SENATE BILL REPORT

                   SB 5901

              As Reported By Senate Committee On:

             Government Operations, March 1, 1995

Title:  An act relating to authorized uses for the proceeds of the special excise tax on lodging imposed by counties and cites.

Brief Description:  Clarifying the authorized uses of the special excise tax on lodging.

Sponsors:  Senators Spanel, Haugen and Rasmussen.

Brief History:

Committee Activity:  Government Operations:  2/21/95, 3/1/95 [DPS].

SENATE COMMITTEE ON GOVERNMENT OPERATIONS

Majority Report:  That Substitute Senate Bill No. 5901 be substituted therefor, and the substitute bill do pass.

  Signed by Senators Haugen, Chair; Sheldon, Vice Chair; Drew, Hale, Heavey, McCaslin and Winsley.

Staff:  Diane Smith (786-7410)

Background:  Cities and counties may levy up to a 2 percent local option special excise tax on the rental of hotel and motel rooms.  This 2 percent tax is credited against the state sales tax rate of 6.5 percent.  If a city imposes this tax, the full amount is credited against any county tax.  The uses to which the proceeds of this tax may be put include the provision of stadiums, convention centers, performing arts centers, visual arts centers, attracting visitors and expanding tourism.  Other civic improvements may be funded by this tax under specific circumstances.  One of these circumstances is cities with populations of at least 1,000 located on one of the San Juan Islands or the county within which such a city is located.  Such a city or county may use the tax to provide for publicly owned facilities for an annual county fair that lasts no longer than seven days or to mitigate the impacts of tourism.

In recent years, the Legislature has authorized additional 2 percent and 3 percent local option hotel/motel taxes which are not credited against the state sales tax rate.  Bellevue, Pierce County and its cities, certain cities and counties bordering the Pacific Ocean, and Yakima County and its cities have this additional taxing authority for a variety of purposes.

Three taxes are combined to form a special fund for the county or city that levies them.  These taxes are the basic, 2 percent local option hotel/motel tax which is credited against state sales tax and two 3 percent local option hotel/motel taxes which are not credited against the state sales tax and the proceeds of which are not directly dedicated to specific purposes by their authorizing statutes.

Summary of Substitute Bill:  The mitigation of tourism is defined to include various facilities for the use of tourists.

The authority to use the special hotel/motel excise tax fund for the funding of specific events, festivals and promotional infrastructures including, but not limited to, an ocean beach boardwalk is extended to a city wholly located on an island, and a city bordering on the Skagit River of not less than 20,000 population.

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

Substitute Bill Compared to Original Bill:  In addition to the single source tax, the access to the special fund is expanded to certain cities on the Skagit River, those wholly located on an island and to any city or county for certain civic festivals.

Appropriation:  None.

Fiscal Note:  Not requested.

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

Testimony For:  Local jurisdictions need this authorization to share in accomplishing the purposes of the hotel/motel tax.

Testimony Against:  None.

Testified:  S. Stephens, San Juan County (pro); Becky Bogard, WA State Hotel and Motel Assn.