HomeMy WebLinkAboutCOW 2018-09-10 Item 3A - Ordinance - Gambling Tax Increase by 1%COUNCIL AGENDA SYNOPSIS
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ITEM INFORMATION
ITEM No.
3.A.
STAFF SPoNSoit: VICKY CARLSEN
OitiGiN,\ I, AG NNDA DATE: 9/10/18
ACI.A;1).\ LH 1 THU; Amend
the Tukwila Municipal Code to increase the gambling tax by 1%.
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SPuNsoleS The Council is being asked to approve the ordinance amending TMC Chapter 3.08.030 to
SLMMARY increase the tax rate on gambling activites from 10% to 11%.
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Comm. E Public Safety Comm.
Comm. E Planning Comm.
CHAIR: QUINN
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COMMFITEE
RECOMMENDATIONS:
SPoNsoR/ADmIN.
Comml'Imv
Finance
Unanimous Approval; Forward to Committee of the Whole
COST IMPACT / FUND SOURCE
l'IXITINDITURI RE()_111RIM AMOUNT BUDGETED APPROPRIATION REQUIRED
$ $ $
Fund Source:
Comments:
MTG. DATE
RECORD OF COUNCIL ACTION
9/10/18
MTG. DATE
ATTACHMENTS
9/10/18
Informational Memorandum dated 8/22/18
Draft Ordinance
Ordinance #2349
Minutes from the Finance Com. Meeting of 9/5/18
9/17/18
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City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Rachel Bianchi
CC: Mayor Ekberg
DATE: August 22, 2018
SUBJECT: Proposed increase to city's gambling activities tax
ISSUE
The City Council is being asked to modify the Tukwila Municipal Code (TMC) to increase the
gambling activities tax on cardrooms by 1%.
BACKGROUND
In 2011 the City Council adopted ordinance 2349, which set the most recent tax rates for
gambling activities, which include bingo games, raffles, amusement games, punchboards, pull
tabs and cardrooms. The ordinance set a rate for each of these, with a three -tiered rate
structure for tax rates associated with card rooms:
• An initial rate of 10%
• When more than five are open the rate moves to 15%
• If more than six, the rate moves to 20%
Currently, there are five cardrooms in Tukwila, resulting in a 10% tax on the gross receipts of
each establishment. The City collected $3.8 million in gambling taxes in 2017.
DISCUSSION
The Administration proposes to raise the rate associated with cardrooms by 1%. Per the TMC,
gambling taxes are used primarily for public safety, which accounts for more than 56% of the
City's general fund. State law caps the tax on cardrooms at 20%.
Jurisdictions in the county vary as to how they regulate and tax card rooms, and many ban such
establishments all together. The City of Auburn has one of the lowest rates at 4%, and
according to staff research, the City of Redmond has the highest at 12%. Both the City of Kent
and King County levy the 11 % rate.
Staff estimates that a 1% increase in the tax levied on cardrooms would generate approximately
$350,000 in additional revenue in 2019. The City heads into the 2019/2020 budget process with
the reality that projected revenues will not meet expenditures. The Administration has directed
departments to reduce expenditures in the next biennium by 3%, but additional resources are
needed in order to provide the current level of City services. A small increase in the gambling
tax is an opportunity to help align revenues with expenditures in the coming biennium.
RECOMMENDATION
Council is being asked to approve the rate increase effective January 1, 2019 and forward this
item to the September 10, 2018 C.O.W. and subsequent September 17, 2018 Regular meeting
for adoption. This will allow sufficient time for notification to affected businesses.
ATTACHMENT
Draft ordinance
Ordinance No. 2349
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AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF TUKWILA, WASHINGTON, AMENDING ORDINANCE
NOS. 2349 §2 AND 1809 §1 (PART), AS CODIFIED AT
TUKWILA MUNICIPAL CODE SECTION 3.08.030, "TAX
RATES," TO INCREASE THE TAX ON CERTAIN
GAMBLING ACTIVITIES; REPEALING ORDINANCE NOS.
2230, 2150 AND 1891; PROVIDING FOR SEVERABILITY;
AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the social card rooms operating in Tukwila generate significant
gambling tax revenues for the City; and
WHEREAS, there is a cost to patrol and enforce City codes related to gambling;
and
WHEREAS, the more card rooms operated as a commercial stimulant, the more
City costs increase; and
WHEREAS, pursuant to the City Council's power to tax certain activities for
revenue purposes as set forth in RCW 9.46.110, the City Council now desires to
increase the tax levied on any social card room operated as a commercial stimulant,
upon certain conditions, by amending Tukwila Municipal Code (TMC) Section
3.08.030.A.4; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. TMC Section 3.08.030, "Tax Rates," Amended. Ordinance Nos.
2349 §2 and 1809 §1 (part), as codified at TMC Section 3.08.030, are hereby amended
to read as follows:
A. Pursuant to RCW 9.46.110 and RCW 9.46.120, as amended by the Laws of
Washington, effective July 27, 1997, there is levied upon all persons, associations and
organizations who have been duly licensed by the Washington State Gambling
Commission, as authorized by law, the following tax:
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1. Bingo games and raffles: To conduct or operate any bingo games and
raffles, a tax rate of 5% of the gross revenue received therefrom, less the actual amount
paid by such person, association or organization for or as prizes.
2. Amusement game: To conduct any amusement game, a tax rate of 2% of
the gross revenue received therefrom, Tess the actual amount paid by such person,
association or organization for or as prizes.
3. Punchboards or pulltabs: For the conduct or operation of any
punchboards or pulltabs, a tax rate of 5% of the gross receipts from such activities for
commercial stimulant operators (taverns, restaurants, etc.); and a tax rate of 10% on the
gross receipts less the amount paid out as prizes for charitable or nonprofit
organizations.
4. Social card games:
a. For the conduct or operation of any premises or facility used to play
social card games, a tax rate of 1-0% 11 % of the gross receipts received therefrom;
provided that when the number of card rooms in the City exceeds five, the tax rate shall
increase to 15% of the gross receipts received therefrom. Additionally, when the
number of card rooms exceeds six, the tax rate shall increase to 20% of the gross
receipts received therefrom.
b. For purposes of this provision, an operating business is defined as: a
business open to the public and engaged in the business of operating a social card
room for a period of 30 days. For purposes of this section, the 30 days are not required
to be consecutive days. After the 30 days of operations, which triggers the increased
tax rate, the Finance Director or his or her designee, shall notify the social card rooms
of the increased rate and that rate shall be paid thereafter by all card rooms in this tax
category, starting the financial quarter after notification.
B. Non -Profit Organizations.
1. No tax shall be imposed under the authority of TMC Chapter 3.08 on bingo
or raffles when such activities or any combination thereof are conducted by any bona
fide charitable or nonprofit organization as defined in RCW 9.46.0209, which
organization has no paid or management personnel, and has gross income from bingo
and raffles, or any combination thereof, not exceeding $5,000 per year, Tess the amount
paid for or as prizes.
2. The Finance Director may waive the tax due each quarter from a bona fide
charitable or nonprofit organization as defined in RCW 9.46.0209. This waiver may
occur only if the charitable or nonprofit organization demonstrates by clear and
convincing documentation that an amount equal to at least 70% of the tax due the City,
as computed pursuant to TMC Section 3.08.030, will be donated to charitable nonprofit
organizations serving the City whose purpose is to provide programs or facilities for
meeting the basic health, education, welfare, or other needs of the residents of the City.
Failure to donate at least 70% of the tax due the City will result in revocation of the
waiver and the disqualification of the bona fide charitable or nonprofit organization to
receive a waiver for future tax payments.
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Section 2. Repealer. Ordinance Nos. 2230, 2150 and 1891 are hereby repealed
in their entirety.
Section 3. Corrections by City Clerk or Code Reviser. Upon approval of the
City Attorney, the City Clerk and the code reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to
other local, state or federal laws, codes, rules, or regulations; or ordinance numbering
and section/subsection numbering.
Section 4. Severability. If any section, subsection, paragraph, sentence, clause or
phrase of this ordinance or its application to any person or situation should be held to be
invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
Section 5. Effective Date. This ordinance or a summary thereof shall be published
in the official newspaper of the City, and shall take effect and be in full force January 1,
2019.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of , 2018.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Rachel B. Turpin, City Attorney
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
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City of Tukwila
Washington
Ordinance No. 3 1-1
C[
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF TUKWILA, WASHINGTON, AMENDING ORDINANCE
NO. 1809 §1 (PART) TO REMOVE THE DISTINCTION
BETWEEN SOCIAL AND PUBLIC CARD ROOMS,
AMENDING VARIOUS ORDINANCES TO INCREASE
THE TAX ON CERTAIN GAMBLING ACTIVITIES UPON
CERTAIN TRIGGERS; AMENDING VARIOUS
ORDINANCES TO PROVIDE FOR INTEREST ON LATE
PAYMENT OF GAMBLING TAXES; PROVIDING FOR
SEVERABILITY; AND ESTABLISHING AN EFFECTIVE
DATE.
WHEREAS, on February 22, 2011, the Tukwila City Council passed Ordinance No.
2323, which allowed social/public card rooms citywide until December 31, 2015, after
which social/public card rooms conducted as a commercial stimulant would thereafter
be prohibited effective January 1, 2016; and
WHEREAS, the social card rooms operating in Tukwila generate significant
gambling tax revenues for the City; and
WHEREAS, there is a cost to patrol and enforce City codes related to gambling;
and
WHEREAS, the more card rooms operated as a commercial stimulant, the more
City costs increase; and
WHEREAS, pursuant to the City Council's power to tax certain activities for
revenue purposes as set forth in RCW 9.46.110, the City Council now desires to
increase the tax levied on any social card room operated as a commercial stimulant,
upon certain conditions, by amending Tukwila Municipal Code (TMC) Section
3.08.030.A.4; and
WHEREAS, the City desires to make its code consistent with state law regarding
the class of taxpayers for each gambling activity; and
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WHEREAS, state law does not distinguish between social and public card rooms,
for taxation purposes;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. TMC Section 3.08.010, "Statutory Provisions Incorporated by
Reference," Amended. Ordinance No. 1809 §1 (part), as codified at TMC Section
3.08.010, is hereby amended to read as follows:
The provisions of Chapter 218, Laws of Washington, 1973 First Extraordinary
Session, as amended by Chapters 135 and 155, Laws of Washington, Third
Extraordinary Session 1974, are incorporated in total by reference as though fully set
forth, and in particular, the definitions as contained in Section 2, Chapter 218, Laws of
1973, First Extraordinary Session, as amended, relating, among others, to "amusement
games," "bingo," "raffles," "gambling," "punchboards," "pulltabs," and "social card
games."
Section 2. TMC Section 3.08.030, "Tax Rates," Amended. Ordinance Nos.
2230 §1, 2150 §1, 1891 §1 and 1809 §1 (part), as codified at TMC Section 3.08.030,
are hereby amended to read as follows:
A. Pursuant to RCW 9.46.110 and RCW 9.46.120, as amended by the Laws of
Washington, effective July 27, 1997, there is levied upon all persons, associations and
organizations who have been duly licensed by the Washington State Gambling
Commission, as authorized by law, the following tax:
1. Bingo games and raffles: To conduct or operate any bingo games and
raffles, a tax rate of 5% of the gross revenue received therefrom, less the actual amount
paid by such person, association or organization for or as prizes.
2. Amusement game: To conduct any amusement game, a tax rate of 2% of
the gross revenue received therefrom, less the actual amount paid by such person,
association or organization for or as prizes.
3. Punchboards or pulltabs: For the conduct or operation of any punchboards
or pulltabs, a tax rate of 5% of the gross receipts from such activities for commercial
stimulant operators (taverns, restaurants, etc.); and a tax rate of 10% on the gross
receipts less the amount paid out as prizes for charitable or nonprofit organizations.
4. Social card games:
a. For the conduct or operation of any premises or facility used to play
social card games, a tax rate of 10% of the gross receipts received therefrom; provided
that when the number of card rooms in the City exceeds five, the tax rate shall increase
to 15% of the gross receipts received therefrom. Additionally, when the number of card
rooms exceeds six, the tax rate shall increase to 20% of the gross receipts received
therefrom.
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b. For purposes of this. provision, an operating business is defined as: a
business open to the public and engaged in the business of operating a social card
room for a period of 30 days. For purposes of this section, the 30 days are not required
to be consecutive days. After the 30 days of operations, which triggers the increased
tax rate, the Finance Director or his or her designee, shall notify the social card rooms
of the increased rate and that rate shall be paid thereafter by all card rooms in this tax
category, starting the financial quarter after notification.
B. Non -Profit Organizations.
1. No tax shall be imposed under the authority of TMC Chapter 3.08 on bingo
or raffles when such activities or any combination thereof are conducted by any bona
fide charitable or nonprofit organization as defined in RCW 9.46.0209, which
organization has no paid or management personnel, and has gross income from bingo
and raffles, or any combination thereof, not exceeding $5,000 per year, less the amount
paid for or as prizes.
2. The Finance Director may waive the tax due each quarter from a bona fide
charitable or nonprofit organization as defined in RCW 9.46.0209. This waiver may
occur only if the charitable or nonprofit organization demonstrates by clear and
convincing documentation that an amount equal to at least 70% of the tax due the City,
as computed pursuant to TMC Section 3.08.030, will be donated to charitable nonprofit
organizations serving the City whose purpose is to provide programs or facilities for
meeting the basic health, education, welfare, or other needs of the residents of the City.
Failure to donate at least 70% of the tax due the City will result in revocation of the
waiver and the disqualification of the bona fide charitable or nonprofit organization to
receive a waiver for future tax payments.
Section 3. TMC Section 3.08.080, "Payment of Tax — Penalty for Late
Payments," Amended. Ordinance Nos. 2323 §3 and 1809 §1 (part), as codified at
TMC Section 3.08.080, are hereby amended to read as follows:
A. The tax imposed by this chapter shall be due and payable in quarterly
installments, and remittance therefor shall accompany each return and be made on or
before the last day of the month following the quarterly period in which the tax accrued.
B. If a person subject to this tax fails to pay any tax required by this chapter within
15 days after the due date thereof, there shall be added to such tax a penalty of 10% of
the tax per month for each month overdue, which shall be added to the amount of the
tax due.
Section 4. Corrections by City Clerk or Code Reviser. Upon approval of the
City Attorney, the City Clerk and the code reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to
other local, state or federal laws, codes, rules, or regulations; or ordinance numbering
and section/subsection numbering.
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Section 5. Severability. If any section, subsection, paragraph, sentence, clause or
phrase of this ordinance or its application to any person or situation should be held to be
invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
Section 6. Effective Date. This ordinance or a summary thereof shall be published
in the official newspaper of the City, and shall take effect and be in full force five days
after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWI , WASHINGTON, at
a Regular Meeting thereof this / cp.)day of .S'.o�i7�e y► /J2 , 2011.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, CMC, City CI'rsr
APPROVED AS TO FIRM BY:
Filed with the City Clerk:
Passed by the City Council:
Published:
11-11
Effective Date:
Shelle f. Kersla j City Attorney Ordinance Number: (9, 3 y 9
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City of Tukwila Public Notice of Ordinance Adoption for Ordinance 2349.
On September 19, 2011 the City Council of the City of Tukwila, Washington, adopted
the following ordinance the main points of which are summarized by title as follows:
Ordinance 2349: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 1809 §1 (PART) TO
REMOVE THE DISTINCTION BETWEEN SOCIAL AND PUBLIC CARD ROOMS,
AMENDING VARIOUS ORDINANCES TO INCREASE THE TAX ON CERTAIN
GAMBLING ACTIVITIES UPON CERTAIN TRIGGERS; AMENDING VARIOUS
ORDINANCES TO PROVIDE FOR INTEREST ON LATE PAYMENT OF GAMBLING
TAXES; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE
DATE.
The full text of this ordinance will be provided upon request.
Christy O'Flaherty, CMC, City Clerk
Published Seattle Times: September 22, 2011
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City of Tukwila
City Council Finance Committee
FINANCE COMMITTEE
Meeting Minutes
September5, 2018 - 5:30 p.m. - Hazelnut Conference Room, City Hall
Councilmembers: De'Sean Quinn, Chair; Dennis Robertson, Kate Kruller
Staff: David Cline, Brandon Miles, Rachel Bianchi, Leon Richardson, Jay Wittwer, Peggy
McCarthy, Vicky Carlsen, Aaron Williams, Wynetta Bivens, Richard Takechi, Jeff
Friend, Derek Speck, Olin Johansen, Anthony Murietta, Laurel Humphrey
Guest: Andrea Reay, Seattle Southside Chamber of Commerce
CALL TO ORDER: Committee Chair Quinn called the meeting to order at 5:30 p.m.
I. PRESENTATIONS
II. BUSINESS AGENDA
A. Ordinance: Amending Gambling Tax
Staff is proposing an amendment to the Tukwila Municipal Code to increase the gambling
activities tax on cardrooms from 10% to 11%. There are currently four cardrooms in Tukwila,
and there is a provision in the code that the rate would become 15% when more than five are
operating. Gamblingtaxes are used primarily for public safety, and state law caps the tax at20%.
Jurisdictions vary on regulation of card rooms. Auburn has a rate of 4% and Redmond has 12%.
Kent and King County are at 11%. The proposed 1% increase would generate approximately
$350,000 in additional revenue. Committee members briefly discussed the proposal and
decided to forward the item for full Council discussion with no recommendation. NO
RECOMMENDATION. FORWARD TO SEPTEMBER 10, 2018 COMMITTEE OF THE WHOLE.
B. Employee Compensation Policy
Staff returned with policy recommendations in the areas of above and below market
adjustments, comparable cities, compression, recruitment incentives, and compensation
review process for non -represented employees. The committee discussed these items and
requested the policy return to committee with additional information as follows:
Market Competitiveness: No recommendation. The three proposals will be discussed at a future
meeting.
Compression: Retain current language in Resolution 1796.
Comparability: Prepare resolution showing both options 1 and 2 in context. Update Table B-1
with the following:
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