Background: A hotel-motel tax is a special sales tax on lodging rentals by hotels, motels, rooming houses, private campgrounds, RV parks, and other similar facilities. Cities and counties are authorized to levy a "basic" or "state-shared" hotel-motel tax of up to 2 percent. These taxes are credited against the state sales tax on the furnishing of lodging. Other hotel-motel taxes are imposed in addition to ordinary state and local sales taxes and are added to the amount paid by the customer. The latter type is often referred to as a "special" hotel-motel tax.

A county hotel-motel tax must allow a credit for the amount of any tax levied by the cities within the county, thus precluding both the city and county tax from applying to the same lodging transaction. Except for the city of Bellevue, cities in King County cannot impose a basic hotel-motel tax until January 1, 2021. Thereafter, cities may impose the tax and the county will only receive revenues generated in the unincorporated areas.

In King County the 2 percent state-shared hotel-motel tax is used for retiring the debt on the Kingdome, arts and heritage programs, and after 2015 (or earlier if the debt is repaid) for repaying the debt on the football stadium and exhibition center and for youth athletic facility grants to cities, counties, or nonprofit organizations if sufficient money is available.

In 1995 the Legislature authorized financing for a new baseball stadium in King County. The state's contribution included a credit against the state sales tax of 0.017 percent of taxable retail sales in King County, sports themed lottery revenues, and commemorative ballpark license plates. King County was authorized to impose a special 0.5 percent sales tax on food and beverages in King County restaurants, taverns, and bars; a 2 percent sales tax on car rentals in King County; and admission taxes at the new ballpark. The baseball team also contributed to the construction of the facility. The 0.017 percent sales tax credit, the 0.5 percent tax on restaurant meals, the lottery revenue, and the 2 percent car rental tax all end when construction bonds are paid.

In 1997 Referendum 48 authorized the financing of a new football stadium in King County. The state's contribution included a credit against the state sales tax of 0.016 percent of the taxable retail sales in King County and sports themed lottery. As mentioned previously, the state shared hotel-motel tax was also dedicated to the stadium from the years of 2016-2021. Additionally a parking tax and admissions tax were allowed at the stadium.

All counties are authorized to impose a 1 percent car rental tax. The revenue from the 1 percent car rental tax may be used for public stadium facilities, and youth or amateur sports activities or facilities.

Summary of Bill: A special purpose account is created within King County to be used for the following purposes at the discretion of King County:

funding tourism promotion;
funding youth or amateur sports activities or facilities;
funding regional center or performing arts centers, with the exception of in Seattle, Bellevue, and Kent;
maintaining or improving publicly-owned stadiums or arenas;
funding community development; and
funding low-income housing.

Deposited into the account are the following revenue sources:

62.5 percent of the state shared hotel-motel tax after the year 2021;
the 0.017 percent credit against the state sales tax when the Safeco Field bonds are retired;
75 percent of the 1 percent rental car tax in King County when the Kingdome bonds are retired;
the 0.016 percent credit against the state sales tax when the Qwest Field bonds are retired;
the 0.5 percent King County food and beverage tax when the Safeco Field bonds are retired through 2015;
the 2 percent rental care tax imposed in King County when the Safeco Field bonds are retired.

In addition the expiration date for the provisions for SB 6638 of 2008 is removed. This has the effect of allowing the following provisions for arts and heritage funding from the hotel-motel tax in King County to continue:

The 40 percent distributions of arts and heritage funds from the hotel-motel tax is no longer distributed to the endowment fund, but instead is distributed to a special account dedicated to art museums, cultural museums, heritage museums, and heritage and preservation programs.
At the time the bonds used to pay for the repairs to the Kingdome are retired, the county hotel-motel tax will be distributed into the account dedicated to the arts and heritage programs until December 31, 2015. The bonds are expected to be retired in late 2014.
Beginning January 1, 2021, 37.5 percent of the county hotel-motel tax revenues will be distributed to the account dedicated to the arts and heritage programs.

Staff Summary of Public Testimony: PRO: This bill will provide local control on these taxes and they will provide economic vitality. It will also provide state control in regards to arts and heritage programs. Federal Way is in support of the bill as we are trying to build a performing arts center. We are committed to this project.

Seattle is looking for a funding source for improvements to the Seattle Center. We would ask that you dedicate some of the revenues to Seattle Center. The Mariners are in favor of this bill. We need nothing today for Safeco Field through this lease term. This bill will be able to help with the new lease negotiations which will take place five to seven years from now.

This gives King County flexibility. Both small and large organizations support this bill. This will bring long-term commitments that will bring confidence to many arts and heritage organizations. It is important that this takes place this year. Funding for bricks and mortar projects are tough to come by. The lodging tax helps with this. This will help with community revitalization.

CON: I oppose the bill because these taxes are set to expire and you lose trust if you keep them going. Helping the University of Washington (UW) with the maintenance of their stadium helps to subsidize the high salaries of football coaches. Recently $141 million was raised by the UW for sports, but they used it for other athletics rather than the stadium. In this downturn, $150 million should go to other purposes than Husky Stadium. This should be voted on. We would like to see the 2 percent rental car tax expire as is was set out to be. Car rental targets are easy targets as it is generally a tax on folks outside of the state. If they don't terminate it will be a new tax. We are supportive of the good things that these bills have done.