Workshop focuses on new room tax distribution
Room tax money is quite possibly the most controversial, most unstable and most misunderstood source of revenue in Douglas County.
The confusion has only increased since the passage of AB616, which will fundamentally change the way transient occupancy tax is distributed in the county.
At a workshop Tuesday night, county leaders attempted to shed some light on the changes and what could be done to mitigate the negative financial effects to certain county programs.
About 30 residents showed up, most of them concerned about what would happen to the vulnerable but important programs. Many said they were willing to pay more taxes to support the services, but were skeptical that a majority of county voters would feel the same way.
Room tax breakdown
Dan Holler, county manager, began by explaining how the room tax money is divided in the county and how it would change under the new law.
The room tax rate at Lake Tahoe in Douglas County currently is 10 percent. One percent was an increase that took effect Oct. 1 of this year, which is dedicated to the newly created Tahoe Douglas Visitors Authority. Two percent is restricted for transportation and other state uses, and the remaining 7 percent is under the county’s control, Holler said.
Of that 7 percent, 2 percent goes to promotion agencies by allocation area. For the 1997-98 budget year, about $1.5 million is allocated to Lake Tahoe Visitors Authority and about $150,000 to the Carson Valley Visitors Authority.
The rest – about $3.3 million – is used to help support the Parks and Recreation Department, debt service on Kahle Park, libraries, Senior Services, the Minden/Tahoe Airport, the two chambers of commerce and administration, according to a staff report by Holler.
Under AB616, the 7 percent would be equally divided between the county and promotion so that each receive 3.5 percent. In 2007, the 7 percent will be divided so that 35 percent goes to county programs and 65 percent goes toward tourism promotion.
Holler said the problem with supporting those programs with room tax is that the revenue stream is not guaranteed or stable. Over the past several years, the increase in room tax revenues has been minimal or nil.
“We are beginning to look at what’s going on with tourism, and we don’t see the ability to fund these programs at the level we do today, with or without AB616,” he said.
More promotion, more money
Lou Martin, a resident of the valley with a business at the lake, pointed out that more money for promotion should turn into more money for the county as room nights increase.
“You will get more money if you spend money on promotion,” Martin told commissioners. “If (promotion agencies) are doing their job, everything should fall into place and you should see an increase in revenues to Douglas County.”
Jacques Etchegoyhen, board chair, expressed some uncertainty that the county would see results.
“We’re hopeful that the increase does do that, but I’m not holding my breath,” he said.
As a result, the board appointed an 11-member committee to recommend methods for increasing revenue to fund room tax-supported services.
Additionally, Holler suggested three primary ways the county could raise the money: Voter approved property taxes; license, permits and fees; and utility operator fee increases.
The property tax rate would need to be increased about 6.5 cents per $100 assessed valuation to fund the library at its current level of service, Holler said. That move would require voter approval, and many participants of Tuesday’s workshop feared that an initiative – even if marketed for the library – could fail.
According to the Nevada Department of Transportation, the county could increase its property tax rate by 20 cents and still have the second lowest rate of all counties in the state. But the majority of residents have proved in the past that they are unreceptive to tax increases, commissioners said.
Holler also suggested implementing an arcade fee, which could generate up to $200,000 starting in 1998. Another proposal was a 1.5 percent increase in a utility operator fee phased in over two years to yield about $900,000.
The board has virtually no authority in placing items on a ballot for sales tax increases, except for specific purposes outlined in state law.
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