Tax exemptions

AN ACT Relating to increasing tax exemption transparency and 1
accountability; amending RCW 43.06.400, 43.88.030, 43.88.055, 2
43.136.045, 43.136.055, 43.136.065, and 82.33.060; adding new 3
sections to chapter 43.88 RCW; adding a new section to chapter 82.32 4
RCW; and creating new sections. 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:6
NEW SECTION. Sec. 1. (1) Hundreds of tax exemptions and special 7
tax preferences have been granted to special interests by the 8
legislature without requiring assessment of whether those exemptions 9
and preferences would create jobs or result in increased economic 10
activity that increases state revenues. These exemptions and 11
preferences result in the entire tax system being less fair for 12
people who do not have special exemptions and preferences and 13
increase the taxes on all other taxpayers in order to fund education 14
and other state services.15
(2) Tax exemptions reduce revenues collected from the tax base 16
and provide preferential treatment to some at the expense of those 17
not getting a tax exemption. Almost as much money as is collected in 18
tax revenues is not collected and is given out as tax exemptions. 19
While every expenditure of revenue must be authorized and 20
appropriated in the state budget approved by the legislature, the 21
H-0464.3
HOUSE BILL 1569
State of Washington 69th Legislature 2025 Regular Session
By Representatives Pollet, Santos, Wylie, Fey, Thai, Goodman, Walen,
Farivar, Doglio, Macri, Tharinger, Taylor, Bergquist, Kloba, Reeves,
Hackney, Bernbaum, Scott, Nance, Peterson, Lekanoff, Berry,
Gregerson, Parshley, Cortes, Ramel, Obras, Simmons, Ormsby,
Salahuddin, and Reed
Read first time 01/24/25. Referred to Committee on Appropriations.
p. 1 HB 1569
massive amounts of funding for these tax preferences and exemptions 1
continue without any readoption by the legislature in each budget. 2
These exemptions and preferences are, therefore, tax expenditures, 3
most of which continue without any legislative action year after year 4
while the state seeks other funding to meet constitutional duties to 5
fund education and other services and obligations. 6
(3) Off-budget spending in the form of tax expenditures has 7
resulted in out-of-control state spending that is depleting the state 8
of needed revenue to fund essential state services like education and 9
health care. Tax expenditures as off-budget spending lack the 10
accountability of other state spending programs because they have not 11
been included in the state biennial budget process and are not 12
subject to the same biennial scrutiny. 13
(4) This act creates a discretionary tax expenditure budget as 14
part of the biennial budget adopted by the legislature. This act 15
reforms the tax expenditure process by including a discretionary tax 16
expenditure budget in the biennial state budget process. This act is 17
intended to improve transparency and accountability by requiring that 18
those tax preferences that have no expiration date in law or have 19
been recommended for review and clarification: Receive a review, 20
clarification, performance measures, and expiration date; are 21
readopted every two years as part of the budget process; or expire. 22
This brings tax expenditures into the state budget process to protect 23
the public's interest, makes them more transparent and accountable, 24
and helps ensure the tax expenditures are producing the results 25
intended when they were adopted by the legislature. The legislature 26
finds that it has not acted to review and clarify or terminate most 27
tax preferences that the joint legislative audit and review committee 28
have recommended for review and clarification or termination by the 29
legislature. It is the legislature's intent to add weight to such 30
findings and recommendations by recognizing that these are tax 31
expenditures and requiring those discretionary preferences to be 32
reviewed and clarified, terminated, or readopted in the biennial 33
budget if they are to be continued. 34
NEW SECTION. Sec. 2. A new section is added to chapter 43.88 35
RCW to read as follows: 36
(1) The omnibus operating appropriations act enacted by the 37
legislature must include a discretionary tax expenditure budget 38
detailing all discretionary tax expenditures. The four-year budget 39
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required to be balanced in RCW 43.88.055 may use revenues from 1
expenditures that expire absent legislative readoption in the next 2
biennial budget pursuant to section 5 (2) of this act, and which are 3
listed in the discretionary tax expenditure report prepared by the 4
department of revenue pursuant to RCW 43.06.400, for the purposes of 5
calculating available resources for the next ensuing fiscal biennium, 6
provided that the omnibus operating appropriations act identifies the 7
expiring discretionary tax expenditures. 8
(2) The discretionary tax expenditure budget must include an 9
estimate of the state revenue impact associated with each 10
discretionary tax expenditure. 11
(3) Discretionary tax expenditures in the discretionary tax 12
expenditure budget must: 13
(a) Be treated as any other state expenditure and must be 14
reauthorized with each biennial budget, until such time as the 15
expenditure otherwise expires; 16
(b) Have an expiration date of no greater than 10 years 17
established in law or have been clarified if recommended for 18
clarification by the joint legislative audit and review committee or 19
the citizen commission for performance measurement of tax preferences 20
review; and 21
(c) Have a revenue reduction of greater than $50,000 per fiscal 22
year or $100,000 per biennium as estimated in the report prepared by 23
the department of revenue pursuant to RCW 43.06.400.24
(4) The legislature may expire a discretionary tax expenditure 25
earlier than its authorized term by either: 26
(a) A majority vote as provided under Article II, section 22 of 27
the state Constitution; or 28
(b) As part of the budget process in the same manner as any other 29
expenditure is approved or denied in the omnibus operating 30
appropriations act by a majority vote of the members of the house of 31
representatives and the senate. 32
(5) For the purposes of this section, "discretionary tax 33
expenditure" means a tax preference, as defined in RCW 43.136.021, 34
which: 35
(a) Impacts revenues appropriated in the omnibus operating 36
appropriations act; 37
(b) Has no expiration date established in law, or has been 38
recommended by the joint legislative audit and review committee for 39
review and clarification, but for which the legislature has not 40
p. 3 HB 1569
clarified and adopted new performance measures and an expiration date 1
pursuant to RCW 82.32.805 and 82.32.808; and 2
(c) Is not required by the state Constitution, United States 3
Constitution, or federal law. 4
NEW SECTION. Sec. 3. A new section is added to chapter 82.32 5
RCW to read as follows: 6
(1) New or existing discretionary tax expenditures may not be 7
approved or reauthorized by the legislature for 10 years after the 8
effective date of this section. 9
(2) Any discretionary tax expenditure that is required to be part 10
of the submitted discretionary tax expenditure budget under section 5 11
of this act by reason of not having an expiration date established in 12
law or not having been reviewed and clarified by the legislature 13
following a recommendation to do so from the joint legislative audit 14
and review committee or citizen commission for performance 15
measurement of tax preferences, but which is not included in the 16
discretionary tax expenditure budget in the adopted omnibus 17
appropriations act, expires at the end of the calendar year in which 18
the budget is adopted. 19
(3) Any new discretionary tax expenditure is subject to the same 20
audit and review procedures as existing discretionary tax 21
expenditures are required to meet. New discretionary tax expenditures 22
authorized as part of the discretionary tax expenditure budget in the 23
omnibus operating appropriations act, but which were not reviewed 24
under all provisions of RCW 43.136.045 or 43.136.055 before 25
authorization in the omnibus operating appropriations act must be 26
prioritized for review by the citizen commission for performance 27
measurement of tax preferences and the joint legislative audit and 28
review committee. 29
(4) For the purpose of this section, "discretionary tax 30
expenditure" means a tax preference, as defined in RCW 43.136.021, 31
which: 32
(a) Impacts revenues appropriated in the omnibus operating 33
appropriations act; 34
(b) Has no expiration date established in law, or has been 35
recommended by the joint legislative audit and review committee for 36
review and clarification, but for which the legislature has not 37
clarified and adopted new performance measures and an expiration date 38
pursuant to RCW 82.32.805 and 82.32.808; and 39
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(c) Is not required by the state Constitution, United States 1
Constitution, or federal law. 2
Sec. 4. RCW 43.06.400 and 2013 c 225 s 605 are each amended to 3
read as follows: 4
(1) Beginning ((in January 1984, and in January of every fourth )) 5
December 1, 2025, and December 1, 2026, and every second year 6
thereafter, the department of revenue must submit to the legislature 7
prior to the regular session a report with a listing of the amount of 8
reduction for the current and next biennium in the revenues of the 9
state or the revenues of local government collected by the state as a 10
result of discretionary tax ((exemptions)) expenditures. ((The 11
listing must include an estimate of the revenue lost from the tax 12
exemption, the purpose of the tax exemption, the persons, 13
organizations, or parts of the population which benefit from the tax 14
exemption, and whether or not the tax exemption conflicts with 15
another state program. The listing )) The report must include a 16
summary of the results of any review by the joint legislative audit 17
and review committee and the citizen commission for performance 18
measurement of tax preferences made pursuant to RCW 43.136.065. The 19
report must be made readily available on the department of revenue's 20
website and include links to relevant reports or recommendations of 21
the joint legislative audit and review committee and the citizen 22
commission for performance measurement of tax preferences. The report 23
also must include but not be limited to the following revenue 24
sources: 25
(a) Real and personal property tax exemptions under Title 84 RCW;26
(b) Business and occupation tax exemptions, deductions, and 27
credits under chapter 82.04 RCW; 28
(c) Retail sales and use tax exemptions under chapters 82.08, 29
82.12, and 82.14 RCW; 30
(d) Public utility tax exemptions and deductions under chapter 31
82.16 RCW; 32
(e) Food fish and shellfish tax exemptions under chapter 82.27 33
RCW; 34
(f) Leasehold excise tax exemptions under chapter 82.29A RCW;35
(g) Motor vehicle and special fuel tax exemptions and refunds 36
under chapter 82.38 RCW; 37
(h) Aircraft fuel tax exemptions under chapter 82.42 RCW;38
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(i) Motor vehicle excise tax exclusions under chapter 82.44 RCW; 1
and 2
(j) Insurance premiums tax exemptions under chapter 48.14 RCW.3
(2) The department of revenue must prepare the ((listing)) report 4
required by this section with the assistance of any other agencies or 5
departments as may be required. 6
(3) ((The department of revenue must present the listing to the 7
ways and means committees of each house in public hearings.8
(4) Beginning in January 1984, and every four years thereafter 9
the governor is requested to review the report from the department of 10
revenue and may submit recommendations to the legislature with 11
respect to the repeal or modification of any tax exemption. The ways 12
and means committees of each house and the appropriate standing 13
committee of each house must hold public hearings and take 14
appropriate action on the recommendations submitted by the governor.15
(5))) The department of revenue must submit the discretionary tax 16
expenditure report to the governor at the time biennial budget 17
requests are due under RCW 43.88.030. The governor is requested to 18
review the discretionary tax expenditure report from the department 19
of revenue and submit it as part of the biennial budget documents 20
under RCW 43.88.030.21
(4) As used in this section, " discretionary tax ((exemption)) 22
expenditure" means ((an exemption, exclusion, or deduction from the 23
base of a tax; a credit against a tax; a deferral of a tax; or a 24
preferential tax rate )) a tax preference, as defined in RCW 25
43.136.021, which:26
(a) Impacts revenues appropriated in the omnibus operating 27
appropriations act;28
(b) Has no expiration date established in law, or has been 29
recommended by the joint legislative audit and review committee for 30
review and clarification, but for which the legislature has not 31
clarified and adopted new performance measures and an expiration date 32
pursuant to RCW 82.32.805 and 82.32.808; and33
(c) Is not required by the state Constitution, United States 34
Constitution, or federal law. 35
(((6) For purposes of the listing due in January 2012, the 36
department of revenue does not have to prepare or update the listing 37
with respect to any tax exemption that would not be likely to 38
increase state revenue if the exemption was repealed or otherwise 39
eliminated.))40
p. 6 HB 1569
NEW SECTION. Sec. 5. A new section is added to chapter 43.88 1
RCW to read as follows: 2
(1)(a) The governor must transmit a proposed discretionary tax 3
expenditure budget and the discretionary report required under RCW 4
43.06.400 to the legislature with the governor's proposed operating 5
budget document or documents with recommendations for ending or 6
continuing each discretionary tax expenditure that either:7
(i) Has no expiration date established in law; 8
(ii) Has been recommended by the joint legislative audit and 9
review committee for review and clarification, but for which the 10
legislature has not clarified and adopted new performance measures 11
and an expiration date pursuant to RCW 82.32.805 and 82.32.808; or12
(iii) Has a revenue reduction of greater than $50,000 per fiscal 13
year or $100,000 per biennium as estimated in the report prepared by 14
the department of revenue pursuant to RCW 43.06.400.15
(b) The discretionary tax expenditure budget must include an 16
estimate of the state revenue impact associated with each 17
discretionary tax expenditure. The discretionary tax expenditure 18
budget may address tax expenditures required under the state 19
Constitution, United States Constitution, or federal law.20
(2) The governor also may submit other recommendations to the 21
legislature with respect to the repeal or modification of any tax 22
expenditure. The fiscal committees of the house of representatives 23
and the senate and the appropriate standing committees of the house 24
of representatives and the senate must hold public hearings.25
(3) For the purpose of this section, "discretionary tax 26
expenditure" means a tax preference as defined in RCW 43.136.021, 27
which: 28
(a) Impacts revenues appropriated in the omnibus operating 29
appropriations act; 30
(b) Has no expiration date established in law, or has been 31
recommended by the joint legislative audit and review committee for 32
review and clarification, but for which the legislature has not 33
clarified and adopted new performance measures and an expiration date 34
pursuant to RCW 82.32.805 and 82.32.808; and 35
(c) Is not required by the state Constitution, United States 36
Constitution, or federal law. 37
Sec. 6. RCW 43.88.030 and 2023 c 474 s 8035 are each amended to 38
read as follows: 39
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(1) The director of financial management shall provide all 1
agencies with a complete set of instructions for submitting biennial 2
budget requests to the director at least three months before agency 3
budget documents are due into the office of financial management. The 4
budget document or documents shall consist of the governor's budget 5
message which shall be explanatory of the budget and shall contain an 6
outline of the proposed financial policies of the state for the 7
ensuing fiscal period, as well as an outline of the proposed six-year 8
financial policies where applicable, and shall describe in connection 9
therewith the important features of the budget. The biennial budget 10
document or documents shall also describe performance indicators that 11
demonstrate measurable progress towards priority results. The message 12
shall set forth the reasons for salient changes from the previous 13
fiscal period in expenditure and revenue items and shall explain any 14
major changes in financial policy. Attached to the budget message 15
shall be such supporting schedules, exhibits and other explanatory 16
material in respect to both current operations and capital 17
improvements as the governor shall deem to be useful to the 18
legislature. The budget document or documents shall set forth a 19
proposal for expenditures in the ensuing fiscal period, or six-year 20
period where applicable, based upon the estimated revenues and 21
caseloads as approved by the economic and revenue forecast council 22
and caseload forecast council or upon the estimated revenues and 23
caseloads of the office of financial management for those funds, 24
accounts, sources, and programs for which the forecast councils do 25
not prepare an official forecast. Revenues shall be estimated for 26
such fiscal period from the source and at the rates existing by law 27
at the time of submission of the budget document, including the 28
supplemental budgets submitted in the even-numbered years of a 29
biennium. However, the estimated revenues and caseloads for use in 30
the governor's budget document may be adjusted to reflect budgetary 31
revenue transfers and revenue and caseload estimates dependent upon 32
budgetary assumptions of enrollments, workloads, and caseloads. All 33
adjustments to the approved estimated revenues and caseloads must be 34
set forth in the budget document. The governor may additionally 35
submit, as an appendix to each supplemental, biennial, or six-year 36
agency budget or to the budget document or documents, a proposal for 37
expenditures in the ensuing fiscal period from revenue sources 38
derived from proposed changes in existing statutes.39
The budget document or documents shall also contain:40
p. 8 HB 1569
(a) Revenues classified by fund and source for the immediately 1
past fiscal period, those received or anticipated for the current 2
fiscal period, and those anticipated for the ensuing biennium;3
(b) The undesignated fund balance or deficit, by fund;4
(c) Such additional information dealing with expenditures, 5
revenues, workload, performance, and personnel as the legislature may 6
direct by law or concurrent resolution; 7
(d) Such additional information dealing with revenues and 8
expenditures as the governor shall deem pertinent and useful to the 9
legislature; 10
(e) Tabulations showing expenditures classified by fund, 11
function, and agency; 12
(f) The expenditures that include nonbudgeted, nonappropriated 13
accounts outside the state treasury; 14
(g) The discretionary tax expenditure budget prepared under 15
section 5 of this act;16
(h) Identification of all proposed direct expenditures to 17
implement the Puget Sound water quality plan under chapter 90.71 RCW, 18
shown by agency and in total; and 19
(((h))) (i) Tabulations showing each postretirement adjustment by 20
retirement system established after fiscal year 1991, to include, but 21
not be limited to, estimated total payments made to the end of the 22
previous biennial period, estimated payments for the present 23
biennium, and estimated payments for the ensuing biennium.24
(2) The budget document or documents shall include detailed 25
estimates of all anticipated revenues applicable to proposed 26
operating ((or)), capital, and discretionary tax expenditures and 27
shall also include all proposed operating ((or)), capital, and 28
discretionary tax expenditures. The total of beginning undesignated 29
fund balance and estimated revenues less working capital and other 30
reserves shall equal or exceed the total of proposed applicable 31
expenditures. The budget document or documents shall further include:32
(a) Interest, amortization and redemption charges on the state 33
debt; 34
(b) Payments of all reliefs, judgments, and claims;35
(c) Other statutory expenditures; 36
(d) Expenditures incident to the operation for each agency;37
(e) Revenues derived from agency operations; 38
(f) Expenditures and revenues shall be given in comparative form 39
showing those incurred or received for the immediately past fiscal 40
p. 9 HB 1569
period and those anticipated for the current biennium and next 1
ensuing biennium; 2
(g) A showing and explanation of amounts of general fund and 3
other funds obligations for debt service and any transfers of moneys 4
that otherwise would have been available for appropriation;5
(h) Common school expenditures on a fiscal-year basis;6
(i) A showing, by agency, of the value and purpose of financing 7
contracts for the lease/purchase or acquisition of personal or real 8
property for the current and ensuing fiscal periods; and9
(j) A showing and explanation of anticipated amounts of general 10
fund and other funds required to amortize the unfunded actuarial 11
accrued liability of the retirement system specified under chapter 12
41.45 RCW, and the contributions to meet such amortization, stated in 13
total dollars and as a level percentage of total compensation.14
(3) The governor's operating budget document or documents shall 15
reflect the statewide priorities as required by RCW 43.88.090.16
(4) The governor's operating budget document or documents shall 17
identify activities that are not addressing the statewide priorities.18
(5)(a) Beginning in the 2021-2023 fiscal biennium, the governor's 19
operating budget document or documents submitted to the legislature 20
must leave, in total, a positive ending fund balance in the general 21
fund and related funds. 22
(b) Beginning in the 2021-2023 fiscal biennium, the projected 23
maintenance level of the governor's operating budget document or 24
documents submitted to the legislature must not exceed the available 25
fiscal resources for the next ensuing fiscal biennium.26
(c) For purposes of this subsection: 27
(i) "Available fiscal resources" means the beginning general fund 28
and related funds balances and any fiscal resources estimated for the 29
general fund and related funds, adjusted for proposed revenue 30
legislation, and with forecasted revenues adjusted to the greater of 31
(A) the official general fund and related funds revenue forecast for 32
the ensuing biennium, or (B) the official general fund and related 33
funds forecast for the second fiscal year of the current fiscal 34
biennium, increased by 4.5 percent for each fiscal year of the 35
ensuing biennium. 36
(ii) "Projected maintenance level" means estimated appropriations 37
necessary to maintain the continuing costs of program and service 38
levels either funded in the governor's budget document or documents 39
submitted to the legislature or mandated by other state or federal 40
p. 10 HB 1569
law, adjusted by the estimated cost of proposed executive branch 1
legislation, and the amount of any general fund moneys projected to 2
be transferred to the budget stabilization account pursuant to 3
Article VII, section 12 of the state Constitution. Proposed executive 4
branch legislation does not include proposals by institutions of 5
higher education, other separately elected officials, or other 6
boards, commissions, and offices not under the authority of the 7
governor that are not funded or assumed in the governor's budget 8
document or documents submitted to the legislature.9
(iii) "Related funds" has the meaning defined in RCW 43.88.055.10
(d) (b) of this subsection (5) does not apply:11
(i) To any governor-proposed legislation submitted to the 12
legislature that makes net reductions in general fund and related 13
funds appropriations to prevent the governor from making across-the-14
board reductions in allotments for these particular funds as provided 15
in RCW 43.88.110(10); or 16
(ii) In a fiscal biennium for which the governor proposes 17
appropriations from the budget stabilization account pursuant to 18
Article VII, section 12(d)(ii) of the state Constitution.19
(6) A separate capital budget document or schedule shall be 20
submitted that will contain the following: 21
(a) A statement setting forth a long-range facilities plan for 22
the state that identifies and includes the highest priority needs 23
within affordable spending levels; 24
(b) A capital program consisting of proposed capital projects for 25
the next biennium and the two biennia succeeding the next biennium 26
consistent with the long-range facilities plan. Insomuch as is 27
practical, and recognizing emergent needs, the capital program shall 28
reflect the priorities, projects, and spending levels proposed in 29
previously submitted capital budget documents in order to provide a 30
reliable long-range planning tool for the legislature and state 31
agencies; 32
(c) A capital plan consisting of proposed capital spending for at 33
least four biennia succeeding the next biennium; 34
(d) A strategic plan for reducing backlogs of maintenance and 35
repair projects. The plan shall include a prioritized list of 36
specific facility deficiencies and capital projects to address the 37
deficiencies for each agency, cost estimates for each project, a 38
schedule for completing projects over a reasonable period of time, 39
p. 11 HB 1569
and identification of normal maintenance activities to reduce future 1
backlogs; 2
(e) A statement of the reason or purpose for a project;3
(f) Verification that a project is consistent with the provisions 4
set forth in chapter 36.70A RCW; 5
(g) A statement about the proposed site, size, and estimated life 6
of the project, if applicable; 7
(h) Estimated total project cost; 8
(i) For major projects valued over five million dollars, 9
estimated costs for the following project components: Acquisition, 10
consultant services, construction, equipment, project management, and 11
other costs included as part of the project. Project component costs 12
shall be displayed in a standard format defined by the office of 13
financial management to allow comparisons between projects;14
(j) Estimated total project cost for each phase of the project as 15
defined by the office of financial management; 16
(k) Estimated ensuing biennium costs; 17
(l) Estimated costs beyond the ensuing biennium;18
(m) Estimated construction start and completion dates;19
(n) Source and type of funds proposed; 20
(o) Estimated ongoing operating budget costs or savings resulting 21
from the project, including staffing and maintenance costs;22
(p) For any capital appropriation requested for a state agency 23
for the acquisition of land or the capital improvement of land in 24
which the primary purpose of the acquisition or improvement is 25
recreation or wildlife habitat conservation, the capital budget 26
document, or an omnibus list of recreation and habitat acquisitions 27
provided with the governor's budget document, shall identify the 28
projected costs of operation and maintenance for at least the two 29
biennia succeeding the next biennium. Omnibus lists of habitat and 30
recreation land acquisitions shall include individual project cost 31
estimates for operation and maintenance as well as a total for all 32
state projects included in the list. The document shall identify the 33
source of funds from which the operation and maintenance costs are 34
proposed to be funded; 35
(q) For any capital budget request for funding in the 2023-2025 36
or 2025-2027 fiscal biennia by an institution of higher education to 37
address a cost increase for any major project, a statement describing 38
the unexpected project costs, ways the agency has mitigated or will 39
mitigate the estimated project costs, and identification of other 40
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funding that may be applied to the project. For purposes of this 1
subsection (6)(q): 2
(i) "Cost increases" means total project costs estimated above 3
those listed in the prior agency budget request and for which the 4
legislature relied in making a funding decision for design or 5
construction, adjusted for C-100 inflation factors; and6
(ii) "Institution of higher education" has the meaning provided 7
in RCW 28B.10.016; 8
(r) Such other information bearing upon capital projects as the 9
governor deems to be useful; 10
(s) Standard terms, including a standard and uniform definition 11
of normal maintenance, for all capital projects; and12
(t) Such other information as the legislature may direct by law 13
or concurrent resolution. 14
For purposes of this subsection (6), the term "capital project" 15
shall be defined subsequent to the analysis, findings, and 16
recommendations of a joint committee comprised of representatives 17
from the house capital appropriations committee, senate ways and 18
means committee, legislative evaluation and accountability program 19
committee, and office of financial management. 20
(7) No change affecting the comparability of agency or program 21
information relating to expenditures, revenues, workload, performance 22
and personnel shall be made in the format of any budget document or 23
report presented to the legislature under this section or RCW 24
43.88.160(1) relative to the format of the budget document or report 25
which was presented to the previous regular session of the 26
legislature during an odd-numbered year without prior legislative 27
concurrence. Prior legislative concurrence shall consist of (a) a 28
favorable majority vote on the proposal by the standing committees on 29
ways and means of both houses if the legislature is in session or (b) 30
a favorable majority vote on the proposal by members of the 31
legislative evaluation and accountability program committee if the 32
legislature is not in session. 33
Sec. 7. RCW 43.88.055 and 2021 c 199 s 103 are each amended to 34
read as follows: 35
(1) The legislature must adopt a four-year balanced budget as 36
follows: 37
(a) Beginning in the 2013-2015 fiscal biennium, the legislature 38
shall enact a balanced omnibus operating appropriations bill that 39
p. 13 HB 1569
leaves, in total, a positive ending fund balance in the general fund 1
and related funds. 2
(b) Beginning in the 2013-2015 fiscal biennium, the projected 3
maintenance level of the omnibus appropriations bill enacted by the 4
legislature shall not exceed the available fiscal resources for the 5
next ensuing fiscal biennium. 6
(2) ((For purposes of this section: )) The definitions in this 7
subsection apply throughout this section unless the context clearly 8
requires otherwise.9
(a) "Available fiscal resources" means the beginning general fund 10
and related fund balances and any fiscal resources estimated for the 11
general fund and related funds, adjusted for enacted legislation, and 12
with forecasted revenues adjusted to the greater of (i) the official 13
general fund and related funds revenue forecast for the ensuing 14
biennium, or (ii) the official general fund and related funds 15
forecast for the second fiscal year of the current fiscal biennium, 16
increased by 4.5 percent for each fiscal year of the ensuing 17
biennium; 18
(b) "Discretionary tax expenditure" means a tax preference, as 19
defined in RCW 43.136.021, which:20
(i) Impacts revenues appropriated in the omnibus operating 21
appropriations act;22
(ii) Has no expiration date established in law, or has been 23
recommended by the joint legislative audit and review committee for 24
review and clarification, but for which the legislature has not 25
clarified and adopted new performance measures and an expiration date 26
pursuant to RCW 82.32.805 and 82.32.808; and27
(iii) Is not required by the state Constitution, United States 28
Constitution, or federal law;29
(c) "Forecasted revenues" means the revenue estimate prepared by 30
the economic and revenue forecast council plus any discretionary tax 31
expenditures identified as not being reauthorized in the omnibus 32
operating appropriations act;33
(d) "Projected maintenance level" means estimated appropriations 34
necessary to maintain the continuing costs of program and service 35
levels either funded in that appropriations bill or mandated by other 36
state or federal law, and the amount of any general fund moneys 37
projected to be transferred to the budget stabilization account 38
pursuant to Article VII, section 12 of the state Constitution;39
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(((c))) (e) "Related funds," as used in this section, means the 1
Washington opportunity pathways account, the workforce education 2
investment account, the fair start for kids account, and the 3
education legacy trust account. 4
(3) Subsection (1)(a) and (b) of this section does not apply to 5
an appropriations bill that makes net reductions in general fund and 6
related funds appropriations and is enacted between July 1st and 7
February 15th of any fiscal year. 8
(4) Subsection (1)(b) of this section does not apply in a fiscal 9
biennium in which money is appropriated from the budget stabilization 10
account pursuant to Article VII, section 12 (d)(ii) of the state 11
Constitution. 12
Sec. 8. RCW 43.136.045 and 2011 c 335 s 2 are each amended to 13
read as follows: 14
(1) The citizen commission for performance measurement of tax 15
preferences must develop a schedule to accomplish an orderly review 16
of discretionary tax ((preferences)) expenditures at least once every 17
((ten)) 10 years. In determining the schedule, the commission must 18
consider the order the discretionary tax ((preferences)) expenditures 19
were enacted into law, in addition to other factors including but not 20
limited to grouping preferences for review by type of industry, 21
economic sector, or policy area. ((The commission may elect to 22
include, anywhere in the schedule, a tax preference that has a 23
statutory expiration date. The commission must omit from the schedule 24
tax preferences that are required by constitutional law, sales and 25
use tax exemptions for machinery and equipment for manufacturing, 26
research and development, or testing, the small business credit for 27
the business and occupation tax, sales and use tax exemptions for 28
food and prescription drugs, property tax relief for retired persons, 29
and property tax valuations based on current use, and may omit any 30
tax preference that the commission determines is a critical part of 31
the structure of the tax system. )) The commission must include, in a 32
timely manner, in the schedule, a discretionary tax expenditure that 33
has a statutory expiration date. The commission shall omit from the 34
schedule discretionary tax expenditures that are required by 35
constitutional law. As an alternative to the process under RCW 36
43.136.055, the commission , as well as the governor or the state 37
legislature, may recommend to the joint legislative audit and review 38
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committee an expedited review process for any discretionary tax 1
((preference)) expenditure or group of expenditures.2
(2) The commission must revise the schedule as needed each year, 3
taking into account newly enacted or terminated discretionary tax 4
((preferences)) expenditures. The commission must deliver the 5
schedule to the joint legislative audit and review committee by 6
September 1st of each year. 7
(3) The commission must provide a process for effective citizen 8
input during its deliberations and must allow comments to be 9
submitted and posted online. 10
(4) For the purpose of this section, "discretionary tax 11
expenditure" means a tax preference, as defined in RCW 43.136.021, 12
which:13
(a) Impacts revenues appropriated in the omnibus operating 14
appropriations act;15
(b) Has no expiration date established in law, or has been 16
recommended by the joint legislative audit and review committee for 17
review and clarification, but for which the legislature has not 18
clarified and adopted new performance measures and an expiration date 19
pursuant to RCW 82.32.805 and 82.32.808; and20
(c) Is not required by the state Constitution, United States 21
Constitution, or federal law.22
Sec. 9. RCW 43.136.055 and 2011 c 335 s 3 are each amended to 23
read as follows: 24
(1) The joint legislative audit and review committee must review 25
tax preferences according to the schedule developed under RCW 26
43.136.045. The committee must consider, but not be limited to, the 27
following factors in the review as relevant to each particular tax 28
preference: 29
(a) The classes of individuals, types of organizations, or types 30
of industries whose state tax liabilities are directly affected by 31
the tax preference; 32
(b) Public policy objectives that might provide a justification 33
for the tax preference, including but not limited to the legislative 34
history, any legislative intent, or the extent to which the tax 35
preference encourages business growth or relocation into this state, 36
promotes growth or retention of high wage jobs, or helps stabilize 37
communities; 38
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(c) Evidence that the existence of the tax preference has 1
contributed to the achievement of any of the public policy 2
objectives; 3
(d) The extent to which continuation of the tax preference might 4
contribute to any of the public policy objectives; 5
(e) The extent to which the tax preference may provide unintended 6
benefits to an individual, organization, or industry other than those 7
the legislature intended; 8
(f) The extent to which terminating the tax preference may have 9
negative effects on the category of taxpayers that currently benefit 10
from the tax preference, and the extent to which resulting higher 11
taxes may have negative effects on employment and the economy;12
(g) The feasibility of modifying the tax preference to provide 13
for adjustment or recapture of the tax benefits of the tax preference 14
if the objectives are not fulfilled; 15
(h) Fiscal impacts of the tax preference, including past impacts 16
and expected future impacts if it is continued. For the purposes of 17
this subsection, "fiscal impact" includes an analysis of the general 18
effects of the tax preference on the overall state economy, 19
including, but not limited to, the effects of the tax preference on 20
the consumption and expenditures of persons and businesses within the 21
state; 22
(i) The extent to which termination of the tax preference would 23
affect the distribution of liability for payment of state taxes;24
(j) The economic impact of the tax preference compared to the 25
economic impact of government activities funded by the tax for which 26
the tax preference is taken at the same level of expenditure as the 27
tax preference. For purposes of this subsection the economic impact 28
shall be determined using the Washington input-output model as 29
published by the office of financial management; 30
(k) The amount of additional revenue generated in comparison to 31
the reduction in revenue from the tax preference, if the tax 32
preference includes a tax preference performance statement, stated 33
legislative intent, or implied intent that seeks to generate 34
additional revenue; and35
(l) Consideration of similar tax preferences adopted in other 36
states, and potential public policy benefits that might be gained by 37
incorporating corresponding provisions in Washington.38
(2) For each tax preference, the committee must provide a 39
recommendation as to whether the tax preference should be continued 40
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without modification, modified, scheduled for sunset review at a 1
future date, or terminated immediately. The committee may recommend 2
accountability standards for the future review of a tax preference.3
Sec. 10. RCW 43.136.065 and 2006 c 197 s 6 are each amended to 4
read as follows: 5
(1) The joint legislative audit and review committee shall report 6
its findings and recommendations for scheduled discretionary tax 7
((preferences)) expenditures to the citizen commission for 8
performance measurement of tax preferences by ((August)) July 30th of 9
each even-numbered year. The commission ((may)) must review and 10
comment on the report of the committee. The committee may revise its 11
report based on the comments of the commission. The committee shall 12
prepare a final report that includes the comments of the commission 13
and submit the final report to the finance committee of the house of 14
representatives ((and)), the ways and means committee of the senate 15
((by December 30th )), the department of revenue, and the governor's 16
office by September 30th of each even-numbered year . The governor and 17
the department of revenue must consider and incorporate the findings 18
of the final report in their preparation of the discretionary tax 19
expenditure budget required under section 5 of this act.20
(2) ((The joint legislative audit and review committee shall 21
submit a special report reviewing all tax preferences that have 22
statutory expiration dates between June 30, 2005, and January 1, 23
2007. For the special report, the committee shall complete a review 24
under RCW 43.136.055, and obtain comments of the citizen commission 25
for performance measurement of tax preferences under subsection (1) 26
of this section, to the extent possible. The committee shall submit 27
the special report to the finance committee of the house of 28
representatives and the ways and means committee of the senate by 29
January 12, 2006.30
(3))) Following receipt of a report under this section, the 31
finance committee of the house of representatives and the ways and 32
means committee of the senate shall jointly hold a public hearing to 33
consider the final report and any related data. 34
(3) For the purpose of this section, "discretionary tax 35
expenditure" means a tax preference, as defined in RCW 43.136.021, 36
which:37
(a) Impacts revenues appropriated in the omnibus operating 38
appropriations act;39
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(b) Has no expiration date established in law, or has been 1
recommended by the joint legislative audit and review committee for 2
review and clarification, but for which the legislature has not 3
clarified and adopted new performance measures and an expiration date 4
pursuant to RCW 82.32.805 and 82.32.808; and5
(c) Is not required by the state Constitution, United States 6
Constitution, or federal law.7
Sec. 11. RCW 82.33.060 and 2020 c 218 s 5 are each amended to 8
read as follows: 9
(1) To facilitate compliance with, and subject to the terms of, 10
RCW 43.88.055 and 43.88.030, the state budget outlook work group 11
shall prepare, subject to the approval of the economic and revenue 12
forecast council under RCW 82.33.010, an official state budget 13
outlook for state revenues and expenditures for the general fund and 14
related funds. The revenue and caseload projections used in the 15
outlook must reflect the most recent official forecasts adopted by 16
the economic and revenue forecast council and the caseload forecast 17
council for the years for which those forecasts are available.18
(2) The outlook must: 19
(a) Estimate revenues to and expenditures from the state general 20
fund and related funds. The estimate of ensuing biennium expenditures 21
must include maintenance items including, but not limited to, 22
continuation of current programs, forecasted growth of current 23
entitlement programs, and actions required by law, including 24
legislation with a future implementation date. Estimates of ensuing 25
biennium expenditures must exclude policy items including, but not 26
limited to, legislation not yet enacted by the legislature, 27
collective bargaining agreements not yet approved by the legislature, 28
and changes to levels of funding for employee salaries and benefits 29
unless those changes are required by statute. Estimated maintenance 30
level expenditures must also exclude costs of court rulings issued 31
during or within fewer than ninety days before the beginning of the 32
current legislative session; 33
(b) Address major budget and revenue drivers, including trends 34
and variability in these drivers; 35
(c) Clearly state the assumptions used in the estimates of 36
baseline and projected expenditures and any adjustments made to those 37
estimates; 38
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(d) Clearly state the assumptions used in the baseline revenue 1
estimates and any adjustments to those estimates; and2
(e) Include the impact of previously enacted legislation with a 3
future implementation date. 4
(3) The outlook must also separately include projections based on 5
the revenues and expenditures proposed in the governor's budget 6
documents submitted to the legislature under RCW 43.88.030.7
(4) The economic and revenue forecast council shall submit state 8
budget outlooks prepared under this section to the governor and the 9
members of the committees on ways and means of the senate and house 10
of representatives, including one copy to the staff of each of the 11
committees, as required by this section. 12
(5) Each January, the state budget outlook work group shall also 13
prepare, subject to the approval of the economic and revenue forecast 14
council, a state budget outlook for state revenues and expenditures 15
that reflects the governor's proposed budget document submitted to 16
the legislature under chapter 43.88 RCW. Within thirty days following 17
enactment of an operating budget by the legislature, the work group 18
shall prepare, subject to the approval of the economic and revenue 19
forecast council, a state budget outlook for state revenues and 20
expenditures that reflects the enacted budget. 21
(6) All agencies of state government shall provide to the 22
supervisor immediate access to all information relating to state 23
budget outlooks. 24
(7) The state budget outlook work group must publish its proposed 25
methodology on the economic and revenue forecast council website. The 26
state budget outlook work group, in consultation with the economic 27
and revenue forecast work group and outside experts if necessary, 28
must analyze the extent to which the proposed methodology for 29
projecting expenditures for the ensuing fiscal biennia may be 30
reliably used to determine the future impact of appropriations and 31
make recommendations to change the outlook process to increase 32
reliability and accuracy. The recommendations are due by December 1, 33
2013, and every five years thereafter. 34
(8)(a) The state budget outlook work group shall maintain a 35
current listing of discretionary tax expenditures on the economic and 36
revenue forecast council website. The listing must include the 37
following information:38
(i) A description of the discretionary tax expenditure;39
(ii) Prior and estimated future fiscal impacts;40
p. 20 HB 1569
(iii) Any stated public policy objective of the discretionary tax 1
expenditure;2
(iv) The expiration date of the discretionary tax expenditure or 3
the lack thereof; and4
(v) The most recently available recommendations to continue, 5
modify, or eliminate the discretionary tax expenditure by the joint 6
legislative audit and review committee and the citizen commission for 7
performance measurement of tax preferences under chapter 43.136 RCW.8
(b) The department of revenue must provide the information 9
contained in the report under RCW 43.06.400 to the state budget 10
outlook work group.11
(c) The websites of the office of financial management, the 12
legislative evaluation and accountability program, and the 13
legislature must post a link to the listing of discretionary tax 14
expenditures.15
(9) For the purpose of this section, "discretionary tax 16
expenditure" means a tax preference, as defined in RCW 43.136.021, 17
which:18
(a) Impacts revenues appropriated in the omnibus operating 19
appropriations act;20
(b) Has no expiration date established in law, or has been 21
recommended by the joint legislative audit and review committee for 22
review and clarification, but for which the legislature has not 23
clarified and adopted new performance measures and an expiration date 24
pursuant to RCW 82.32.805 and 82.32.808; and25
(c) Is not required by the state Constitution, United States 26
Constitution, or federal law.27
NEW SECTION. Sec. 12. The department of revenue and the office 28
of the code reviser must draft proposed legislation making technical 29
corrections and any other changes required for the administration and 30
implementation of this act and submit the draft to the chair of the 31
house finance committee and the chair of the senate ways and means 32
committee on or before December 31, 2025.33
NEW SECTION. Sec. 13. If any provision of this act or its 34
application to any person or circumstance is held invalid, the 35
remainder of the act or the application of the provision to other 36
persons or circumstances is not affected.37
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NEW SECTION. Sec. 14. This act may be known and cited as the 1
tax exemption transparency and accountability act.2
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