Heading off a legislative tax grab - and an unpredictable electorate - Douglas County commissioners are considering enacting a 3 percent lodging license tax that would raise $1.36 million a year for tourism, parks and recreation.
The board was set to put a 3 percent increase in the transient occupancy tax on the November ballot to shore up room tax revenue on the decline for 10 years.
Last month, the district attorney's office issued an opinion that it was within commissioners' power to charge businesses that rent lodgings a 3 percent license tax based on a percentage of rates collected without going to the Legislature or the voters.
County Manager T. Michael Brown, in a report to the board for consideration Thursday, encouraged commissioners to be pro-active.
"It was understood that there was a very real possibility that the Legislature would not approve an increase for Douglas County. In fact, it was a real possibility that the 2011 Legislature would increase the TOT rate by 3 percent themselves and take the funds to support state programs - just as they did to Clark and Washoe counties in the 2009 legislative session," Brown said in his report.
He said county staff was advised by Carson City of a section of Nevada law that allows for a transient lodging license tax.
The license tax would accomplish the same effective increase in the TOT rate through Nevada Revised Statutes and could be implemented as early as June 1, Brown said.
If the tax increase were passed on the November ballot and the 2011 Legislature approved it, the earliest the county would begin collecting funds would be July 1, 2011.
Implementing a 3 percent license tax would provide about $1.36 million in funding approximately a year earlier than the legislative approach.
He urged the board to enact the license tax to ensure local use for local revenues.
"Putting these additional funds to work as soon as possible is critical to support our local economy, as well as our park and recreation facility and equipment needs," he said.
Under a proposed timetable, the board would introduce the ordinance on April 15, with second reading and possible adoption May 6. The ordinance could be in effect with vendors collecting the tax June. 1.
Estimates for revenue generated by each 1 percent are $400,000 at the Lake and $60,000 in the Valley.
Douglas County was approached by the Tahoe Douglas Visitors Authority and the Lake Tahoe Gaming Alliance a year ago asking for support to increase the transient occupancy tax to raise more funds for tourism promotion at Lake Tahoe.
The county was considering asking for a TOT increase to fund park and recreation facility and equipment maintenance, all lagging because of the reduction on revenues over the past 10 years.
An increase in room tax revenue has been supported by the board because most of it is paid by tourists. In February, Brown advised the board that budget revenues needed to be revised downward by about $1 million, or 17 percent, because of the decline in transient occupancy tax.
