‘Bed tax’ plan generates controversy – BOCC disagree, so do representatives of the lodging industry

Community and business leaders clashed last week when a proposal that would raise the hotel/motel tax an additional 2 percent came before county commissioners for formal debate.

Billed as a “work session” for the commission, the Dec. 18 meeting drew both supporters and opponents who packed the county courthouse hearings room and voiced conflicting opinions about the merits of the proposal.

Last year, the county collected roughly $325,000 from its current tax on hotels, motels, inns and B & Bs. The existing tax is a 2 percent charge on overnight room-stays. The proposed increase would boost the tax rate to 4 percent.

Sandy Playa of Ship Bay Inn on Orcas Island, a member of the county lodging tax advisory committee, objected both to the lack of public discussion before the tax increase proposal went to the commission, and its timing.

Playa said innkeepers and communities elsewhere are offering discounted rates and incentives to attract more visitors instead of raising prices. Either the inn or its customers would have to pay an additional $5 per night if the increase were adopted, she said.

“It’s bad timing right now,” said Playa, adding that the portrayal of universal support for the proposal by supporters is inaccurate. “I also have no trust for how these people intend to spend the money when its support has been misrepresented.”

Backed by the Orcas and San Juan islands chambers of commerce and the San Juan County Business Association, the proposal asks that the additional tax be used solely to promote tourism. The marketing campaign would target shoulder-season opportunities for visitors, supporters say.

Orcas Island Chamber of Commerce President Michael Rivkin said the domestic market and chase for tourism dollars has become increasingly competitive. The local economy suffers from a “total lack of county strategy” for tourism promotion and the San Juans are no longer the “media-darling”, he said.

“We’ve had our time and it’s over,” Rivkin said.

Rivkin and fellow proponents insist the proposal has overwhelming support of the members of each of the associations. Most members responded to several surveys which show the majority favors boosting the so-called “bed tax” as long as it is dedicated solely for promotion, supporters say.

Currently, 70 percent of existing funds are divided among theaters, museums, and performing arts centers of the three major islands. The county Fair and county Parks also get a cut of the funds. The county Visitor Information Service receives 20 percent — roughly $55,000 last year — with the remaining 10 percent allocated for special projects.

Becky Smith, manager of the county VIS, said regardless of the marketing campaign and its off-season emphasis, most visitors are still likely to come during the height of the tourist season. Smith said island businesses already struggle to meet demand of visitors during the summer season.

“If we do go for the additional tax amount — strictly for promotion — we have to build more infrastructure,” said Smith, who opposes the proposal.

If the commission pursues the additional tax, the pending ordinance would be reviewed by the county’s lodging tax advisory committee for recommendation. Following the committee’s recommendation, state law requires a 45-day period before the ordinance could be adopted at public hearing. The commission is scheduled to revisit the proposal Feb. 5.

The commission currently remains divided. Chairman John Evans of Orcas Island favors the increase. He worries that the local economy and residents will suffer without it.

Commissioner Darcie Nielsen of San Juan Island supports the tax-hike but has advocated that additional funds be managed and allocated by a neutral party. She suggested that the Islands Economic Development Council could serve as an independent agent to study and recommended how the added money could best be spent.

Bringing the development council on-board to study the proposal’s benefits and drawbacks was also favored by Commissioner Rhea Miller of Lopez Island. Miller is reluctant to approve it as now proposed. She doubts the community supports spending more than $1 million during the next three years to promote tourism.

“Before I can move forward I need, to know how the money would spent,” said Miller, noting that the local economy may not be able to support an expanding number of inns or hotels competing for a limited number of customers. “How many slices to the pie can San Juan County support? To me, that discussion hasn’t happened, yet.”

— Scott Rasmussen is Staff Reporter for sanjuanjournal.com and The Journal of the San Juans. He can be reached at (360) 378-4191 ext. 13 or email.

Comment on this story.

COMMENTING RULES: We encourage an open exchange of ideas in our online community, but we ask you to follow our guidelines for respecting community standards. In a nutshell, don't say anything you wouldn't want your mother to read.