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Part 2: San Diego Tax Hike Money Goes to Hoteliers

Audio

Aired 4/19/09

San Diego voters have twice rejected increasing the hotel room tax, even though some of the money would have paid for badly needed firefighters and equipment. But in December, just five weeks after wildfires burned down 365 homes in San Diego the city council raised the hotel tax on its own and handed over the extra tax dollars to a group of hoteliers to promote tourism. KPBS Reporter Amita Sharma has more.

In recent years, San Diego’s lodging industry has blown hot and cold over the hotel tax.

In 2004, it raised $1 million to support a ballot measure that would have increased the Transient Occupancy Tax known as the TOT by 2 ½ cents. It failed. Just eight months later, the industry spent $500,000 to successfully defeat a similar measure.

What’s the difference? The first tax hike earmarked money for tourism promotion in addition to firefighting. The second one did not.  San Diego’s lodging industry chief Mike McDowell.

McDowell: Our point was if you’re going to raise the TOT, then you need to make some sort of commitment to supporting tourism promotion.

In late 2004, the industry said an increase in the hotel tax would kill their business.

But last December, the industry came back to city council members -- and this time McDowell urged them to raise the hotel tax. The council did so without a public vote. The city was able to get around a vote by creating something called the Tourism Marketing District. That means the jump in the hotel tax is not officially a tax, it’s a fee. But here’s the catch. The money can’t be used for public purposes like firefighting. It can only be used to promote San Diego to visitors.

McDowell: When the city has chosen to raise the TOT, they have chosen to use for things other than marketing. In this case, while we are charging this fee and passing it along, 100 percent of it is going to mitigate any kind of reduction in demand that might occur.”  

But some believe the $29 million dollars in extra revenue the hotel tax hike is supposed to create this year is money better spent on public services. They, including Councilwoman Donna Frye , say the hike is especially galling in a city like San Diego where budget shortfalls are chronic and where fires have destroyed more than 1,000 homes in the last five years partly because the city doesn’t have enough firefighters or stations.

Frye: Thirty million dollars is a lot of money to give away, especially when it’s really the public’s money. And that’s how I see it. When tourists come to visit San Diego, not only do they expect a really nice place to stay but they also expect a really safe place to stay.

The original purpose of the tourism occupancy tax when it was created in 1965 was in fact for marketing and promotion. But the city has repeatedly raided the money to spend on city services like police and fire. With the new tourism marketing district, a board of men who operate large hotels get to decide how to spend the millions for promotion.

UCSD Political Scientist Steve Erie says that’s how San Diego has always done business.

Erie: It’s called private government. Basically, we hand over public benefitted decision-making to private individuals, unaccountable not elected. And they get to decide how public money in this case, a fee or tax is used.

Erie says San Diegans ought to be upset at the city council for allowing this to happen. But he doesn’t believe they are.

Erie: You can blame leaders but you also have to change the city’s voters. They really don’t care particularly if it’s a tax on the out-of-towners.

Two of the city’s voters who do care are Barbara and Neil Levine.

Levine: Are you going to make the call about the windows?

The Levines lost their Rancho Bernardo home in the fires last October. They say using the money from the hike in the hotel tax for anything other than fire protection is offensive.

Levine: It’s salt in the wound. You know the desperate need and then you go ahead and again basically take money away from where it needs to be spent. It is horrendous.

Levine: If these were good times and all of our fire and safety needs were funded and everything was just hunky dory, I wouldn’t have a problem. But those aren’t the times we live in.

Erie says unless San Diegans and their leaders start addressing fire needs honestly, the next time a fire hits, there may not be a city left to promote.

Amita Sharma, KPBS News.

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