HOUSE BILL REPORT

                 SHB 1669

                    As Amended by Senate

Title:  An act relating to the use of hotel, motel, and related businesses tax receipts for tourist promotional structures.

Brief Description:  Extending hotel/motel tax authorization for tourist promotional structures to cities wholly located on an island.

Sponsors:  By House Committee on Finance (originally sponsored by Representatives Beeksma, Sehlin, Quall, Hargrove, Hymes and Costa).

Brief History:

  Committee Activity:

Finance:  2/15/95, 2/27/95 [DPS].

  Floor Activity:

     Passed House:  3/8/95, 98-0.

Senate Amended.

HOUSE COMMITTEE ON FINANCE

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 12 members:  Representatives B. Thomas, Chairman; Boldt, Vice Chairman; Carrell, Vice Chairman; Morris, Ranking Minority Member; Dickerson, Assistant Ranking Minority Member; Hymes; Mason; Mulliken; Pennington; Schoesler; Sheldon and Van Luven.

Staff:  Bob Longman (786-7139).

Background:  A special sales tax on hotel-motel room rentals was first authorized in 1967 for King County to build the Kingdome.  The rate was 2 percent, and was levied on sales of lodging by hotels, rooming houses, tourist courts, motels, and trailer camps throughout the county.  The Legislature allowed the tax to be credited against the state sales tax rate.  The 1973 Legislature extended this taxing authority to all cities and counties, and expanded the uses to include convention centers as well as sports facilities.  The uses have since been expanded to provide financing for a variety of facilities and programs, including the construction and operation of stadiums, convention center facilities, performing arts facilities, visual arts center facilities, and promoting tourism.  Some jurisdictions have special authorizations to use the revenue for particular purposes, such as tall ship tourist attractions, ocean beach boardwalks, and public restrooms.

The basic tax is a credit against the state sales taxes that are imposed on hotel-motel room rental charges.  Therefore, the total amount of tax paid by the consumer is not increased as a result of the basic hotel-motel tax.

In recent years, the Legislature has authorized additional state and local option hotel/motel taxes and has significantly expanded the uses of revenues.  The newer local option taxes are not credited against the state sales tax rate.  Therefore, these taxes increase the total amount of tax paid by the consumer. 

Specifically allowed uses of hotel/motel tax revenue include funding special events or festivals or promotional infrastructures including but not limited to an ocean beach boardwalk.  This authority applies only to cities bordering on the Pacific Ocean or on Baker Bay with a population of not less than 800 and the county in which such a city is located.

Summary of Bill:  A city wholly located on an island may use hotel/motel tax proceeds for tourist promotional infrastructures, structures, or buildings, including but not limited to public docks and viewing towers. Coupeville, Langely, Oak Harbor, and Friday Harbor are cities located on islands.

EFFECT OF SENATE AMENDMENT(S):

The amendment adds a city bordering on the Skagit River with a population of not less than 20,000, and cities with a population of not less than 10,000 in a county made of islands to the list eligible to impose the special hotel/motel excise tax.

The authority to use the special hotel/motel excise tax is also expanded to any city or county for the purpose of funding a civic festival under certain circumstances.

For cities located on any San Juan Island and the county in which they are located, the mitigation of tourism is defined to include various facilities for the use of tourists.

Appropriation:  None.

Fiscal Note:  Available.  New fiscal note requested on February 28, 1995.

Effective Date of Bill:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  Oak Harbor needs economic diversification, and tourism is a good choice.  This bill provides a way for the city to enhance tourism.  A broader bill that has the same standards for all local governments would be better.

Testimony Against:  None.

Testified:  (pro) Representative Barney Beeksma, prime sponsor; Phil Boyle, City of Oak Harbor; Steve Gerbaugh, Oak Harbor City Council; and (with concerns) Becky Bogard, Washington State Hotel and Motel Association.

Votes on Final Passage:

Yeas 98