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Published on Friday, March 4, 2016

Redirecting certain lodging tax revenue to statewide tourism funding

Last week we were surprised by the introduction of a bill, SB 6672, which would limit city authority to impose a lodging tax on the short-term rental of residential dwellings and timeshares. This would include properties rented through websites such as Airbnb, as well as other rentals of timeshares, bed and breakfasts, and short-term rentals that are in a building designed to be a residence (not a hotel or motel). By limiting this local authority, the state could impose its full sales tax on these rentals.

The proposal would have redirected an estimated $1.7 million from cities and counties in the first year alone. The revenue would be used to fund a statewide tourism marketing program instead.

Initially, it looked like the bill was moving quickly through the legislative process. It was introduced on Monday and heard in the Senate Ways & Means Committee on Wednesday. However, the committee declined to take further action on the bill, and it appears dead for the session.

We are anticipating that next year’s development of the 2017-19 biennial budget will be extraordinarily difficult because of the revenue still needed to fund the K-12 education system per the McCleary court decision and the demands on mental health and homelessness services. This lodging tax bill was a reminder that legislators are taking a close look at every dollar, including state-shared revenues and programs with local sales tax credits, and city officials must continue to educate legislators about the need, purpose, and history of city funding programs.

Categories: Budget & finance