**UPDATE 4/28/09, 10 a.m. In the original version of this post, I said Seattle put the $30 million requirement in the settlement with Clay Bennett to pressure the Legislature to come through with KeyArena funds. That's not right, according to Seattle City Attorney Tom Carr. While the city wanted the $30 million payment in the settlement, it was Bennett's lawyers who demanded that the payment be contingent on the Legislature coming through with KeyArena money this year. Carr says Seattle tried to keep the Legislature out of it but reluctantly agreed to Bennett's terms. As of today, it looks like a smart bet by Bennett.

Original post follows:

The Legislature adjourned early this morning with no action taken on Senate Bill 6116, which would have allowed Seattle to use $75 million in local taxes to help pay for a $300 million KeyArena expansion.

The bill would have allowed King County to use locally-generated car-rental, hotel and restaurant taxes to pay for a bunch of projects: KeyArena, future maintenance at Safeco Field, low-income housing, arts and possibly a $150 million upgrade to Husky Stadium.

In a written statement, Sens. Ed Murray and Sen. Jeanne Kohl-Welles, the Seattle Democrats who sponsored the proposal, said they couldn't get enough votes to bring the plan to the Senate floor.

They complained the proposal had been "widely misperceived" as "the Stadium Bill" even thought it could have funded all kinds of projects throughout King County.

The failure likely means Sonics-turned-Thunder owner Clay Bennett won't have to worry about paying Seattle an extra $30 million as part of the settlement which allowed him to move the Sonics to Oklahoma City last year.

Bennett paid $45 million up-front and would have owed the additional $30 million in five years if the Legislature approved the KeyArena funding and then Seattle didn't get a replacement NBA team within five years.

That requirement was put in the settlement by Seattle Mayor Greg Nickels as an incentive for the Legislature to finally come through with some KeyArena money for the NBA to give Seattle another team. Microsoft CEO Steve Ballmer and other investors have promised to pay half the cost of the KeyArena project -- and seek to purchase an NBA team -- if the Legislature approved the arena bill.

But just as in 2005, 2006, 2007 and 2008, lawmakers weren't interested.

Murray and Kohl-Welles noted that counties across the state have been granted leeway to use local taxes for community projects, but "the political will did not exist to grant it for Seattle and King County."

They said they'll try to revive the proposal in some form if the Legislature, as expected, goes into a special session.