King County restaurant tax — what’s next?

During the mid 90s, the Legislature authorized a number of taxes in King County to finance the construction and bond re-payment for the construction of the Kingdome, Safeco Field and Quest Field. Among the taxes is a 0.5% tax on the purchase of food and beverages in restaurants, bars, taverns and hotels (e.g. – the “restaurant tax”). The restaurant tax is exclusively dedicated to re-pay the bonds used to finance the construction of Safeco Field. Under the authorizing legislation, the restaurant tax sunsets upon the re-payment of the Safeco Field bonds, or 2015 , whichever comes first. Additional taxes on rental car and hotel/motel receipts were also used to finance the bonds, and have their own unique sunset clauses.

Projections have shown that the Safeco Field bonds will be fully paid during 2011, sparking debate over the potential use of these taxes for other purposes.  In recent years, proposals have surfaced to make the restaurant tax permanent and use the funds for health care, social services, housing and other similar uses. The WRA has been consistent over the past few years in its position:

·    Under no circumstances can the WRA support the restaurant tax continuing beyond 2015.
·    If the tax continues until 2015, the use of the funds from the restaurant tax must have a direct nexus to tourism, arts, economic development and/or the hospitality sector in King County.

Unless a proposal meets these two tests, the WRA supports the tax expiring upon repayment of the bonds.

Late last year, King County Executive Dow Constantine reached out to the WRA to understand our concerns and examine whether a proposal could be developed that meets our needs. The Executive emerged with HB 1997, which would:

·    Extend the restaurant tax until 2015
·    Funds from the tax would be invested in tourism, economic development and expansion of the Washington State Convention and Trade Center. A small portion of funds could be used for affordable housing.
·    Extend the tax on rental car receipts beyond the repayment of the Safeco Field bonds.

Despite support from the Seattle Chamber, the Seattle Hotel Association, the WRA, 4 Culture and other groups, the bill has met stiff resistance in the legislative process. The primary argument used by opponents is that the Legislature promised taxpayers that these taxes would “go away” when the bonds were retired. The media, and others, have been repeatedly reminding lawmakers of the heated debates that occurred over the public funding of the stadiums, and argue that lawmakers should adhere to the promise made to the citizens at the time the projects were initiated. The message is resonating. Additionally, the rental car industry is objecting strenuously to the extension of the tax on their receipts (perhaps justifiably since HB 1997 extends the rental car tax indefinitely).

Earlier in the session, HB 1997 passed the House on a mostly partisan 55-42 vote; however, on Friday, April 1 the bill failed to garner the necessary 12 votes needed to pass out of the Senate Ways and Means Committee before the fiscal committee cut-off. In committees, the rules of process stipulate that a bill must be passed from a committee with a majority of members of the committee signing the bill sheet before the end of the legislative day. On April 1, two members were absent from the Senate Ways and Means Committee – and only 11 members signed the bill out of committee. Despite efforts by King County’s team to locate the missing members, the bill failed to get the requisite number of signature by the cut-off deadline. Accordingly, the bill is considered dead for the session.

However, no bill that has the interest of legislative leadership is ever really dead while the Legislature is in session. We believe that the King County Executive and legislative leadership will try to find a way to resurrect the bill, perhaps by amending another bill that is currently working through the process, or, heaven forbid, by bringing it back in a special session if one is necessary to complete a budget. The WRA will continue to work closely with the bill’s proponents to ensure that if a final bill emerges, it does not deviate from WRA’s principals.

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