Council Sends Hotel Occupancy Tax Back to Voters

For the second time this year, voters will be asked to decide if the city should raise the tax hotels must charge customers.

In March, about 60% of city voters rejected a proposal to raise the hotel occupancy tax from 10% to 13% in March.

With a 3-2 vote, the City Council recently decided to put a proposal on the November ballot to raise the tax to 12%. They’ve also changed the name of the tax, calling it the hotel visitor’s tax.

When the council unanimously put the proposal on the March ballot, the argument for it was the opportunity to benefit from hotels being built in the city and the Disneyland expansion.

“I still think that the city ought to use the muscle from these new hotels and draw more revenue from the people who don’t live inside of the city,” Councilman Mark Rosen said.

Rosen said this new proposal will fare better than the March measure.

“We did it at the last minute for the March election,” he said. “I don’t think the word got out. A general election will draw more voters and we’ll get a better sample of the city.”

Councilman Mark Leyes agrees that the new measure will fare better than the March proposal but still voted against putting it on the November ballot.

“I don’t oppose the tax,” Leyes said. “But the voters did decide in March by a 60 to 40 margin. Will the additional voters in November be inclined to raise taxes? I don’t know if they are.

“In a way the vote in March was a message to the council,” Leyes said. “Not only do [voters] not want to raise taxes, maybe they don’t quite trust us enough with more revenue for any reason.”

That was certainly the position of former Councilman Bob Dinsen, who wrote the argument against the March proposal. And Dinsen said he hasn’t changed his mind.

Dinsen also said the increased tax would hurt the city’s smaller hotels, as Garden Grove’s bed tax is currently a third less than Anaheim’s, which is 15%.

“Maybe we need to sit back a couple of years,” Leyes said. “Let the hotels situate themselves and let them market themselves as being less expensive than Anaheim before we possibly put a crimp in their competitiveness.”

But Rosen said the proposal has the support of the big hotels, and that it allows the council to create exemptions for smaller motels.

“We’ll sit down and figure out what criteria to use, perhaps using amount of room or distance from Disneyland,” if the proposal is approved by voters in November, Rosen said. “I still think it’s a valid source of revenue.”

Chris Ceballos can be reached at (714) 966-7440.