It’s been called the “billion dollar tax,” but do most San Diegans even know what it is or where the money goes?
I’m talking about the San Diego Tourism Marketing District, a collection of nearly 200 hotels and motels in San Diego that, for the last four years, has been placing a 2 percent surcharge on their customers’ bills, in addition to the more familiar and commonplace transient occupancy taxes. All facilities with 70 or more rooms within the city limits charge these fees.
Where does the money go? The law governing the Tourism Marketing District requires the city to contract with the district “to plan and carry out certain activities,” largely including marketing San Diego as a tourist destination. The district — essentially the hotel owners — then decides how that money is spent.
What’s wrong with this picture? On the surface, there’s the issue of tax dollars being handed over to private business to spend as they see fit. But even worse is that these businesses decided to collect these taxes and allocate the money raised to themselves without involving local citizens in the debate at all.
While other hotel taxes, like transient occupancy taxes, must pass muster at the ballot box (attempts in spring and fall of 2004 both failed), the Tourism Marketing District tax passed by agreement between the hoteliers and the City Council — even though the city has no voice in how the tax money is spent or even in the appointment of members to the district board. That responsibility lies exclusively with the hotel owners.
The Tourism Marketing District experiment is set to expire this December, but the hotel industry has already come forward with a plan to not only extend the program for another 39 ½ years, but also to considerably expand its reach. Under the new plan, every business that provides lodging in the city, rather than only those with 70 rooms or more, would have to contribute to the marketing fund. Those with 30 rooms or less would only have to charge their patrons 0.55 percent extra, rather than the standard 2 percent.
Once again, this tax would not be put to a public vote, even though “staycationing” San Diegans and their visiting families and friends are asked to foot a significant portion of the bill. Not only would regular citizens have no voice in whether to raise hotel taxes, but many of the hotels, especially small businesses such as bed-and-breakfasts, would also find their voices drowned in this system. Votes from large hotels that benefit more from generalized marketing would have more weight than those from independent operations dependent on their niche marketing efforts. The more money you already make, the more your vote counts, those who designed the proposal say.
It’s important for all San Diegans to consider where these monies go. While transient occupancy tax increases could go into the city’s general fund and pay for improvements that would benefit tourists and locals alike, up to 90 percent of Tourism Marketing District funds, by the district’s own admission, is spent on marketing that benefits the hotels directly. Imagine the dysfunction we’d see in government if every industry could direct the taxes it generates to be spent only on increasing that industry’s profits.
We’re not talking about a small sum, either. If there were absolutely no growth in the tourism industry between now and 2053, more than $1 billion in tax dollars would be diverted for the use of the hotel industry. Assuming a relatively modest growth rate of 3 percent, the Voice of San Diego estimates the tax could rise upward of $1.4 billion.
Think of it this way: San Diego voters have repeatedly rejected an increase in the hotel tax, even when the money benefits all San Diegans. Is there really a reason to believe that those same voters, if given a chance, would choose to raise taxes and put all of the money in the hands of hotel owners?
Citizens of San Diego have made it clear at the ballot box that they don’t want to raise taxes. The proposed Tourism Marketing District expansion is an end run around those citizens, implementing policy that plan backers know they’d never be able to get the public to approve. Handing over this new tax money to hoteliers to use as they see fit makes matters even worse. It’s time for the city’s voters to stand up and tell their councilmembers it’s time for this scam to stop.
Lemmon is the business manager of the San Diego County Building and Construction Trades Council AFL-CIO overseeing 23 trade union affiliates. For more information about the Building Trades Council, visit sdbuildingtrades.com.