This bill amends existing lodging tax laws to authorize and limit local lodging excise taxes and to expand taxing and fiscal authorities for public facilities districts (PFDs). It allows municipalities (cities and towns) to impose a municipal excise tax on lodging taxable under chapter 82.08 RCW, subject to a cap (the municipal rate may not exceed the lesser of 2% or a rate that, when combined with other listed lodging taxes, equals 12%), with taxes imposed in increments no smaller than tenths of a percent and with specific grandfathering rules tied to historical authorization dates. Counties that adopt county-level lodging taxes must grant a credit against the county tax for the full amount of any city or town tax imposed on the same taxable event. The act creates or clarifies PFD authority and limits. PFDs created coextensive with a county are municipal corporations and taxing authorities that may impose an excise tax on lodging (with a general exemption for premises with fewer than 40 units). A standard PFD excise tax may not exceed 2% and may be used only for acquiring, designing, constructing, remodeling, maintaining, equipping, repairing, and operating PFD public facilities, and may not be imposed until the district has approved the facility proposal. For PFDs created in very large counties (county population thresholds described), the bill authorizes replacement and additional lodging excise taxes for convention and trade center purposes with higher rate caps in specified geographic portions of the district (up to 7% in the largest-city portion, up to 2.8% in the remainder, and an additional up-to-2% tax only in the largest-city portion). Those additional taxes must be credited against state lodging tax liability, may only be imposed to pay or secure district obligations and to fund required payments to the state, and the additional-tax authority expires on the earlier of July 1, 2029 or when specified district obligations are fully satisfied. The bill establishes fiscal procedures and administrative rules for the PFD taxes: beginning the first full state fiscal year after a statutory “transfer date” (defined elsewhere in RCW 36.100.230), a PFD that levies the additional tax must transfer to the state on June 30th each fiscal year an annual payment equal to additional-tax revenues plus an interest charge based on one-half that amount times the prior calendar year’s average annual return of the Washington state local government investment pool; if a PFD cannot remit the full annual payment because revenues are needed for debt service, the unpaid portion is treated as a loan from the state and must be repaid under an agreement with the state treasurer executed prior to the transfer date, with a repayment interest rate described as the “twenty bond general obligation bond buyer index plus one percentage point.” The Department of Revenue must collect the taxes at no cost to districts and the state treasurer distributes proceeds; PFDs may pledge revenues to secure obligations, and while such pledges are in effect the legislature may not withdraw or modify the taxing authority or increase the annual payment amount. The bill also directs quarterly payments to certain cities that had previously authorized a short-term rental operator tax, requires PFD distributions to counties (50% of certain tax revenues) after city payments, deems certain taxes as having been imposed as of December 1, 2000 for RCW 82.14.410 purposes, and includes expiration and effective dates for specified sections (Section 3 expires July 1, 2035; Section 4 takes effect July 1, 2035). Important context is missing from the extracted text: the statutory “transfer date” definition is not included here, several referenced subsections and earlier sections are incomplete or not present, and the precise wording of the referenced interest index phrase is unclear.

If enacted, the bill lets cities, towns, and county-based public facilities districts (PFDs) charge new or higher taxes on hotel stays and many short-term rentals, with tighter caps and some targeted higher rates for PFDs in very large counties that run convention and trade centers. That will likely increase the price paid by guests and short-term rental customers in affected areas, while creating earmarked revenue streams PFDs can use to build, renovate, operate, or secure debt for public facilities. The Department of Revenue will collect these taxes at no cost to the districts, and PFDs must pass portions of some receipts on to the state each year and to counties or certain cities for affordable housing and community development programs. The entities most affected are PFDs (new revenue and new repayment obligations), counties and qualifying cities (new receipts but also new administrative conditions), and lodging operators and guests (higher tax burdens, with small premises and hostels largely exempted). PFDs gain the ability to pledge tax revenue to secure bonds, but they also face a binding annual transfer to the state and the risk of state loans if transfers fall short; any such loan obligations survive the expiration of the tax authority. Important implementation details that affect timing and enforcement—most notably the defined “transfer date” and some related subsections—are not included in the extracted text, so the precise start dates and certain limits are unclear.