LAKE STEVENS – 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.
Reporter Jackson Holtz: 425-339-3437 or jholtz@heraldnet.com.
Meeting tonight
The City Council is expected to discuss the gambling tax proposal and vote on the 2007 budget when it meets at 7 tonight at the Lake Stevens Educational Service Center, 12309 22nd St. NE.
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