Beverly Hills : Hotel Tax Collection

The City Council cleared the way Tuesday for the city to begin collecting hotel taxes monthly instead of at the end of each quarter beginning in January. The approval allows the city to draw interest on millions of dollars sooner and also minimizes the impact of delinquencies on the city.

The 12% tax on room rentals is expected to bring in $7.2 million to city coffers this fiscal year, City Manager Mark Scott said in his report to the council.

The tax makes up 10% of the city’s General Fund, so “clearly, by any measure, the City of Beverly Hills collects a significant amount of revenue via the Transient Occupancy Tax,” Scott said.

The city stands to bring in an additional $60,000 in interest each year by changing the payment schedule, he said.

Requiring hotels to pay the tax monthly instead of every three months will also reduce the amount of money the city has at risk, Scott said. More than $150,000 in delinquent hotel taxes is owed to the city from the 1991-92 fiscal year, he said.

The monthly payment system will also serve as a weather vane for judging the economic climate, Scott said. Knowing the number of hotel units occupied is a valuable tool because hotel guests spend money in the city’s shops and restaurants, which also generate taxes for the city.

Scott noted that the cities of Anaheim and San Diego have collected hotel taxes monthly for more than 10 years.