HOUSE BILL REPORT

HB 1388

BYRepresentatives Nutley, J. Williams, Leonard, Sanders, Barnes, Wineberry, Padden, Heavey, Anderson, Jacobsen, Valle, May, Ballard, Nelson, Jesernig, Todd, Moyer, Lux, Unsoeld, Ferguson and Day

Exempting temporary lodging for homeless persons from state and local excise taxation.

House Committe on Housing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (6)

      Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Barnes, Sanders, J. Williams and Wineberry.

House Staff:Kenny Pittman (786-7392)

Rereferred House Committee on Ways & Means/Revenue

Majority Report:  The substitute bill by Committee on Housing as amended by Committee on Ways & Means/Revenue do pass.  (9)

      Signed by Representatives Appelwick, Chair; Basich, Dellwo, Holland, Rust, Schoon, Taylor, Valle and Winsley.

House Staff:      Rick Wickman (786-7136)

AS REPORTED BY COMMITTEE ON WAYS & MEANS/REVENUE

JANUARY 26, 1988

BACKGROUND:

The use of hotel and motel facilities for emergency short term lodging (less than thirty days) of homeless persons, by local nonprofit organizations, is common throughout the state. This approach to providing emergency shelter, on a short term basis, is cost-effective for many smaller emergency shelter programs.

In 1987, $509,900 was spent, for the use of hotel and motel facilities, by nonprofit organizations for emergency short term lodging of homeless persons.

The Department of Revenue has determined that a retail sale includes the furnishing of lodging by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property.

The state requires the collection of a retail sales tax based on the percentage of the selling price.  The current state sales tax rate is 6.5 percent, with counties and cities authorized to levy an additional combined retail sales tax not to exceed 1.3 percent.

In addition to the state and local retail sales tax, the Legislature has authorized a special excise tax on lodging in specified cities and counties.  The excise tax rate is 2 percent in Pierce and King Counties and the city of Tacoma, and 5 percent in the city of Seattle.

SUMMARY:

SUBSTITUTE BILL:  Lodging for homeless persons would be exempt from special excise and retail sale taxation at the state and local level.  To qualify for the exemption, the lodging must be provided on an emergency basis of less than thirty days and through a shelter voucher program administered by an eligible organization.

An eligible organization is defined as only cities, towns, and counties, or their respective agencies, and groups that provide emergency food and shelter services to homeless persons.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The term nonprofit organization is changed to eligible organization and is defined to mean only cities, towns, and counties, or their respective agencies, and groups that provide emergency food and shelter services to homeless persons.

CHANGES PROPOSED BY COMMITTEE ON WAYS & MEANS/REVENUE:  Amendment corrects a statutory reference to apply an exemption for transient lodgings tax.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Available.

Effective Date:This bill takes effect July 1, 1988.

House Committee ‑ Testified For:    (Housing)  Sylvie McGee, Washington State Coalition for Homeless; and Stan Finkelstein, Association of Washington Cities.

(Ways & Means/Revenue)  Maureen Howard, Washington State Coalition for Homeless.

House Committee - Testified Against:      (Housing)  None Presented.

(Ways & Means/Revenue)  None Presented.

House Committee - Testimony For:    (Housing)  The required payment of the state and local taxes on the lodging is an extra expense to programs.  At a time when the demand for emergency shelter space is high, many local programs are looking for ways to do more with limited funds.  The exemption allows programs to assist addition homeless persons within existing revenues.  The needs of the homeless exceed the minimal loss of revenue to the cities that this exemption would provide.  This is a positive effort by the state.

(Ways & Means/Revenue)  A sales and transient lodgings tax exemption is necessary for the homeless voucher program because taxation should not apply to a necessary public service and because elimination of the tax will provide needed dollars to expand the program.

House Committee - Testimony Against:      (Housing)  None Presented.

(Ways & Means/Revenue)  None Presented.