San Diego eyes boost in hotel tax
Proposal alarms tourist industry

By Ray Huard, Staff Writer
Copyright 2001 San Diego Union-Tribune
Article date: September 27, 2001
 

Visitors to San Diego would be socked with higher hotel bills under a tax plan reviewed by a City Council committee yesterday.

The city's current 10.5 percent transient occupancy tax on hotel and motel room bills would rise to about 13.5 percent under a proposal presented to the Rules Committee by representatives of the labor union that represents city firefighters.

Tourism officials, unaware that the tax increase was up for committee review yesterday, were dismayed upon learning of it.

In a telephone interview, Convention and Visitors Bureau President Reint Reinders said the proposal couldn't come at a worse time, with hotels and restaurants already reeling from a slowing economy and sharply curtailed travel following the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon. "People love to come to San Diego, but we have been hit like every other city," Reinders said.

The Rules Committee, at the urging of Mayor Dick Murphy, instructed the city manager and city attorney to analyze the proposal and report back to the committee in two weeks.

Councilman Jim Madaffer, a committee member, said, "I campaigned on the idea of not really being too excited about the idea of raising the TOT (transient occupancy tax)."

Madaffer, who was elected in December, added, "Certainly I would never imagine it going up that fast that quickly."

Council members Toni Atkins, Byron Wear and George Stevens were more receptive.

"It's a good idea to look at this as an option," Atkins said.

As outlined by Firefighters Local 145 President Ron Saathoff, San Diego would set its hotel room tax rate to match the average rate charged by 10 major western cities considered to be primary competitors for the tourism and convention trade.

The cities and their current room-tax rates are Houston, 17 percent; San Antonio and Seattle, 16 percent; Anaheim, 15 percent; Los Angeles, San Francisco and Denver, 14 percent; Phoenix, 11.5 percent; San Jose 10 percent; and Las Vegas 9 percent.

San Diego's rate would be adjusted every two years.

Scott Barnett, executive director of the San Diego County Taxpayers Association, said raising San Diego taxes to equal those in other cities "is a boneheaded approach to public policy."

"We are open to looking at a reasonable TOT increase at some point, but only for specific purposes. A general increase to just fatten the city coffers is probably something we would never support," Barnett said.

San Diego's transient occupancy tax was created in 1964 to raise money to promote tourism. The tax now helps to pay for basic city services, including public safety, and to support about 200 civic organizations.

The last increase occurred in 1994, when the council boosted it from 9 percent to 10.5 percent.

The firefighters' proposal would require voter approval because the establishment of a formula for an automatic tax adjustment would amount to a change of the city charter. Such modifications require a vote of the public.

Saathoff urged council members to put the proposal on the March 2002 ballot. He said the labor union is pushing for a March vote because another measure on that ballot would make it harder to raise taxes in the future.

That measure, dubbed the San Diego Taxpayers Protection Act of 2000, would require two-thirds voter approval of any increases in taxes, including the transient occupancy tax. It was put on the ballot as a result of a initiative petition drive last year that was bankrolled by hotel owner Doug Manchester.

Saathoff said firefighters are proposing the increase in part because the city for years has been too short of cash to make needed repairs at fire stations and replace worn-out equipment.

"We are at a point right now, on fire apparatus alone, where we don't have sufficient reserve equipment," Saathoff said.

The current city budget, however, reflects the council effort to make up for past neglect by spending about $7 million on new trucks and other equipment for firefighters and lifeguards.

Although the transient tax plan was presented yesterday by the firefighters union, a draft of ordinance creating it was prepared in August by Assistant City Attorney Leslie Girard. That led to some speculation that the tax plan originated in Mayor Dick Murphy's office. But that is not the case, Saathoff and the mayor's chief of staff, John Kern, said yesterday.

Saathoff said he presented his proposal to the mayor's office as a courtesy. Kern said he then asked the City Attorney's Office to determine whether the plan was legal and to prepare a draft ordinance for the council committee to look at yesterday.

"It was not the mayor's proposal," Kern said. He said Murphy has taken no position on the tax plan.
 

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