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Part 1: San Diego Tax Hike Money Goes to Hoteliers

Audio

Aired 4/19/09

San Diegans don’t like taxes. Even taxes they can dump on out-of-town guests. Twice in the last four years, San Diegans have rejected proposals to increase the hotel tax in order to pay for much needed firefighting tools. Last December, just weeks after wildfires had destroyed hundreds of homes in the city, the hotel tax was increased but not for firefighting.  KPBS Reporter Amita Sharma has the details.

Blackened rubble from some of the fire-ravaged homes in Rancho Bernardo still hadn’t been cleared by last December when the San Diego City Council hiked the hotel tax 2 percentage points. But that money won’t go for more firefighters or more fire stations.  Instead, the council decided to give the extra $29 million in tax dollars to a group of hoteliers to promote the city.

Frye: So let’s talk about what we’re not going to be getting. We could have added additional fire trucks. We could have added more fire equipment.

That’s Councilwoman Donna Frye . She was one of two council members to vote against raising the hotel tax. Frye says it’s crazy to spend money on promoting the city when one of its stations was so short on fire trucks during the October wildfires it had to borrow some that had been used as props at birthday parties. The timing of the council’s move is brazen at best says UCSD Political Science Professor Steve Erie.

Erie: At least they waited five or six weeks. You know I’m amazed they didn’t wait until seven days afterward. You know they really have no shame.

For years, San Diego’s Lodging Industry has lobbied for more money for tourism promotion. The industry finally convinced the council in December that it could hike the room tax at large hotels by 2 percent without a public vote by creating what’s called a Tourism Marketing District . A group of nine unelected men who run big hotels in town now control how the $29 million is spent on marketing San Diego. Lodging industry chief Mike McDowell says the additional cash is badly needed to keep the city’s hotel rooms full.

McDowell: It is expected that there will be 10,000 and 12,000 new hotel rooms in the city of San Diego by 2013, which means that in order for us just to stay flat in our occupancy rates of the hotels, we have to have an additional one million hotel overnight visitors by 2013.

San Diego’s hotel occupancy rates are already the fifth highest in the country. And officials at the convention center say they’ve had to turn away business because there aren’t enough hotel rooms to accommodate visitors.   

Money from a higher hotel tax might have gone to pay for firefighting. But taxpayers rejected that idea -- not once but twice.

“I think voters are in no mood to raise the TOT tax.”

With $29 million in new tax dollars now dedicated to tourism promotion, the city might have cut back on the millions in general fund money used for this purpose. In fact, backers of the Tourism Marketing District promised the city’s general fund would save $10 million. But Frye says that savings is an illusion because the city’s own rules require it to spend a fixed amount on marketing. She tried to persuade the council to slash the city’s required spending on tourism. They refused.

Murtaza Buxamusa is director of research and policy at The Center on Policy Initiatives . He calls the lodging industry a “special animal” at City Hall.

Buxamusa: It has a certain sway over the mayor and council that no other industry enjoys except for real estate and development. It has consistently been active in elections. There have been over 50 individual contributors from the tourism industry to the current mayoral election.

Over the last three years, Councilman Faulconer took more than $38,000 from the industry. He says money spent on the Tourism Marketing District is a good investment because every new visitor means more tax dollars into the city’s general fund.

Faulconer: The money that comes in from tourism helps our neighborhoods, helps our streets, helps fund fire, helps fund police, helps fund parks and recreation.

The city stands to collect up to $163 million in tourism tax dollars this year. With more money going in to promotion now, Faulconer says the city’s return on its investment will only get better.

Amita Sharma, KPBS News.

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