Already struggling to fill rooms, hoteliers and tourism officials fear a pair of tax proposals will stymie further their efforts to draw conferences and tourists to Connecticut.
Under one bill being considered in the Connecticut General Assembly, regional planning organizations would be allowed to impose an additional tax on hotel room occupancy sales. A separate bill under consideration in the current session would return a portion of the state hotel tax to municipalities, which could be appealing for legislators reluctant to break precedent and allow taxation authority on a local basis.
The proposals are an outgrowth of the legislative Municipal Opportunities & Regional Efficiencies (MORE) Commission, which explores ways to get towns working together in various regions of the state, and reduce their dependence on property taxes for revenue.
“Local option taxes ”“ we know they are controversial,” said Gian-Carl Casa, director of public policy and advocacy for the Connecticut Conference of Municipalities, testifying on the legislation this spring in Hartford. “But they do mean that people within a community ”“ people who live and pay taxes in towns and cities ”“ will be able to decide best what mix of revenue sources work best for that community. It may not be the same in every municipality, but what”™s the same is that there is an over-dependence on property taxes in every community across the state.”
Hotels and tourists officials are against the bills.
“Allowing a municipality to impose its own occupancy tax on a hotel would make that hotel less competitive with respect to other hotels located in Connecticut or outside the state,” said Karen Senich, executive director of the Connecticut Commission on Culture and Tourism. “A convention or meeting planner, group tour operator or travel agent looks at the cost of a hotel in total, including the taxes. When a Connecticut municipality is allowed to impose additional taxes that make the cost of a particular hotel much higher than the cost of a similar establishment in a surrounding state, the planner or agent will look elsewhere.”
Connecticut has charged a hotel room sales tax since 1959, according to Judith Lohman, an analyst in the Connecticut Office of Legislative Research. In 1978 the Connecticut General Assembly passed legislation to dedicate a portion of the hotel tax revenue to promote local tourism; in 1992, it created a dozen tourism agencies, including what evolved into the Connecticut Commission on Culture and Tourism.
In 2006, however, moneys that had been reserved for tourism agencies were funneled into the state”™s General Fund; tourism activities are funded today by state appropriations supplemented by federal funding, private contributions and proceeds from sales of tourism-related advertising and products.
Connecticut room occupancy tax collections in 2009 were 14 percent lower than in 2008.
“Why is the lodging industry once again being targeted to produce additional tax revenue, when the state has abandoned the industry by reducing state tourism and marketing funding to one dollar?” fumed Chuck Moran, president of the Connecticut Lodging Association and general manager of Courtyard by Marriott in Cromwell, south of Hartford. “Tourism is not ”¦ a magical goose with an endless supply of golden eggs. An increased tax burden coupled with state tourism marketing budgeted at one dollar undermines the industry and all the people who work in it.”
