HOUSE BILL REPORT

HB 1935

BYRepresentatives Grant, Winsley, Wang, Nutley, Todd, Leonard, Scott, Nelson, Phillips and Locke

Providing funding for the housing trust fund from the state sales tax on lodging.

House Committe on Housing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (8)

      Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Winsley, Ranking Republican Member; Anderson, Ballard, Inslee, Rector and Todd.

Minority Report:  Without recommendation.  (1)

      Signed by Representative Padden.

House Staff:Kenny Pittman (786-7392)

AS REPORTED BY COMMITTEE ON HOUSING FEBRUARY 28, 1989

BACKGROUND:

The Washington State Housing Trust Fund was created in 1986 to assist in meeting the basic housing needs of low-income persons, persons in rural areas, and persons with special housing needs.  The Department of Community Development is responsible for the administration of the Housing Trust Fund program.

The Department of Revenue has determined that a retail sale includes the furnishing of lodging by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property.

The state requires the collection of a retail sales tax based on the percentage of the selling price.  The current state retail tax rate of 6.5 percent is imposed on lodging of a continuous period of less than 30 days.

SUMMARY:

SUBSTITUTE BILL:  The state's retail sales tax on lodging furnished by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property is extended from occupancies of a continuous period of less than 30 days to less than 90 days.

The revenue collected from the 6.5 percent retail sales tax shall be disbursed as follows:  (a) occupancies of a continuous period of less than 30 days shall be deposited into the state general fund, less the authorized two percent diversion by counties or cities for public stadiums, convention, performing arts, or visual art facilities; and (b) occupancies of a continuous period over 30 days, but less than 90 days shall be deposited into the Washington State Housing Trust Fund.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Clarification that counties and cities are still authorized to divert the two percent from the retail sales tax on lodging of a continuous basis of less than 30 days.

Revenue:    This bill has a revenue impact.

Fiscal Note:      Requested February 16, 1989.

House Committee ‑ Testified For:    Mike Ryherd, Washington Low Income Housing Congress; Tony Lee, Washington Association of Churches.

House Committee - Testified Against:      Rebecca Bogard, Washington State Lodging Association.

House Committee - Testimony For:    This is one approach to fund the state's housing trust fund.  The retail sales tax revenue generated from occupancies that exceed 30 days would be placed in the Housing Trust Fund.  The bill would have no impact on state revenue or local hotel/motel taxes. Low-income persons that reside in motels under rental agreements (single room occupancies) are covered under the state's landlord-tenant law.  This bill would not have an impact on them.

House Committee - Testimony Against:      The rest of the hotel industry is not as healthy as in Seattle. Most people that stay in hotels over 30 days usually enter into a lease, which would be exempt from the provisions of this bill. The legislation would cause a bookkeeping nightmare when trying to figure out the tax revenue.  Most long term occupancies in motels is by low-income persons. This bill would hurt the group it is trying to help.