May 29, 2002

Measure hikes tax levied on tourists

By MICHAEL DE GIVE
Sentinel STAFF WRITER

SANTA CRUZ — A measure heading for the November ballot proposes a new way to fund the county’s visitor center: Make the tourists pay for it.

The initiative, backed by local hoteliers and other tourist industry leaders, would raise the hotel tax by 1 percent in the county and city of Santa Cruz. The increase would go entirely to fund the Santa Cruz County Conference & Visitors Council.

With visitors footing the bill, city and county governments would be relieved of the burden, which reached $985,000 this year.

"It’s a healthy amount. We can certainly find something else to do with that money — in a heartbeat," said county Supervisor Ellen Pirie, who supports the idea.

The county’s contribution to the visitors council was $277,718 this year. The city of Santa Cruz contributed $417,523.

The rest was funded by private-sector donations and the cities of Capitola, Scotts Valley and Watsonville, which would not be affected by the initiative.

However, initiatives in those cities may follow if the November measure succeeds, said Maggie Ivy, chief executive officer of the visitors council.

The transient occupancy tax now stands at 10 percent and is projected to bring in $7.17 million this budget year. If passed by two-thirds of the voters, the tax would be raised to 11 percent. The increase would roughly equal what the city and county give the center now.

The tax would free the agency from having to raise money from local governments, which are considering cuts in several departments this year.

While the visitors council budget has received cost-of-living increases in recent years, there’s no guarantee those funding levels will continue, Ivy said.

"It’s clear that local government is going to be challenged in the next couple of years to deal with shortfalls in tax revenue," Ivy said.

The city of Santa Cruz tried to raise the hotel tax by 2 percent in 2000, but the campaign — Measure U — failed at the ballot box with only 54 percent of the votes. That initiative, aggressively opposed by the local lodging industry, would have funded a homeless services center.

"I think this one stands a better chance of passing," Pirie said. "You’ve already got the lodging industry on board — it’s their idea."

Ivy believesthinks voters will back the idea since it won’t increase their tax burden.

Ivy also said it makes sense to fund tourism marketing with tourism spending. It will tie the center’s funding to how good a job it’s doing attracting overnight visitors.

"When the economy is poor, and the collections are down, we could take a hit," Ivy said. "During those times, we’ll have to rely even more on the private sector to fund our work."

Ivy said a majority of supervisors and council members support the idea, although they haven’t signed off on actual ballot language.

Bob Suhr, a county resident who led the Measure J campaign to repeal the county’s utility tax earlier this year, said he hasn’t had time to study the proposal, and had no comment.

Contact Michael de Give atmdegive@santa-cruz.com.