AN ACT Relating to tourism marketing; reenacting and amending RCW 43.79A.040; adding a new section to chapter 82.04 RCW; adding a new section to chapter 44.28 RCW; adding a new chapter to Title 43 RCW; adding a new chapter to Title 82 RCW; providing an effective date; providing an expiration date; and declaring an emergency.

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

(2) The purpose of this act is to establish the framework and funding for a statewide tourism marketing program. The program needs to have a structure that includes significant, stable, long-term funding, and it should be implemented and managed by the tourism industry. The source of funds should be from major sectors of the tourism industry with government assistance in collecting these funds and providing accountability for their expenditure. The fees and charges imposed in this chapter will bring direct benefits to those paying the fees and charges by bringing more tourists into the state who will patronize the participating businesses.

(1) "Adjusted gross revenue" means a business's total taxable amount for all of its activities that are subject to tax under chapters 82.04 and 82.16 RCW. For purposes of this subsection, "taxable amount" means the gross income of the business as defined in RCW 82.04.080 and gross income as defined in RCW 82.16.010, less any validly claimed deductions or exemptions under chapter 82.04 or 82.16 RCW.

(2) "Assessed sectors" means businesses in any of the following industry sectors:

(a) Lodging; and

(b) Food service, attractions and entertainment, retail, and transportation.

(3) "Attractions and entertainment" means businesses whose primary business activity in this state is:

(a) Producing live presentations involving the performance of actors, actresses, singers, dancers, musical groups, or other performing artists;

(b) Operating a professional or semiprofessional team or club primarily engaged in participating in live sporting events before a paying audience;

(c) Operating any kind of racetrack or the presenting or promoting of racing events held at a racetrack;

(d) Organizing, promoting, or managing performing arts productions; sporting events; and similar events, such as fairs, concerts, and festivals;

(e) Representing or managing creative and performing artists, athletes, entertainers, or other public figures;

(f) The preservation and exhibition of objects of historical, cultural, or educational value;

(g) The preservation and exhibition of sites, buildings, forts, or communities that describe events or persons of particular historical interest;

(h) The preservation and exhibition of live plant or animal life displays;

(i) The preservation and exhibition of natural areas or settings;

(j) Operating an amusement park, theme park, water park, or similar facility;

(k) Operating an amusement arcade or parlor, including a billiards parlor;

(l) Operating a golf course open to the public;

(m) Operating a driving range or miniature golf facility;

(n) Operating a downhill or cross-country skiing area, including operating equipment such as ski lifts and tows;

(o) Acting as a travel agent or tour operator taxable under RCW 82.04.260(5);

(p) Engaging in the business of operating contests of chance taxable under RCW 82.04.285; or

(q) Operating a "marina," which means providing docking or storage facilities primarily or exclusively for pleasure craft owners, with or without any related activities, such as retailing fuel and marine supplies, and repairing, maintaining, or renting pleasure craft.

(4) "Authority" means the Washington tourism marketing authority created in section 3 of this act.

(5) "Business" means a person as defined in RCW 82.04.030, required to file tax returns with the department for purposes of reporting taxes due under chapter 82.04, 82.08, or 82.16 RCW.

(6) "Common control group" means any number of businesses in the food service industry sector that have the same ownership. For purposes of this subsection, businesses have the same ownership if at least eighty percent of each business is owned, directly or indirectly, by the same five or fewer persons.

(7) "Department" means the department of revenue.

(8) "Director" means the director of the department of revenue.

(9) "Food service" means businesses whose primary business activity in this state is operating a "restaurant" as defined in RCW 82.08.9995.

(10) "Lodging" means a person that furnishes lodging taxable by the state under chapter 82.08 RCW at a facility that contains twenty or more lodging units.

(11) "Primary" means:

(a) The business activity that generated more than fifty percent of a business's total adjusted gross revenue during the preceding calendar year or, if the person did not engage in business during the preceding calendar year, during the current calendar year; or

(b) The business activity that generated the most adjusted gross revenue during the preceding calendar year or, if the person did not engage in business during the preceding calendar year, during the current calendar year, if the business engaged in more than two business activities during the relevant time period and none of the activities generated more than fifty percent of the business's total adjusted gross revenue.

(12)(a) "Retail" means businesses whose primary business activity in this state is making retail sales from the operation of one or more of the following:

(i) An establishment that primarily sells one or more of the following categories of goods: Alcohol products intended for off-premises consumption; any type of clothing, including shoes and accessories; jewelry; luggage or leather goods; sporting goods, including athletic uniform supply stores, fishing supply stores, bicycle shops, golf equipment stores, saddlery stores, diving equipment stores, general sporting goods stores, fitness equipment stores, outdoor recreation stores, and gun shops; books; novelty merchandise; souvenirs; greeting cards; seasonal and holiday decorations; curios; toys; games; and hobby and craft supplies except needlecraft;

(ii) An establishment that has separate departments for various merchandise lines, including department stores and discount department stores;

(iii) An establishment selling a general line of groceries in combination with general lines of merchandise, including warehouse clubs and supercenters; or

(iv) An establishment selling a general line of merchandise, such as apparel, automotive parts, dry goods, hardware, groceries, housewares, or home furnishings, and other lines of merchandise in limited amounts, with none of the lines of merchandise predominating, such as dollar stores, general stores, and variety stores.

(b) "Retail" does not include:

(i) Businesses primarily engaged in making retail sales via the internet;

(ii) Businesses in the food service sector pursuant to subsection (9) of this section; or

(iii) Establishments primarily making retail sales in any one of the following categories: Electronics; appliances; health and personal care products, such as prescription and nonprescription drugs and medicines, first-aid products, toiletries, beauty supplies, perfume, personal grooming products, dietary supplements as defined in RCW 82.08.0293; durable medical equipment, prosthetic devices, or mobility enhancing equipment as those terms are defined in RCW 82.08.0283; groceries; gasoline, or gasoline and very limited lines of groceries and other merchandise; specialty food items, including bakeries, meat markets, and fish and seafood markets; hardware, building materials, lawn and garden supplies, or any combination thereof; motor vehicles or watercraft; automotive parts and accessories, including tires; furniture; nursery and garden products; fresh cut flowers, potted ornamental plants, floral arrangements, floral bouquets, wreaths, or similar products; outdoor power equipment; home furnishings; or used merchandise.

(13) "Secretary" means the secretary of state.

(14) "Statewide tourism marketing account" means the account created pursuant to section 5 of this act in the custody of the state treasurer. This account shall be the depository for fees collected pursuant to section 6 of this act and charges collected pursuant to section 11 of this act, except as otherwise provided in section 5 of this act.

(15) "Transportation" means businesses whose primary business activity in this state is:

(a) Transporting paying passengers for hire by motor vehicle or vessel, but not including:

(i) Transportation that crosses the state's boundaries or the territorial waters of the state; or

(ii) Businesses whose primary business activity in this state is providing transportation for "persons with special transportation needs" as defined in RCW 81.66.010;

(b) Providing day trips for sightseeing purposes. Such transportation includes sightseeing busses and trolleys, steam train excursions, horse-drawn carriage rides, airboat rides, dinner cruises, harbor sightseeing tours, aerial sightseeing flights, hot air balloon rides, aerial tramways, and similar transportation activities;

(c) Making retail car rentals as defined in RCW 82.08.011; or

(d) Providing automobile parking or storage garage services defined as a retail sale in RCW 82.04.050.

(2) The authority is responsible for acting as a business management organization on behalf of the citizens of the state to manage financial resources and contract for statewide tourism marketing services.

(3) Membership in the authority includes all businesses subject to the fee imposed in section 6 of this act or the charge imposed in section 11 of this act.

(4) The office of the secretary of state must provide administrative assistance to the authority.

(b) Board membership shall be allocated to the assessed sectors as follows:

(i) Lodging, four members;

(ii) Food service, three members;

(iii) Retail, two members;

(iv) Attractions and entertainment, one member; and

(v) Transportation, one member.

(c) In addition, there shall be two members representing regional destination marketing organizations.

(d) The secretary and the director shall serve as ex officio voting members of the authority.

(2) The secretary and the director must jointly make appointments to the board from nominations submitted by organizations representing assessed sectors and members of the authority. Appointments shall reflect diversity in geography, size of businesses, gender, and ethnicity.

(3)(a) Half of the initial appointments under subsection (1)(b)(i), (ii), and (iii) of this section shall be for two years. The initial appointment under subsection (1)(b)(iv) of this section shall be for four years. The initial appointment under subsection (1)(b)(v) of this section shall be for two years.

(b) After the initial appointments, all appointments shall be for four years.

(4) The board shall select from its membership the chair of the board and such other officers as it deems appropriate.

(5) A majority of the board constitutes a quorum.

(6) The board shall create its own bylaws in accordance with the laws of the state of Washington.

(7) Any member of the board may be removed for misfeasance, malfeasance, or willful neglect of duty after notice and a public hearing, unless the notice and hearing are expressly waived in writing by the affected member.

(8) If a vacancy occurs on the board, the secretary and the director shall appoint a replacement from the same sector and from recommendations provided by businesses in that sector. The appointed member shall serve the remainder of the term.

(9) The members of the board serve without compensation but are entitled to reimbursement, solely from the funds of the authority, for expenses incurred in the discharge of their duties.

(10) The board shall meet at least quarterly.

(11) No board member of the authority may serve on the board of an organization that could be considered for the contract authorized by section 8 of this act.

(12) Beginning in fiscal year 2017, the authority shall report to the appropriate legislative committees concerning the effectiveness of the statewide tourism marketing program funded from the statewide tourism marketing account.

(2) Two percent of the total revenue collected by the department from fees under section 6 of this act and from the charge on lodging businesses under section 11 of this act must be deposited into the general fund to reimburse the state for administration and collection expenses incurred by the department.

(2) All fees collected under this section shall be deposited in the statewide tourism marketing account, except as otherwise provided in section 5 of this act.

(3) The department must collect the fees imposed under this section from businesses subject to the fee in the manner prescribed by the department. To the extent practicable, the reporting and payment of the fee must coincide with the business's regular tax reporting method and frequency for the taxes imposed in chapters 82.04 and 82.16 RCW.

(4) The amount of the fee is based on a business's annual adjusted gross revenue for the preceding calendar year as shown in the rate tables below. However, if a business did not engage in business during the preceding calendar year, the fee for the current year is the lowest fee amount for the applicable assessed sector. For businesses that file tax returns with the department on a more frequent basis than annually, a business may elect to either report and pay the entire fee on the return for the first reporting period of the current calendar year or in installments. If a taxpayer elects to pay the fee in installments, the amount of each payment is determined by multiplying the fee provided in this subsection by a fraction, the numerator of which is the number of months in the reporting period, and the denominator of which is twelve.

(a) Food service.

(b) Attractions and entertainment.

(c) Retail.

(d) Transportation.

(5) The department must send a list of businesses it determines are in the assessed sectors to the authority annually at a time and in a form and format as mutually agreed to by the department and the authority. The list must identify lodging separately from the other assessed sectors. For those businesses, except lodging, it may also include information concerning the amount and payment of fees.

(6) Chapter 82.32 RCW applies to the fees imposed under this section.

(7)(a) If the legislature redirects or changes the use of the statewide tourism marketing account to a use other than that authorized in this chapter, fees shall not be imposed under this section as of the first day of the month that is at least sixty days from the date the department receives written notification from the authority as provided in (b) of this subsection.

(b) The authority must notify the department in writing of any action by the legislature that would redirect or change the use of the statewide tourism marketing account to a use other than that authorized in this chapter.

(8) The department may adopt rules under chapter 34.05 RCW to implement this section.

(b) The amount of the credit is the amount that such fees owed by all members of the common control group for the calendar year exceeds the amount of such fees that would have been owed for the calendar year if the common control group had been allowed to pay the fees as a single entity.

(c) Only one member of a common control group is entitled to a credit under this section for any single calendar year. However, a different member of a common control group may receive a credit under this section for a subsequent calendar year. No refunds may be granted for credits under this section. Approved credit may be carried forward and used against fees incurred under section 6 of this act for up to four calendar years following the calendar year in which the department approved the credit.

(2) A common control group seeking credit under this section must apply to the department. A common control group may not apply for more than one credit for a calendar year. Applications must be submitted in a form and manner as required by the department and must include:

(a) Information about the ownership interests of each member of the common control group;

(b) A statement designating which business in the common control group will receive the credit provided under this section;

(c) Information necessary to calculate the amount of the credit; and

(d) Other information or documentation as the department may require.

(3) To claim a credit under this section, a business must electronically file with the department all returns, forms, applications, and other information the department requires in an electronic format as provided or approved by the department. The department may cancel approved credit if the recipient of the credit does not comply with this subsection.

(4) Except for RCW 82.32.805 and 82.32.808, chapter 82.32 RCW applies to the administration of credits provided under this section.

(5) The department may adopt rules under chapter 34.05 RCW to implement this section.

(a) Entering into a contract for a multiple-year statewide tourism marketing plan with a statewide nonprofit organization existing on the effective date of this section whose sole purpose is marketing Washington to tourists and who meets the requirements of subsection (2) of this section;

(b) Contracting for the evaluation of the impact of the statewide tourism marketing program; and

(c) Paying for administrative expenses of the authority, which shall not exceed one and one-half percent of funds collected in any fiscal year.

(2) In entering into a contract for a statewide marketing program, the authority must require the statewide nonprofit organization to be governed by a board reflecting sectors of the tourism industry and having geographically diverse representation. Sectors of the tourism industry must include adventure/outdoor recreation, arts and culture, attractions, lodging, food service, retail, and transportation. Other sectors may also include representatives of other organizations that have contributed to funding for the statewide tourism marketing program or that have particular expertise in tourism marketing, including but not limited to port districts, tribes, destination marketing organizations, economic development organizations, airlines, cruise ships, and other tourism related businesses. Geographic diversity will be based on regions established by the nonprofit organization. If, after appropriate notice, the authority determines that there is only one qualified entity, then the authority may issue a sole source contract. The authority shall include a provision in such a contract that will enable the contractor to pay expenses in a timely manner.

(3) All funds collected by the authority under this chapter, including interest, dividends, and other profits, are and must remain under the complete control of the authority and its board of directors, be fully available to achieve the intent of this chapter, and be used for the sole purpose of achieving the intent of this chapter.

(4)(a) The authority may suspend the fees under section 6 of this act and charges under section 11 of this act if the authority, by a majority vote, determines that the program as implemented pursuant to subsection (1)(a) of this section is not effective.

(b) The effective date for the fee suspension will be the first day of the month that is at least sixty days from the date the department receives written notification from the authority to suspend the fees.

(1) "Lodging business" means a person that furnishes lodging  taxable by the state under chapter 82.08 RCW at a facility that has twenty or more lodging units.

(2) "Occupied room" means a room in a facility operated by a lodging business, if the room is used by an overnight guest for consideration.

(3) Unless the context clearly requires otherwise, the definitions in chapters 82.04, 82.08, and 82.12 RCW apply to this chapter.

(2) Except for RCW 82.32.805 and 82.32.808, chapter 82.32 RCW applies to the charge imposed in this section. The due dates, reporting periods, and return requirements applicable to a lodging business for the taxes imposed in chapters 82.04 and 82.08 RCW also apply to the charge on lodging imposed in this section.

(3) All charges collected under this section must be deposited in the statewide tourism marketing account, except as otherwise provided in section 5 of this act.

Sec. 14.  RCW 43.79A.040 and 2013 c 251 s 5 and 2013 c 88 s 1 are each reenacted and amended to read as follows:

(1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury, and may be commingled with moneys in the state treasury for cash management and cash balance purposes.

(2) All income received from investment of the treasurer's trust fund must be set aside in an account in the treasury trust fund to be known as the investment income account.

(3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments must occur prior to distribution of earnings set forth in subsection (4) of this section.

(4)(a) Monthly, the state treasurer must distribute the earnings credited to the investment income account to the state general fund except under (b), (c), and (d) of this subsection.

(b) The following accounts and funds must receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington promise scholarship account, the Washington advanced college tuition payment program account, the accessible communities account, the community and technical college innovation account, the agricultural local fund, the American Indian scholarship endowment fund, the foster care scholarship endowment fund, the foster care endowed scholarship trust fund, the contract harvesting revolving account, the Washington state combined fund drive account, the commemorative works account, the county enhanced 911 excise tax account, the toll collection account, the developmental disabilities endowment trust fund, the energy account, the fair fund, the family leave insurance account, the food animal veterinarian conditional scholarship account, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the GET ready for math and science scholarship account, the Washington global health technologies and product development account, the grain inspection revolving fund, the industrial insurance rainy day fund, the juvenile accountability incentive account, the law enforcement officers' and firefighters' plan 2 expense fund, the local tourism promotion account, the multiagency permitting team account, the pilotage account, the produce railcar pool account, the regional transportation investment district account, the rural rehabilitation account, the statewide tourism marketing account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the children's trust fund, the Washington horse racing commission Washington bred owners' bonus fund and breeder awards account, the Washington horse racing commission class C purse fund account, the individual development account program account, the Washington horse racing commission operating account, the life sciences discovery fund, the Washington state heritage center account, the reduced cigarette ignition propensity account, the center for childhood deafness and hearing loss account, the school for the blind account, the Millersylvania park trust fund, the public employees' and retirees' insurance reserve fund, and the radiation perpetual maintenance fund.

(c) The following accounts and funds must receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right-of-way revolving fund, the advanced environmental mitigation revolving account, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.

(d) Any state agency that has independent authority over accounts or funds not statutorily required to be held in the custody of the state treasurer that deposits funds into a fund or account in the custody of the state treasurer pursuant to an agreement with the office of the state treasurer shall receive its proportionate share of earnings based upon each account's or fund's average daily balance for the period.

(5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 15.  A new section is added to chapter 82.04 RCW to read as follows:

This chapter does not apply to amounts received by a nonprofit organization from the Washington tourism marketing authority pursuant to a contract authorized under section 8(1)(a) of this act.

NEW SECTION.  Sec. 16.  A new section is added to chapter 44.28 RCW to read as follows:

(1) In addition to the findings and legislative intent in section 1, chapter . . ., Laws of 2015 (section 1 of this act), it is the legislature's specific public policy objective to increase tourism in the state through the statewide tourism marketing program authorized in chapter 43.--- RCW (the new chapter created in section 17 of this act). It is the legislature's intent to that the statewide tourism marketing program will induce more tourists to Washington who will spend their disposable income in this state, thereby increasing the state's economy and revenue to state and local governments. Additionally, the statewide tourism marketing program may increase spending by Washington residents through greater awareness and participation in festivals, activities, and events occurring outside their communities.

(2) The joint legislative audit and review committee shall conduct the study of the statewide tourism marketing program authorized in chapter 43.--- RCW (the new chapter created in section 17 of this act) and report on the effectiveness of the program in achieving these outcomes and the state's return on investment from the fees and charges authorized under sections 6 and 11 of this act.

(3) The report is due no later than December 1, 2022.

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