Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Community Development, Housing & Tribal Affairs Committee

HB 1123

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 Description: Concerning tourism marketing.

Sponsors: Representatives Condotta, Ryu, Barkis, Kirby, Wilcox, Tarleton, McBride, Smith, Muri, Frame, Tharinger, Morris and J. Walsh.

Brief Summary of Bill

  • Creates the Washington Tourism Marketing Authority to manage financial resources for the development of a statewide tourism marketing plan.

  • Directs 0.1 percent of retail sales taxes collected on lodging, car rentals, and restaurants to fund the implementation of the statewide tourism marketing plan.

  • Requires JLARC to complete an evaluation of the Authority.

Hearing Date: 1/25/17

Staff: Kirsten Lee (786-7133).

Background:

State Tourism.

The State Tourism Commission (Commission) was created in 2007 to direct the state tourism program administered through the Department of Commerce (Department). The Commission was comprised of public and private industry representatives and was directed to promote and expand the state tourism industry. The Commission could raise funds and owned an account.

The Legislature terminated the State Tourism Program and the Commission at the end of the 2009-11 biennium. In the same year, the Washington Tourism Alliance (WTA) was formed to assume official state tourism marketing and promotion activities. The WTA is a private nonprofit organization comprised of members of the state tourism industry. The WTA receives funding from its members. Among its activities, the WTA operates a state tourism website, publishes the official state tourism guide, and holds an annual tourism summit.

In 2014 the Legislature directed the WTA to propose a private funding mechanism for a state tourism marketing program, including how revenues would be allocated and collected from each tourism industry sector. The Departments of Revenue (DOR), the Department, the Office of the State Treasurer, and the Office of the Secretary of State (OSOS) were required to assist the WTA in developing the funding mechanism. The WTA was also directed to propose a governance structure that includes a board representing the five industry sectors as well as destination marketing organizations.

Sales and Use Tax.

Retail sales taxes are imposed on retail sales of most articles of tangible personal property, digital products, and some services. A retail sale is a sale to the final consumer or end user of the property, digital product, or service. If retail sales taxes were not collected when the user acquired the property, digital products, or services, then use taxes apply to the value of property, digital product, or service when used in this state. The state, most cities, and all counties levy retail sales and use taxes. The state sales and use tax rate is 6.5 percent; local sales and use tax rates vary from 1.0 percent to 3.3 percent, depending on the location.

Joint Legislative Audit and Review Committee (JLARC).

The Joint Legislative Audit and Review Committee (JLARC) is comprised of an equal number of House and Senate members, Democrats and Republicans. The non-partisan staff of the JLARC conduct performance audits, program evaluations, sunset reviews, and other analyses assigned by the Legislature and the Committee itself.

Summary of Bill:

The Washington Tourism Marketing Authority (Authority) is established as a public entity to manage state revenues and contract for statewide tourism marketing services. The Authority receives administrative support from the Department, and is governed by a board of directors (Board) comprised of 13 voting members:

The Director of the Department appoints all voting, non-legislative representatives of the board, and must take into consideration contributions of a particular industry, and accept and consider nominations from a tourism industry or related business when making appointments. The chair of the board must be a member from a tourism industry or related business.

A nonvoting advisory committee to the board is also established. The advisory board consists of:

Appointments must reflect diversity in geography, business size, gender, and ethnicity. Appointments last for four years, though initial appointments are staggered between two and four year terms. Board members are not compensated, but may be reimbursed for expenses.

Statewide Tourism Marketing Account.

The Statewide Tourism Marketing Account (Account) is created in the custody of the state treasurer, as an appropriated account. Expenditures from the account may only be made by the chair of the Authority or the chair’s designee for allowable expenses related to implementation of the statewide tourism program. Allowable expenses include:

Expenditures may only be made when a two-to-one private to state match has been provided.

At the end of the 2017-2019 biennium, all revenues that remain in the Account that are not matched by private funds will revert back to the General Fund.

Sales and Use Tax.

Beginning July 1, 2017, 0.1 percent of taxes collected on retail sales of lodging, car rental, and restaurants must be deposited into the Statewide Tourism Marketing Account, up to five million dollars per biennium. Funds collected are subject to private matching funds prior to expenditure.

Joint Legislative Audit and Review Committee (JLARC).

The JLARC must evaluate the performance of the Authority, and report back to the Governor and economic development committees of the Legislature by December 1, 2020, to determine the extent to which the Authority contributed to the growth of the tourism industry and economic development of the state.

By December 1, 2018, the Authority must provide an interim report to the Governor and economic development committees of the Legislature, reporting its progress in implementing a statewide tourism marketing program.

Appropriation: None.

Fiscal Note: Requested on January 19, 2017.

Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.