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Tue., June 18, 2013

Editorial: Lodging tax needs better oversight, accounting

The state budget may sunset June 30, but not the lodging tax that promotes or sustains many of tourism-related events and facilities in Washington.

The Legislature has already overwhelmingly approved, and Gov. Jay Inslee has signed, a bill that allows cities and counties to collect two sales taxes of up to 2 percent each on overnight accommodations. Because the state stopped funding tourism promotion two years ago, the levy has become more important than ever.

The law needed changing.

Washington cities collected $36 million in lodging taxes in 2011, counties about the same amount. Businesses that pay the tax can use it as an offset against state taxes.

Spokane’s lodging revenues support many sports and cultural events and, with the approval of voters last fall, expansion of the Convention Center. In fact, the Public Facilities District gets most of the $2 million-plus the twin taxes generate.

But since its inception to help finance the late, unlamented Kingdome, more and more questions have been asked about whether the funds were effectively promoting more “heads in beds.” The Legislature expanded the qualifying uses in 2007, with a requirement the Joint Legislative Audit and Review Committee come back with a report in 2012 on compliance.

There was no study.

The reporting from local governments was so sporadic and so unreliable, the committee could not do an analysis. Cities and counties were not collecting information on tourist spending, so they could not estimate the impact of the lodging tax money. Some jurisdictions were overriding the recommendations of local lodging tax advisory commissions that review applications for grants.

Spokane Valley, for example, has twice insisted on funding Valleyfest despite a recommendation the event receive no money. Festivals are popular with local officials, but they attract few overnight visitors to the hotels collecting the lodging tax.

From now on, all applicants – including festivals – must go through the local committees. They must estimate how their event will increase overnight stays, attract visitors from more than 50 miles away, or those from out of state, or out of the country.

Local jurisdictions can distribute money only to applicants approved by committee. And the recipients must prepare a publicly available report after their event that accounts for those visitors.

Those reports will go to JLARC, which will summarize the information for the Legislature.

The people of Washington deserve that kind of accounting. Many do not stay in hotels or RV parks, and so do not pay the tax directly. But those revenues offset payments to the state, so every taxpayer is entitled to know how that money is being used, even if the roughly $70 million is modest compared to a state budget of $33 billion.

These are head counts worth taking.

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Members of The Spokesman-Review editorial board help to determine The Spokesman-Review's position on issues of interest to the Inland Northwest. Board members are:

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