A Hotel/Motel Tax Increase: What Would It Do?
BALLOT MEASURE
In the November 2022 general election, El Dorado County voters will be asked to raise the Transient Occupancy Tax, known as “TOT” or sometimes as the “Hotel/Motel Tax.”
WHAT IS “TOT”?
The County imposes and collects a 10% tax, only in the unincorporated part of the County, on the rent charged by operators of hotels, motels, inns or other lodging, including short-term rentals such as Airbnb but excluding campsites and RV parks.
The tax was originally enacted to offset various impacts of tourism, including to roads and other infrastructure. As such, it is applied only to visitors using the relevant lodging types.
El Dorado County residents would pay TOT only if they stayed in lodging covered by the tax.
The existing 10% TOT rate was established in 2004, when Measure H passed by a 60 percent majority of votes. Because the Measure was passed as a General Tax, the use of funds is not legally restricted and can be used for general governmental purposes at the discretion of the Board of Supervisors. That Board set a policy that TOT revenue “shall be directed toward the impact of tourism and economic development, with consideration for support of tourism and promotion activities within the County and for continued support for grant fund allocations to support Veteran programs within the County.”
Consistent with this policy, in the 2021-22 fiscal year alone, the Board directed $3,000,000 toward offsetting tourism impacts; $1,300,000 toward economic development; $621,000 toward tourism and promotion activities; and $281,000 to support Veteran programs.
WHAT WILL THE BALLOT MEASURES DO?
The measure that West Slope residents will see on their November ballot would increase TOT in their area from the existing 10 % to 12 %. Voters in the Lake Tahoe area of El Dorado County will vote on a measure affecting only TOT rates in their area. The current rate of 10 percent would be increased to 14 percent. Every voter will see only one measure on their ballot, depending on where they live.
If the measures are approved by the voters, the existing 10% Countywide TOT rate would remain a General Tax, thereby allowing the Board of Supervisors to maintain their existing flexibility with allocations while remaining within the scope set in 2004. But revenue from the proposed increases to the TOT rate would be a Special Tax dedicated exclusively to snow removal and road maintenance.
HOW MUCH WOULD THE TAX INCREASE GENERATE?
WEST SLOPE
The increase in the TOT rate from 10% to 12% on the West Slope would generate an estimated $340,000 in additional revenue annually. It would be spent
entirely on maintenance of existing roads on the West Slope.
TAHOE AREA
The increase in the TOT rate from 10% to 14% in the Tahoe area would generate an estimated $2.5 million in additional revenue annually. It would be spent
entirely on snow removal and maintenance of existing roads in the Tahoe area.
If both measures pass, the combined estimated funding dedicated to road maintenance and snow removal would be $2,840,000, which would reduce the reliance on the County General Fund for road maintenance. Ideally, maintenance of our roadways would require several times that figure, but proceeds from this tax increase would allow significant improvement in the level of service DOT will be able to provide.
HOW DO WE PAY FOR ROADS?
Road maintenance in El Dorado County is paid for through the Road Fund, which is supported through contributions from the County General Fund, gas tax proceeds, and other state and federal sources.
The Road Fund balance has decreased dramatically over the last 15 years because of reductions in contributions from the State General Fund (Prop 1B), State gas tax appropriations, and federal timber/logging subsidies. In the same period, however, construction and material costs have almost tripled. The County was hopeful that funding from the Road Repair and Accountability Act of 2017 (Senate Bill 1) would alleviate the loss of revenues, but the estimates did not materialize.
ROAD FACTS
- Because of diminished funding, the El Dorado County Department of Transportation (DOT) has significantly reduced overall expenditures, including services, supplies, deferred maintenance and staff.
- Since Fiscal Year 2013-14 County road expenses have increased approx. 46% while revenue has increased only 28%.
- Federal and State grants have drastically diminished over the past 10 years.
- DOT staff maintain over 80,000 individual pieces of infrastructure annually, and approximately 1,100 centerline miles.
- Roadside brushing/fuel reduction has been scaled back to prioritize more costly infrastructure such as bridges, box culverts, roadways, guardrails, etc. Responsible for assessing and removal of snow for approximately 100 lane miles in the South Lake Tahoe area.
- DOT performs snow removal with a lot of outdated and failing snow removal equipment, causing delays in clearing roads.
