Washington State Opinion

Pierce County Washington is considering adding another hotel tax to your hotel bill

So, if hotel costs and taxes are too much in Pierce County -it follows, just visit Astoria Oregon for your tour trip – as a result, your hotel bill just might cost less?

Astoria Oregon, Old Riverfront Trolley, now that is a ‘tourism’ reason to visit.

Current and past news stories

Article by David Wicker, Government, Council OKs 1.25 percent cut, (Pierce county: Final action on budget expected next week) The News Tribune (Tacoma) 10 June 2009, (“HOTEL FEES A group of local hotel owners wants Pierce County to impose room fees ranging from 50 cents to $1.50 a night to fund tourism promotion.”) available at http://www.thenewstribune.com/news/government/story/773515.html (last visited 10 June 2009) describes the new proposed tax or “room fees”. (Note: My comment has been removed from this The Tacoma News Tribune article comments -for example, see with comments wording replaced: “johnesherman wrote on 06/10/2009 05:15:22 AM: johnesherman’s comment is abusive and has been removed.” ).

So, let Pierce County impose more ‘Citizens’ taxes related to people that pay bills for hotels and motels -as a result, it is our choice to just tour some-place-else that has less taxes like Astoria Oregon.

Let’s review older stories that also present this room fee (new tax) idea; for example, see David Wickert, Political Buzz, Plan would boost hotel charges to pay for tourism promotion, the News Tribune (Tacoma) 20 May 2009 (with comments) available at http://blogs.thenewstribune.com/politics/2009/05/20/plan_would_boost_hotel_charges_to_pay_fo (last visited 10 June 2009). So, let’s re-read this past article and read the comments posted to this article – it follows, just to understand some past history related to this proposed new Pierce County room fee (I still call it a new tax). See also, David Wickert, Government, Pierce County hotel owners seek new fee to promote tourism, The News Tribune (Tacoma), 21 May 2009, (“[P]ierce county: Council to consider petition to fund tourism promotion with added room charge”) available at http://www.thenewstribune.com/news/government/story/749876.html (last visited 10 June 2009).

What fee is proposed to be charged where in Pierce County?

Let’s take a look at Pierce County Resolution No. R2009-32, (Adopted 19 May 2009) (Adobe PDF document) available at http://www.mrsc.org/ords/P5r2009-32.pdf (last visited 18 June 2009), and presented within this document is the occupied room fee Special Assessments imposed per occupied room per day at these defined location areas:

• Tacoma — $1.50
• Fife, Puyallup, Lakewood — $1.00
• City of Sumner, Gig Harbor, Dupont, and Pierce County — $0.50

Therefore this Pierce County Council resolution appears to provided the largest economic money collection benefit to City of Tacoma.

What is the difference between ‘fee’ and ‘tax’ let’s take a simple review

Just a couple of simple definition the average person might appreciate to differentiating ‘fee’ from a ‘tax’¹

• Tax—The objective in assessing the tax is to generate revenue to be used for the needs of the public. compare with
• Fee—A fixed charge of perquisite charged as recompense for labor; reward, compensation, or wage given to a person for performance of service or something done or to be done.

So, what again is a lodging room ‘fee’ or as a restatement what does a lodging room ‘fee’ pay for what lodging room customer value added service received for the ‘fee”? Anybody know?

What do we know about taxes and lodging taxes already?

Some tabular data presented by the State of Washington, Department of Revenue, State of Washington
Taxpayer Account Administration, WASHINGTON STATE DEPARTMENT OF REVENUE LOCAL SALES TAX CHANGE, Pierce County Regional Transit Authority (RTA) Tax Reporting Change, State of Washington, Taxpayer Account Administration (Adobe PDF document) (“Effective April 1, 2009 lodging businesses located in Pierce County that have 26 or more rooms/spaces (or are located in Fife, Lakewood, Puyallup or Puyallup RDA) are not subject to the five-tenths of one percent (.005) increase in the RTA. Your jurisdiction’s combined rate (retail sales/lodging tax) is at the sales tax cap for your location code. The cap only applies to lodging sales.”) available at http://dor.wa.gov/Docs/Pubs/LocalSalesTaxChng/2009/sn_09_PierceCoRTA.pdf (last visited 10 June 2009). Therefore, we now know what the taxes and lodging taxes are that became effective 1 Apr. 2009.

Pierce County Washington does what for tourism with money already?

Pierce County Washington, Community Services, TOURISM PROMOTION PROGRAM (“GENERAL: The Pierce County Tourism Program is funded through a tax on lodging in hotels, motels, inns, Bed & Breakfasts, camps, and other tourism facilities in which guests stay for a short term. The tax produces approximately $400,000 annually which is allocated to activities that promote tourism in unincorporated Pierce County, and in the cities and towns of Bonney Lake, Carbonado, Edgewood, Fircrest, Milton, Orting, Roy, Ruston, South Prairie, Steilacoom, Sumner, University Place and Wilkeson. The cities of Buckley, Dupont, Eatonville, Fife, Gig Harbor, Lakewood, Puyallup, and Tacoma directly receive the taxes generated by tourism facilities located within their jurisdictions and are excluded from the Pierce County allocation. The 2010 application process is open from February 6, 2009 through March 6, 2009.”) available at http://www.co.pierce.wa.us/pc/abtus/ourorg/comsvcs/cd/tourism.htm (last visited 10 June 2009); as a result, we can see that Pierce County Community Services already is spending money on tourism related activities.

Lodging tax rules dicta

The Washington State Attorney General has done a review of how a municipality might spend lodging tax revenue: Authority of municipality to allocate lodging tax revenues to facilities in which the municipality has no ownership interest.² So, in summary this AGO opinion is this about spending lodging tax money:

1. A municipality lacks authority to allocate lodging tax revenue to operate a tourism-related facility in which the municipality has no ownership interest.

2. A municipality may not spend lodging tax revenue on operating expenses of special events and festivals designed to attract tourists where such events and festivals are operated by non-governmental entities.

3. A municipality may not provide advance payment to private organizations for tourism promotion; payment must occur after the services have been performed.

Justia US Laws provides comments related to Washington Revised Code RCW 67.28.1817: Lodging tax advisory committee³ that present:

(1) Before proposing imposition of a new tax under this chapter, an increase in the rate of a tax imposed under this chapter, repeal of an exemption from a tax imposed under this chapter, or a change in the use of revenue received under this chapter, a municipality with a population of five thousand or more shall establish a lodging tax advisory committee under this section. A lodging tax advisory committee shall consist of at least five members, appointed by the legislative body of the municipality, unless the municipality has a charter providing for a different appointment authority. The committee membership shall include: (a) At least two members who are representatives of businesses required to collect tax under this chapter; and (b) at least two members who are persons involved in activities authorized to be funded by revenue received under this chapter. Persons who are eligible for appointment under (a) of this subsection are not eligible for appointment under (b) of this subsection. Persons who are eligible for appointment under (b) of this subsection are not eligible for appointment under (a) of this subsection. Organizations representing businesses required to collect tax under this chapter, organizations involved in activities authorized to be funded by revenue received under this chapter, and local agencies involved in tourism promotion may submit recommendations for membership on the committee. The number of members who are representatives of businesses required to collect tax under this chapter shall equal the number of members who are involved in activities authorized to be funded by revenue received under this chapter. One member shall be an elected official of the municipality who shall serve as chair of the committee. An advisory committee for a county may include one nonvoting member who is an elected official of a city or town in the county. An advisory committee for a city or town may include one nonvoting member who is an elected official of the county in which the city or town is located. The appointing authority shall review the membership of the advisory committee annually and make changes as appropriate.

(2) Any municipality that proposes imposition of a tax under this chapter, an increase in the rate of a tax imposed under this chapter, repeal of an exemption from a tax imposed under this chapter, or a change in the use of revenue received under this chapter shall submit the proposal to the lodging tax advisory committee for review and comment. The submission shall occur at least forty-five days before final action on or passage of the proposal by the municipality. The advisory committee shall submit comments on the proposal in a timely manner through generally applicable public comment procedures. The comments shall include an analysis of the extent to which the proposal will accommodate activities for tourists or increase tourism, and the extent to which the proposal will affect the long-term stability of the fund created under RCW 67.28.1815. Failure of the advisory committee to submit comments before final action on or passage of the proposal shall not prevent the municipality from acting on the proposal. A municipality is not required to submit an amended proposal to an advisory committee under this section.

. . . .

What is known about Washington State lodging taxes?

The Association of Washington Cities (AWC) provides some insight into What cities and legislators need to know about the hotel-motel tax⁴ presents a good lodging tax summary; for example:

The hotel-motel tax is a tax imposed by cities and counties upon the sale of, or charge made for the furnishing of lodging. The tax applies to sales of lodging by a hotel, rooming house, tourist court, motel, or trailer camp, and the granting of any similar license to use real property. The occupancy of real property for a continuous period of one month or more is presumed to be a rental or lease of real property rather than a sale of lodging and therefore not subject to the tax.

The tax is collected by the seller of lodging and remitted to the Washington State Department of Revenue, which distributes the tax to the appropriate local government.

City of Tacoma in Pierce County spends its lodging tax collected revenues how?

Let’s see, so the questions have been asked to City of Tacoma; as a result, now just waiting for the revenue spending answers from City of Tacoma- it follows, to post the City of Tacoma lodging tax spending information right-here.

Still waiting e-mail answer to my Thursday 11 June 2009 e-mail questions to City of Tacoma that no reply has been received as of Friday 12 June 2009, and this e-mail questions presented this:

To: Robert.McNair-Huff@cityoftacoma.org
Subject: Where is the link to the “Washington Revised Code RCW 67.28.1817: Lodging tax advisory committee” for the City of Tacoma?
Date: Thu, 11 Jun 2009 07:47:10 -0700

Hi Robert,

Doing a simple search of the City of Tacoma website;p as a result, I can not find the standing committee as defined by RCW 67.28.1817 for “Lodging tax advisory committee” and how the lodging tax money collected within the City of Tacoma is spent and on what?

Can you help with this missing information that is difficult for me to locate from doing simple online search within the City of Tacoma website today?

Thanks for the missing information citation links.

Have a good day,

John Sherman
Tacoma WA

But, maybe it takes some time to gather the City of Tacoma public information so I will just wait for the reply e-mail City of Tacoma lodging tax information.

Now, Friday 12 June 2009 City of Tacoma has presented who, or which lodging tax committee, makes the lodging tax recomendations and where all the Tacoma lodging tax revenue is spent, so verbatim the reply e-mail says this:

Subject: Lodging tax advisory committee
Date: Fri, 12 Jun 2009 14:35:22 -0700

Mr. Sherman,

Thank you for your request. The “Lodging tax advisory committee” you asked about is currently called the Hotel/Motel Tax Advisory Committee. It is not a standing committee as it is only needed when we propose a new tax, increase the rate, repeal an excemption from the tax, or change the use of the revenue. We are currently using the revenue to pay bonds for the Greater Tacoma Convention Center. If you have any additional questions please let me know. Have a great weekend!

Thank you,

Jeff Chandler
Special Assistant to the City Manager
747 Market Street – 12th Floor
Tacoma, WA 98402

Therefore, my understanding is complete just-what City of Tacoma does with lodging taxes collected spending.

What amount of money is collected by City of Tacoma from lodging?

From old Washington State Department of Revenue reporting for Year 2007⁵ within Table 10: 2007 Annual Summary of Distributions of Lodging Taxes to Cities and Counties is Pierce County presented Tacoma total distribution as $3,167,257.11 and that did not include any Tourism Promotion Area revenue source. Therefore, I think that people that travel and have paid lodging taxes and have paid a-lot-of-money during Year 2007, but I do not have the current Tacoma dollars distribution for Year 2008?

Washington 2009-10 Legislative Session and local tourism promotion areas bills

Let’s take a look at what the Washington State 2009-10 Legislative Session is doing within House Bill 2SHB1290 HB 1290 – 2009-10: Concerning local tourism promotion areas looks-to-me that when 2SHB1290 becomes effective (Effective date 7/26/2009)⁶ maybe Pierce County is racing the formation of a tourism promotion areas, else some new tourism promotion areas rules might just apply?

State of Washington already has tourism promotion area rules

Let’s review a summary of some of these rules as defined within Wash. Rev. Code § 35.101 the Tourism promotion areas statutory compilations.⁷ So, let’s look at the summary titles:

RCW Sections
35.101.010 Definitions.
35.101.020 Establishment — Petition.
35.101.030 Resolution of intention to establish area — Hearing.
35.101.040 Limitations on area included — Interlocal agreements.
35.101.050 Lodging charge — Limitations.
35.101.055 Exemption — Temporary medical housing.
35.101.060 Notice of hearing.
35.101.070 Conduct of hearing — Termination of proceedings.
35.101.080 Establishment of area — Ordinance.
35.101.090 Administration, collection of lodging charge.
35.101.100 Local tourism promotion account created.
35.101.110 Charges are in addition to special assessments.
35.101.120 Charges are not a tax on sale of lodging.
35.101.130 Legislative authority has sole discretion concerning use for tourism promotion — Contracts for operation of area.
35.101.140 Disestablishment of area — Hearing — Resolution.

What has the State of Washington done for the industry of lodging?

We see that State of Washington had determined that Charges are not a tax on sale of lodging and spending of this collected not a tax money is spent as defined by 35.101.010(4) “Tourism promotion” means activities and expenditures designed to increase tourism and convention business, including but not limited to advertising, publicizing, or otherwise distributing information for the purpose of attracting and welcoming tourists, and operating tourism destination marketing organizations.

My opinion is this after some basic lodging taxes and fees use and proposed new fees

I think this -for example, the Pierce County lodging industry would like to get their hands on tourist money in addition to the normal inn public lodging charges and lodging taxes already collected that benefit the public supported tourist promotion cost; since the City of Tacoma’s lodging tax money is only providing support for Greater Tacoma Convention Center and not tourist project as promoted by private business or inns within the Pierce County area.

I think the average person might argue that lodging room ‘fees’ are really a form of ‘tax’ because the money that is paid to an innkeeper is absent defined consumer benefit services received for the money paid; therefore more like a ‘tax’ where the money is collected and spent for the tourism public good as determined by somebody else than the lodging ‘fee’ payor.

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Endnotes