Lodging Taxes Fund Tourism

A few years ago, during the 2003 Legislative Session, the hospitality industry set a goal to raise revenue for the promotion of tourism in Oregon. At the time, the industry was fighting with the Legislature every year to try and hold on to about $3,000,000 in Lottery funds to promote Oregon.

That amount ranked Oregon 47th in the nation for tourism promotion spending. The average state was spending almost $14,000,000 per year, so Oregon was well below average in ranking and dollars. Even so, tourism industry trade groups fought to hold on to that small dollar amount because visitors were spending $5.9 billion a year in our state.

Other states were growing their tourism budgets, and Oregon was not, so there was considerable concern among tourism industry advocates that Oregon was losing market share.

During that 2003 Session, Oregon Lodging Association and Oregon Restaurant Association were the main industry groups fighting to pass House Bill (HB) 2267, which did become law. First, the bill instituted a one percent statewide lodging tax on all lodging properties in Oregon. This money was dedicated to the promotion of tourism through the Oregon Tourism Commission and Travel Oregon.

Second, the bill required any local governments with a lodging tax in place to determine what percentage was currently being used for tourism promotion and maintain at least that level in the future. The percentage is not allowed to decrease. The bill also required any local government that institutes a local lodging tax in the future to use at least 70 percent of the new revenue for tourism promotion.

The second part of the law was just as important as the first part. This component directed local operators to work with the state to develop cooperative projects in attracting visitors to and around Oregon. These partnerships have been the most successful result of HB 2267.

Some local governments continue to oppose the part of the statute that protects new local lodging taxes for tourism promotion uses. These local governments have a short-sided view of taking money out of economic development, and taxing tourists to try and pit citizens against tourists, which hurts local businesses.

Protection of this agreement is led by the Oregon Restaurant & Lodging Association. In this decade, state tourism promotion funds have grown to over $10 million dollars a year; visitor spending has increased to over $8 billion a year. Local taxes collected off tourists have increased from $69 million in 2003, to over $100 million in 2008.

The current system benefits the entire state, and benefits local economies and local government as well. But year after year, the biggest fight local governments wage is on “stealing” lodging taxes for general fund services. As an advocacy organization, ORLA tries to find balanced solutions that raise bigger dollars in local communities without harming the growing partnership built around tourism promotion.

ORLA needs to ensure that the state statute remains in place. Additionally, some local governments have looked to use local tax dollars for “tourism promotion” activities that we believe do not fall under the statutory definitions. Finally, there is always a risk of other interest groups trying to reallocate the statewide tax revenue to fund programs other than tourism promotion and the Oregon Tourism Commission.

This is the time to attract visitors to rebuild Oregon’s economic base. It is the time to grow state and local partnerships. Promotions need to be built that restore consumer confidence. Growth in Oregon’s tourism industry increases tax dollars and customer counts for businesses. Local governments should let go of the same old fight year after year in an effort to shift tourism promotion dollars away from economic growth. But, they don’t seem to want to give it up.

ORLA will continue to protect the partnership, and will endeavor to find ways to help local governments build infrastructure. This mission will benefit everyone. We will work to remind local leaders that targeting business segments is not a solution to the problem, it is a distraction. Hopefully local governments will some day begin to work with the business community in finding these solutions as well. | BILL PERRY

CONNECT:
BILL PERRY, ORLA • BPerry@OregonRLA.org

See also: Promoting Tourism & Monitoring Lodging Taxes