It's an old story, but still a disgusting one. Whenever local governments feel a fiscal pinch, they often look to the hospitality business to bail them out of their troubles. Most times, it's a short-term solution that's bound to fail in the long run. The tactic involves boosting the hotel occupancy tax rate with the additional proceeds going to prop up budgetary shortfalls or to pay for some pet projects taxpayers otherwise wouldn't agree to fund.
The trend toward diversion of occupancy tax funds for uses other than tourism promotion—the only legitimate use—appears to once again be on the rise. In the past several days, news reports recount how several local governments are moving to rob occupancy tax accounts for dubious purposes:
• According to a story last week in The Florida Times-Union, the city of Jacksonville will take $1.2 million of occupancy taxes (representing a third of the city's 6% levy on hotel rooms) and use it to install a high-definition scoreboard in the local basketball arena. The lawmakers' dubious rationale: the new scoreboard will help the city lure NCAA basketball tournament games to Jacksonville. Sounds like a long shot at best, and that money could be better spent marketing the city's attractions to potential visitors in natural feeder markets.
• Two days later, the MetroWest Daily News reported that Milford, MA approved a hike in its occupancy tax from 4% to 6%, with the extra cash going into the town's general coffers. The city fathers in this Podunk burg don't even pretend the money will somehow benefit the flow of tourism. As Town Administrator Louis Celozzi told the Daily News, “It was sold on the idea it's other people's money, so it's quite easy to say you're in favor of taxing people coming from out of town or out of state.” I'm shocked the owners and GMs of the six or so branded hotels in the town don't protest this kind of irresponsible talk from an elected official who, in essence, has his hands in their bank accounts.