Finding local cash in hotel fees must wait

In the seemingly constant scramble by Connecticut municipalities to find new ways to raise revenue and ease nearly total reliance on property taxes to fund services ranging from schools to snow plowing, one persistent proposal is to allow towns and cities to collect a local room occupancy tax for short-term hotel stays.

Look no further than Groton to find hard evidence of the desperate need for such revenue diversification. Faced with losing at least $5 million in state aid to education for the upcoming fiscal year, the Groton Town Council recently voted to cut $5.2 million from the town’s school budget. This action left school officials scrambling and resulted in a recommendation to close Pleasant Valley elementary school and lay off at least 70 school employees. School Superintendent Michael Graner said even with those drastic measures, the district must cut $1.5 million more before it meets the council’s reduction.

We certainly feel Groton’s pain and think giving Connecticut municipalities the ability to impose a modest local hotel occupancy tax is worth serious consideration. Travelers already pay such taxes when visiting many cities and states throughout the country – in places as divergent as Vermont and New York City, for example.

However, now is not the time for such consideration. The state already charges visitors the highest-in-the-nation hotel occupancy at 15 percent. Tacking yet another fee on top of this already whopping amount would simply not be judicious. With the state’s economy still sputtering, it’s not time to risk any of the dollars spent here by visitors who come for both leisure and business purposes.

According to 2016 data from the National Conference of State Legislatures, Connecticut’s 15 percent hotel occupancy tax far outstrips similar taxes imposed in other states. The District of Columbia’s 14.5 percent tax comes to the closest to the Nutmeg State’s, but Connecticut and Washington, D.C. are joined by just three states – Hawaii, New Jersey and Rhode Island – in having state hotel occupancy taxes that top 10 percent. Most states charge half or less of Connecticut’s rate.

The data can be deceiving, however. Travelers to many of these other jurisdictions aren’t really spending fewer dollars in hotel taxes. Many states charge lower state taxes on hotel occupancies, but allow counties or municipalities to tack local occupancy taxes on top. In some jurisdictions, the total occupancy tax paid tops Connecticut’s 15 percent.

The debate over local occupancy taxes or local sales taxes on hotel rooms and restaurant sales has been a recurring one in Hartford. Stonington officials on several occasions pushed for the ability to impose such local taxes and former Groton state Rep. John Scott also proposed such a measure in 2015.

The issue is worth more debate and study, but for now, not implementation.

When (and if) the state’s economy is stronger, and fiscal stability established, legislators should consider lowering the state’s hotel occupancy tax and allowing municipalities to impose modest local taxes. Such a measure, if properly calibrated, would not hurt the tourists upon whom so many of our businesses depend, but could produce hefty amounts of revenue for municipalities.

 

The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Tim Cotter, Staff Writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.

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