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HB 1569 - Tax exemptions

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Section 1

  1. Hundreds of tax exemptions and special tax preferences have been granted to special interests by the legislature without requiring assessment of whether those exemptions and preferences would create jobs or result in increased economic activity that increases state revenues. These exemptions and preferences result in the entire tax system being less fair for people who do not have special exemptions and preferences and increase the taxes on all other taxpayers in order to fund education and other state services.

  2. Tax exemptions reduce revenues collected from the tax base and provide preferential treatment to some at the expense of those not getting a tax exemption. Almost as much money as is collected in tax revenues is not collected and is given out as tax exemptions. While every expenditure of revenue must be authorized and appropriated in the state budget approved by the legislature, the massive amounts of funding for these tax preferences and exemptions continue without any readoption by the legislature in each budget. These exemptions and preferences are, therefore, tax expenditures, most of which continue without any legislative action year after year while the state seeks other funding to meet constitutional duties to fund education and other services and obligations.

  3. Off-budget spending in the form of tax expenditures has resulted in out-of-control state spending that is depleting the state of needed revenue to fund essential state services like education and health care. Tax expenditures as off-budget spending lack the accountability of other state spending programs because they have not been included in the state biennial budget process and are not subject to the same biennial scrutiny.

  4. This act creates a discretionary tax expenditure budget as part of the biennial budget adopted by the legislature. This act reforms the tax expenditure process by including a discretionary tax expenditure budget in the biennial state budget process. This act is intended to improve transparency and accountability by requiring that those tax preferences that have no expiration date in law or have been recommended for review and clarification: Receive a review, clarification, performance measures, and expiration date; are readopted every two years as part of the budget process; or expire. This brings tax expenditures into the state budget process to protect the public's interest, makes them more transparent and accountable, and helps ensure the tax expenditures are producing the results intended when they were adopted by the legislature. The legislature finds that it has not acted to review and clarify or terminate most tax preferences that the joint legislative audit and review committee have recommended for review and clarification or termination by the legislature. It is the legislature's intent to add weight to such findings and recommendations by recognizing that these are tax expenditures and requiring those discretionary preferences to be reviewed and clarified, terminated, or readopted in the biennial budget if they are to be continued.

Section 2

  1. The omnibus operating appropriations act enacted by the legislature must include a discretionary tax expenditure budget detailing all discretionary tax expenditures. The four-year budget required to be balanced in RCW 43.88.055 may use revenues from expenditures that expire absent legislative readoption in the next biennial budget pursuant to section 5(2) of this act, and which are listed in the discretionary tax expenditure report prepared by the department of revenue pursuant to RCW 43.06.400, for the purposes of calculating available resources for the next ensuing fiscal biennium, provided that the omnibus operating appropriations act identifies the expiring discretionary tax expenditures.

  2. The discretionary tax expenditure budget must include an estimate of the state revenue impact associated with each discretionary tax expenditure.

  3. Discretionary tax expenditures in the discretionary tax expenditure budget must:

    1. Be treated as any other state expenditure and must be reauthorized with each biennial budget, until such time as the expenditure otherwise expires;

    2. Have an expiration date of no greater than 10 years established in law or have been clarified if recommended for clarification by the joint legislative audit and review committee or the citizen commission for performance measurement of tax preferences review; and

    3. Have a revenue reduction of greater than $50,000 per fiscal year or $100,000 per biennium as estimated in the report prepared by the department of revenue pursuant to RCW 43.06.400.

  4. The legislature may expire a discretionary tax expenditure earlier than its authorized term by either:

    1. A majority vote as provided under Article II, section 22 of the state Constitution; or

    2. As part of the budget process in the same manner as any other expenditure is approved or denied in the omnibus operating appropriations act by a majority vote of the members of the house of representatives and the senate.

  5. For the purposes of this section, "discretionary tax expenditure" means a tax preference, as defined in RCW 43.136.021, which:

    1. Impacts revenues appropriated in the omnibus operating appropriations act;

    2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

    3. Is not required by the state Constitution, United States Constitution, or federal law.

Section 3

  1. New or existing discretionary tax expenditures may not be approved or reauthorized by the legislature for 10 years after the effective date of this section.

  2. Any discretionary tax expenditure that is required to be part of the submitted discretionary tax expenditure budget under section 5 of this act by reason of not having an expiration date established in law or not having been reviewed and clarified by the legislature following a recommendation to do so from the joint legislative audit and review committee or citizen commission for performance measurement of tax preferences, but which is not included in the discretionary tax expenditure budget in the adopted omnibus appropriations act, expires at the end of the calendar year in which the budget is adopted.

  3. Any new discretionary tax expenditure is subject to the same audit and review procedures as existing discretionary tax expenditures are required to meet. New discretionary tax expenditures authorized as part of the discretionary tax expenditure budget in the omnibus operating appropriations act, but which were not reviewed under all provisions of RCW 43.136.045 or 43.136.055 before authorization in the omnibus operating appropriations act must be prioritized for review by the citizen commission for performance measurement of tax preferences and the joint legislative audit and review committee.

  4. For the purpose of this section, "discretionary tax expenditure" means a tax preference, as defined in RCW 43.136.021, which:

    1. Impacts revenues appropriated in the omnibus operating appropriations act;

    2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

    3. Is not required by the state Constitution, United States Constitution, or federal law.

Section 4

  1. Beginning December 1, 2025, and December 1, 2026, and every second year thereafter, the department of revenue must submit to the legislature prior to the regular session a report with a listing of the amount of reduction for the current and next biennium in the revenues of the state or the revenues of local government collected by the state as a result of discretionary tax expenditures. The report must include a summary of the results of any review by the joint legislative audit and review committee and the citizen commission for performance measurement of tax preferences made pursuant to RCW 43.136.065. The report must be made readily available on the department of revenue's website and include links to relevant reports or recommendations of the joint legislative audit and review committee and the citizen commission for performance measurement of tax preferences. The report also must include but not be limited to the following revenue sources:

    1. Real and personal property tax exemptions under Title 84 RCW;

    2. Business and occupation tax exemptions, deductions, and credits under chapter 82.04 RCW;

    3. Retail sales and use tax exemptions under chapters 82.08, 82.12, and 82.14 RCW;

    4. Public utility tax exemptions and deductions under chapter 82.16 RCW;

    5. Food fish and shellfish tax exemptions under chapter 82.27 RCW;

    6. Leasehold excise tax exemptions under chapter 82.29A RCW;

    7. Motor vehicle and special fuel tax exemptions and refunds under chapter 82.38 RCW;

    8. Aircraft fuel tax exemptions under chapter 82.42 RCW;

      1. Motor vehicle excise tax exclusions under chapter 82.44 RCW; and

    9. Insurance premiums tax exemptions under chapter 48.14 RCW.

  2. The department of revenue must prepare the report required by this section with the assistance of any other agencies or departments as may be required.

3.

The department of revenue must submit the discretionary tax expenditure report to the governor at the time biennial budget requests are due under RCW 43.88.030. The governor is requested to review the discretionary tax expenditure report from the department of revenue and submit it as part of the biennial budget documents under RCW 43.88.030.

  1. As used in this section, "discretionary tax expenditure" means a tax preference, as defined in RCW 43.136.021, which:

    1. Impacts revenues appropriated in the omnibus operating appropriations act;

    2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

    3. Is not required by the state Constitution, United States Constitution, or federal law.

Section 5

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    1. The governor must transmit a proposed discretionary tax expenditure budget and the discretionary report required under RCW 43.06.400 to the legislature with the governor's proposed operating budget document or documents with recommendations for ending or continuing each discretionary tax expenditure that either:

      1. Has no expiration date established in law;

      2. Has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; or

      3. Has a revenue reduction of greater than $50,000 per fiscal year or $100,000 per biennium as estimated in the report prepared by the department of revenue pursuant to RCW 43.06.400.

    2. The discretionary tax expenditure budget must include an estimate of the state revenue impact associated with each discretionary tax expenditure. The discretionary tax expenditure budget may address tax expenditures required under the state Constitution, United States Constitution, or federal law.

  2. The governor also may submit other recommendations to the legislature with respect to the repeal or modification of any tax expenditure. The fiscal committees of the house of representatives and the senate and the appropriate standing committees of the house of representatives and the senate must hold public hearings.

  3. For the purpose of this section, "discretionary tax expenditure" means a tax preference as defined in RCW 43.136.021, which:

    1. Impacts revenues appropriated in the omnibus operating appropriations act;

    2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

    3. Is not required by the state Constitution, United States Constitution, or federal law.

Section 6

  1. The director of financial management shall provide all agencies with a complete set of instructions for submitting biennial budget requests to the director at least three months before agency budget documents are due into the office of financial management. The budget document or documents shall consist of the governor's budget message which shall be explanatory of the budget and shall contain an outline of the proposed financial policies of the state for the ensuing fiscal period, as well as an outline of the proposed six-year financial policies where applicable, and shall describe in connection therewith the important features of the budget. The biennial budget document or documents shall also describe performance indicators that demonstrate measurable progress towards priority results. The message shall set forth the reasons for salient changes from the previous fiscal period in expenditure and revenue items and shall explain any major changes in financial policy. Attached to the budget message shall be such supporting schedules, exhibits and other explanatory material in respect to both current operations and capital improvements as the governor shall deem to be useful to the legislature. The budget document or documents shall set forth a proposal for expenditures in the ensuing fiscal period, or six-year period where applicable, based upon the estimated revenues and caseloads as approved by the economic and revenue forecast council and caseload forecast council or upon the estimated revenues and caseloads of the office of financial management for those funds, accounts, sources, and programs for which the forecast councils do not prepare an official forecast. Revenues shall be estimated for such fiscal period from the source and at the rates existing by law at the time of submission of the budget document, including the supplemental budgets submitted in the even-numbered years of a biennium. However, the estimated revenues and caseloads for use in the governor's budget document may be adjusted to reflect budgetary revenue transfers and revenue and caseload estimates dependent upon budgetary assumptions of enrollments, workloads, and caseloads. All adjustments to the approved estimated revenues and caseloads must be set forth in the budget document. The governor may additionally submit, as an appendix to each supplemental, biennial, or six-year agency budget or to the budget document or documents, a proposal for expenditures in the ensuing fiscal period from revenue sources derived from proposed changes in existing statutes.

The budget document or documents shall also contain:

a. Revenues classified by fund and source for the immediately past fiscal period, those received or anticipated for the current fiscal period, and those anticipated for the ensuing biennium;

b. The undesignated fund balance or deficit, by fund;

c. Such additional information dealing with expenditures, revenues, workload, performance, and personnel as the legislature may direct by law or concurrent resolution;

d. Such additional information dealing with revenues and expenditures as the governor shall deem pertinent and useful to the legislature;

e. Tabulations showing expenditures classified by fund, function, and agency;

f. The expenditures that include nonbudgeted, nonappropriated accounts outside the state treasury;

g. The discretionary tax expenditure budget prepared under section 5 of this act;

h. Identification of all proposed direct expenditures to implement the Puget Sound water quality plan under chapter 90.71 RCW, shown by agency and in total; and

    i. Tabulations showing each postretirement adjustment by retirement system established after fiscal year 1991, to include, but not be limited to, estimated total payments made to the end of the previous biennial period, estimated payments for the present biennium, and estimated payments for the ensuing biennium.

  1. The budget document or documents shall include detailed estimates of all anticipated revenues applicable to proposed operating , capital, and discretionary tax expenditures and shall also include all proposed operating , capital, and discretionary tax expenditures. The total of beginning undesignated fund balance and estimated revenues less working capital and other reserves shall equal or exceed the total of proposed applicable expenditures. The budget document or documents shall further include:

    1. Interest, amortization and redemption charges on the state debt;

    2. Payments of all reliefs, judgments, and claims;

    3. Other statutory expenditures;

    4. Expenditures incident to the operation for each agency;

    5. Revenues derived from agency operations;

    6. Expenditures and revenues shall be given in comparative form showing those incurred or received for the immediately past fiscal period and those anticipated for the current biennium and next ensuing biennium;

    7. A showing and explanation of amounts of general fund and other funds obligations for debt service and any transfers of moneys that otherwise would have been available for appropriation;

    8. Common school expenditures on a fiscal-year basis;

      1. A showing, by agency, of the value and purpose of financing contracts for the lease/purchase or acquisition of personal or real property for the current and ensuing fiscal periods; and

    9. A showing and explanation of anticipated amounts of general fund and other funds required to amortize the unfunded actuarial accrued liability of the retirement system specified under chapter 41.45 RCW, and the contributions to meet such amortization, stated in total dollars and as a level percentage of total compensation.

  2. The governor's operating budget document or documents shall reflect the statewide priorities as required by RCW 43.88.090.

  3. The governor's operating budget document or documents shall identify activities that are not addressing the statewide priorities.

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    1. Beginning in the 2021-2023 fiscal biennium, the governor's operating budget document or documents submitted to the legislature must leave, in total, a positive ending fund balance in the general fund and related funds.

    2. Beginning in the 2021-2023 fiscal biennium, the projected maintenance level of the governor's operating budget document or documents submitted to the legislature must not exceed the available fiscal resources for the next ensuing fiscal biennium.

    3. For purposes of this subsection:

      1. "Available fiscal resources" means the beginning general fund and related funds balances and any fiscal resources estimated for the general fund and related funds, adjusted for proposed revenue legislation, and with forecasted revenues adjusted to the greater of (A) the official general fund and related funds revenue forecast for the ensuing biennium, or (B) the official general fund and related funds forecast for the second fiscal year of the current fiscal biennium, increased by 4.5 percent for each fiscal year of the ensuing biennium.

      2. "Projected maintenance level" means estimated appropriations necessary to maintain the continuing costs of program and service levels either funded in the governor's budget document or documents submitted to the legislature or mandated by other state or federal law, adjusted by the estimated cost of proposed executive branch legislation, and the amount of any general fund moneys projected to be transferred to the budget stabilization account pursuant to Article VII, section 12 of the state Constitution. Proposed executive branch legislation does not include proposals by institutions of higher education, other separately elected officials, or other boards, commissions, and offices not under the authority of the governor that are not funded or assumed in the governor's budget document or documents submitted to the legislature.

      3. "Related funds" has the meaning defined in RCW 43.88.055.

    4. (b) of this subsection (5) does not apply:

      1. To any governor-proposed legislation submitted to the legislature that makes net reductions in general fund and related funds appropriations to prevent the governor from making across-the-board reductions in allotments for these particular funds as provided in RCW 43.88.110(10); or

      2. In a fiscal biennium for which the governor proposes appropriations from the budget stabilization account pursuant to Article VII, section 12(d)(ii) of the state Constitution.

  5. A separate capital budget document or schedule shall be submitted that will contain the following:

    1. A statement setting forth a long-range facilities plan for the state that identifies and includes the highest priority needs within affordable spending levels;

    2. A capital program consisting of proposed capital projects for the next biennium and the two biennia succeeding the next biennium consistent with the long-range facilities plan. Insomuch as is practical, and recognizing emergent needs, the capital program shall reflect the priorities, projects, and spending levels proposed in previously submitted capital budget documents in order to provide a reliable long-range planning tool for the legislature and state agencies;

    3. A capital plan consisting of proposed capital spending for at least four biennia succeeding the next biennium;

    4. A strategic plan for reducing backlogs of maintenance and repair projects. The plan shall include a prioritized list of specific facility deficiencies and capital projects to address the deficiencies for each agency, cost estimates for each project, a schedule for completing projects over a reasonable period of time, and identification of normal maintenance activities to reduce future backlogs;

    5. A statement of the reason or purpose for a project;

    6. Verification that a project is consistent with the provisions set forth in chapter 36.70A RCW;

    7. A statement about the proposed site, size, and estimated life of the project, if applicable;

    8. Estimated total project cost;

      1. For major projects valued over five million dollars, estimated costs for the following project components: Acquisition, consultant services, construction, equipment, project management, and other costs included as part of the project. Project component costs shall be displayed in a standard format defined by the office of financial management to allow comparisons between projects;

    9. Estimated total project cost for each phase of the project as defined by the office of financial management;

    10. Estimated ensuing biennium costs;

    11. Estimated costs beyond the ensuing biennium;

    12. Estimated construction start and completion dates;

    13. Source and type of funds proposed;

    14. Estimated ongoing operating budget costs or savings resulting from the project, including staffing and maintenance costs;

    15. For any capital appropriation requested for a state agency for the acquisition of land or the capital improvement of land in which the primary purpose of the acquisition or improvement is recreation or wildlife habitat conservation, the capital budget document, or an omnibus list of recreation and habitat acquisitions provided with the governor's budget document, shall identify the projected costs of operation and maintenance for at least the two biennia succeeding the next biennium. Omnibus lists of habitat and recreation land acquisitions shall include individual project cost estimates for operation and maintenance as well as a total for all state projects included in the list. The document shall identify the source of funds from which the operation and maintenance costs are proposed to be funded;

    16. For any capital budget request for funding in the 2023-2025 or 2025-2027 fiscal biennia by an institution of higher education to address a cost increase for any major project, a statement describing the unexpected project costs, ways the agency has mitigated or will mitigate the estimated project costs, and identification of other funding that may be applied to the project. For purposes of this subsection (6)(q):

      1. "Cost increases" means total project costs estimated above those listed in the prior agency budget request and for which the legislature relied in making a funding decision for design or construction, adjusted for C-100 inflation factors; and

      2. "Institution of higher education" has the meaning provided in RCW 28B.10.016;

    17. Such other information bearing upon capital projects as the governor deems to be useful;

    18. Standard terms, including a standard and uniform definition of normal maintenance, for all capital projects; and

    19. Such other information as the legislature may direct by law or concurrent resolution.

For purposes of this subsection (6), the term "capital project" shall be defined subsequent to the analysis, findings, and recommendations of a joint committee comprised of representatives from the house capital appropriations committee, senate ways and means committee, legislative evaluation and accountability program committee, and office of financial management.

  1. No change affecting the comparability of agency or program information relating to expenditures, revenues, workload, performance and personnel shall be made in the format of any budget document or report presented to the legislature under this section or RCW 43.88.160(1) relative to the format of the budget document or report which was presented to the previous regular session of the legislature during an odd-numbered year without prior legislative concurrence. Prior legislative concurrence shall consist of (a) a favorable majority vote on the proposal by the standing committees on ways and means of both houses if the legislature is in session or (b) a favorable majority vote on the proposal by members of the legislative evaluation and accountability program committee if the legislature is not in session.

Section 7

  1. The legislature must adopt a four-year balanced budget as follows:

    1. Beginning in the 2013-2015 fiscal biennium, the legislature shall enact a balanced omnibus operating appropriations bill that leaves, in total, a positive ending fund balance in the general fund and related funds.

    2. Beginning in the 2013-2015 fiscal biennium, the projected maintenance level of the omnibus appropriations bill enacted by the legislature shall not exceed the available fiscal resources for the next ensuing fiscal biennium.

  2. The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

    1. "Available fiscal resources" means the beginning general fund and related fund balances and any fiscal resources estimated for the general fund and related funds, adjusted for enacted legislation, and with forecasted revenues adjusted to the greater of (i) the official general fund and related funds revenue forecast for the ensuing biennium, or (ii) the official general fund and related funds forecast for the second fiscal year of the current fiscal biennium, increased by 4.5 percent for each fiscal year of the ensuing biennium;

    2. "Discretionary tax expenditure" means a tax preference, as defined in RCW 43.136.021, which:

      1. Impacts revenues appropriated in the omnibus operating appropriations act;

      2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

      3. Is not required by the state Constitution, United States Constitution, or federal law;

    3. "Forecasted revenues" means the revenue estimate prepared by the economic and revenue forecast council plus any discretionary tax expenditures identified as not being reauthorized in the omnibus operating appropriations act;

    4. "Projected maintenance level" means estimated appropriations necessary to maintain the continuing costs of program and service levels either funded in that appropriations bill or mandated by other state or federal law, and the amount of any general fund moneys projected to be transferred to the budget stabilization account pursuant to Article VII, section 12 of the state Constitution;

    5. "Related funds," as used in this section, means the Washington opportunity pathways account, the workforce education investment account, the fair start for kids account, and the education legacy trust account.

  3. Subsection (1)(a) and (b) of this section does not apply to an appropriations bill that makes net reductions in general fund and related funds appropriations and is enacted between July 1st and February 15th of any fiscal year.

  4. Subsection (1)(b) of this section does not apply in a fiscal biennium in which money is appropriated from the budget stabilization account pursuant to Article VII, section 12(d)(ii) of the state Constitution.

Section 8

  1. The citizen commission for performance measurement of tax preferences must develop a schedule to accomplish an orderly review of discretionary tax expenditures at least once every 10 years. In determining the schedule, the commission must consider the order the discretionary tax expenditures were enacted into law, in addition to other factors including but not limited to grouping preferences for review by type of industry, economic sector, or policy area. The commission must include, in a timely manner, in the schedule, a discretionary tax expenditure that has a statutory expiration date. The commission shall omit from the schedule discretionary tax expenditures that are required by constitutional law. As an alternative to the process under RCW 43.136.055, the commission, as well as the governor or the state legislature, may recommend to the joint legislative audit and review committee an expedited review process for any discretionary tax expenditure or group of expenditures.

  2. The commission must revise the schedule as needed each year, taking into account newly enacted or terminated discretionary tax expenditures. The commission must deliver the schedule to the joint legislative audit and review committee by September 1st of each year.

  3. The commission must provide a process for effective citizen input during its deliberations and must allow comments to be submitted and posted online.

  4. For the purpose of this section, "discretionary tax expenditure" means a tax preference, as defined in RCW 43.136.021, which:

    1. Impacts revenues appropriated in the omnibus operating appropriations act;

    2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

    3. Is not required by the state Constitution, United States Constitution, or federal law.

Section 9

  1. The joint legislative audit and review committee must review tax preferences according to the schedule developed under RCW 43.136.045. The committee must consider, but not be limited to, the following factors in the review as relevant to each particular tax preference:

    1. The classes of individuals, types of organizations, or types of industries whose state tax liabilities are directly affected by the tax preference;

    2. Public policy objectives that might provide a justification for the tax preference, including but not limited to the legislative history, any legislative intent, or the extent to which the tax preference encourages business growth or relocation into this state, promotes growth or retention of high wage jobs, or helps stabilize communities;

    3. Evidence that the existence of the tax preference has contributed to the achievement of any of the public policy objectives;

    4. The extent to which continuation of the tax preference might contribute to any of the public policy objectives;

    5. The extent to which the tax preference may provide unintended benefits to an individual, organization, or industry other than those the legislature intended;

    6. The extent to which terminating the tax preference may have negative effects on the category of taxpayers that currently benefit from the tax preference, and the extent to which resulting higher taxes may have negative effects on employment and the economy;

    7. The feasibility of modifying the tax preference to provide for adjustment or recapture of the tax benefits of the tax preference if the objectives are not fulfilled;

    8. Fiscal impacts of the tax preference, including past impacts and expected future impacts if it is continued. For the purposes of this subsection, "fiscal impact" includes an analysis of the general effects of the tax preference on the overall state economy, including, but not limited to, the effects of the tax preference on the consumption and expenditures of persons and businesses within the state;

      1. The extent to which termination of the tax preference would affect the distribution of liability for payment of state taxes;

    9. The economic impact of the tax preference compared to the economic impact of government activities funded by the tax for which the tax preference is taken at the same level of expenditure as the tax preference. For purposes of this subsection the economic impact shall be determined using the Washington input-output model as published by the office of financial management;

    10. The amount of additional revenue generated in comparison to the reduction in revenue from the tax preference, if the tax preference includes a tax preference performance statement, stated legislative intent, or implied intent that seeks to generate additional revenue; and

    11. Consideration of similar tax preferences adopted in other states, and potential public policy benefits that might be gained by incorporating corresponding provisions in Washington.

  2. For each tax preference, the committee must provide a recommendation as to whether the tax preference should be continued without modification, modified, scheduled for sunset review at a future date, or terminated immediately. The committee may recommend accountability standards for the future review of a tax preference.

Section 10

  1. The joint legislative audit and review committee shall report its findings and recommendations for scheduled discretionary tax expenditures to the citizen commission for performance measurement of tax preferences by July 30th of each even-numbered year. The commission must review and comment on the report of the committee. The committee may revise its report based on the comments of the commission. The committee shall prepare a final report that includes the comments of the commission and submit the final report to the finance committee of the house of representatives , the ways and means committee of the senate , the department of revenue, and the governor's office by September 30th of each even-numbered year. The governor and the department of revenue must consider and incorporate the findings of the final report in their preparation of the discretionary tax expenditure budget required under section 5 of this act.

2.

Following receipt of a report under this section, the finance committee of the house of representatives and the ways and means committee of the senate shall jointly hold a public hearing to consider the final report and any related data.

  1. For the purpose of this section, "discretionary tax expenditure" means a tax preference, as defined in RCW 43.136.021, which:

    1. Impacts revenues appropriated in the omnibus operating appropriations act;

    2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

    3. Is not required by the state Constitution, United States Constitution, or federal law.

Section 11

  1. To facilitate compliance with, and subject to the terms of, RCW 43.88.055 and 43.88.030, the state budget outlook work group shall prepare, subject to the approval of the economic and revenue forecast council under RCW 82.33.010, an official state budget outlook for state revenues and expenditures for the general fund and related funds. The revenue and caseload projections used in the outlook must reflect the most recent official forecasts adopted by the economic and revenue forecast council and the caseload forecast council for the years for which those forecasts are available.

  2. The outlook must:

    1. Estimate revenues to and expenditures from the state general fund and related funds. The estimate of ensuing biennium expenditures must include maintenance items including, but not limited to, continuation of current programs, forecasted growth of current entitlement programs, and actions required by law, including legislation with a future implementation date. Estimates of ensuing biennium expenditures must exclude policy items including, but not limited to, legislation not yet enacted by the legislature, collective bargaining agreements not yet approved by the legislature, and changes to levels of funding for employee salaries and benefits unless those changes are required by statute. Estimated maintenance level expenditures must also exclude costs of court rulings issued during or within fewer than ninety days before the beginning of the current legislative session;

    2. Address major budget and revenue drivers, including trends and variability in these drivers;

    3. Clearly state the assumptions used in the estimates of baseline and projected expenditures and any adjustments made to those estimates;

    4. Clearly state the assumptions used in the baseline revenue estimates and any adjustments to those estimates; and

    5. Include the impact of previously enacted legislation with a future implementation date.

  3. The outlook must also separately include projections based on the revenues and expenditures proposed in the governor's budget documents submitted to the legislature under RCW 43.88.030.

  4. The economic and revenue forecast council shall submit state budget outlooks prepared under this section to the governor and the members of the committees on ways and means of the senate and house of representatives, including one copy to the staff of each of the committees, as required by this section.

  5. Each January, the state budget outlook work group shall also prepare, subject to the approval of the economic and revenue forecast council, a state budget outlook for state revenues and expenditures that reflects the governor's proposed budget document submitted to the legislature under chapter 43.88 RCW. Within thirty days following enactment of an operating budget by the legislature, the work group shall prepare, subject to the approval of the economic and revenue forecast council, a state budget outlook for state revenues and expenditures that reflects the enacted budget.

  6. All agencies of state government shall provide to the supervisor immediate access to all information relating to state budget outlooks.

  7. The state budget outlook work group must publish its proposed methodology on the economic and revenue forecast council website. The state budget outlook work group, in consultation with the economic and revenue forecast work group and outside experts if necessary, must analyze the extent to which the proposed methodology for projecting expenditures for the ensuing fiscal biennia may be reliably used to determine the future impact of appropriations and make recommendations to change the outlook process to increase reliability and accuracy. The recommendations are due by December 1, 2013, and every five years thereafter.

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    1. The state budget outlook work group shall maintain a current listing of discretionary tax expenditures on the economic and revenue forecast council website. The listing must include the following information:

      1. A description of the discretionary tax expenditure;

      2. Prior and estimated future fiscal impacts;

      3. Any stated public policy objective of the discretionary tax expenditure;

      4. The expiration date of the discretionary tax expenditure or the lack thereof; and

    2. The most recently available recommendations to continue, modify, or eliminate the discretionary tax expenditure by the joint legislative audit and review committee and the citizen commission for performance measurement of tax preferences under chapter 43.136 RCW.

    3. The department of revenue must provide the information contained in the report under RCW 43.06.400 to the state budget outlook work group.

    4. The websites of the office of financial management, the legislative evaluation and accountability program, and the legislature must post a link to the listing of discretionary tax expenditures.

  9. For the purpose of this section, "discretionary tax expenditure" means a tax preference, as defined in RCW 43.136.021, which:

    1. Impacts revenues appropriated in the omnibus operating appropriations act;

    2. Has no expiration date established in law, or has been recommended by the joint legislative audit and review committee for review and clarification, but for which the legislature has not clarified and adopted new performance measures and an expiration date pursuant to RCW 82.32.805 and 82.32.808; and

    3. Is not required by the state Constitution, United States Constitution, or federal law.

Section 12

The department of revenue and the office of the code reviser must draft proposed legislation making technical corrections and any other changes required for the administration and implementation of this act and submit the draft to the chair of the house finance committee and the chair of the senate ways and means committee on or before December 31, 2025.

Section 13

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.

Section 14

This act may be known and cited as the tax exemption transparency and accountability act.

Created by @tannewt. Contribute on GitHub.