Tuesday, November 28, 2006

A new gambling tax proposal would be better for local gambling businesses,
city officials said. The proposal is for a lower tax on area businesses -
the Highway 9 Casino and some restaurants and taverns - than the one they
currently pay to Snohomish County. "This would be considerably less than
they are used to paying the county," Mayor Vern Little said. Snohomish
County taxes gambling businesses on their gross earnings. But come Dec. 20,
the Frontier Village area on the west side of the lake is scheduled to
become part of Lake Stevens. The city is in the process of annexing the
708-acre area. Now, the city is debating the best way to implement a
gambling tax that is fair to local businesses, the mayor said. The city
doesn't have a gambling tax on its books, but now is proposing one on the
businesses' net earnings. A gambling tax would help pay for police services,
Chief Randy Celori said. Word of the proposal prompted an outcry from area
gambling businesses last month. Fearful that a tax might cost too much and
force them to close, business owners and employees implored city leaders to
consider a lower tax than the one Snohomish County imposes. They asked for a
tax on net earnings instead of gross earnings. Under a gross tax, a customer
could spend $100 and win that money back, but the business still would be
taxed on the $100 in revenue. A net tax would tap into only the business'
actual proceeds. How those net earnings would be determined is unclear,
Little said.

Highway 9 Casino General Manager Carol Henry said she'd prefer to have the
city come in and audit her books to determine net earnings. The alternative
is to rely on the numbers filed with the Washington State Gaming Commission.
Those numbers are too high, she said.

Henry said she's willing to pay a tax.

"We're just hoping that they'll do some sort of a fair tax for us," she
said.

Under the city's proposal, the tax would be phased in over three years,
Celori said.

The City Council is scheduled to hold two more public hearings before voting
on the issue. The first of those hearings is scheduled for tonight.

In the meantime, Little, who became mayor on Nov. 6, said he's met with
businesses and is working to come up with an equitable plan.

"We want to do the right thing," he said. "This isn't about just collecting
the tax. We want to do the right thing by everybody."