HOUSE BILL REPORT

HB 2051

As Reported by House Committee On:

Finance

Title: An act relating to removing an expiration date applicable to heritage and arts program funding.

Brief Description: Removing an expiration date applicable to heritage and arts program funding.

Sponsors: Representatives Hunter, Priest, Sullivan, Pettigrew, Springer, Clibborn, Anderson, Ericks, Pedersen, Roach, White, Goodman, Nelson, Hurst, Carlyle, Eddy, Rodne, Kenney, Kessler, Kagi and Santos.

Brief History:

Committee Activity:

Finance: 2/24/09, 3/2/09 [DP].

Majority Report: Do pass. Signed by 6 members: Representatives Hunter, Chair; Hasegawa, Vice Chair; Conway, Ericks, Santos and Springer.

Minority Report: Do not pass. Signed by 3 members: Representatives Orcutt, Ranking Minority Member; Parker, Assistant Ranking Minority Member; Condotta.

Staff: Rick Peterson (786-7150)

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 "special" hotel-motel taxes.The hotel-motel tax in King County was initially applied to servicing the debt on the Kingdome. Beginning in 1989, 70 percent of the tax revenues above $5.3 million per year were dedicated to arts and heritage programs in King County. The other 30 percent of the revenue in excess of $5.3 million was dedicated first to retiring the Kingdome debt, then to acquisition of open space lands, youth sports activities, and tourism promotion. This arrangement was scheduled to end in 2012. After 2012, all of the hotel-motel tax was designated to retiring the Kingdome debt. Once the Kingdome debt was retired, then the full amount of hotel-motel tax in King County went to retiring the debt on Qwest Field.

The 2008 Legislature made some changes to the distribution of the hotel-motel for arts and heritage programs. Before the 2008 legislation, 70 percent of amount above $5.3 million went to arts and heritage programs. Of this, 60 percent was available for current use and 40 percent was placed in an arts endowment fund, of which the principal could not be used.

After the 2008 legislation, the 40 percent distribution of the arts and heritage amount was placed into an account dedicated to art museums, cultural museums, heritage museums, and heritage and preservation programs rather than the endowment fund and the balance in the endowment fund was allowed to be used. Also, once the bonds used to pay for the repairs to the Kingdome were retired, the King County hotel-motel tax would be distributed into the account dedicated to the arts and heritage programs until December 31, 2015. After 2015 the hotel-motel tax would go to paying for Qwest Field. Beginning January 1, 2021, at least 37.5 percent of the county hotel-motel tax revenues will be distributed to the account dedicated to the arts and heritage programs. A late amendment to the 2008 legislation expired all of the distribution changes to the hotel-motel tax in King County on July 1, 2009.

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Summary of Bill:

The July 1, 2009 expiration date on distributional changes to the King County hotel-motel distributions adopted by the 2008 Legislature 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 occur: (1) 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 an account dedicated to art museums, cultural museums, heritage museums, and heritage and preservation programs; (2) 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; and (3) beginning January 1, 2021, at least 37.5 percent of the county hotel-motel tax revenues will be distributed to the account dedicated to the arts and heritage programs.

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Appropriation: None.

Fiscal Note: Available.

Effective Date: The bill has an emergency clause and takes effect on July 1, 2009.

Staff Summary of Public Testimony:

(In support) Arts and heritage programs, supported by hotel-motel taxes in King County, serve thousands of kids and adults each year. 4Culture has assisted our theater group many times, sustaining our services and providing low income people with access to plays and discount tickets for seniors and students. 4Culture also helped in emergencies when equipment failed. 4Culture has provided sustained support for nonprofit arts education organizations. They have allowed us to do long term planning because we can apply for funding into the future. Support from 4Culture can be leveraged for additional support from the community and corporate sectors. 4Culture also provides support for construction activities.

(With concerns) When Referendum 48 was passed authorizing the new football stadium, promises were made that funds in excess of that needed for bond repayment would go to youth athletic facilities funding. To date the program has not received any excess revenue. However, there is still the anticipation that funds will be available in the future. This bill would divert some of the funding for youth athletic facilities.

(Opposed) None.

Persons Testifying: (In support) Representative Hunter, prime sponsor; Paul Toliver, Earshot Jazz; Scott Nolte, Taproot Theatre; Christopher Shainin, Kirkland Arts Center; and Patricia Cosgrove, White River Valley Museum.

(With concerns) Jim Fox, Recreation and Conservation Office.

Persons Signed In To Testify But Not Testifying: None.