Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Finance Committee

HB 2250

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Bill

Reduce the City of Seattle convention center tax by 1 percent beginning on January 1, 2021.
Eliminates the City of Seattle convention center tax beginning January 1, 2030.
Reduces the state convention center tax rates by 14.3 percent beginning January 1, 2030.
Modifies distributions into the state convention and trade center account and state convention and trade center operations account to reflect lower tax rates for the state convention center tax.

Background:

A state "convention center" tax applies to lodging within King County. This special sales and use tax applies only to the sale of lodging in hotels, motels, and similar facilities in King County with at least 60 units. The tax applies only when a lodging unit is used for a continuous period of less than one month (longer use is considered as a rental of real property, rather than a "license" to use the property). The tax rate is 7.0 percent within the city of Seattle and 2.8 percent throughout the remainder of King County. The rates will drop to 6 and 2.4 percent respectively when the bonds to finance construction or expansion of the convention center are retired. All proceeds of the convention center tax are devoted to the state convention center facility located in Seattle. Receipts are deposited into two accounts within the state treasury: (1) the state convention and trade center account (used for acquisition, design, and construction of facilities and retirement of bonds); and (2) the state convention and trade center operations account. Currently, 85.71 percent of the tax receipts go to the construction account and the remainder may be used for operations.

The City of Seattle imposes a 2 percent tax (local convention center tax) to the same charges for accommodations as the state convention center tax. The 2 percent tax is credited against the state retail sales tax, so that it does not increase the cost of room rentals to customers. All of the revenues are deposited in the state convention and trade center account and are dedicated to costs of expanding the convention center. Thus, the effect of this tax is to shift funds from the state general fund to the state convention and trade center account within the state treasury.

Summary of Bill:

Beginning January 1, 2021, the local convention center tax rate imposed by the City of Seattle is lowered from 2 percent to 1 percent. The City of Seattle may not impose the tax beginning on January 1, 2030.

Beginning January 1, 2030, the state convention center tax rate is lowered from 7 percent to 6 percent in the City of Seattle and from 2.8 percent to 2.4 percent in the remainder of King County.

Beginning January 1, 2030, the distributions of the state convention center tax into the state convention and trade center account and state convention and trade center operations account are modified to reflect the lower tax rates.