Spokane's University District and the area between Pullman and Moscow, Idaho stand to get millions of dollars in improvements under a bill lawmakers approved Monday.

Senate Bill 5045 now goes to Gov. Chris Gregoire to be signed into law.

The bill allows local governments to designate "revitalization areas." It essentially recycles some tax dollars: improvements spur economic growth, generating more taxes. And the money pays for the improvements.

The law allows work on public infrastructure like roads, pedestrian bridges, landscaping, sidewalks and utilities.

The bill authorizes 7 demonstration projects:
-A Spokane University District project, to get up to $250,000 a year.
-A Whitman County Pullman/Moscow corridor improvement project, up to $200,000 a year.
-and five others, including projects in University Place, Tacoma, Bremerton, Auburn and Vancouver.

Those dollars could be used to pay off long-term bonds, so the projects can total millions of dollars.

Senate Majority Leader Lisa Brown, D-Spokane, said that the dollars will help foster the University District, home to core health care, education and research programs that are key to the region's economic development strategy.

The bill also sets up a process for other local governments to set up their own revitalization districts.

The plan is a form of tax increment financing, which is more widely used in other states. First approved by Washington lawmakers in 1982, the change triggered a lawsuit in 1995, when a Spokane property owner sued over plans to use a share of tax dollars to pay to redevelop the area around Bernard Street. In 1995, the state Supreme Court vetoed the plan, saying it wrongfully spent tax dollars intended for schools.

In 2001 and 2006, lawmakers approved modified versions that allowed some tax increment financing with new property taxes and a slice of the state sales tax. lawmakers passed a fix that allowed some tax increment financing. Several local areas have been set up, including ones in West Plains, Liberty Lake, Spokane and Medical Lake.

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