Council Panel Votes for 1% Hotel Tax Hike

A San Diego City Council committee voted Wednesday to raise the hotel room tax by one cent and to form an ad hoc panel to study additional increases.

The Rules, Legislation and Intergovernmental Relations Committee voted 4-1 for the penny increase from the current 7% in the transient occupancy tax (TOT).

The proposed increase is expected to come before the full council for a vote on June 6 and, if approved, would go into effect Aug. 1. It would generate about $4 million each year. The proposed ad hoc committee would study the possibility of future increases and how the funds from the one-cent increase would be spent.

City Councilwoman Judy McCarty, who had asked in the past that the money from the tax hike be used to help finance the cost of improving the city’s ailing sewer system, was the lone dissenter.

“I think that if we’re going to increase the TOT, we need to realize that we need to put some of (the revenue) into the category of maintenance,” McCarty said. “Like I’ve said in the past, tourists flush toilets too. The tourists who use Mission Bay should also help us out.”

‘Arts Are Industry’

Councilwoman Abbe Wolfsheimer, responding to McCarty’s concerns, said: “Toilets don’t really attract tourists.”

“We are getting to the point where arts are industry,” she said. “I think you can market San Diego’s hotels and motels by saying not only are you going to enjoy our beaches and zoos but you’re also going to enjoy our arts.”

Wolfsheimer, wearing an “I Vote for the Arts” button, sided with the 12 representatives of groups ranging from the Old Globe Theatre to the Centro Cultural de la Raza who, donning the big buttons, spoke in favor of the tax increase.

Mayor Maureen O’Connor, the committee chairman, reiterated her contention that the $4 million generated by the increase would not significantly reduce the $1.5-billion price tag to install a secondary sewage treatment system as required by federal law. “We are not dealing with a lot of money here,” she said.

Instead, O’Connor wants to use the tax money to improve Mission Bay and Balboa parks, fund in part her proposed Russian arts festival, fund local arts groups and finance a city office of protocol. The city now spends about $9 million for the arts from its budget of about $800 million, O’Connor said.

O’Connor noted that the city has to maintain the “competitive edge” in the tourism industry. She said the “original intent and integrity” of the 1964 ordinance enacting the hotel room tax was to promote the city.

“I include in the definition of promotion the idea of Super Bowls, Holiday Bowls and the arts,” she said.

O’Connor said San Diego’s hotel room tax is “comparatively low” in relation to other cities such as San Francisco (11%), New Orleans (11%), Los Angeles (12%), and New York (13%).

Opposing the increase was Ted Kissane, president of the San Diego Hotel and Motel Assn., who said that the tourism industry pumps about $2.5 billion into the city’s economy and the hotel room tax hike would hurt the industry.

Kissane asked that the city not increase the TOT until completion of the new convention center in 1990.

After the meeting, Kissane said: “The TOT was put in force to promote tourism. It has created the third largest industry in the city. Now they are killing the goose that laid the golden egg.”

According to the 1964 ordinance, the city must spend 4 cents of the current 7-cent tax to promote San Diego by supporting endeavors such as the city’s Convention and Visitors Bureau, 1 cent on quasi-promotional programs such as anti-litter campaigns, with the remaining 2 cents going into the city’s general fund.