HOUSE BILL REPORT

HB 1116

BYRepresentatives Zellinsky, Schmidt, Nutley, Pruitt, Sayan, Kremen, Haugen, Ballard, Vekich, Peery, Cooper, R. Meyers, Betrozoff, Rayburn, Doty and Morris

Allowing specified counties to collect an additional tax on lodging for tourism promotion.

House Committe on Local Government

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (14)

      Signed by Representatives Haugen, Chair; Cooper, Vice Chair; Ferguson, Ranking Republican Member; Horn, Nealey, Nelson, Nutley, Phillips, Raiter, Rayburn, Todd, Wolfe, Wood and Zellinsky.

House Staff:Steve Lundin (786-7127)

AS REPORTED BY COMMITTEE ON LOCAL GOVERNMENT FEBRUARY 14, 1989

BACKGROUND:

A variety of excise taxes have been authorized to be imposed on hotel and motel room rentals for various purposes, as follows:

(1)  Any county or city may impose an excise tax of not to exceed two percent on hotel and motel room rentals.  This tax is a credit against the state sales tax on such room rentals. Receipts from this tax may be used for: (a) the costs of constructing or operating stadium facilities, convention center facilities, performing arts center facilities, or visual arts center facilities; (b) publicity to attract visitors and encourage tourist expansion; (c) the expansion of tourism in distressed areas; (d) refurbishing and operating a steam railway for tourism promotion purposes; or (e) by any city or county bordering on Grays Harbor County for the construction and operation of a movable tall ships tourist attraction.

(2)  The state of Washington imposes excise taxes on hotel and motel room rentals to finance the state convention center as follows: (a) six percent in Seattle: (b) two and four-tenths percent everywhere else in King County; and (c) no tax elsewhere in the state.  Provisions are made to increase the rate in Seattle to seven percent and two and eight-tenths percent elsewhere in King County, commencing on January 1, 1993, and to reduce the rates to six percent in Seattle and two and four- tenths percent elsewhere in King County upon a finding that the receipts from these tax rates exceed a certain amount.  This tax is in addition to the state and local sales taxes on room rental charges.

(3)  A city (i.e., Bellevue) that incorporated before January 1, 1982, that has a population of over 60,000 and is located in a county with over one million population (i.e., King County), other than the city of Seattle, may impose an excise tax on hotel and motel room rentals of not to exceed three percent to be used exclusively for the acquisition, design, and construction of a convention and trade center.  This tax is in addition to the state and local sales taxes on room rental charges.

(4)  Pierce County, and the cities in Pierce County, are authorized to impose an additional excise tax of not to exceed two percent on hotel and motel room rentals.  Receipts from these taxes may be used only for visitor and convention promotion and development.  This tax is in addition to the state and local sales taxes on room rental charges.

(5)  The City of Ocean Shores is authorized to impose an excise tax on hotel and motel room rentals of up to three percent for any purpose.  This tax is in addition to the state and local sales taxes on room rental charges.

(6)  Pierce County is authorized to impose an excise tax on hotel and motel room rentals of up to three percent for constructing and operating an indoor aquatic facility.  This tax is in addition to the state and local sales taxes on room rental charges.

(7)  Thurston County is authorized to impose an excise tax on hotel and motel room rentals of up to three percent for an Olympic academy facility.  This tax is in addition to the state and local sales taxes on room rental charges.

(8)  Complicated general wording that only describes Yakima County, authorizes this county, and under certain circumstances the cities in this county, to impose excise taxes on hotel and motel room rentals of up to two percent for any purpose.  This tax is in addition to the state and local sales taxes on room rental charges.

(9)  A public facilities district may be established in any county with at least 300,000 population, that is located at least one hundred miles from any county in the state in which the state has constructed and owns a convention center, i.e., in Spokane County.  Such a district can impose a variety of taxes to construct and operate convention, sports, entertainment, trade, and related facilities.  The taxes include an excise tax on hotel and motel room rentals of up to two percent.  This tax is in addition to the state and local sales taxes on room rental charges.

SUMMARY:

SUBSTITUTE BILL:  A county, and any city or town in the county, may impose an excise tax of up to two and one-half percent on hotel/motel room rental charges if:  (1) an organization that is devoted exclusively to promoting tourism throughout the county exists as of June 1, 1989; and (2) no other hotel/motel room rental charge tax has been authorized to be imposed in the county, city or town, other than the general room rental charge tax that is a credit against the state sales tax.  This new tax is in addition to the state and local sales taxes on room rental charges.

Any county imposing this tax must give a credit for a similar tax imposed by a city or town in the county.  Receipts from the tax may be used only to promote tourism and conventions in the county, city or town.  No tax receipts may be expended unless all jurisdictions in the county that are imposing the tax agree on a single entity to expend the funds.  The county, cities and towns may contract with a private non-profit group to engage in such promotional activities.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The tax rate was clarified.  Instead of listing several counties that could impose the tax, more general language was used.  Instead of having the taxes imposed for a private, non-profit entity to expend for tourism promotion purposes, the county or city can expend the receipts for such purposes, or contract with a private non-profit entity to engage in such activities on their behalf.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Donna Cantonwine and Jan Larsen, Vancouver Chamber of Commerce; Clyde Stricklind and Mim Heuss, Kitsap County Visitors and Convention Bureau; and Becky Bogart, Washington State Lodging Association.

House Committee - Testified Against:      Ted Heck, Washington Resorts and Private Parks.

House Committee - Testimony For:    We need this.  Except for those few areas with special hotel/motel taxes, our taxes on hotel/motel rooms are very low.  This is for the benefit of promoting tourism.

House Committee - Testimony Against:      There is no question that ongoing and significant state and local level promotional efforts are needed to sustain and increase this important economic sector.  However, a much fairer funding alternative is needed.