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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Anonymous said...

so is keyarena legislation dead this session? (virtually a rhetorical question, but still worth asking)

Mr Baker said...

shorter= not yet

As badly as HB 2912 was butchered it might be better to let that thing die and try again next year if the Senate can not amend it to have the stadium tax actually pay for that type of infrastructure.

This year, like last year, they will not act on this legislation before they act on the budget bills.

Even looking at the cutoff calendar you can see that both the County-wide hotel tax bill, as well as the Convention Center hotel tax, are exempt from the cutoff because they both give back a sales tax credit.

the bill that could fund keyarena, king county arts, and workforce housing has already passed from one house to the other before cutoff 3/1. If you do not get your bill passed off the Floor to the other side by Monday you are done.
The convention center bill has to pass out of the house by tomorrow, or the state budget will be missing as least 9 million dollars this year.

The workforce housing bill has had a hearing and could be voted on in the Senate Ways & Means Committee, the bill that pays for it in King County, your bill HB 2912, has not had a hearing yet. The bill has been referred to that committee. They could have a hearing and move it to the Senate Floor as late as a week from next Monday.

The other bill that could fund workforce housing and arts is SB 6051 in the House Finance Committee. The arts community has hopes for that bill, but seeing how HB 2912 was handled I would not expect that to move unless the Senate WM Committee runs out of time and doesn't pass HB 2912

bmac said...

what was the bill that passsed already that can fund Key Arena,workforce housing and the arts?

Mr Baker said...

Mmmm, maybe SB 6051.
. HB 2912 passed from the House to the Senate Ways & Means Committee. It was stripped of Husky Stadium, and it is not likely able to fund KeyArena in its current form. The Senate could amend it.

The Senate Ways and Means Committee passed SB 6051 to the House Finance Committee. I think that bill could fund almost anything. I expect the House to amend it to death, or ignore it. I'll be shocked if they pass it as-is.

Read page 6, it says "professional sports" right in it.

Peter said...

"Mmmm, maybe SB 6051."

what about the fact that kohl-welles told me in an email that 6051 is for "arts and heritage programs only"?

"As badly as HB 2912 was butchered it might be better to let that thing die and try again next year if the Senate can not amend it to have the stadium tax actually pay for that type of infrastructure."

but don't they have to pass at least 6051 in order to extend the tax to act next year? if they let the tax die, won't it take a 2/3 majority to create new taxes. i know they suspended that rule, but i can already see the backlash now if they pass keyarena with just a simple majority. another thing to think about: how much longer will ballmer still be in if we tell him "no" again this year?

Peter said...

"This year, like last year, they will not act on this legislation before they act on the budget bills."

so if this gets done, it will get done the final week? how much times have we heard that before? the upside to that is if they pass it with no time left for the house to reamend it, the house will have to "take it or leave it." when do you think they will get done with byudget bills? the session ends march 12.

Mr Baker said...

I know what she told you, and it may be true, but Look at the bill, it was substituted on the Senate Floor to include Yakama (though they failed to revise the date for them, "clerical error". Read page 6, section (i) "ametuer and professional sports".

I do not expect that language to survive. So, how about we keep our mouths shut, cross our fingers, and see if anybody notices, you, me, and the growing masses that seam to be reading my blog.

Mr Baker said...

And, yes, last year SB 6116 showed up with a couple days to go and got in the calendar for a vote on the last day.

It is just bad manners, or poor form, to even take testimony on this bill before general fund bills.
Legislators are working really hard right now, and they will be in session tomorrow, trying to get the budget bills done.

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