NOTES ON THE
         LOCAL TAX DISTRIBUTIONS REVENUE RESEARCH REPORT

The distribution amounts reported in this publication are amounts
disbursed to local governments, cities and counties, from the
Office of the State Treasurer.  The sales tax is collected by the
Department of Revenue which is responsible for the correct
allocation of the funds.  The amounts in this publication are
based on the local share of retail sales and use taxes collected
two months prior to the distribution.  Distributions are made
monthly; however, no allowances or adjustments are made for late
returns.  Distributions from late returns are made in the second
month after the returns are received just as they are for current
returns.  The data are used by local governments to track
disbursements and plan budgets.

Differences Between Local Tax Distributions and the Quarterly
Business Review

The amounts reported in this publication should not be compared
with the Quarterly Business Review (QBR) amounts for taxable
retail sales by county and city (tables 3 and 4).  The two
amounts differ in the following respects.

1.   The local distribution amounts are based on local retail
     sales and use taxes.  QBR amounts are based on retail sales
     only.  The use tax is levied on items purchased out of state
     but used in state and on other items on which sales tax has
     not been paid.  Use tax can fluctuate significantly due to
     purchases of machinery and equipment.

2.   Local sales and use tax distributions are made monthly based
     on cash collections of two months prior, without regard to
     when the tax liability occurred.  QBR taxable retail sales
     are reported for the month in which the liability occurs.
     Adjustments are made for returns up to two months late.

3.   State and county shares are deducted from the local
     distribution and not from the amounts reported as taxable
     retail sales.

Local Sales and Use Tax Distributions

A portion of the sales tax collected is a local tax and is
returned to the city or county where the sales transaction took
place.  The city or county is identified by a location code on
the tax form.  Except for the hotel/motel tax, the state share of
the sales tax is 6.5 percent.  The calculation for the
distributions of the local sales and use tax is as follows.  In
most cases, a 1 percent fee is deducted from the total reported
collections for state administration of the program.  (State law
allows deduction of up to 2 percent for administration costs.)
Of the remaining 99 percent, 15 percent is given to the county.
The remaining 85 percent is distributed to the cities as their
share of the basic or optional tax.  Counties receive the full
amount attributable to sales in the unincorporated areas, plus
the 15 percent share from the cities.

Distributions can fluctuate dramatically due to population
changes, as well as annexations and incorporations.  Businesses
are notified if their location code has changed due to an
incorporation or due to annexation into a public transportation
benefit area (PTBA).

Criminal Justice Tax Distributions

The criminal justice tax is an additional local sales/use tax of
0.1 percent for criminal justice programs.  The criminal justice
distribution is based on population rather than location code.
This tax is levied only by the county and is imposed county-wide,
but the receipts are shared with the cities.  Of the revenues
collected for criminal justice, 1.5 percent is taken for
administration.  Of the amount remaining, 10 percent is
distributed to the county and 90 percent is distributed to cities
and counties on a per capita basis based on their official April
1 populations.  As of January 1, 1996, twenty-one of the thirty-
nine counties impose the 0.1 percent criminal justice tax.

Juvenile Detention Facility Tax Distributions

The juvenile detention facility tax of 0.1 percent was approved
by the 1995 Legislature solely for the purpose of providing funds
for juvenile detention facilities and jails in counties with
populations less than one million.  Each county must vote to
approve the tax for collection.  It is levied only by the county
and is imposed county-wide.  Of the revenues collected, 1.5
percent is taken for administration and the remainder is
distributed wholly to the county.

Baseball Stadium Fund Distributions

Engrossed House Bill 2115 provides funding measures for a
baseball stadium in King County.  Three sections of the bill that
affect the taxes that certain King County businesses will collect
are explained below.  These taxes are effective beginning January
1, 1996.

1.   Section 101 establishes a new mechanism for sharing of the
     state retail sales and use tax that is derived from King
     County.  King County is authorized to levy an additional
     local sales and use tax at a maximum rate of 0.017 percent.
     The proceeds of the tax are deducted from the 6.5 percent
     state tax; therefore, the consumer will not experience an
     additional tax burden.  The proceeds will be diverted to the
     county as the state share for paying the principal and
     interest on bonds for the stadium.

2.   Section 201(1) authorizes an additional local tax of 0.5
     percent on food and beverages sold by restaurants, taverns
     and bars throughout King County.  This tax is not deducted
     from other sales taxes, so it will be an additional tax for
     the consumer.

3.   Section 201(2) authorizes an additional special stadium
     sales and use tax of 2 percent on car rentals that occur
     within King County.  The tax rate for car rentals in King
     County will therefore be 17.1 percent which represents the
     total of the combined state and local retail sales tax (8.2
     percent), statewide car rental tax (5.9 percent), optional
     King County car rental tax (1 percent) and special stadium
     sales and use tax (2 percent).

Transit Tax Distributions

Twenty-two cities, counties or PTBAs levy a local sales and use
tax for transit programs.  The tax ranges in rate from 0.1 to 0.6
percent.  After an administration fee of 1.5 percent is taken,
the remainder is returned to the transit districts.

Hotel/Motel Tax Distributions

The "regular" hotel/motel tax distributions, shown on pages 18
through 21, are for a local option tax of 2 percent on sales of
hotel/motel rooms.  The regular hotel/motel tax is not paid in
addition to other state and local sales taxes.  Instead, it is
credited against the state's 6.5 percent retail sales tax.
Cities can levy the regular hotel/motel tax within their
corporate limits and counties can levy the tax in unincorporated
areas and within cities that do not levy the tax.  (There are two
exceptions.  The first is King County where the only city
authorized to impose the tax is Bellevue and county government
levies the hotel/motel tax throughout the entire county,
including Bellevue.  The second exception is in Yakima County
where both the City of Yakima and the county levy the hotel/motel
tax within the City of Yakima.)

Blanks beside a county name indicate the county does not levy the
tax.  Cities not levying the tax have been excluded from the
table.  Zeros indicate the city or county levies the tax but did
not receive a distribution that month.

State law requires that data on individual taxpayers be kept
confidential.  To comply with this requirement, in the regular
and additional hotel/motel tax distribution tables, a "D"
indicates that the data cannot be disclosed because the
jurisdictions have fewer than three hotels or have fewer than
three taxpayers who report on a monthly basis.  The amounts
distributed for the hotel/motel tax have been aggregated in the
category called "Ds" in the summary table at the bottom of page
21; they are not included in the total for the county.

Additional Hotel/Motel Taxes

The "additional" (also referred to as "special") hotel/motel tax
distributions shown on page 22 are for hotel/motel taxes that
have been authorized by statute for specific cities and counties
for specific purposes.  These taxes, which vary in rate from 2
percent to 3 percent, are paid in addition to all other state and
local sales taxes.