2005 Legislative Update

1. 2005 Legislative Update Presented by: Joy A Hermann, CPA Assistant to the Director of Administration Washington State Auditor’s Office Phone 360-902-0365 June 22, 2005

2. Legislative Themes Revenue Enhancements Accountability Education Elections Court Improvements Improving Service to Citizens

3. Revenue Enhancements The 2005-2007 Biennial Budget will: • Provides new funds of $25 Million for the Learning Assistance Program. • Provides funding for Initiative728 of $138 Million to reduce class size and restores Initiative 732 funding of $139 Million for COLAs for teachers. • Provide new funding of $74 Million to increase higher education enrollment by 7,900 students. • Provides $51 Million in new funds for health care of 40,000 uninsured children. • COLAs for State employees of 3.2% for FY 05 and 1.6% for FY 06. • Reduces middle management in state government by 1,000 positions saving $50 Million. • Restore the Estate Tax on estates worth more than $1.5 Million in SB 6096 • Raise Taxes on cigarettes, hard liquor and extended warranties. The 2005-2007 Transportation Bills will: • Increase Motor Vehicle Fuel Taxes by 9.5 cents over three years. • A weight fee is levied on vehicles that do not currently pay a weight fee to include passenger vehicles, trucks, motor homes and cargo vehicles. Annual vehicle weight fees for vehicles are from $10 to $3,400. DOL fees are also adjusted to recover the cost of issuing various licenses and permits. • Increases local government and state revenues for transportation projects such as: • Improvements to I-90 East. • HOV lanes at I-5 and Highway 16. • Improvements to SR 405 from Renton to Bellevue. • Alaskan Way Viaduct Replacement • State Route 520Bridge Replacement.

4. Local Government Revenue Enhancements HB 1635 - Gives Cities And Towns The Authority To Operate Ambulance And EMS Services As A Public Utility. SB 5177 - Allows cities in addition to counties to form Transportation Benefit Districts (TBDs) outside of King, Pierce and Snohomish Counties. However, port districts and transit districts may also participate in the establishment of a TBD. TBDs may fund projects from a local, statewide or regional transportation plan. Allows voter approved sales and use taxes, vehicle fee, impact fees, or vehicle tolls to be assessed to support the transportation District. Effective 08/01/05. SB 6050 - The bill reduces the Real Estate Excise Tax (REET) deposited in the Public Works Assistance Account from 7.7 percent to 6.1 percent, and deposits 1.6 percent of the REET into the new city-county assistance account. The level of funding will be split equally between cities and counties. A separate distribution formula for cities and counties is specified. The bill also requires the JLARC to determine the extent to which the distributions to cities and counties target the funding shortfalls created by the repeal of the motor vehicle excise tax due by 12/31/08. Effective 08/01/05.

5. Accountability State Agency Accountability: • HB 1970 - State agencies implement a management, accountability, & performance system (GMAP). • HB 1064 - Authorizes the State Auditor, in collaboration with a 10 member citizen advisory board, to develop and implement a plan for performance audits of state government. Audits must be contracted out. Key provisions of the program are: • A Statewide Performance Review based on citizen, legislative, state employees and managers, and other stakeholder involvement to develop a statewide audit plan. • Includes only agencies of the executive branch of government excluding transportation agencies. • Total Appropriation for the 05-07 biennium is $2.8 million. • Requires JLARC to contract for a performance audit of the performance audit program on a four year cycle. • SB 6103 - Authorizes performance audits of the Department of Transportation, Transportation Improvement Board, County Road Administration Board and Traffic Safety Commission and any other agency that receives primarily transportation funding. • Requires the State Auditor’s Office to contract for the audits. • Audit Resolution is fixed with OFM. OFM has to report by December 31st of each year on agency resolutions to the legislature. • Total Appropriation for the 05-07 biennium is $4 million. Also See WWW.SAO.WA.GOV/PerformanceAudit/default.htm

6. Accountability (Continued) • HB 1242 – Priorities of Government: Declares intent to focus the biennial budget on how state agencies produce real results that reflect the goals of the statutory programs. With this renewed focus on achieving true results, state agencies, OFM and the legislature will be able to prioritize state resources. • The Governor’s office will communicate statewide priorities to agencies to use in developing budget recommendations for their agency. (Includes extensive public input) • Agencies are required to develop quality and productivity measures for all major activities instead of the program measures currently required. • OFM must regularly conduct reviews of selected activities to analyze whether the objectives and measurements submitted by agencies demonstrate progress toward statewide results. (OFM will consult with the HECB and the SBCTC for reviews that include higher ed institutions.) • When periodic reviews determine that the agency is making insufficient progress towards the goals of its programs, the agency’s budget request must contain remedies or improvements in the program. • SB 5509 -The Leadership in Energy and Environmental Design (LEED) Silver certification is required for all major facility projects of public agencies and any other entity receiving any funding in the Capital Budget. These standards are commonly referred to as High Performing Green Building standards. • By 2008, CTED must develop for housing trust fund projects. • School district compliance is phased in from 2006 through 2008 and schools may meet WA Sustainable School Design Protocol instead. • Extends to non-public agencies that receive funding in a state capital budget. • By 2009 OSPI and GA will report to capital budget committees of the legislature on the program.

7. Accountability (continued) • HB 1133 - Change references in law from “WA Public Disclosure Act” to “Public Records Act”. Deletes all previous exceptions to Public Disclosure laws at RCW 42.17.312 through 42.17.31921, but reestablishes them at RCW 42.30.900. Effective 07/01/06. • HB 1758 - Clarifies public disclosure exemption to cover attorney-client privilege as applied to public agencies and officials. Provides that records pertaining to obtaining legal advice are exempt. Clarifies that records are not exempt merely because they reflect meetings where counsel was present or because a record was provided to counsel. • Prohibits agencies from denying a request for public records on the basis that the request is overbroad. • Requires agencies to separately appoint and publicly identify an individual whose responsibility is to serve as its public records officer responsible for all requests and ensuring compliance. • Requires the AG by February 1, 2006, to adopt a model rule for state and local agencies to follow, addressing: Providing fullest assistance to requestors, Fulfilling large requests in the most timely manner, Fulfilling requests for electronic records. • Provides a 1 year statute of limitations for filing for judicial review of public disclosure actions. • HB 1856 - The Department of Labor and Industries will prepare financial statements on the industrial insurance funds using generally accepted accounting principles. • SB 5046 - An ethics board, in addition to ethics board staff, may issue an order of dismissal based on the complaint not being within the board's jurisdiction, the complaint being unfounded or frivolous, or the complaint alleging violations that do not constitute material violations of the ethics laws. A dismissal issued by the board itself may not be appealed to the board. The Attorney General must investigate complaints dealing with use of public funds in political campaigns only when requested to do so by an ethics board.

8. HB 1079 - The membership of the Children's Administration oversight committee on education of foster youth is expanded to include staff from the HECB, foster youth, former foster youth, and foster parents. Responsibilities are expanded. Eligible former foster youth are guaranteed a state need grant and receive job placement priority in the state work-study program. HB 1152 – Creates WA Early Learning Council. To implement a pilot project on quality improvement through (1) a rating system; and (2) a tiered reimbursement program. Eliminates Child Care Coordinating Committee. Effective 05/16/05. SB 5087 - The SBCTC must update the 1996 best practices audit of compensation and employment conditions for part-time faculty. College administrators are added to the list of task force members. The task force must report its findings to the SBCTC by December 1, 2005. The SBCTC must use the best practices principles identified in the audit in the development of each biennial operating budget request. HB 1050 -An endowed scholarship program is created for financially needy foster care youth to age 23. $150,000 from the state general fund is appropriated to the HECB for the 2006 fiscal year. The amount of the scholarship may not exceed the student's demonstrated financial need to include tuition, fees, books, supplies, transportation, room, board, personal expenses, and child care. Receipt of a scholarship does not affect eligibility for other state financial aid. HB 1068 - The requirement that each public school student in the 3rd, 6th, and 9th grades take a norm-referenced achievement is removed. HB 1100 - The state financial aid account is created in trust of the State Treasurer. Purpose of this change is to ensure disbursements from the account are exempt from state laws regarding allotment or lapsing of funds. Programs affected are State Need Grant, State Work Study, Educational Opportunity Grant and others. Education

9. Elections Election Procedures are Improved or Clarified by: • HB 1447 - Establishes a 5-year instant runoff voting (IRV) pilot project conducted by the Secretary of State (SOS) to examine its use as a local option for nonpartisan offices in any qualifying city. Project may commence following notification to the SOS of participation by a qualifying county auditor. Allows a qualifying city to adopt IRV for the election of nonpartisan candidates following a city charter amendment & compliance with pilot project requirements. • HB 1754 - Allows counties to conduct entirely absentee elections. • SB 5499 - Provides: • Armed service absentee ballots must be counted as of the date signed. • A voter may not cure a missing or mismatched signature for purposes of counting in a recount. • The vote difference to trigger a manual recount at the state level is changed from 150 to 1000. • Penalty for knowingly double voting is now a class C felony. • SB 5743 - Requires Sec of State, in conjunction with the WA State Patrol and the Administrator of the Courts to perform quarterly reviews to ensure that known felons are removed from statewide voter registration lists. • Initiative 872 - For partisan elections, a primary must be held. Only the top two candidates will be certified as qualified to appear on the general election ballot. If the candidate expresses a party preference, it must be shown on ballot and voters pamphlet. Each voter has the right to cast a vote for any candidate for each office without any limitation based on party preference or affiliation of either the voter or the candidate.

10. Court Improvements Revenue and Service Enhancements: • SB 5454 - Provides new revenues to reimburse cities & counties for judges salaries to fund improvements in court staffing, facilities, & services. Also provides increased funding for: • County law libraries, • A criminal and civil indigent defense program HB 1542, • Representation of Parents in dependency and termination proceedings. Provides these revenue sources by increasing District Court Filing Fees, Superior Court Filing Fees, and many others. • HB 1112 & HB 1202 - Authorizes one additional District Court Judge in Clark, Thurston and Kitsap Counties & one Superior Court Judge in Skagit County. Counties have 2 years to fund these position. • HB 1747 - Moves the administration and oversight of state-funded civil legal services from the CTED to a newly created independent agency of the judicial branch called the Office of Civil Legal Aid (OCLA). OCLA is lead by 7 member oversight committee. Effective 07/01/05. • SB 5173 – Makes mediation communication privileged and not subject to discovery or admissible in evidence in a proceeding unless waived or precluded. Effective 01/01/06.

11. Improving Service to Citizens Improving Access to Health Care: • SB 5198 - Washington laws governing Medicare supplemental plans are amended to be consistent with the Balanced Budget Act and the Medicare Modernization Act. (See also SB 5406) • Insurers can no longer discriminate in pricing or deny issuance of a Medicare Supplement policy to an individual who is 65 or older and enrolled for benefits under Medicare Part B based on age, health status, claims experience, receipt of health care, or medical condition. • HB 1154 - Requires group health insurance plans to provide the same amounts and terms of coverage for mental health services as is provided for medical and surgical services. This requirement may be phased in over a 5 year period. • Exempts groups with fewer than 50 employees from offering mandatory mental health coverage. • Once phased in, limitations on mental health services may only be made if equally applied to Medical and Surgical services. • SB 5471 - The the Health Care Authority (Authority) will establish a prescription drug purchasing consortium. In addition to state agencies, the consortium may include, local government, private entities, labor organizations, and individuals without insurance, or who are underinsured. The Authority may impose fees on participants to cover the administrative expense of operating the purchasing consortium. An 11 member advisory committee is created to advise the Authority on the implementation of the purchasing consortium. JLARC will complete a performance audit of consortium outcomes by 12/1/08. • SB 5763 - Unified Involuntary Treatment Act (ITA). A three step process is established that creates a single, unified ITA for mental health and chemical dependency, for both adults and children, to be completed in 2009. The single act will provide a single standard and process for mental health and chemical dependency involuntary commitment. Effective 07/01/05. • SB 5558 - The Health Care Authority must establish a nonprofit foundation (appointed) to assist uninsured individuals with an income below 300 percent of the federal poverty level in obtaining free or low cost prescription drugs.

12. Improving Service to Citizens (continued) Reducing Homelessness: • HB 2163 - Homeless Housing Program at CTED. • Funded by $10 County Auditor fee. • Requires Statewide Homeless Census by CTED. • CTED & local governments prepare plans to reduce homelessness by 50% in 10 years. • New grant program for cities and counties. Effective 08/01/05. • SB 5767 - Creates a homeless housing task force in each county to develop 10 year plan to reduce homelessness. Veterans Relief: • HB 1019 - Veterans with 100% service connected disability are eligible for the same property tax relief as senior citizens with income below $25,000. They are exempt on all excess levies. The assessed value of their home is frozen and they are exempt on regular levies on the greater of $60,000 or 60% of assessed valuation. • HB 1189 -'Requires the councils of each county to establish a veterans advisory board, made up primarily of veteran's who are members of national veteran's service organizations, to allow the veterans community to advise the county council on appropriate and needed assistance programs for local indigent veterans and their families. Other Services: • HB 1379 - By 9/1/05 the Liquor Control Board to select 20 high volume stores to be open on Sunday and report sales and expense data back to Legislature by 1/1/07. • HB 1694 - Exempts the following employee and dependent information from disclosure when it is held by any public agency in personnel records, public employment related records, volunteer rosters, or mailing lists: personal wireless telephone numbers, personal e-mail addresses, social security numbers, and emergency contact information of employees or volunteer.

13. Other Important Measures • Protecting the Environment: • HB 1397 – To comply with the Federal Clean Air Act, WA has adopted California motor vehicle emission standards for passenger cars, light and medium duty passenger vehicles. Effective 05/06/05. • No vehicle of model year 2009 or later will be registered in the state unless it meets the new Emission standards or has 7,500 miles or more. Starting in 2009, new vehicles are exempt from emission inspections. • Beginning in 2012, the Dept. of Ecology may authorize businesses other than the emissions inspection contractor to conduct emission inspections, and perform repairs on any vehicles. Emission inspections program terminates in 2020. • HB 2097 - Development of a Hood Canal rehabilitation program is authorized for areas in Jefferson, Kitsap, and Mason Counties. The Puget Sound Action Team (PSAT) is designated as the state lead agency for the program. Effective 05/16/05. • The Hood Canal Coordinating Council (HCCC) is designated as the program's local management board. • Both agencies must participate in the development of the program to determine the prioritization, approval, funding of projects, studies, and activities related to Hood Canal's low dissolved oxygen concentrations. • In developing the program and establishing the funding criteria, the PSAT and HCCC must solicit participation by federal, tribal, state and local agencies as well as universities and nonprofit organizations with expertise related to rehabilitation program activities. Other Measures: • HB 1286 - Establishes the Medical Flexible Spending Account for State Employees. Effective 7/24/05. • HB 1995 - Assigns the responsibility for the stewardship, preservation, operation, and maintenance of the public and historic facilities of the state capitol to the Department of General Administration, subject to the policy direction of the State Capitol Committee and the Legislative Buildings Committee as created in SHB 1301. • SB 5097 - Requires that apprenticeship labor must be utilized for a minimum of 15% of the labor hours on all public works contracts let by the STATE that are expected to exceed $1 million. Effective 2/24/05.

14. Other Important Measures (Cont.) State Agency or Program Changes: • SB 5513 - The Governor now appoints the Secretary of Transportation. The Secretary assumes authority previously directed to the Washington Transportation Commission to propose the WSDOT agency budget and to authorize departmental request legislation. The Transportation Policy Institute (TPI) is established within the Washington Transportation Commission, to conduct research, prepare studies. The Legislative Transportation Committee is dissolved. The Transportation Commission must designate a Transportation Performance Audit Board Administrator. This administrator must, to the greatest extent possible, hire consultants to conduct the audits. Effective 07/01/05. • HB 1008 - Allows the Department of General Administration to purchase motor vehicles without an appropriation and eliminates the requirement to maintain a motor pool for the Seattle Area. • SB 5056 - The Office of Archaeology and Historic Preservation (OAHP) is abolished and its powers and duties are transferred to the Department of Archaeology and Historic Preservation (DAHP). The director, who must also serve as the State Historic Preservation Officer, is appointed by the Governor. The DAHP is given the authority to adopt rules to keep the state in compliance with federal law. • SB 5926 - Permits GET program units to be purchased for non-Washington residents. Protects the GET Program assets from bankruptcy proceedings. Creates a single value for all payouts and refunds, based on the current value of tuition and fees at a public higher education institution rather than on a weighted average. • HB 1160 - The requirement that DSHS annually report on its efforts to reduce violence in state hospitals is restored. The report is due by September 1 and must be made to the House and Senate Commerce Committees. • HB 1830 - The capital projects review board is created in the Department of General Administration to provide an evaluation of public capital projects construction processes, including the impact of contracting methods on project outcomes, and to advise the legislature on policies related to major public works delivery methods.

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