Thursday, February 25, 2010

Washington State Legislature Under Reported Story HB 3027, Washington State Convention Center

Friday morning the Washington State House Finance Committed will vote to pass HB 3027 in executive session, it will pass, it is unlikely to be amended at this point. It will likely get to the House Floor and passed with little or no debate.

Because the state needs to take back its 2% tax credit, and wants to again take money from the Tax collected on hotels in Seattle to help balance the state budget. At issue here is the structure of the current law; Seattle hotels with more than 60 rooms charge 5% tax on top of the near 10% sales tax (yes, that is 10 AND 5% sales tax). The state credits the fund this tax goes into with a 2% tax credit, so, 7% feeds the fund.

In order to pass a bill and make law, not war, one side of the legislature (the House in this case) needs to pass a bill to the other side to be considered testimony/committee vote/ floor vote/maybe amended/maybe passed back to the other side to vote to accept changes... Friday is day 47 of the 60 day special session that ends on March 11th (tickity-tock, look at the clock).

Legislative time is short.

The fund pays the construction bonds and maintenance on the existing Washington State Convention Center. The Center would like to expand, depends on the funding structure to gain favorable borrow/bond rates for expanding. Changing the funding structure now would cause the cost of the money borrowed to go up.
The state does need to take the tax credit back.
The conflict is that the state took money from the fund two years ago for other state needs, that hurt the center's start on getting a start on expanding.

(emphasis mine)

"What we heard was this is a bad time for the state to be making a major investment like this, when we have a $9 billion state shortfall," Christison says ruefully. In fact, for the second year in a row, the Legislature instead purloined millions from the center's surplus funds-$65 million in fiscal 2008 and another $22 million in 2009-to help balance the state budget.

. . .

"It looks like at this point the convention center is a pretty self-sustaining business," says Sen. Tom. "Going forward, we want them to stand on their own." Overall, though, Tom says he believes the convention center and the Legislature will come to an agreement this year. "We're having very friendly conversations to work toward a mutually beneficial outcome. Obviously, the convention business is very important to our region, and downtown Seattle is a great place to come."
Mike Ullmann, Trading Spaces, Seattle Business Magazine

The state and the Seattle hoteliers have an agreement written as legislation that the state is attempting to rewrite.

Think about it this way, you own a business and are willing take on an added 5% on top of the existing high sales tax to set up a fund to build infrastructure that in tern generates more sales tax. Having this agreement with a public or private entity should not matter in understanding how attempting to rewrite the agreement, and rob from the existing fund, could be problematic for the other party (the state). The added infrastructure is a competitive advantage to the Seattle hotels. the tax is a competitive disadvantage. The state taking from that fund is all downside to that business, and it happens to be.

The hoteliers business partner is ripping them off. Everybody that steals has a good reason, right? If it were me ripping them off in this way then I would expect them to drag me into court, too.

Double-bonus, the money was collected in just Seattle and spread all over the state in the general fund. You are welcome, the rest of Washington State. If the entire state needs money by this method then tax ALL of the hotels in the state that extra 5%.

If the state could stop screwing Seattle for ten minutes (work that into your legislative calendar) I might use that time to see the state's side of the story.

So, the hoteliers in Seattle are actively taking the state to court. There is a settlement in the works between the state and the hoteliers. There could be a new multimillion dollar convention center built in downtown Seattle, or not. We have less than two weeks to go in this legislative session. Tens of millions of dollars are at stake. . .

This is not a newspaper, but one of the few places that have bothered to write a word about it.
Please read Mike Ullmann's Trading Spaces in Seattle Business Magazine.

The bill, HB 3027, is still Remarkibly Sparse.", and so is the reporting from "news" organizations.

Have a great day,
Mike Baker

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