HomeMy WebLinkAboutReg 2011-09-19 Item 5C - Ordinance - Gambling Tax Increase on Social Card RoomsCOUNCIL AGENDA SYNOPSIS
Initial. ITEMNO.
Meetiizg Date Prepared by Mag o s review Cotiici�-reliew
08/22/11 MH
09/12111 MH 5 C
09/19/11 MH
ITEM INFORMATION
I CAS NUMR]3R: 11-085 STAFF SPONSOR: ORIG INiV_ AGI_NDA DAT1_: 8/22/11
AGi 1 Trrul, Gambling tax rate increase based on the number of social card rooms in the City.
C. \7'I )Itl' M DiJ'cud:4071 Motion Resolution ❑X Ordinance Bid..A) and Public Hearing Otber
9/12/11
1418 Dote 8122111 Mtg Date Mtg Date [lltg Date9 19 1Mt Date [Vltg Date Mtg Date
SP( )NSO'R Council Mayor HR DCD .Finance .Fire IT P &R Police PW
SPONSOR'S Ordinance 2323 required all commercial social card rooms to cease operation by January 1,
SUMMARY 2016. At the August 8, 2011 Committee of the Whole meeting, the Council asked staff to
draft an ordinance based on a taxing structure to be based on the number of social card
rooms within the City.
RI xII?WI ?D Rl' cow Mtg. CA &P Cmte F &S Cmte Transportation Cmte
Utilities Cmte Arts Comm. Parks Comm. Planning Comm.
DATE: COMMITTEE CHAIR:
RECOMMENDATIONS:
SPONSOR /.ADMIN. City Attorney /City Council
CO)MM1 .I°r11", Forward Issue to Committee of the Whole
COST IMPACT FUND SOURCE
EXPI1NDI'I'URI:Ri? uIIZI?D AMOUNTBUDGETED APPROPRIATION REQUIRED
$2.1 million $0
Fund Source:
Colninents: Retains the existing revenue stream from gaming uses
MTG. DATE I RECORD OF COUNCIL ACTION
8/22/11 Forward to the 9/12/11 Committee of the Whole Meeting
9/12/11 Foward to the next Regular Meeting
MTG. DATE I ATTACHMENTS
8/22/11 I Informational Memorandum dated 8/16/11
Ordinance in draft form
9/12/11 Informational Memorandum dated 9/7/11
Ordinance in draft form
9/19/11 Ordinance in final form with amendments from September 12, 2011 Council meeting
Informational Memorandum dated 8/15/11
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City of Tukwila
Jim Haggerton, Mayor
INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
City Council
FROM: Shawn Hunstock, Interim City Administrator
DATE: September 15, 2011
SUBJECT: Gambling Tax Late Payment Penalty Rate
ISSUE
Should the City change the current lump -sum penalty for late payment of gambling
taxes to a percentage that would continue to be applied monthly until the tax is paid in
full?
BACKGROUND
Tukwila Municipal Code Section 3.08.080 currently provides for a lump -sum penalty of
10% of the tax due for the first 17 days of delinquency and 15% for 18 or more days of
delinquency.
DISCUSSION
Under the current gambling tax penalty provisions, a hypothetical casino that might owe
$200,000 in delinquent taxes would owe a lump -sum penalty of $20,000 (10 for 1 -17
days of delinquency, or $30,000 (15 for 18 or more days of delinquency. The penalty
does not compound each month, it is strictly a one -time lump -sum penalty for the
delinquent taxes due.
As a deterrent to businesses to not pay their taxes, staff is proposing a late fee structure
similar to other sections of the TMC whereby the amount of the penalty compounds
each month for unpaid debts owed the City. For instance, assuming a penalty rate of
10% with the example of an outstanding tax due of $200,000, the penalty due the first
month would be $20,000, the second month would be $22,000, the third month would
be $24,200 and so on. Such a penalty would encourage businesses to pay the taxes in
a timely manner and would improve the City's cash flows and earnings potential. These
proposed changes are identified in strikethrough underline format on the attached
ordinance.
RECOMMENDATION
Staff is recommending adopting the change in penalty rates for delinquent gambling
taxes.
ATTACHMENT
Draft Ordinance
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Washington
Ordinance N®.
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," "punch boards," "pulltabs," and "social card
games.," and "public card rooms."
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,
rooms in the ity an operatina business is defined as: a business open to the public
and enaaaed in the business of operatina 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, a—o Ti of onnu pane„ is issue 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 subiect to this tax fails to pav anv tax reauired 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. T#eF s be add a pena f or due if S Gh eRt i RO t
made by the d date thereof as fellows:
I
1 n �cromp sum pena eq to 10% o d with a MiniM Um of $2
for the first 17 days' delinq enGy;
i
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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.
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 TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of 2011.
ATTEST /AUTHENTICATED:
Christy O'Flaherty, CMC, City Clerk
APPROVED AS TO FORM BY:
Shelley M. Kerslake, City Attorney
Jim Haggerton, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
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