Editors Note: Attorney Cory Briggs responded to a commenter on Thursday’s Starting Line item regarding a proposed ballot measure on hotel taxes and a shared a bit of history about the tourism industry’s relationship with the City of San Diego. We’ve taken the liberty of posting it as a “Readers Write” essay.
…I offer this for the sake of precision. The scam is very clever, and I don’t want people to mistake one bad actor for another (which is very easy to do in this town because there are so many). To win at the ballot box, we need the public to understand exactly what’s going on. (I’ll jump on my soapbox at the end.)
The SDTA is not taxing anyone. The City is taxing tourists 10.5% as TOT and then another 2% for the “Tourism Marketing District Assessment” but it’s really a tax. The hoteliers claim to have imposed the TMD tax on themselves as a “self-assessment,” which is how they rationalized not putting the 2% hike to the voters, but then wrote the rules in a way that allows them to put the 2% TMD tax on their hotel guests’ bills right next to the TOT. The hotels collect the money from their guests and pay it over to the City, and the City then writes a check for that same 2% (after deducting a small admin fee) to the San Diego Tourism Marketing District Corporation.
The SDTMDC is run by a small handful of big hoteliers, and they get to decide how the money is spent. At this point, the public has no ability to influence the rate of the TMD tax or how it is spent — except at the ballot box if we get enough signatures on this initiative.
A couple other things to keep in mind. First, the San Diego Municipal Code already sets aside $.04 out of the $.105/dollar TOT for the purpose of “promoting the City.” In other words, the law already requires that 4/10.5 of the TOT be spent on advertising. The initiative announced yesterday would not change that, leaving current funding levels for “promoting the City” completely intact.
Second, about a decade ago, the hoteliers agreed to support a TOT hike as long as it included MORE money for promoting the City. Due to that “earmark,” the hike required a two-thirds vote and fell a few points short of passing. Thus, the voters clearly said “no more money for promoting the City.” Shortly thereafter the City tried to get the TOT raised without the earmark, thus requiring a simple majority approval. This time the hoteliers — because there was no earmark for their benefit — opposed the second TOT hike, and it too failed on election day. In their view, if the money isn’t set aside for their selfish purposes, then nobody can have it for any other public purpose. It’s their way or the highway!
Third, the tourism industry has long argued that the City needs solid, up-to-date infrastructure if it’s going to continue to be a top tourist destination. The City currently has a funding deficit of at least $1.7 billion for the infrastructure backlog. Until yesterday’s announcement, nobody was seriously talking in public about raising the taxes that tourists pay in order to maintain and improve the infrastructure that the tourist industry says they expect when visiting America’s Finest City, to ensure that tourists and the businesses making money off them are paying their fair share of the City’s upkeep. Instead, we’ve heard about taxpayer give-aways to sports teams and hoteliers AND megabonds that would be added to local residents’ property-tax bills.
I think our City’s leaders and the Downtown special interests have it backwards. It is time for the tourists and the businesses that profit from tourism to pay their fair share of the City’s operating costs. I like to say: “It’s time for the Downtown Crowd to pay its own way.” Once that’s happening, then we residents should have a conversation about how much money we still need to fix the rest of the infrastructure to a level that is acceptable to us, and we should identify how we’re going to pay for that. Then, and only then, do we talk about giving away money (if at all) to professional sports teams.
For more on this topic, see Cory Briggs’ article Who Runs San Diego: The Use and Abuse of the Transient Occupancy Tax