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HomeMy WebLinkAbout1988-3104 AMENDING THE 1988 YAKIMA CITY BUDGET U����� � ORDINANCE NO. �� � ��u�^ AN ORDINANCE amending the 1988 budget for the City of Yakima; and making an appropriation of $37,955 in the General Fund for expenditure during 1388 for election costs. WHEREAS, the General Fund contains an unappropriated fund balance -~ available for appropriation as provided by this ordinance, and WHEREAS, the amount of $37,955 must be appropriated within the General Fund in order to provide funding for unanticipated general and special election costs, and WHEREAS, at the time of the adoption of the 1988 budget it could not reasonably have been foreseen that the appropriation provided for by this ordinance would be required; and the City Council finds that. an emergency exists of the type contemplated by RCW 35.33.091 and that it is in the best interests of the City to make the appropriation herein provided, now, therefore, BE IT ORDAINED BY THE CITY OF YAK|kW\: Section 1. The amount of $37,955 is hereby appropriated from the Unappropriated Fund Balance in the General Fund to account nurber 000.O14.625.0000.514.30-49E as a 1988 appropriation. ) Section J. This ordinance is one making an appropriation and shall take effect inrnadiate|y upon its passage, approval and mub|}sztinnas provided by law and by the City Charter. ' PASSED BY THE CITY COUNCIL, signed and approved this day'uf June, 1988. Mayor _'- ATTEST: • ���� ' � • ' `�, �u' �^2 � - 4, City Clerk First Reading JUN 4 1988 Publication Date JUN ^1 * Effective Date JUN 2 -�{-1 ' oPo| C2 . ` M E M O R A N D U M JUNE 7, 1988 �� • ��� TO: Members of the City Council FROM: Pat Berndt Bernie Sims SUBJECT: Trade Stimulant Operators' Request for a Reduction in City Gambling Taxes BACKGROUND The following is a summary to date of written and oral communications, and analysis done relating to the Trade Stimulant Operators (TSO) request last year for a reduction in local taxes on punchboards and pulltabs. Pursuant to a report on the gambling tax issue presented to the City Council on January 12, 1988, a Council Committee, along with City staff have had several discussion meetings with representatives of the TSO to review their operations and the impact of local gambling taxes. Council members and staff were provided information about the mechanics of ^ punchboard and pull tab operations which handicap profitability to the in- dustry due to the tax rate applying to gross sales vs. net sales. Addi- tionally, the City was provided with helpful information from TS0 members to assist in strengthening municipal enforcement efforts with delinquent gambling tax accounts. TS[) representatives were informed about the efforts invested by Legal and Finance staffs to collect and enforce payment of gambling taxes and de|ln- , quent accounts, as well as the Police Department's ongoing on-site inspection process. We believe the foregoing discussions have led to an atmosphere of greater understanding and cooperation on both sides. Nevertheless, the central issue outstanding is a TSO request for a tax rate reduction equal to the State average of 3.75% of gross receipts on punchboard and pull tabs. ANALYS|S There appears to be some validity to considering a rate reduction from 5% of ����V gross to between 3.9% to 4.3% of gross sales. The average tax rate of all ��' Eastern Washington cities which impose a gambling tax is 4.1%; the average tax rate of Eastern Washington cities over 25,000 which impose the tax is 4.3% -- see Exhibit I. We are using Eastern Washington cities for compari- son since they do not impose a local 0&O tax. Most Western Washington cities do impose a local BEO tax at an average amount of 0.14% -- see Ex- DXV| B1 �� �w� • ' . hibit ||. Therefore, if the local B&O tax average rate of 0.14% for cities in Western Washington were added to the state average of 3.75% for gambling activities on punchboards and pull tabs the total equivalent tax would equal 3.89%. This would seem to be a more representative comparison of the total tax rate on this industry between Eastern and Washington Washington Nic7 a local B6{) tax rate would normally be extended to the entire business operation, requiring even larger tax payments from the business as �� a whole. ���V �� Based on this comparison it is our view that a reduction in the City gambling tax rate from 5% to 4% would be more in line with Eastern Wash- ington cities' average tax rates for this industry and with the taxes imposed on the industry in Western Washington cities, inclusive of local B&O taxes. Additionally, a reduction of the local tax rate from 5% to 4% would also offset the State gambling tax of 1% as shown in Exhibit |||. Exhibit IV depicts gross industry earnings for punchboard/pu|| tab opera- tions for the four quarters of 1987. It is important to note the following: 1. The "Tax Due" sum of $172,919.80 represents the amount of money the City of Yakima would have received if all payments were made during 1987. 2. Some payments (mainly 4th quarter 1987) would not normally be made until 1988, and a few remain unpaid and are in the collec- tion/litigation process. 3. Penalties and interest are not induded. This exhibit is useful in that it gives a recent picture of average expecta- tions. Using $172,920 as a benchmark, a reduction retroactive to April 1, 1988 would decrease 1988 annual revenue to $155,628; a loss of $17,292. Re- ducing the rate to 4$ as of October 1, 1988, would reduce 1989 annualized revenue to $138,330: a loss of $34,584 as depicted below; excluding interest and penalty payments for delinquent accounts. Effective Effective 4/1/88 10/1/88 Estimated Revenue $172,920 $172,920 Reduction in Revenue 17,292 34,584 Revised Revenue $155,628 $138,336 From the standpoint of fairness to this industry, a reduction in the City tax of 1% seems warranted, even though the City revenues would "decrease" by 1111 $34,584 annually. A disproportionate tax burden on this industry should not be continued simply in the interest of maintaining City revenues. Further, we are op- DXVI B2 �� �m�' timistic that current enforcement and collection efforts, interest and penalty payments, combined with the business stimulation generated by a tax rate • reduction can equalize the revenue loss incurred by the City. RECOMMENDATION 40 Accordingly, based upon the above analysis it is our recommendation that the City Council approve the attached ordinance reducing the City gambling tax rate on punchboards and pull tabs, from 5% to 4% of gross sales, effec- tive with payments due for the 2nd quarter of 1988. • • DXVI B3 • T.S.0. /DATA.ANALYSIS - 25-APR 04:15:56 PM - EXHIBIT I EASTERN WASHINGTON - - GAMBLING - TAX- RATES - AND RECEIPTS - -- 1987 1937 EASTERN WASHINGTON CITIES TAX NET/ PUNCHBOARDS ALL WITH A-- GAMBLING- TAX _ - RATE- GROSS ---- PULLTABS GAMBLING EPHRATA 5.0% GROSS 7,355 KENNEWICK 1.5X GROSS 43,549 102,976 -- - MOSES LAKE - 4.0% GROSS -- - __. ___ 85.251 OTHELLO 2.5% GROSS 5,636 PASCO 3.Qp% GROSS 102,625 RICHLAND 5.0% SROSS 33.596 SPOKANE 5.0% GROSS - 412,741 805.300 WALLA WALLA 5.0X GROSS 51' SELAH 5.0X GROSS 7 UNION GAP 5.0% GROSS 28,094 50.159 CITY AVERAGE 4.1X YAKIMA 5.0% GROSS $143,567 $237,268 - EASTERN WASHINGTON CITIES - OVER 25,300 TAX NET WITH A GAMBLING TAX RATE GROSS POPULATION 1. SPOKANE - - - _ 5.0% - - GROSS - 172.100 Z. YAKIMA S.OX GROSS 49,600 3. KENNEWICK 1.5% GROSS 37,320 4. RICHLAND 5.0% GROSS 30,280 5. -- - - - -- WALLA WALLA -- -- 5.0% GROSS -- - - - - -- - 25.420 CITY AVERAGE 4.3% ID 1111 111 • 4110 111/1 III ... . 2/29/88 =lb 111/0 , . _ * ************************************ * CITY OF BELLEVUE * * * EXHIBIT II * BUS:NESS AND OCCUPATION TAX SURVEY * * February, 1988 * * * * For 23 Washincton Cities * * ************************************ ***************BUSINESS AND OCCUPATION TAX RATES BY INDUSTRY********************** . 1987 . Average Official Admin. B&O . CITIES STZVEYED: Population Retail Wholesale Manufacturing Extracting Services Office Tax Rate % --- _ Auburn 30,260 N/A N/A N/A N/A N/A N/A N/A Bellevue 82,060 0.130% 0.130% 0.130 0.130% 0.130% $.1026 sc ft 0.130% Bellincham 46,360 0.17C% 0.170% C.170% 0.170% 0.440% N/A .." 0.224% Bremerton 32,390 0.125% 0.160% N/A N/A 0.20C% N/A \0.162% Edmonds 26,300 N/A N/A N/A N/A N/A N/A N/A - Everett 60,100 0.125% 0.125% 0.125% 0.125% 0.125% 0.125% \ 0.125% Kennewick - 37,320 N/A N/A N/A N/A N/A N/A N/A K.nt 30,090 N/A N/A N/A N/A N/A N/A N/A Kirkland :9,430 N/A N/A N/A N/A N/A N/A N/A Longview 29,520 0.100% 0.100% 0.10C% N/A 0.200% N/A 0.125% Lynnwood 24,260 N/A N/A N/A N/A N/A N/A N/A Mercer Is:and - First $100,000 20,760 0.050% 0.05C% 0.050% 0.05C% 0.050% N/A 0.050% Mercer Island - Over 8100,000 0.100% 0.100% 0.10C% 0.100% 0.100% N/A 0.100% • Olympia 29,600 0.100% 0.100% 0.100% 0.10C% 0.200% N/A 0.120% Pullman 22,240 N/A N/A N/A N/A N/A N/A N/A . . Redmond 30,260 N/A N/A N/A N/A N/A N/A N/A Renton 35,360 N/A N/A N/A N/A N/A N/A N/A Richland 30,260 N/A N/A N/A N/A N/A N/A N/A • . Seattle 492,300 0.285% 0.185% 0.185% 0.185% 0.357% N/A 0.219% Smokane 172,100 N/A N/A N/A N/A N/A N/A N/A . Tacoma 158,900 0.150% 0.100% 0.110% 0.110% 0.500% N/A 0.194% Vancouver 43,390 0.110% 0.110% 0.022% 0.1:0% 0.110% N/A 0.092% Walla Walla 25,420 N/A N/A N/A N/A N/A N/A N/A Yakima 49,600 N/A N/A N/A N/A N/A N/A N/A AVERAGE B&0 TAX RATE 0.222% 0.121% 0.109% 0.120% 0.219% N/A 0.140% . . NOTE: According to the responses received, Bellevue and Everett are the only cities wbich earmark a portion of their B&O tax for capital purposes. Of the total .08% levied by the City of Bellevue, .03%, or 23.1%, A restricted for capita/ purposes. . . Of the .125% levied by the City of Everett, the new .025% has been designated for capital. , . • . -- _ . . 7 . _ - .... ' EXHIBIT III • TAXES PAID ON GAMBLING MONEY BOARDS & PULLTABS 7.896 STATE SALES TAX AT TIME OF PURCHASE OF WHICH THE CITY RECEIVES 1.3% WE PAY THE FOLLOWING TAXES WHEN THEY ARE PULLED ON GROSS: 5.0000 % CITY TAX STATE TAX (APPROX.) .0025 96 FEDERAL TAX 6.0025 % TAX ON GROSS .0150 % B.O. TAX PAID ON NET • MERCHANDISE BOARDS NO TAX IS PAID AT TIME OF PURCHASE. WE PAY THE FOLLOWING TAXES WHEN PULLED: (GROSS) 7.8000 % STATE SALES TAX * .0025 % FEDERAL TAX 5.0000 96 CITY TAX 1.0000 % STATE TAX (APPROX.) 13.8025 % TOTAL * CITY RECEIVES 1.3% OF STATE SALES TAX. THIS MEANS WE ACTUALLY PAY 6.3% OF GROSS TO CITY! • • III III III • PUNCH.PULL /1987 25 -1988 04:23:26 PM EXHIBIT IV PUNCHBOARDS 6 PULLTABS RECEIPTS - AS REPORTED 15T QTR. 2ND QTR. 3RD QTR. 4TH QTR. TOTAL TAX TAX GROSS GROSS GROSS GROSS 1937 RATE DUE BILL'S PLACE $59.809.05 $53,590.95 $69,190.10 583.595.40 5266.185.50 5.002 513.309.23 BLUE BANJO 12,737.75 8,07650 8.077.00 10,559.75 39,499 .00 5.00% 51.972.55 BOONDOX TAVERN 86,399.70 84,090.35 94, 88. 4,3 2.00 349.730. 5 5.00% $17.486.50 BULLWINKLES 28,278.85 23.854.05 25.423.50 22,340.60 99,897.00 5.00% S4.994.85 CORKY'S 13,095.40 13,132.70 13,451.95 22,046.35 61.726.40 5.002 3 3 , 9 8 5:5 DISSY'S 6.337.00 3,540.75 5.100.75 6,333.25 21.311.75 5.002 t . DRAGON INN 7.009.75 6,743.50 3,921.00 6,019.50 23,693.75 5.00% S1.184.69 EAGLE LANES 6,500.50 2,867.00 2,952.00 5,271.25 17.590.75 5.00% S379.54 FINAL FRAME 20,499.00 9,901.00 6,374.00 22,157.00 58.931.00 5.00% S2,946.55 F.O.E. #289 48,549.25 49,722.00 49,429.00 57,546.00 205.246.25 5.00% S10.262.31 JACK -SONS 31,799.00 30,930.70 36,779.25 47,128.00 146,636.95 5.00% $7.331.85 LEE'S TAVERN 8,677.40 10,101.15 5,132.00 0.00 23.960.55 5.00% $1,198.03 LEFTY'S TAVERN 10,222.25 2,716.00 16,492.00 23,369.50 52.799.75 5.00% $2.639.99 LEWISVILLE TAVERN 41,788.33 53,234.65 61,361.00 65,410.50 221,844.45 5.00% S11,092.22 MELTON'S BRASS RAIL 0.00 0.00 0.00 3.005.00 3.005.00 5.00% S150.25 MIKE'S TAVERN 16,797.75 22.538.85 - 22,664.43 21.709.10 83.710.10 5.00% 54,185.51 MINDA LANES 14,473.00 5,551.25 3,444.25 9,987.50 33.456.00 5.00% 51.672.80 0LE °S PLACE 18.466.40 17,921.45 37,485.05 38,902.40 112,775.30 5.00% $5,638.77 PHOENIS 22,643.00 20.387.50 20,605.00 21,805.25 85,445.75 5.00% S4,272.29 RANCH TAVERN 38,473.35 45,402.35 21,893.00 36,239.35 162,008.05 5.00% %7.100.40 ROXIE'S TAVERN 2,633.05 10,613.00 13,088.00 17,202.85 43.536.90 5.00% $2.176.85 SHADY CORNERS 20,495.83 19.366.80 14,733.00 18,706.04 73.801.64 5.002 53.690.08 SKOOKUM CAFE 8,421.00 4,727.00 3.354.00 6.427.25 22,929.25 5.00% 51.146.46 S.E. COMM. CENTER 41,049.75 44.900.50 37,157.00 32,248.00 155.355.25 5.00% $7.767.76 SPORTS CENTER 42.616.25 51,371.25 50,699.00 67,360.00 212,046.50 5.00X, $10,602.33 SPORTS TAVERN 12,816.50 1,160.00 11,328.00 13,131.00 44,435.50 5.p $2,221.73 5T0CKMAN5 22,110.03 24.928.00 0.03 1 66,196.75 5.0 2 $3.309.84 SUSIE'S SALOON 16,381.43 18,485.15 22.979.45 24.419.25 80.265.25 5.00% S4,013.26 THE OFFICE 10,3 11,92 21,51 13 0.00 4 5. p 0 % $2,191.87 THE RHINO 15.318.43 14,368.05 16,632.© 17,212.00 63.522.45 5.02 $ 3,176.12 TWIN BRIDGES 77,310.49 100,182.10 108.790.80 147,651.60 433.934.99 5.00% S21,696.75 Y.F.W. #379 38,759.00 40,447.00 34,137.00 31,617.25 144.960.25 5.00% $7.248.01 TOTAL GROSS 5805,973.09 5819.312.75 5844,062.50 5989.047.69 53.458.396.03 5.00% $172,919.80 GROSS PROPOSED ESTIMATED RECEIPTS RATE RECEIPTS 53,458,396.03 4.00% S138,335.84 ANNUAL REVENUE LOSS $34,583.96 SIX MONTH LOSS 517.291.98