Wednesday, December 06, 2006

Gambling businesses in Lake Stevens would pay one of the lowest tax rates in
Snohomish County if a proposal before the City Council is approved. The
council is expected to review the proposal tonight . According to a 2005
study conducted by Lake Stevens, only Sultan has a lower gambling tax than
the proposed 5 percent tax Lake Stevens officials are considering. The city
wants to impose the gambling tax before it annexes the Frontier Village
area - including the Highway 9 Casino - on Dec. 20. If passed, the tax could
bring in as much as $139,000 each year to help provide police services at
gambling businesses, Police Chief Randy Celori said. The gambling tax
proposal, first presented in October, sparked an outcry from some businesses
saying a tax could force them out of business. Since then, the city has
floated a number of proposals, all less than Snohomish County's current
tax - 5 percent on pull tabs and 10 percent on card tables' gross earnings.
The Lake Stevens proposal is much less, Mayor Vern Little said. "We set it
less than half what they're paying in the county," he said. The Lake Stevens
proposals would introduce a tax at increasing amounts over three years, he
said. Many of the business owners asked for a tax on net earnings - after
they deduct their costs -rather than a tax on gross earnings. Under a gross
tax, a customer could spend $100 and win that money back, but the business
would be taxed on the $100 in revenue. A net tax would tap into only the
business' actual gambling earnings. Businesses are required to file
quarterly earnings reports to the state Gambling Commission. Those reports
detail gross earnings and net earnings on card tables, officials said. The
net earnings reported to the state are the gross minus poker prize payoffs,
Highway 9 Casino general manager Carol Henry said. Determining the true
net - the number that reflects the entire business proceeds - would be
difficult short of having city accountants audit the business' books, Henry
said. That's not a business the city wants to get into, city finance and
administration director Jan Berg said.

Through negotiations, the city decided to stick with a net earnings tax
based on numbers filed with the state, Celori said.

The only other Snohomish County city to have approved a net gambling tax is
Sultan, according to the report.

Of the eight other cities that have a gambling tax, all tax gross earnings
and some, such as Marysville, tax card tables as much as 20 percent.

The Lake Stevens proposal is for a 5 percent tax.

Billy Tackitt, the co-owner of the Buzz Inn restaurant in downtown Lake
Stevens, which sells pull tabs, said he's fine with the current proposal.

"As long as a tax is reasonable, I don't think too may people will object to
it," he said.

On Friday, city officials met with the Highway 9 Casino, the city's only
card table business, and a representative from Barclays North, the
building's landlord.

At the meeting, the group discussed a slightly lower tax for the card table,
Celori said.

"We feel pretty confident that (the city is) trying to work with us," the
casino's Henry said.

The revised proposal is good for the casino business, said Blair Anderson,
the president-elect of the Greater Lake Stevens Chamber of Commerce and a
Barclays North representative.

"We think it will keep the casino in business, so we're actually pretty
excited about it," he said.

The City Council is scheduled to review the proposal tonight but likely
won't vote until its next meeting, Celori said.

The council next scheduled meeting is Dec. 11, but the city could call a
special meeting before then.