Hotel Tax on the Rise?
Voters May Decide 2.5 Percent Jump
It didn’t take long on Tuesday for the supervisors to take the first steps toward asking voters to increase the county’s hotel bed tax in November, but what different entities could benefit from the extra revenue remains to be determined. The 4-1 vote propelled a plan that, if approved by a majority of voters, would increase that tax in the unincorporated region from its 24-year rate of 10 percent to 12.5 percent, slightly higher than the 12 percent figure used by many of the county’s cities. The item will come back to the board in May for placement on the ballot.
The increase from 10 percent to 12.5 percent could mean an increase from $7.2 million to $7.9 million in 2014-2015 and from $7.5 million to $9.4 million in 2015-2016. Revenues from hotel bed tax — formally known as the transient occupancy tax, or TOT — have jumped in cities throughout the county. In the unincorporated region, the lion’s share of the money comes from Montecito.
The county has been refloating the idea of raising the tax for some months, mostly spurred by concerns over how to deal with Supervisor Peter Adam’s maintenance ordinance, Measure M, should it pass in June. But Tuesday’s vote was for a general tax — meaning the tax’s earnings would be added to the General Fund pot — and not a tax directed to any specific target, such as infrastructure. The supervisors agreed that the money should be partially directed to economic development, but Adam, the dissenting vote, favored a specific tax. Supervisor Steve Lavagnino and the others disagreed, however, saying a specific tax’s requirement of two-thirds voter approval would be an uphill battle.
Though it appeared early in the discussion that Supervisor Janet Wolf, who deemed an increase to 12 percent a “more reasonable approach” and one more palatable to the lodging industry, would leave Salud Carbajal, Doreen Farr, and Lavagnino without their necessary fourth vote, she sided with them in the end. (It briefly echoed a hearing from July 2012, when Lavagnino, Carbajal, and Farr wanted an increase to 12 percent, but Wolf didn’t buy it, saying more research was needed and that the year’s ballot was already tax-heavy.)
In advocating for the increase, Lavagnino pointed to the county’s loss in 2012 of its $1.5 million share of the City of Goleta’s hotel bed tax; the county’s cut expired as planned under the two jurisdictions’ tax-sharing deal. Carbajal stressed that the tax wouldn’t, for the most part, affect county residents but visitors. “When all of us go visit another place, we rarely know or ask, ‘What is the transient occupancy tax?’” he said.
