NEWS UPDATE FROM STATE REPRESENTATIVE DAVID GOMBERG: Local Effects of Lodging Tax Debate in Salem

By Representative David Gomberg, House District 10

4/21/2025

Last week, I explained that your legislature has reached the halfway point, and that bills not approved in committee by deadlines set in our rules would no longer be considered. We began with a record number of proposals. And as expected, a record number of bills are now “dead”. A somewhat typical number are now advancing with many of those sent to budget uncertainty in Ways and Means, where we will wait to see if there is money to pay for them.

Bills that don’t cost money are sent to the floor for a vote. And there are a lot of them! Basically, the flood of bills backed up in Legislative Counsel, where proposals and amendments are formatted. Committee work was delayed, and that resulted in an overflow of measures in committees just before the deadline. Those that survived are headed to the floor. Thursday, there were more than fifty scheduled.

Most measures on the floor have no opposition. The bill summary is read by legislative staff. The measure is explained, usually by the bill author. There is little, if any, debate. And then there is a vote. That takes about five minutes. And it is important to note that most measures pass by an overwhelming and bipartisan majority.

A few bills take much longer with debate, motions, and maneuvering taking several hours.

The result is that this week, many committee meetings were canceled, and the House convened for longer hours in both the mornings and afternoons as we worked to advance scheduled bills for a vote so they could move across to the Senate. And despite good progress, four dozen measures remain to be considered. That may necessitate morning, afternoon, and evening sessions next week to clear the backlog.

I presided in the House roughly five hours each day as we considered bills approved in committee before the deadline.

Members listen to and engage in debate. But more time is spent on non-controversial or routine matters. Most members bring computers to their desks to work on correspondence, speeches, or committee tasks. Others take time to meet and talk at member desks. It is my honor to preside at floor sessions, but that means little time to multitask.

Thursday morning began with a reading by seventh-grade student Luna Chatila of her essay selected for the Oregon Blue Book entitled “What I Love About Oregon”. You can see Luna here. Listen for her moving remarks about coming to America as a refugee from Lebanon (you can hear Capitol construction noises in the background). As she left the podium, I took one of the roses from our floral bouquets and handed it to her.

Once we get through the backlog, I hope to summarize some of the bills advancing to the Senate and some that have come across to the House.

This week, I’d like to focus on a subject that has generated several legislative proposals and is of particular interest and consequence to our coastal economy. That subject is how we collect and use lodging taxes paid by visitors in our hotels and vacation rentals.

Cities and counties in Oregon are eyeing changes to the state’s lodging tax law as a potential fix for funding strains on local services and infrastructure.

For decades, local governments have collected lodging taxes from hotels, motels, and other short-term lodging providers, and in 2003, the Legislature imposed a statewide tax. The statute also established restrictions around how local lodging tax dollars could be spent, requiring at least 70% to go toward tourism promotion and tourism-related facilities and reserving the remaining 30% for local discretionary spending. The law is meant to support tourism while also putting money back into communities, but many local governments have called out what they see as an imbalance.

70 percent must go toward local tourism infrastructure (trails, performing arts and visual art centers, visitor centers, and other venues) as well as tourism marketing.
30 percent of all taxes levied after 2003 can go toward the applicable local government’s general fund.

Legislative proposals are suggesting either an adjustment of the 70/30 split with more money available to local governments, or proposing that the 70% be used for tourism infrastructure, promotion, and public safety – the argument being that more people in town place more demands on police and emergency medical support.

Lodging taxes don’t always pencil out to a perfect 70/30 split because the rule only applies to taxes set after the law passed in 2003. Some local governments levied room taxes before then and now have more than 30% going toward the general fund. Lincoln City and Newport, for example, first established their lodging taxes in the 1970s. In Lincoln City, 62% goes directly into the general fund. In Coos Bay, North Bend, and in Yachats, 61% goes to the taxing entity, while just 39% goes to tourism. In Manzanita, 90% is kept for the general fund, with only 10% going to tourism.

Vacation rentals have significantly increased lodging tax revenue and also generated controversy in neighborhoods. TripAdvisor shows over 900 in Lincoln City. Most VRBs operate legally. But some fail to register, fail to collect taxes, or worse, collect taxes from consumers but do not return them to local government.

There are approximately 120 local governments that levy transient lodging taxes in Oregon. And while the 70/30 rule is not always the standard, communities bear the burden of maintaining and operating things that directly benefit tourists that are primarily funded by and for community members, like public safety, and community infrastructure. When you have a huge rush of tourists who come over a weekend, the population can double for some communities. Roads, trails, and parks wear out a lot faster, water systems are strained, and public safety call volumes increase.

The League of Oregon Cities (LOC) is advocating changes in the split formula. They argue that in high-tourism cities, the impact of tourism extends beyond hotels and visitor attractions. It places significant strain on essential infrastructure and public safety services, including:

Roads – Increased wear and congestion from millions of annual visitors.
Water & Wastewater Systems – Higher demand for clean water and wastewater treatment, especially during peak seasons.
Public Safety (Police, Fire, EMS) – Increased emergency response needs due to a higher volume of visitors.

On the other hand, the Oregon Restaurant & Lodging Association has consistently opposed changes to local lodging taxes.

They argue that tourism generates property and income taxes that benefit local communities. These revenues support local businesses, including restaurants, lodging, and other tourism-related ventures, which in turn create hundreds of jobs for community members. The taxes paid by these businesses and their employees help fund critical public services and improve the overall quality of life in our communities. When managed wisely, TLT revenues create a balance between tourism’s economic benefits and the sustainability of our coastal communities. By fueling local services, jobs, and community infrastructure, these resources enhance quality of life for residents while supporting Oregon’s vibrant visitor economy.

The Oregon Coast Visitors Association (who receive some funding from the TLT) has also raised concerns about changing the tax. Here are the arguments they published earlier this year:

Tourism contributes $2.3 billion and nearly 26,000 jobs to the coastal economy, employing workers and keeping afloat through seasonal influxes the restaurants and other local recreational and cultural opportunities that year-round residents enjoy. Tourism isn’t just about attracting visitors; it builds an exceptional quality of life for people who live in communities around the state. But without adequate water and sewers, good roads, or adequate emergency services, these jobs are not sustainable.

A 2024 public opinion poll found that over 70% of voters support changing the law so that a larger portion of local TLT revenue can be used to fund vital city services, helping sustain and enhance tourism by addressing its impacts, rather than disproportionally allocating funds to traditional tourism promotion.

Two years ago, I unsuccessfully proposed that more lodging tax dollars be allocated to police and fire services. Several different proposals were introduced this session focused on this major concern and conflict in our coastal communities:

SB 453: Requires the Legislative Revenue Officer to study the 70 percent-30 percent division between the permissible uses of new and increased local transient lodging tax revenues.
SB 457: Requires the Legislative Revenue Officer to study the inclusion of public safety programs as tourism promotion for purposes of transient lodging tax expenditures.
HB 2977: Increases the state transient lodging tax.
HB 3325: Provides that taxing districts within counties with high average annual ratios of tourists to residents may expend a certain percentage of net transient lodging taxes for essential services that benefit both residents and tourists.
HB 3556: Extends the permissible uses of net revenue from a new or increased local transient lodging tax to include public safety services and certain costs related to “community infrastructure.”

Some of the proposals were introduced to spark conversation. Some have stalled. And some failed to move by the deadline and are technically dead. Overall, I expect the conversation to evolve into high-attention public hearings before the session concludes.

Still on the tourism topic, ORLA is reporting evolving consequences of proposed tariffs.

On April 3, Tourism Economics released its latest updated forecast on anticipated changes to international travel demands based largely on tariff policies enacted by the Trump administration. It should be mentioned that this update is based on data assumptions made on March 27, and future forecast updates are anticipated to be more concerning given the April 2 tariff announcements.

Highlights from the latest Tourism Economics report include the following:

The outlook for inbound international travel to the United States is now expected to decline 9.4% year over year, led by a 20.2% decline in visitation from Canada.
International visitor spending in the United States is expected to decline 5% this year, representing a loss of $9 billion in spending.
Much of the spending loss is due to fewer Canadian visitors ($3.4 billion).
The impact in Oregon will likely be more severe as Canadians represent roughly 55% of our international visitors.

All seven tourism regions in Oregon remain below pre-pandemic occupancy levels. This fact is based on comprehensive research conducted by Travel Oregon for the 2024 calendar year. Fewer “heads in beds” in all regions of the state compared to 2019 means less spending power flowing to our main street retail shops and restaurants.

This downward trend in international visitor counts contributes to the discussion about how we spend tourism taxes.

At least 21 of Oregon’s 36 county governments, from the Portland metro area to rural southern Oregon, are facing deficits that could prompt cuts to public services, including law enforcement, road maintenance, and health care, according to the Association of Oregon Counties.

In addition, more than a third of Oregon’s cities anticipated a shortfall as the 2024-2025 fiscal year comes to a close, according to 76 cities that responded to a 2023 survey by the League of Oregon Cities. Since then, many officials say the problem has only grown.

Oregon’s budget woes long precede the Trump administration. The League of Oregon Cities says revenue for local governments has become increasingly insufficient since the 1990s, when voters passed two constitutional amendments in an effort to rein in property taxes, which remain a primary source of county and city funding. Measure 5, which was passed in 1990, set limits on the amount of property taxes that could be taken from each account: $10 per $1,000 real market value for general government taxes. Measure 50, which was passed in 1997, capped how quickly those taxes could increase, setting the limit at 3% annually.

The budget challenges come from a mix of problems, some recent and some simmering for decades. Pandemic-era federal funds that buoyed local government services have largely disappeared. Government revenue, which primarily comes from property taxes, has not kept up with inflation and rising personnel costs. Meanwhile, federal funding – once a reliable source of money for Oregon governments – could see changes under the Trump administration.

Last week, I reported $225 million is in limbo for communities across Oregon after the Trump administration canceled federal grants that include costs for things like a day care center, a water treatment plant, and hospital upgrades. The state is also seeing effects. Two years ago, at the halfway point of the session, we had approved about 30 federal grant applications. This year, we have processed only eight.

Some local officials said Oregon needs to reform its property tax system and how revenue is shared. Not all local government leaders agree.

“I don’t trust the Oregon State Legislature to reform anything with the property tax evaluation,” Lake County Commissioner James Williams said. “If anything, I would want to see more economic development, and I want to see deregulation, honestly, to let the world know that Oregon is open for business.”

Lobbyists also doubt that reforming Oregon’s property tax system is a possibility in the near future. “I don’t have the sense that there is energy or appetite to do that this session,” said the counties’ association.

Three new coastal license plates are working to secure enough buyers to qualify for official production and availability. Under current rules, DMV can begin producing a plate when sponsoring organizations sell at least 3,000 vouchers at $40 each to purchasers who wish to obtain a plate.

The Vibrant Ocean plate would support shark research at OSU.
The Puffin plate would support Oregon Coast Aquarium’s rehabilitation and conservation efforts.
Oregon Dungeness Crab plates would raise money for programs that support and sustain the Oregon Dungeness crab fishery.

Longtime readers will forgive me for being partial to the Coastal Playground Gray Whale plate I helped create to support the Marine Mammal program at Hatfield. More than 35,000 Oregon cars display one.

And with the proliferation of specialty plates, getting a new one isn’t easy. So far, the Crab plate reports less than 300 sales of the 3,000 needed.

Truth be told, my next license plate effort will be an Oregon Pet Plate to support spay and neuter programs around Oregon. But before we design and offer a plate, I’ll need to pass HB 3871, creating the Animal Welfare Trust to administer the program. The bill is currently awaiting attention in Ways and Means.

Oregon currently offers plenty of plate options to support conservation efforts, arts, industries, sports teams, and veterans organizations. Typically, the plate costs an extra $40, with most of that going to the sponsor organization. Here are a few examples.

Legislative time is flying by and we’re ready for another of our monthly Town Hall events. Get caught up on all the goings-on in Salem in this live conversation with Senator Dick Anderson (R, Lincoln City) and myself, Representative David Gomberg (D, Otis).

Note that this month, for the April 25 meeting, there is NO IN-PERSON gathering. You can join from the comfort of your home or workplace via Zoom.

CLICK HERE TO JOIN THE APRIL 25 MEETING, STARTING AT 8AM

I hope to see many of you remotely on Friday. As soon as the meeting concludes, I’ll be off to Klamath Falls for another Ways and Means public hearing.

Check back next week as I hope to have more news on the bills moving through your legislature.