BILL REQ. #:  H-1826.2 

Read first time 02/18/09.   Referred to Committee on Finance.

     AN ACT Relating to sales and use taxes on car rentals, restaurants, and lodging to fund arts and heritage programs, regional centers, human services, low-income housing, and community development in a county with a population of one million five hundred thousand or more; amending RCW 67.28.180, 82.14.049, and 82.14.360; adding a new section to chapter 67.28 RCW; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 67.28.180 and 2008 c 264 s 2 are each amended to read as follows:
     (1) Subject to the conditions set forth in subsections (2) and (3) of this section, the legislative body of any county or any city, is authorized to levy and collect a special excise tax of not to exceed two percent on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW.
     (2) Any levy authorized by this section shall be subject to the following:
     (a) Any county ordinance or resolution adopted pursuant to this section shall contain, in addition to all other provisions required to conform to this chapter, a provision allowing a credit against the county tax for the full amount of any city tax imposed pursuant to this section upon the same taxable event.
     (b) In the event that any county has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such county shall be exempt from the provisions of (a) of this subsection, to the extent that the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160: PROVIDED, That so much of such pledged tax revenues, together with any investment earnings thereon, not immediately necessary for actual payment of principal and interest on such bonds may be used: (i) In any county with a population of one million or more, for repayment either of limited tax levy general obligation bonds or of any county fund or account from which a loan was made, the proceeds from the bonds or loan being used to pay for constructing, installing, improving, and equipping stadium capital improvement projects, and to pay for any engineering, planning, financial, legal and professional services incident to the development of such stadium capital improvement projects, regardless of the date the debt for such capital improvement projects was or may be incurred; (ii) in any county with a population of one million or more, for repayment or refinancing of bonded indebtedness incurred prior to January 1, 1997, for any purpose authorized by this section or relating to stadium repairs or rehabilitation, including but not limited to the cost of settling legal claims, reimbursing operating funds, interest payments on short-term loans, and any other purpose for which such debt has been incurred if the county has created a public stadium authority to develop a stadium and exhibition center under RCW 36.102.030; or (iii) in other counties, for county-owned facilities for agricultural promotion until January 1, 2009, and thereafter for any purpose authorized in this chapter.
     A county is exempt under this subsection with respect to city revenue or general obligation bonds issued after April 1, 1991, only if such bonds mature before January 1, 2013. If any county located east of the crest of the Cascade mountains has levied the tax authorized by this section and has, prior to June 26, 1975, pledged the tax revenue for payment of principal and interest on city revenue or general obligation bonds, the county is exempt under this subsection with respect to revenue or general obligation bonds issued after January 1, 2007, only if the bonds mature before January 1, 2021. Such a county may only use funds under this subsection (2)(b) for constructing or improving facilities authorized under this chapter, including county-owned facilities for agricultural promotion, and must perform an annual financial audit of organizations receiving funding on the use of the funds.
     As used in this subsection (2)(b), "capital improvement projects" may include, but not be limited to a stadium restaurant facility, restroom facilities, artificial turf system, seating facilities, parking facilities and scoreboard and information system adjacent to or within a county owned stadium, together with equipment, utilities, accessories and appurtenances necessary thereto. The stadium restaurant authorized by this subsection (2)(b) shall be operated by a private concessionaire under a contract with the county.
     (c)(i) No city within a county exempt under subsection (2)(b) of this section may levy the tax authorized by this section so long as said county is so exempt.
     (ii) No city within a county with a population of one million or more may levy the tax authorized by this section.
     (iii) However, in the event that any city in a county described in (c)(i) or (ii) of this subsection (2) has levied the tax authorized by this section and has, prior to June 26, 1975, authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160, such city may levy the tax so long as the tax revenues are pledged for payment of principal and interest on bonds issued at any time pursuant to the provisions of RCW 67.28.150 through 67.28.160.
     (3) Any levy authorized by this section by a county ((that has levied the tax authorized by this section and has, prior to June 26, 1975, either pledged the tax revenues for payment of principal and interest on city revenue or general obligation bonds authorized and issued pursuant to RCW 67.28.150 through 67.28.160 or has authorized and issued revenue or general obligation bonds pursuant to the provisions of RCW 67.28.150 through 67.28.160)) with a population of one million five hundred thousand or more shall be subject to the following:
     (a) Taxes collected under this section in any calendar year before 2013 in excess of five million three hundred thousand dollars shall only be used as follows:
     (i) ((Seventy-five percent from January 1, 1992, through December 31, 2000, and)) Seventy percent from January 1, 2001, through December 31, 2012, for art museums, cultural museums, heritage museums, heritage and preservation programs, the arts, and the performing arts. Moneys spent under this subsection (3)(a)(i) shall be used for the purposes of this subsection (3)(a)(i) in all parts of the county.
     (ii) ((Twenty-five percent from January 1, 1992, through December 31, 2000, and)) Thirty percent from January 1, 2001, through December 31, 2012, for the following purposes and in a manner reflecting the following order of priority: Stadium purposes as authorized under subsection (2)(b) of this section; acquisition of open space lands; youth sports activities; and tourism promotion. If all or part of the debt on the stadium is refinanced, all revenues under this subsection (3)(a)(ii) shall be used to retire the debt.
     (b) From January 1, 2013, through December 31, 2015, in a county with a population of one million five hundred thousand or more, all revenues under this section shall be used to retire the debt on the stadium, until the debt on the stadium is retired, and then deposited in the stadium and exhibition center account under RCW 43.99N.060. ((On and after the date the debt on the stadium is retired, and through December 31, 2015, all revenues under this section in a county of a [one] million or more shall be deposited in the special account under (f) of this subsection.))
     (c) From January 1, 2016, through December 31, 2020, ((in a county with a population of one million or more,)) all revenues under this section shall be deposited in the stadium and exhibition center account under RCW 43.99N.060.
     (d) On and after January 1, 2021, ((at least thirty-seven and one-half percent of)) revenues ((under this section in a county of a [one] million or more)) shall be deposited ((in the special account under (f) of this subsection)) by the county in a special county arts, regional center, low-income housing, and community development fund as provided in section 3 of this act.
     (e) ((At least seventy percent of moneys spent under (a)(i) of this subsection for the period January 1, 1992, through December 31, 2000, shall be used only for the purchase, design, construction, and remodeling of performing arts, visual arts, heritage, and cultural facilities, and for the purchase of fixed assets that will benefit art, heritage, and cultural organizations. For purposes of this subsection, fixed assets are tangible objects such as machinery and other equipment intended to be held or used for ten years or more. Moneys received under this subsection (3)(e) may be used for payment of principal and interest on bonds issued for capital projects. Qualifying organizations receiving moneys under this subsection (3)(e) must be financially stable and have at least the following:
     (i) A legally constituted and working board of directors;
     (ii) A record of artistic, heritage, or cultural accomplishments;
     (iii) Been in existence and operating for at least two years;
     (iv) Demonstrated ability to maintain net current liabilities at less than thirty percent of general operating expenses;
     (v) Demonstrated ability to sustain operational capacity subsequent to completion of projects or purchase of machinery and equipment; and
     (vi) Evidence that there has been independent financial review of the organization.
     (f))) At least forty percent of the revenues distributed pursuant to (a)(i) of this subsection for the period January 1, 2001, through July 1, 2008, shall be deposited in a special account. The account may only be used for the purposes of (a)(i) of this subsection.
     (((g))) (f) School districts and schools shall not receive revenues distributed pursuant to (a)(i) of this subsection.
     (((h))) (g) Moneys distributed to art museums, cultural museums, heritage museums, heritage and preservation programs, the arts, and the performing arts, and moneys distributed for tourism promotion shall be in addition to and may not be used to replace or supplant any other funding by the legislative body of the county.
     (((i))) (h) As used in this section, "tourism promotion" includes activities intended to attract visitors for overnight stays, arts, heritage, and cultural events, and recreational, professional, and amateur sports events. Moneys allocated to tourism promotion in a class AA county shall be allocated to nonprofit organizations formed for the express purpose of tourism promotion in the county. Such organizations shall use moneys from the taxes to promote events in all parts of the class AA county.
     (((j))) (i) No taxes collected under this section may be used for the operation or maintenance of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged. Expenditures for operation or maintenance include all expenditures other than expenditures that directly result in new fixed assets or that directly increase the capacity, life span, or operating economy of existing fixed assets.
     (((k))) (j) No ad valorem property taxes may be used for debt service on bonds issued for a public stadium that is financed by bonds to which the tax is pledged, unless the taxes collected under this section are or are projected to be insufficient to meet debt service requirements on such bonds.
     (((l))) (k) If a substantial part of the operation and management of a public stadium that is financed directly or indirectly by bonds to which the tax is pledged is performed by a nonpublic entity or if a public stadium is sold that is financed directly or indirectly by bonds to which the tax is pledged, any bonds to which the tax is pledged shall be retired. This subsection (3)(((l))) (k) does not apply in respect to a public stadium under chapter 36.102 RCW transferred to, owned by, or constructed by a public facilities district under chapter 36.100 RCW or a stadium and exhibition center.
     (((m))) (l) The county shall not lease a public stadium that is financed directly or indirectly by bonds to which the tax is pledged to, or authorize the use of the public stadium by, a professional major league sports franchise unless the sports franchise gives the right of first refusal to purchase the sports franchise, upon its sale, to local government. This subsection (3)(((m))) (l) does not apply to contracts in existence on April 1, 1986.
     If a court of competent jurisdiction declares any provision of this subsection (3) invalid, then that invalid provision shall be null and void and the remainder of this section is not affected. ((Section 2, chapter 264, Laws of 2008 expires July 1, 2009.))

Sec. 2   RCW 82.14.049 and 2008 c 264 s 4 are each amended to read as follows:
     The legislative authority of any county may impose a sales and use tax, in addition to the tax authorized by RCW 82.14.030, upon retail car rentals within the county that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of tax shall be one percent of the selling price in the case of a sales tax or rental value of the vehicle in the case of a use tax. Proceeds of the tax shall not be used to subsidize any professional sports team and shall be used solely for the following purposes:
     (1) Acquiring, constructing, maintaining, or operating public sports stadium facilities;
     (2) Engineering, planning, financial, legal, or professional services incidental to public sports stadium facilities;
     (3) Youth or amateur sport activities or facilities; ((or))
     (4) Debt or refinancing debt issued for the purposes of subsection (1) of this section; or
     (5) For deposit into a special county arts, regional center, low-income housing, and community development fund created in section 3 of this act.
     In a county with a population less than one million five hundred thousand, at least seventy-five percent of the tax imposed under this section shall be used for the purposes of subsections (1), (2), and (4) of this section. In a county of one million five hundred thousand or more, at least seventy-five percent of the tax imposed under this section shall be used to retire the debt on the stadium under RCW 67.28.180(2)(b)(ii), until that debt is fully retired, and at least seventy-five percent must be used as required under subsection (5) of this section after the debt is fully retired.

Sec. 3   RCW 82.14.360 and 2008 c 86 s 104 are each amended to read as follows:
     (1) The legislative authority of a county with a population of one million five hundred thousand or more may impose a special stadium sales and use tax upon the retail sale or use within the county by restaurants, taverns, and bars of food and beverages that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of the tax shall not exceed five-tenths of one percent of the selling price in the case of a sales tax, or value of the article used in the case of a use tax. The tax authorized under this subsection is in addition to any other taxes authorized by law and shall not be credited against any other tax imposed upon the same taxable event. As used in this section, "restaurant" does not include grocery stores, mini-markets, or convenience stores. A county may not impose the tax authorized in this subsection after January 1, 2016.
     (2) The legislative authority of a county with a population of one million five hundred thousand or more may impose a special stadium sales and use tax upon retail car rentals within the county that are taxable by the state under chapters 82.08 and 82.12 RCW. The rate of the tax shall not exceed two percent of the selling price in the case of a sales tax, or rental value of the vehicle in the case of a use tax. The tax imposed under this subsection is in addition to any other taxes authorized by law and shall not be credited against any other tax imposed upon the same taxable event.
     (3)(a) Except as provided in (b) of this subsection, the revenue from the taxes imposed under the authority of this section shall be used for the purpose of principal and interest payments on bonds, issued by the county, to acquire, construct, own, remodel, maintain, equip, reequip, repair, and operate a baseball stadium. Revenues from the taxes authorized in this section may be used for design and other preconstruction costs of the baseball stadium until bonds are issued for the baseball stadium. The county shall issue bonds, in an amount determined to be necessary by the public facilities district, for the district to acquire, construct, own, and equip the baseball stadium. The county shall have no obligation to issue bonds in an amount greater than that which would be supported by the tax revenues under this section, RCW 82.14.0485, and 36.38.010(4) (a) and (b). If the revenue from the taxes imposed under the authority of this section exceeds the amount needed for such principal and interest payments in any year, the excess shall be used solely:
     (((a))) (i) For early retirement of the bonds issued for the baseball stadium; and
     (((b))) (ii) If the revenue from the taxes imposed under this section exceeds the amount needed for the purposes in (a) of this subsection in any year, the excess shall be placed in a contingency fund which may only be used to pay unanticipated capital costs on the baseball stadium, excluding any cost overruns on initial construction.
     (b) When the bonds issued for the construction of the baseball stadium are retired, the revenue from the taxes imposed under the authority of this section must be deposited by the county in a special county arts, regional center, low-income housing, and community development fund as provided in section 3 of this act.
     (4) The proceeds of any bonds issued for the baseball stadium shall be provided to the district.
     (5) As used in this section, "baseball stadium" means "baseball stadium" as defined in RCW 82.14.0485.
     (((6) The taxes imposed under this section shall expire when the bonds issued for the construction of the baseball stadium are retired, but not later than twenty years after the taxes are first collected.))

NEW SECTION.  Sec. 4   A new section is added to chapter 67.28 RCW to read as follows:
     (1) Revenue deposited in a special county arts, regional center, low-income housing, and community development fund, as provided in RCW 67.28.180(3)(e), 82.14.049, and 82.14.360, must be used only for regional centers, art museums, cultural museums, heritage museums, heritage and preservation programs, the arts, the performing arts, low-income housing, community development, and human services.
     (2) The county must distribute money in the account as follows:
     (a) For the years 2012 through 2015:
     (i) Eight percent for art museums, cultural museums, heritage museums, heritage and preservation programs, the arts, and the performing arts. The distribution in this subsection (2)(a)(i) begins in 2013;
     (ii) Two and one-half percent for regional centers in the unincorporated area and cities with a population less than four hundred thousand;
     (iii) For deposit into a reserve account: (A) Twenty percent in 2013, (B) twenty-eight percent in 2014, and (C) thirty-five percent in 2015;
     (iv) One million dollars in 2012, two million dollars in 2013, and three million dollars in 2014 and 2015, for community development;
     (v) Eight million dollars for low-income housing;
     (vi) The remainder for human services.
     (b) For the years 2016 through 2020:
     (i) Thirty-three percent for art museums, cultural museums, heritage museums, heritage and preservation programs, the arts, and the performing arts;
     (ii) Ten percent for regional centers in the unincorporated area and cities with a population less than four hundred thousand;
     (iii) Three million dollars each year for community development; and
     (iv) Eight million dollars for low-income housing.
     (c) For the years 2021 and thereafter:
     (i) Twenty-two percent for art museums, cultural museums, heritage museums, heritage and preservation programs, the arts, and the performing arts;
     (ii) Twenty-five percent for regional centers in the unincorporated area and cities with a population less than four hundred thousand; and
     (iii) Three million dollars each year for community development; and
     (iv) The remainder for low-income housing.

NEW SECTION.  Sec. 5   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2009.