSTITUTE SENATE BILL NO. 5201, by Senate Committee on Ways and Means (originally sponsored by Senators Bauer, Cantu, McAuliffe, Haugen, Winsley, Snyder, Loveland, Sheldon, Fairley, West, Long, Palmer, Schow, Moyer, Sellar, Rasmussen, Deccio, Heavey, Quigley, C. Anderson, Oke, Roach and Hale) (by request of Governor Lowry)
Providing tax exemptions for manufacturing and processing.
MOTION
On motion of Senator Bauer, the rules were suspended and Engrossed Substitute Senate Bill No. 5201 was returned to second reading and read the second time.
MOTION
Senator Bauer moved that the following amendment by Senators Bauer, Gaspard, Cantu, Sellar, Hargrove, Swecker, Snyder and Palmer be adopted:
Strike everything after the enacting clause and insert the following:
"NEW SECTION. Sec. 1. The legislature finds and declares that:
(1) The health, safety, and welfare of the people of the state of Washington are heavily dependent upon the continued encouragement, development, and expansion of opportunities for family wage employment in our state's private sector;
(2) The state's private sector must be encouraged to commit to continuous improvement of process, products, and services and to deliver high-quality, high-value products through technological innovations and high-performance work organizations;
(3) The state's opportunities for increased economic dealings with other states and nations of the world are dependent on supporting and attracting a diverse, stable, and competitive economic base of private sector employers;
(4) The state's current policy of applying its sales and use taxes to machinery, equipment, and installation labor used in manufacturing, research and development, and other activities has placed our state's private sector at a competitive disadvantage with other states and serves as a significant disincentive to the continuous improvement of products, technology, and modernization necessary for the preservation, stabilization, and expansion of employment and to ensure a stable economy; and
(5) It is vital to the continued development of economic opportunity in this state, including the development of new businesses and the expansion or modernization of existing businesses, that the state of Washington provide tax incentives to entities making a commitment to sites and operations in this state.
NEW SECTION. Sec. 2. A new section is added to chapter 82.08 RCW to read as follows:
(1) The tax levied by RCW 82.08.020 shall not apply to sales to a manufacturer or processor for hire of machinery and equipment used directly in a manufacturing operation, or to sales of or charges made for labor and services rendered in respect to installing the machinery and equipment, but only when the purchaser provides the seller with an exemption certificate in a form and manner prescribed by the department by rule, and the purchaser provides the department with a duplicate of the certificate or a summary of exempt sales as the department may require. The seller shall retain a copy of the certificate for the seller's files.
(2) For purposes of this section and section 3 of this act:
(a) "Machinery and equipment" means industrial fixtures, devices, and support facilities. "Machinery and equipment" includes pollution control equipment installed and used in a manufacturing operation to prevent air pollution, water pollution, or contamination that might otherwise result from the manufacturing operation.
(b) "Machinery and equipment" does not include:
(i) Hand tools;
(ii) Property with a useful life of less than one year;
(iii) Repair parts required to restore machinery and equipment to normal working order;
(iv) Replacement parts that do not increase productivity, improve efficiency, or extend the useful life of the machinery and equipment; or
(v) Building fixtures that are not integral to the manufacturing operation that are permanently affixed to and become a physical part of a building, such as utility systems for heating, ventilation, air conditioning, communications, plumbing, or electrical.
(c) Machinery and equipment is "used directly" in a manufacturing operation if the machinery and equipment:
(i) Acts upon or interacts with an item of tangible personal property;
(ii) Conveys, transports, handles, or temporarily stores an item of tangible personal property at the manufacturing site;
(iii) Controls, guides, measures, verifies, aligns, regulates, or tests tangible personal property;
(iv) Provides physical support for or access to tangible personal property;
(v) Produces power for, or lubricates machinery and equipment;
(vi) Produces another item of tangible personal property for use in the manufacturing operation; or
(vii) Places tangible personal property in the container, package, or wrapping in which the tangible personal property is normally sold or transported.
(d) "Manufacturing operation" means the manufacturing of articles, substances, or commodities for sale as tangible personal property. The manufacturing operation begins at the point where the raw materials enter the manufacturing site and ends at the point where the finished product leaves the manufacturing site. The term also includes that portion of a cogeneration project that is used to generate power for consumption within the manufacturing site of which the cogeneration project is an integral part. The term does not include research and development, the production of electricity by a light and power business as defined in RCW 82.16.010, or the preparation of food products on the premises of a person selling food products at retail.
(e) "Cogeneration" means the simultaneous generation of electrical energy and low-grade heat from the same fuel.
NEW SECTION. Sec. 3. A new section is added to chapter 82.12 RCW to read as follows:
The provisions of this chapter shall not apply in respect to the use by a manufacturer or processor for hire of machinery and equipment used directly in a manufacturing operation, but only when the user provides the department with:
(1) An exemption certificate in a form and manner prescribed by the department within sixty days of the first use of the machinery and equipment in this state; or
(2) An annual summary listing the machinery and equipment by January 31 of the year following the calendar year in which the machinery and equipment is first used in this state.
Sec. 4. RCW 82.04.190 and 1986 c 231 s 2 are each amended to read as follows:
"Consumer" means the following:
(1) Any person who purchases, acquires, owns, holds, or uses any article of tangible personal property irrespective of the nature of the person's business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than for the purpose (a) of resale as tangible personal property in the regular course of business or (b) of incorporating such property as an ingredient or component of real or personal property when installing, repairing, cleaning, altering, imprinting, improving, constructing, or decorating such real or personal property of or for consumers or (c) of consuming such property in producing for sale a new article of tangible personal property or a new substance, of which such property becomes an ingredient or component or as a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale or (d) purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon;
(2) Any person engaged in any business activity taxable under RCW 82.04.290 and any person who purchases, acquires, or uses any telephone service as defined in RCW 82.04.065, other than for resale in the regular course of business;
(3) Any person engaged in the business of contracting for the building, repairing or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state of Washington or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind as defined in RCW 82.04.280, in respect to tangible personal property when such person incorporates such property as an ingredient or component of such publicly owned street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle by installing, placing or spreading the property in or upon the right of way of such street, place, road, highway, easement, bridge, tunnel, or trestle or in or upon the site of such mass public transportation terminal or parking facility;
(4) Any person who is an owner, lessee or has the right of possession to or an easement in real property which is being constructed, repaired, decorated, improved, or otherwise altered by a person engaged in business, excluding only (a) municipal corporations or political subdivisions of the state in respect to labor and services rendered to their real property which is used or held for public road purposes, and (b) the United States, instrumentalities thereof, and county and city housing authorities created pursuant to chapter 35.82 RCW in respect to labor and services rendered to their real property. Nothing contained in this or any other subsection of this definition shall be construed to modify any other definition of "consumer";
(5) Any person who is an owner, lessee, or has the right of possession to personal property which is being constructed, repaired, improved, cleaned, imprinted, or otherwise altered by a person engaged in business;
(6) Any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation; also, any person engaged in the business of clearing land and moving earth of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW. Any such person shall be a consumer within the meaning of this subsection in respect to tangible personal property incorporated into, installed in, or attached to such building or other structure by such person; and
(7) Any person who is a lessor of machinery and equipment, the rental of which is exempt from the tax imposed by RCW 82.08.020 under section 2 of this act, with respect to the sale of or charge made for tangible personal property consumed and for labor and services rendered in respect to repairing the machinery and equipment.
Nothing contained in this or any other subsection of this definition shall be construed to modify any other definition of "consumer."
Sec. 5. RCW 82.60.020 and 1994 sp.s. c 7 s 704 and 1994 sp.s. c 1 s 1 are each reenacted and amended to read as follows:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Applicant" means a person applying for a tax deferral under this chapter.
(2) "Department" means the department of revenue.
(3) "Eligible area" means: (a) A county in which the average level of unemployment for the three years before the year in which an application is filed under this chapter exceeds the average state unemployment for those years by twenty percent; (b) a metropolitan statistical area, as defined by the office of federal statistical policy and standards, United States department of commerce, in which the average level of unemployment for the calendar year immediately preceding the year in which an application is filed under this chapter exceeds the average state unemployment for such calendar year by twenty percent; (c) a designated community empowerment zone approved under RCW 43.63A.700 or a county containing such a community empowerment zone; (d) a town with a population of less than twelve hundred persons in those counties that are not covered under (a) of this subsection that are timber impact areas as defined in RCW 43.31.601; ((or)) (e) a county designated by the governor as an eligible area under RCW 82.60.047; or (f) a county that is contiguous to a county that qualifies as an eligible area under (a) or (e) of this subsection.
(4)(a) "Eligible investment project" means:
(i) An investment project in an eligible area as defined in subsection (3)(a), (b), (d), or (e) of this section; or
(ii) That portion of an investment project in an eligible area as defined in subsection (3)(c) or (f) of this section which((: (i))) is directly utilized to create at least one new full-time qualified employment position for each three hundred thousand dollars of investment on which a deferral is requested in an application approved before July 1, 1994, and for each seven hundred fifty thousand dollars of investment on which a deferral is requested in an application approved after June 30, 1994((; and
(ii) Either initiates a new operation, or expands or diversifies a current operation by expanding, equipping, or renovating an existing facility with costs in excess of twenty-five percent of the true and fair value of the facility prior to improvement)).
(b) The lessor/owner of a qualified building is not eligible for a deferral unless the underlying ownership of the buildings, machinery, and equipment vests exclusively in the same person, or unless the lessor by written contract agrees to pass the economic benefit of the deferral to the lessee in the form of reduced rent payments.
(((b))) (c) For purposes of (a)(((i))) (ii) of this subsection((,)):
(i) The department shall consider the entire investment project, including any investment in machinery and equipment that otherwise qualifies for exemption under section 2 or 3 of this act, for purposes of determining the portion of the investment project that qualifies for deferral as an eligible investment project; and
(ii) The number of new full-time qualified employment positions created by an investment project shall be deemed to be reduced by the number of full-time employment positions maintained by the recipient in any other community in this state that are displaced as a result of the investment project.
(((c))) (d) "Eligible investment project" does not include any portion of an investment project undertaken by a light and power business as defined in RCW 82.16.010(5), other than that portion of a cogeneration project((s that are both an integral part of a manufacturing facility and owned at least fifty percent by the manufacturer)) that is used to generate power for consumption within the manufacturing site of which the cogeneration project is an integral part, or investment projects which have already received deferrals under this chapter.
(5) "Investment project" means an investment in qualified buildings or qualified machinery and equipment, including labor and services rendered in the planning, installation, and construction of the project.
(6) "Manufacturing" means all activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials so that as a result thereof a new, different, or useful substance or article of tangible personal property is produced for sale or commercial or industrial use and shall include the production or fabrication of specially made or custom made articles. "Manufacturing" also includes computer programming, the production of computer software, and other computer-related services, and the activities performed by research and development laboratories and commercial testing laboratories.
(7) "Person" has the meaning given in RCW 82.04.030.
(8) "Qualified buildings" means construction of new structures, and expansion or renovation of existing structures for the purpose of increasing floor space or production capacity used for manufacturing and research and development activities, including plant offices and warehouses or other facilities for the storage of raw material or finished goods if such facilities are an essential or an integral part of a factory, mill, plant, or laboratory used for manufacturing or research and development. If a building is used partly for manufacturing or research and development and partly for other purposes, the applicable tax deferral shall be determined by apportionment of the costs of construction under rules adopted by the department.
(9) "Qualified employment position" means a permanent full-time employee employed in the eligible investment project during the entire tax year.
(10) "Qualified machinery and equipment" means all new industrial and research fixtures, equipment, and support facilities that are an integral and necessary part of a manufacturing or research and development operation. "Qualified machinery and equipment" includes: Computers; software; data processing equipment; laboratory equipment; manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; operating structures; and all equipment used to control or operate the machinery.
(11) "Recipient" means a person receiving a tax deferral under this chapter.
(12) "Research and development" means the development, refinement, testing, marketing, and commercialization of a product, service, or process before commercial sales have begun. As used in this subsection, "commercial sales" excludes sales of prototypes or sales for market testing if the total gross receipts from such sales of the product, service, or process do not exceed one million dollars.
Sec. 6. RCW 82.60.040 and 1994 sp.s. c 1 s 3 are each amended to read as follows:
(1) The department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project that:
(a) Is located in an eligible area ((other than a designated neighborhood reinvestment area approved under RCW 43.63A.700)) as defined in RCW 82.60.020(3)(a), (b), (d), or (e);
(b) Is located in ((any county)) an eligible area as defined in RCW 82.60.020(3)(f) if seventy-five percent of the new qualified employment positions are to be filled by residents of a contiguous county that ((qualifies as)) is an eligible area as defined in RCW 82.60.020(3)(a) or (e); or
(c) Is located in ((a designated neighborhood reinvestment area approved under RCW 43.63A.700, or in a county containing such a neighborhood reinvestment area,)) an eligible area as defined in RCW 82.60.020(3)(c) if seventy-five percent of the new qualified employment positions are to be filled by residents of ((the neighborhood reinvestment area)) a designated community empowerment zone approved under RCW 43.63A.700 located within the county in which the eligible investment project is located.
(2) The department shall keep a running total of all deferrals granted under this chapter during each fiscal biennium.
Sec. 7. RCW 82.60.045 and 1994 sp.s. c 1 s 4 are each amended to read as follows:
In addition to the other requirements of this chapter, a recipient of a tax deferral under RCW 82.60.040(1) (b) or (c) shall meet the following requirements:
(1) The recipient shall fill at least seventy-five percent of the new qualified employment positions with residents of the contiguous county or ((neighborhood reinvestment area)) community empowerment zone by December 31 of the calendar year during which the department certifies that the investment project is operationally completed, and shall maintain the required percentage during each of the seven succeeding calendar years.
(2) If the deferral is for expansion or diversification of an existing facility, the recipient shall ensure that the percentage of qualified employment positions filled by residents of the contiguous county or ((neighborhood reinvestment area)) community empowerment zone for periods prior to the application be maintained for seven calendar years after the year during which the department certifies that the investment project is operationally completed.
Sec. 8. RCW 82.60.065 and 1994 sp.s. c 1 s 6 are each amended to read as follows:
Except as provided in RCW 82.60.070:
(1) Taxes deferred under this chapter on the sale or use of labor that is directly used in the construction of an investment project for which a deferral has been granted under this chapter after June 11, 1986, and prior to July 1, 1994, need not be repaid.
(2) Taxes deferred under this chapter on an investment project for which a deferral has been granted under this chapter after June 30, 1994, need not be repaid.
(3) Taxes deferred under this chapter need not be repaid on machinery and equipment for lumber and wood products industries, and sales of or charges made for labor and services, of the type which qualifies for exemption under section 2 or 3 of this act to the extent the taxes have not been repaid before the effective date of this section.
Sec. 9. RCW 82.60.070 and 1994 sp.s. c 1 s 5 are each amended to read as follows:
(1) Each recipient of a deferral granted under this chapter prior to July 1, 1994, shall submit a report to the department on December 31st of each year during the repayment period until the tax deferral is repaid. Each recipient of a deferral granted under this chapter after June 30, 1994, shall submit a report to the department on December 31st of the year in which the investment project is certified by the department as having been operationally completed, and on December 31st of each of the seven succeeding calendar years. The report shall contain information, as required by the department, from which the department may determine whether the recipient is meeting the requirements of this chapter. If the recipient fails to submit a report or submits an inadequate report, the department may declare the amount of deferred taxes outstanding to be immediately assessed and payable.
(2) If, on the basis of a report under this section or other information, the department finds that an investment project is not eligible for tax deferral under this chapter for reasons other than failure to create the required number of qualified employment positions, the amount of deferred taxes outstanding for the project shall be immediately due.
(3) If, on the basis of a report under this section or other information, the department finds that an investment project for which a deferral has been granted under this chapter prior to July 1, 1994, has been operationally complete for three years and has failed to create the required number of qualified employment positions, the department shall assess interest, but not penalties, on the deferred taxes for the project. The interest shall be assessed at the rate provided for delinquent excise taxes, shall be assessed retroactively to the date of deferral, and shall accrue until the deferred taxes are repaid.
(4) If, on the basis of a report under this section or other information, the department finds that an investment project for which a deferral has been granted under this chapter after June 30, 1994, has been operationally complete for three years and has failed to create the required number of qualified employment positions, the amount of taxes not eligible for deferral shall be immediately due. The department shall assess interest at the rate provided for delinquent excise taxes, but not penalties, retroactively to the date of deferral.
(5) If, on the basis of a report under this section or other information, the department finds that an investment project qualifying for deferral under RCW 82.60.040(1) (b) or (c) has failed to comply with any requirement of RCW 82.60.045 for any calendar year for which reports are required under subsection (1) of this section, twelve and one-half percent of the amount of deferred taxes shall be immediately due. The department shall assess interest at the rate provided for delinquent excise taxes, but not penalties, retroactively to the date of deferral.
(6) Notwithstanding any other subsection of this section, deferred taxes need not be repaid on machinery and equipment for lumber and wood products industries, and sales of or charges made for labor and services, of the type which qualifies for exemption under section 2 or 3 of this act to the extent the taxes have not been repaid before the effective date of this section.
(7) Notwithstanding any other subsection of this section, deferred taxes on the following need not be repaid:
(a) Machinery and equipment, and sales of or charges made for labor and services, which at the time of purchase would have qualified for exemption under section 2 of this act; and
(b) Machinery and equipment which at the time of first use would have qualified for exemption under section 3 of this act.
Sec. 10. RCW 82.61.010 and 1994 c 125 s 1 are each amended to read as follows:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Applicant" means a person applying for a tax deferral under this chapter.
(2) "Person" has the meaning given in RCW 82.04.030.
(3) "Department" means the department of revenue.
(4) "Eligible investment project" means:
(a) Construction of new buildings and the acquisition of new related machinery and equipment when the buildings, machinery, and equipment are to be used for either manufacturing or research and development activities, which construction is commenced prior to December 31, ((1998)) 1995; or
(b) Acquisition prior to December 31, ((1998)) 1995, of new machinery and equipment to be used for either manufacturing or research and development if the machinery and equipment is housed in a new leased structure. The lessor/owner of the structure is not eligible for a deferral unless the underlying ownership of the buildings, machinery, and equipment vests exclusively in the same person; or
(c) Acquisition of all new or used machinery, equipment, or other personal property for use in the production or casting of aluminum at an aluminum smelter or at facilities related to an aluminum smelter, if the plant was in operation prior to 1975 and has ceased operations or is in imminent danger of ceasing operations for economic reasons, as determined by the department, and if the person applying for a deferral (i) has consulted with any collective bargaining unit that represented employees of the plant pursuant to a collective bargaining agreement that was in effect either immediately prior to the time the plant ceased operations or during the period when the plant was in imminent danger of ceasing operations, on the proposed operation of the plant and on the terms and conditions of employment for wage and salaried employees and (ii) has obtained a written concurrence from the bargaining unit on the decision to apply for a deferral under this chapter; or
(d) Modernization projects involving construction, acquisition, or upgrading of equipment or machinery, including services and labor, which are commenced after May 19, 1987, and are intended to increase the operating efficiency of existing plants which are either aluminum smelters or aluminum rolling mills or of facilities related to such plants, if the plant was in operation prior to 1975, and if the person applying for a deferral (i) has consulted with any collective bargaining unit that represents employees of the plant on the proposed operation of the plant and the terms and conditions of employment for wage and salaried employees and (ii) has obtained a written concurrence from the bargaining unit on the decision to apply for a deferral under this chapter.
(5) "Manufacturing" means all activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials so that as a result thereof a new, different, or useful substance or article of tangible personal property is produced for sale or commercial or industrial use and includes the production or fabrication of specially made or custom-made articles.
(6) "Research and development" means the development, refinement, testing, marketing, and commercialization of a product, service, or process before commercial sales have begun.
(7) "Buildings" means only those new structures used for either manufacturing or research and development activities, including plant offices and warehouses or other facilities for the storage of raw materials or finished goods if such facilities are an essential or an integral part of a factory, mill, plant, or laboratory used for manufacturing or research and development purposes. If a building is used partly for manufacturing or research and development and partly for other purposes, the applicable tax deferral shall be determined by apportionment of the costs of construction under rules adopted by the department.
(8) "Machinery and equipment" means all industrial and research fixtures, equipment, and support facilities that are an integral and necessary part of a manufacturing or research and development operation. "Qualified machinery and equipment" includes computers; software; data processing equipment; laboratory equipment; manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; operating structures; and all equipment used to control or operate the machinery. For purposes of this chapter, new machinery and equipment means either new to the taxing jurisdiction of the state or new to the certificate holder. Used machinery and equipment may be treated as new equipment and machinery if the certificate holder either brings the machinery and equipment into Washington or makes a retail purchase of the machinery and equipment in Washington or elsewhere.
(9) "Qualified employment position" means a permanent full-time employee employed in the eligible investment project during the entire tax year.
(10) "Recipient" means a person receiving a tax deferral under this chapter.
(11) "Certificate holder" means an applicant to whom a tax deferral certificate has been issued.
(12) "Operationally complete" means constructed or improved to the point of being functionally useable for the intended purpose.
(13) "Initiation of construction" means that date upon which on-site construction commences.
NEW SECTION. Sec. 11. The following acts or parts of acts are each repealed:
(1) RCW 82.61.020 and 1987 c 497 s 2 & 1985 ex.s. c 2 s 2; and
(2) RCW 82.61.040 and 1993 sp.s. c 25 s 408, 1988 c 41 s 2, 1986 c 116 s 10, & 1985 ex.s. c 2 s 8.
Sec. 12. RCW 82.63.010 and 1994 sp.s. c 5 s 3 are each amended to read as follows:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Advanced computing" means technologies used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment.
(2) "Advanced materials" means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials.
(3) "Applicant" means a person applying for a tax deferral under this chapter.
(4) "Biotechnology" means the application of technologies, such as recombinant DNA techniques, biochemistry, molecular and cellular biology, genetics and genetic engineering, cell fusion techniques, and new bioprocesses, using living organisms, or parts of organisms, to produce or modify products, to improve plants or animals, to develop microorganisms for specific uses, to identify targets for small molecule pharmaceutical development, or to transform biological systems into useful processes and products or to develop microorganisms for specific uses.
(5) "Department" means the department of revenue.
(6) "Electronic device technology" means technologies involving microelectronics; semiconductors; electronic equipment and instrumentation; radio frequency, microwave, and millimeter electronics; optical and optic-electrical devices; and data and digital communications and imaging devices.
(7) "Eligible investment project" means ((that portion of)) an investment project which either initiates a new operation, or expands or diversifies a current operation by expanding, renovating, or equipping an existing facility ((with costs in excess of twenty-five percent of the true and fair value of the facility prior to improvement)). The lessor or owner of the qualified building is not eligible for a deferral unless the underlying ownership of the buildings, machinery, and equipment vests exclusively in the same person, or unless the lessor by written contract agrees to pass the economic benefit of the deferral to the lessee in the form of reduced rent payments.
(8) "Environmental technology" means assessment and prevention of threats or damage to human health or the environment, environmental cleanup, and the development of alternative energy sources.
(9) "Investment project" means an investment in qualified buildings or qualified machinery and equipment, including labor and services rendered in the planning, installation, and construction or improvement of the project.
(10) "Person" has the meaning given in RCW 82.04.030.
(11) "Pilot scale manufacturing" means design, construction, and testing of preproduction prototypes and models in the fields of biotechnology, advanced computing, electronic device technology, advanced materials, and environmental technology other than for commercial sale. As used in this subsection, "commercial sale" excludes sales of prototypes or sales for market testing if the total gross receipts from such sales of the product, service, or process do not exceed one million dollars.
(12) "Qualified buildings" means construction of new structures, and expansion or renovation of existing structures for the purpose of increasing floor space or production capacity used for pilot scale manufacturing or qualified research and development, including plant offices and other facilities that are an essential or an integral part of a structure used for pilot scale manufacturing or qualified research and development. If a building is used partly for pilot scale manufacturing or qualified research and development, and partly for other purposes, the applicable tax deferral shall be determined by apportionment of the costs of construction under rules adopted by the department.
(13) "Qualified machinery and equipment" means fixtures, equipment, and support facilities that are an integral and necessary part of a pilot scale manufacturing or qualified research and development operation. "Qualified machinery and equipment" includes: Computers; software; data processing equipment; laboratory equipment, instrumentation, and other devices used in a process of experimentation to develop a new or improved pilot model, plant process, product, formula, invention, or similar property; manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; vats, tanks, and fermenters; operating structures; and all other equipment used to control, monitor, or operate the machinery. For purposes of this chapter, qualified machinery and equipment must be either new to the taxing jurisdiction of the state or new to the certificate holder, except that used machinery and equipment may be treated as qualified machinery and equipment if the certificate holder either brings the machinery and equipment into Washington or makes a retail purchase of the machinery and equipment in Washington or elsewhere.
(14) "Qualified research and development" means research and development performed within this state in the fields of advanced computing, advanced materials, biotechnology, electronic device technology, and environmental technology.
(15) "Recipient" means a person receiving a tax deferral under this chapter.
(16) "Research and development" means activities performed to discover technological information, and technical and nonroutine activities concerned with translating technological information into new or improved products, processes, techniques, formulas, inventions, or software. The term includes exploration of a new use for an existing drug, device, or biological product if the new use requires separate licensing by the federal food and drug administration under chapter 21, C.F.R., as amended. The term does not include adaptation or duplication of existing products where the products are not substantially improved by application of the technology, nor does the term include surveys and studies, social science and humanities research, market research or testing, quality control, sale promotion and service, computer software developed for internal use, and research in areas such as improved style, taste, and seasonal design.
NEW SECTION. Sec. 13. A new section is added to chapter 82.63 RCW to read as follows:
(1) Except as provided in subsection (2) of this section, taxes deferred under this chapter need not be repaid.
(2) If, on the basis of a report under RCW 82.63.020 or other information, the department finds that an investment project is used for purposes other than qualified research and development or pilot scale manufacturing at any time during the calendar year in which the investment project is certified by the department as having been operationally completed, or at any time during any of the seven succeeding calendar years, a portion of deferred taxes shall be immediately due according to the following schedule:
Year in which use occurs % of deferred taxes due
1 100%
2 87.5%
3 75%
4 62.5%
5 50%
6 37.5%
7 25%
8 12.5%
The department shall assess interest at the rate provided for delinquent taxes, but not penalties, retroactively to the date of deferral.
(3) Notwithstanding subsection (2) of this section, deferred taxes on the following need not be repaid:
(a) Machinery and equipment, and sales of or charges made for labor and services, which at the time of purchase would have qualified for exemption under section 2 of this act; and
(b) Machinery and equipment which at the time of first use would have qualified for exemption under section 3 of this act.
NEW SECTION. Sec. 14. The following acts or parts of acts are each repealed:
(1) RCW 82.63.040 and 1994 sp.s. c 5 s 6; and
(2) RCW 82.63.050 and 1994 sp.s. c 5 s 7.
NEW SECTION. Sec. 15. The legislative fiscal committees shall report to the legislature by December 1, 1999, on the economic impacts of the manufacturers' tax exemption. This report shall analyze employment and other relevant economic data from before and after the enactment of the tax exemptions authorized under this act and shall measure the effect on the creation or retention of family wage jobs and diversification of the state's economy. Analytic techniques may include, but not be limited to, comparisons of Washington to other states that did not enact business tax changes, comparisons across Washington counties based on usage of the tax exemptions, and comparisons across similar firms based on their use of the tax exemptions. In performing the analysis, the legislative fiscal committees shall consult with business and labor interests. The department or revenue, the employment security department, and other agencies shall provide to the legislative fiscal committees such data as the legislative fiscal committees may request in performing the analysis required under this section.
NEW SECTION. Sec. 16. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995."
Debate ensued.
The President declared the question before the Senate to be the adoption of the striking amendment by Senators Bauer, Gaspard, Cantu, Sellar, Hargrove, Swecker, Snyder and Palmer to Engrossed Substitute Senate Bill No. 5201.
The motion by Senator Bauer carried and the striking amendment was adopted:
MOTIONS
On motion of Senator Bauer, the following title amendment was adopted:
On page 1, line 3 of the title, after "development;" strike the remainder of the title and insert "amending RCW 82.04.190, 82.60.040, 82.60.045, 82.60.065, 82.60.070, 82.61.010, and 82.63.010; reenacting and amending RCW 82.60.020; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 82.63 RCW; creating new sections; repealing RCW 82.61.020, 82.61.040, 82.63.040, and 82.63.050; providing an effective date; and declaring an emergency."
On motion of Senator Bauer, the rules were suspended, Second Engrossed Substitute Senate Bill No. 5201, under suspension of the rules, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.
Debate ensued.
The President declared the question before the Senate to be the roll call on the final passage of Second Engrossed Substitute Senate Bill No. 5201, under suspension of the rules.
ROLL CALL
The Secretary called the roll on the final passage of Second Engrossed Substitute Senate Bill No. 5201, under suspension of the rules, and the bill passed the Senate by the following vote: Yeas, 45; Nays, 1; Absent, 0; Excused, 3.
Voting yea: Senators Anderson, A., Bauer, Cantu, Deccio, Drew, Finkbeiner, Franklin, Fraser, Gaspard, Hale, Hargrove, Haugen, Heavey, Hochstatter, Johnson, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Owen, Palmer, Pelz, Prentice, Prince, Quigley, Rasmussen, Rinehart, Roach, Sellar, Sheldon, Smith, Snyder, Spanel, Strannigan, Sutherland, Swecker, West, Winsley, Wojahn and Wood - 45.
Voting nay: Senator Fairley - 1.
Excused: Senators Anderson, C., Moyer and Schow - 3.
SECOND ENGROSSED SUBSTITUTE SENATE BILL NO. 5201, under suspension of the rules, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.
MOTION
On motion of Senator Bauer, Second Engrossed Substitute Senate Bill No. 5201 was ordered immediately transmitted to the House of Representatives.
There being no objection, the President returned the Senate to the sixth order of business.
SECOND READING
SECOND ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2010, by House Committee on Appropriations (originally sponsored by Representatives Ballasiotes, Quall, Sherstad, Chandler, Schoesler, Radcliff and Blanton)
Revising corrections provisions.
The bill was read the second time.
MOTION
On motion of Senator Hargrove, the rules were suspended, Second Engrossed Second Substitute House Bill No. 2010 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.
Debate ensued.
The President declared the question before the Senate to be the roll call on the final passage of Second Engrossed Second Substitute House Bill No. 2010.
ROLL CALL
The Secretary called the roll on the final passage of Second Engrossed Second Substitute House Bill No. 2010 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 1; Excused, 3.
Voting yea: Senators Anderson, A., Bauer, Cantu, Deccio, Drew, Fairley, Finkbeiner, Franklin, Fraser, Gaspard, Hale, Hargrove, Haugen, Heavey, Hochstatter, Johnson, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Owen, Palmer, Pelz, Prentice, Prince, Quigley, Rasmussen, Rinehart, Roach, Sellar, Sheldon, Snyder, Spanel, Strannigan, Sutherland, Swecker, West, Winsley, Wojahn and Wood - 45.
Absent: Senator Smith - 1.
Excused: Senators Anderson, C., Moyer and Schow - 3.
SECOND ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2010, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.
There being no objection, the President returned the Senate to the fourth order of business.
MESSAGE FROM THE HOUSE
May 19, 1995
MR. PRESIDENT:
The House has passed SECOND ENGROSSED SUBSTITUTE SENATE BILL NO. 6049 with the following amendments:
Strike everything after the enacting clause and insert the following:
"Sec. 1. RCW 36.100.010 and 1995 c ... (Substitute Senate Bill No. 5127) s 1 are each amended to read as follows:
(1) A public facilities district may be created in any county and shall be coextensive with the boundaries of the county.
(2) A public facilities district shall be created upon adoption of a resolution providing for the creation of such a district by the county legislative authority in which the proposed district is located.
(3) A public facilities district is a municipal corporation, an independent taxing "authority" within the meaning of Article VII, section 1 of the state Constitution, and a "taxing district" within the meaning of Article VII, section 2 of the state Constitution.
(4) No taxes authorized under this chapter may be assessed or levied unless a majority of the voters of the public facilities district has ((validated the creation of the public facilities district at a general or special election. A single ballot proposition may both authorize the creation of a public facilities district and the imposition of the sales and use tax under RCW 82.14.048 or both the creation of a public facilities district and the imposition of the excise tax under RCW 36.100.040)) approved such tax at a general or special election. A single ballot proposition may both validate the imposition of the sales and use tax under RCW 82.14.048 and the excise tax under RCW 36.100.040.
(5) A public facilities district shall constitute a body corporate and shall possess all the usual powers of a corporation for public purposes as well as all other powers that may now or hereafter be specifically conferred by statute, including, but not limited to, the authority to hire employees, staff, and services, to enter into contracts, and to sue and be sued.
(6) The county legislative authority may transfer property to the public facilities district as part of the process of creating the public facilities district under this chapter.
Sec. 2. RCW 36.100.020 and 1995 c ... (Substitute Senate Bill No. 5127) s 2 are each amended to read as follows:
(1) A public facilities district shall be governed by a board of directors consisting of five or seven members as provided in this section. If the largest city in the county has a population that is at least forty percent of the total county population, the board of directors of the public facilities district shall consist of five members selected as follows: (((1))) (a) Two members appointed by the county legislative authority to serve for four-year staggered terms; (((2))) (b) two members appointed by the city council of the largest city in the county to serve for four-year staggered terms; and (((3))) (c) one person to serve for a four-year term who is selected by the other directors. If the largest city in the county has a population of less than forty percent of the total county population, the county legislative authority shall establish in the resolution creating the public facilities district whether the board of directors of the public facilities district ((have)) has either five or seven members, and the county legislative authority shall appoint the members of the board of directors to reflect the interests of cities and towns in the county, as well as the unincorporated area of the county. However, if the largest city in the county has a population of less than forty percent of the total county population, and the county operates under a county charter, which provides for an elected county executive, the members shall be appointed by the county executive subject to confirmation by the county legislative authority.
(2) At least one member on the board of directors shall be representative of the lodging industry in the public facilities district before the public facilities district imposes the excise tax under RCW 36.100.040.
(3) Members of the board of directors shall serve four-year terms of office, except that two of the initial five board members or three of the initial seven board members shall serve two-year terms of office.
(4) A vacancy shall be filled in the same manner as the original appointment was made and the person appointed to fill a vacancy shall serve for the remainder of the unexpired term of the office for the position to which he or she was appointed.
(5) A director may be removed from office ((for cause)) by action of at least two-thirds of the members of the ((county legislative)) authority which made the appointment.
Sec. 3. RCW 36.100.030 and 1995 c ... (Substitute Senate Bill No. 5127) s 3 are each amended to read as follows:
(1) A public facilities district is authorized to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate sports facilities, entertainment facilities, or convention facilities, or any combination of such facilities, together with contiguous parking facilities. The taxes that are provided for in this chapter may only be imposed for these purposes.
(2) A public facilities district may enter into agreements under chapter 39.34 RCW for the joint provision and operation of such facilities and may enter into contracts under chapter 39.34 RCW where any party to the contract provides and operates such facilities for the other party or parties to the contract.
(3) Notwithstanding the establishment of a career, civil, or merit service system, a public facility district may contract with a public or private entity for the operation or management of its public facilities.
(4) A public facilities district is authorized to use the supplemental alternative public works contracting procedures set forth in chapter 39.10 RCW in connection with the design, construction, reconstruction, remodel, or alteration of any of its public facilities.
(5) A public facilities district may impose charges and fees for the use of its facilities, and may accept and expend or use gifts, grants, and donations.
Sec. 4. RCW 36.100.060 and 1995 c ... (Substitute Senate Bill No. 5127) s 5 are each amended to read as follows:
(1) To carry out the purpose of this chapter, a public facilities district may issue general obligation bonds, not to exceed an amount, together with any outstanding nonvoter approved general obligation indebtedness, equal to ((three-eighths)) one-half of one percent of the value of taxable property within the district, as the term "value of taxable property" is defined in RCW 39.36.015. A facilities district additionally may issue general obligation bonds for capital purposes only, together with any outstanding general obligation indebtedness, not to exceed an amount equal to one and one-fourth percent of the value of the taxable property within the district, as the term "value of taxable property" is defined in RCW 39.36.015, when authorized by the voters of the public facilities district pursuant to Article VIII, section 6 of the state Constitution, and to provide for the retirement thereof by excess property tax levies as provided in this chapter.
(2) General obligation bonds may be issued with a maturity of up to thirty years, and shall be issued and sold in accordance with the provisions of chapter 39.46 RCW.
(3) The general obligation bonds may be payable from the operating revenues of the public facilities district in addition to the tax receipts of the district.
(4) The excise tax imposed pursuant to RCW 36.100.040 shall terminate upon final payment of all bonded indebtedness for its public facilities.
NEW SECTION. Sec. 5. No direct or collateral attack on any public facilities district purported to be authorized or created in conformance with this chapter may be commenced more than thirty days after creation by the county legislative authority.
NEW SECTION. Sec. 6. (1) The governing board of a public facilities district may apply for deferral of taxes on the construction of buildings, site preparation, and the acquisition of related machinery and equipment for a new public facility. Application shall be made to the department of revenue in a form and manner prescribed by the department of revenue. The application shall contain information regarding the location of the public facility, estimated or actual costs, time schedules for completion and operation, and other information required by the department of revenue. The department of revenue shall approve the application within sixty days if it meets the requirements of this section.
(2) The department of revenue shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on the public facility. The use of the certificate shall be governed by rules established by the department of revenue.
(3) The public facilities district shall begin paying the deferred taxes in the fifth year after the date certified by the department of revenue as the date on which the public facility is operationally complete. The first payment is due on December 31st of the fifth calendar year after such certified date, with subsequent annual payments due on December 31st of the following nine years. Each payment shall equal ten percent of the deferred tax.
(4) The department of revenue may authorize an accelerated repayment schedule upon request of the public facilities district.
(5) Interest shall not be charged on any taxes deferred under this section for the period of deferral, although all other penalties and interest applicable to delinquent excise taxes may be assessed and imposed for delinquent payments under this section. The debt for deferred taxes is not extinguished by insolvency or other failure of the public facilities district.
(6) Applications and any other information received by the department of revenue under this section are not confidential and are subject to disclosure. Chapter 82.32 RCW applies to the administration of this section.
(7) As used in this section, "public facility" means a baseball stadium with a retractable roof or canopy and natural turf.
NEW SECTION. Sec. 7. A new section is added to chapter 82.14 RCW to read as follows:
(1) The legislative authority of a county with a population of one million or more operating under a county charter may impose a special stadium sales and use tax by resolution adopted on or before December 31, 1995, for collection following its approval by a majority of the voters in the county at a general or special election.
(2) The rate of the tax shall equal 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. The tax imposed under this section shall not be credited against any other tax imposed upon the same taxable event.
(3) The revenue from the tax imposed under this section shall be used for the purpose of principal and interest payments on bonds issued by a public facilities district, created within the county under chapter 36.100 RCW, to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium with a retractable roof or canopy and natural turf. If the revenue from the tax imposed under this section exceeds the amount needed for such principal and interest payments in any year, the excess shall be used solely for either or both: (a) Early retirement of the bonds issued for the baseball stadium; or (b) retirement of bonds issued for expanding, remodelling, repairing, or reequipping of a multipurpose stadium that has a seating capacity over forty-five thousand.
(4) The tax authorized under this section may be collected only after the county executive has certified to the department of revenue that a professional major league baseball team has made a binding and legally enforceable contractual commitment to:
(a) Play at least ninety percent of its home games in the stadium for a period of time not shorter than the term of the bonds issued to finance the initial construction of the stadium;
(b) Contribute principal of forty-five million dollars toward the bonded cost of construction of the stadium, which contribution shall be made during a term not to exceed the term of the bonds issued to finance the initial construction of the stadium. If all or part of the contribution is made after the date of issuance of the bonds, the team shall contribute an additional amount equal to the accruing interest on the deferred portion of the contribution, calculated at the interest rate on the bonds maturing in the year in which the deferred contribution is made; and
(c) Share a portion of the profits generated by the baseball team from the operation of the professional franchise for a period of time equal to the term of the bonds issued to finance the initial construction of the stadium, after offsetting any losses incurred by the baseball team after the effective date of this act. Such profits and the portion to be shared shall be defined by agreement between the public facilities district and the baseball team. The shared profits shall be used to retire the bonds issued to finance the initial construction of the stadium. If the bonds are retired before the expiration of their term, the shared profits shall be paid to the public facilities district.
(5) The tax imposed under this section shall expire when the bonds issued for the construction of the new public facilities are retired, but not later than twenty years after the tax is first collected.
Sec. 8. RCW 35.21.280 and 1965 c 7 s 35.21.280 are each amended to read as follows:
Every city and town may levy and fix a tax of not more than one cent on twenty cents or fraction thereof to be paid by the person who pays an admission charge to any place: PROVIDED, No city or town shall impose such tax on persons paying an admission to any activity of any elementary or secondary school. This includes a tax on persons who are admitted free of charge or at reduced rates to any place for which other persons pay a charge or a regular higher charge for the same privileges or accommodations. A city that is located in a county with a population of one million or more may not levy a tax on events in stadia constructed on or after January 1, 1995, that are owned by county government or a public facilities district under chapter 36.100 RCW and that have seating capacities over forty thousand. The city or town may require anyone who receives payment for an admission charge to collect and remit the tax to the city or town.
The term "admission charge" includes:
(1) A charge made for season tickets or subscriptions;
(2) A cover charge, or a charge made for use of seats and tables reserved or otherwise, and other similar accommodations;
(3) A charge made for food and refreshment in any place where free entertainment, recreation or amusement is provided;
(4) A charge made for rental or use of equipment or facilities for purposes of recreation or amusement; if the rental of the equipment or facilities is necessary to the enjoyment of a privilege for which a general admission is charged, the combined charges shall be considered as the admission charge;
(5) Automobile parking charges if the amount of the charge is determined according to the number of passengers in the automobile.
Sec. 9. RCW 36.38.010 and 1963 c 4 s 36.38.010 are each amended to read as follows:
(1) Any county may by ordinance enacted by its ((board of)) county ((commissioners)) legislative authority, levy and fix a tax of not more than one cent on twenty cents or fraction thereof to be paid for county purposes by persons who pay an admission charge to any place, including a tax on persons who are admitted free of charge or at reduced rates to any place for which other persons pay a charge or a regular higher charge for the same or similar privileges or accommodations; and require that one who receives any admission charge to any place shall collect and remit the tax to the county treasurer of the county: PROVIDED, No county shall impose such tax on persons paying an admission to any activity of any elementary or secondary school.
(2) As used in this chapter, the term "admission charge" includes a charge made for season tickets or subscriptions, a cover charge, or a charge made for use of seats and tables, reserved or otherwise, and other similar accommodations; a charge made for food and refreshments in any place where any free entertainment, recreation, or amusement is provided; a charge made for rental or use of equipment or facilities for purpose of recreation or amusement, and where the rental of the equipment or facilities is necessary to the enjoyment of a privilege for which a general admission is charged, the combined charges shall be considered as the admission charge. It shall also include any automobile parking charge where the amount of such charge is determined according to the number of passengers in any automobile.
(3) The tax herein authorized shall not be exclusive and shall not prevent any city or town within the taxing county, when authorized by law, from imposing within its corporate limits a tax of the same or similar kind: PROVIDED, That whenever the same or similar kind of tax is imposed by any such city or town, no such tax shall be levied within the corporate limits of such city or town by the ((board of)) county ((commissioners)), except that the legislative authority of a county with a population of one million or more may exclusively levy a tax on events in stadiums constructed on or after January 1, 1995, that are owned by county government or a public facilities district under chapter 36.100 RCW and that have seating capacities over forty thousand at the rate of not more than one cent on twenty cents or fraction thereof.
(4) By contract, the county shall obligate itself to provide the revenue from the tax authorized by this section on events in stadia owned, managed, or operated by a public facilities district, having seating capacities over forty thousand, and constructed on or after January 1, 1995, to the public facilities district.
Sec. 10. RCW 67.28.180 and 1995 c ... (Engrossed Substitute Senate Bill No. 5943) s 8 are each amended to read as follows:
(1) Subject to the conditions set forth in subsections (2) and (3) of this section, the legislative body of any county or any city, is authorized to levy and collect a special excise tax of not to exceed two percent on the sale of or charge made for the furnishing of lodging by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property: PROVIDED, That it shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or to enjoy the same.
(2) Any levy authorized by this section shall be subject to the following:
(a) Any county ordinance or resolution adopted pursuant to this section shall contain, in addition to all other provisions required to conform to this chapter, a provision allowing a credit against the county tax for the full amount of any city tax imposed pursuant to this section upon the same taxable event.
(b) In the event that any county has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such county shall be exempt from the provisions of (a) of this subsection, to the extent that the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160: PROVIDED, That so much of such pledged tax revenues, together with any investment earnings thereon, not immediately necessary for actual payment of principal and interest on such bonds may be used: (i) In any county with a population of one million or more, for repayment either of limited tax levy general obligation bonds or of any county fund or account from which a loan was made, the proceeds from the bonds or loan being used to pay for constructing, installing, improving, and equipping stadium capital improvement projects, and to pay for any engineering, planning, financial, legal and professional services incident to the development of such stadium capital improvement projects, regardless of the date the debt for such capital improvement projects was or may be incurred; or (ii) in other counties, for county-owned facilities for agricultural promotion. A county is exempt under this subsection in respect to city revenue or general obligation bonds issued after April 1, 1991, only if such bonds mature before January 1, 2013.
As used in this subsection (2)(b), "capital improvement projects" may include, but not be limited to a stadium restaurant facility, restroom facilities, artificial turf system, seating facilities, parking facilities and scoreboard and information system adjacent to or within a county owned stadium, together with equipment, utilities, accessories and appurtenances necessary thereto. The stadium restaurant authorized by this subsection (2)(b) shall be operated by a private concessionaire under a contract with the county.
(c) No city within a county exempt under subsection (2)(b) of this section may levy the tax authorized by this section so long as said county is so exempt: PROVIDED, That in the event that any city in such county has levied the tax authorized by this section and has, prior to June 26, 1975, authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such city may levy the tax so long as the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160.
(3) Any levy authorized by this section by a county that has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160 shall be subject to the following:
(a) Taxes collected under this section in any calendar year in excess of five million three hundred thousand dollars shall only be used as follows:
(i) Seventy-five percent from January 1, 1992, through December 31, 2000, and seventy percent from January 1, 2001, through December 31, 2012, for art museums, cultural museums, heritage museums, the arts, and the performing arts. Moneys spent under this subsection (3)(a)(i) shall be used for the purposes of this subsection (3)(a)(i) in all parts of the county.
(ii) Twenty-five percent from January 1, 1992, through December 31, 2000, and thirty percent from January 1, 2001, through December 31, 2012, for the following purposes and in a manner reflecting the following order of priority: Stadium capital improvements, as defined in subsection (2)(b) of this section; acquisition of open space lands; youth sports activities; and tourism promotion.
(b) At least seventy percent of moneys spent under (a)(i) of this subsection for the period January 1, 1992, through December 31, 2000, shall be used only for the purchase, design, construction, and remodeling of performing arts, visual arts, heritage, and cultural facilities, and for the purchase of fixed assets that will benefit art, heritage, and cultural organizations. For purposes of this subsection, fixed assets are tangible objects such as machinery and other equipment intended to be held or used for ten years or more. Moneys received under this subsection (3)(b) may be used for payment of principal and interest on bonds issued for capital projects. Qualifying organizations receiving moneys under this subsection (3)(b) must be financially stable and have at least the following:
(i) A legally constituted and working board of directors;
(ii) A record of artistic, heritage, or cultural accomplishments;
(iii) Been in existence and operating for at least two years;
(iv) Demonstrated ability to maintain net current liabilities at less than thirty percent of general operating expenses;
(v) Demonstrated ability to sustain operational capacity subsequent to completion of projects or purchase of machinery and equipment; and
(vi) Evidence that there has been independent financial review of the organization.
(c) At least forty percent of the revenues distributed pursuant to (a)(i) of this subsection for the period January 1, 2001, through December 31, 2012, shall be deposited in an account and shall be used to establish an endowment. Principal in the account shall remain permanent and irreducible. The earnings from investments of balances in the account may only be used for the purposes of (a)(i) of this subsection.
(d) School districts and schools shall not receive revenues distributed pursuant to (a)(i) of this subsection.
(e) Moneys distributed to art museums, cultural museums, heritage museums, the arts, and the performing arts, and moneys distributed for tourism promotion shall be in addition to and may not be used to replace or supplant any other funding by the legislative body of the county.
(f) As used in this section, "tourism promotion" includes activities intended to attract visitors for overnight stays, arts, heritage, and cultural events, and recreational, professional, and amateur sports events. Moneys allocated to tourism promotion in a class AA county shall be allocated to nonprofit organizations formed for the express purpose of tourism promotion in the county. Such organizations shall use moneys from the taxes to promote events in all parts of the class AA county.
(g) No taxes collected under this section may be used for the operation or maintenance of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged. Expenditures for operation or maintenance include all expenditures other than expenditures that directly result in new fixed assets or that directly increase the capacity, life span, or operating economy of existing fixed assets.
(h) No ad valorem property taxes may be used for debt service on bonds issued for a public stadium that is financed by bonds to which the tax is pledged, unless the taxes collected under this section are or are projected to be insufficient to meet debt service requirements on such bonds.
(i) If a substantial part of the operation and management of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged is performed by a nonpublic entity or if a public stadium is sold that is financed directly or indirectly by bonds to which the tax is pledged, any bonds to which the tax is pledged shall be retired. This subsection (3)(i) does not apply in respect to a public stadium transferred to, owned by, or constructed by a public facilities district under chapter 36.100 RCW.
(j) The county shall not lease a public stadium that is financed directly or indirectly by bonds to which the tax is pledged to, or authorize the use of the public stadium by, a professional major league sports franchise unless the sports franchise gives the right of first refusal to purchase the sports franchise, upon its sale, to local government. This subsection (3)(j) does not apply to contracts in existence on April 1, 1986.
If a court of competent jurisdiction declares any provision of this subsection (3) invalid, then that invalid provision shall be null and void and the remainder of this section is not affected.
NEW SECTION. Sec. 11. Sections 5 and 6 of this act are each added to chapter 36.100 RCW.
NEW SECTION. Sec. 12. 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. 13. (1) Sections 1 through 9 and 11 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995.
(2) Sections 10 and 12 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately."
On page 1, line 2 of the title, after "teams;" strike the remainder of the title and insert "amending RCW 36.100.010, 36.100.020, 36.100.030, 36.100.060, 35.21.280, 36.38.010, and 67.28.180; adding new sections to chapter 36.100 RCW; adding a new section to chapter 82.14 RCW; providing an effective date; and declaring an emergency.", and the same are herewith transmitted.
TIMOTHY A. MARTIN, Chief Clerk
MOTION
Senator Hargrove moved that the Senate do concur in the House amendments to Second Engrossed Substitute Senate Bill No. 6049.
Debate ensued.
The President declared the question before the Senate to be the motion by Senator Hargrove that the Senate do concur in the House amendments to Second Engrossed Substitute Senate Bill No. 6049.
The motion by Senator Hargrove carried and the Senate concurred in the House amendments to Second Engrossed Substitute Senate Bill No. 6049.
MOTION
On motion of Senator Loveland, Senator Smith was excused.
The President declared the question before the Senate to be the roll call on the final passage of Second Engrossed Substitute Senate Bill No. 6049, as amended by the House.
ROLL CALL
The Secretary called the roll on the final passage of Second Engrossed Substitute Senate Bill No. 6049, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 31; Nays, 14; Absent, 0; Excused, 4.
Voting yea: Senators Deccio, Drew, Finkbeiner, Franklin, Gaspard, Hale, Hargrove, Haugen, Heavey, Kohl, Long, Loveland, McAuliffe, McDonald, Newhouse, Oke, Palmer, Prentice, Prince, Quigley, Rasmussen, Rinehart, Sellar, Sheldon, Snyder, Spanel, Sutherland, Swecker, West, Winsley and Wood - 31.
Voting nay: Senators Anderson, A., Bauer, Cantu, Fairley, Fraser, Hochstatter, Johnson, McCaslin, Morton, Owen, Pelz, Roach, Strannigan and Wojahn - 14.
Excused: Senators Anderson, C., Moyer, Schow and Smith - 4.
SECOND ENGROSSED SUBSTITUTE SENATE BILL NO. 6049, as amended by the House, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.
MOTION
At 4:23 p.m., on motion of Senator Spanel, the Senate was declared to be at ease.
The Senate was called to order at 5:13 p.m. by President Pritchard.
MOTION
At 5:13 p.m., on motion of Senator Spanel, the Senate adjourned until 9:00 a.m., Tuesday, May 23, 1995.
JOEL PRITCHARD, President of the Senate
MARTY BROWN, Secretary of the Senate