The Grand County Council is scheduled to vote next week on whether to increase taxes on tourists staying in the area.
To generate more revenue, the city council is considering Councilman Chris Baird’s proposal to increase the so-called “temporary room tax” rate from 3 percent to 4.25 percent, the highest the state allows.
Baird said the increase, if approved, would put Grand County on par with other Utah counties focused on tourism. He said 15 of Utah’s 29 counties have top lodging taxes.
“Ultimately it’s either raising the temporary occupancy tax or raising the property tax,” Baird said. “Otherwise, we will cut back on service.”
Baird said Grand County is in this predicament because it has a small population, below-average income, and a small property tax base. About 9,200 people live in Grand County, but he has less than 5% of his taxable county wealth.
Given that more than two million tourists use the county’s services each year, Baird said the budget is tight.
The county allocates funds to various funds such as roads, travel councils, and solid waste management. Each ministry budgets and disburses funds from its own fund. Just like a personal bank account, the goal is to maintain a balance.
In recent years, the county has paid part of its operating costs out of its endowment balance, or surplus, because revenues are tighter than expenditures.
“The balances of these funds will be empty,” Baird said.
The roads department’s fund balance, for example, will be exhausted by the end of the year, he said. The county opposes payment for road works, salaries, and general maintenance.
In fact, Baird said the Highways Department’s operating deficit next year will be about $250,000.
He said there was concern that the fund would run out of money because maintaining roads is one of the county’s main responsibilities.
Ultimately, the county may need to draw down the balance of its main bank account, the General Fund, to continue providing services and begin working on necessary maintenance and capital improvements.
Baird estimates that the temporary room tax rate increase will generate an additional $728,000 in annual revenue.
Its funding supports search and rescue, law enforcement, Old Spanish Trail Arena, Star Hall, Grand Center, emergency management services, solid waste management, travel councils, and maintenance of paved pedestrian and cycle paths. May be used to aid administration.
The state mandates how the county uses the income it earns from the temporary resident tax. Basically, it should be used to promote tourism or reduce the impact of tourism.
Funds currently spent primarily on tourist-used services could be covered by additional temporary accommodation taxes, freeing the General Fund for other county services and needs.
These included upgrading the county’s IT systems, improving prisons and courts, increasing salaries and reclassifying some positions for county employees, addressing drainage issues, and replacing some road department equipment. be
But some business owners fear that further tax hikes will discourage tourists from staying, or even visiting, at all.
“We get a lot of feedback from customers that they can’t come here anymore because they don’t have the money,” said Doug Sorensen, owner of Portal Resort and Campground at 1261 North Highway. 191. “It used to be a family gathering area. I think the prices of things like groceries are high to begin with. These visitors we are encouraging entry are also limited in quantity.”
Guests at Sorensen campgrounds pay between $35 and $100 per night before tax, depending on amenities. Since his business is located in the city, customers are already paying the 12% tax, he said.
Sorensen said owners will be forced to cut staff if tourists stop coming because they can’t afford to pay for lodging or camping. He said Moab is already suffering from high unemployment thanks to its seasonal tourism-based economy.
“It’s definitely a tourist destination,” says Sorensen. “What[the council members]don’t understand is that it keeps this town alive.
“What I am asking is they need to take a step back and think about this. We think enough is enough.”
County legislator Jim Nyland does not support a temporary room tax rate increase.
His main concern is relying on funds that would not come in if tourism were to falter.
“The county is once again using unguaranteed funds,” he said. “Already right now, we’re spending a lot of money on various budgets across the county.
“Some city council members want the money to go to departmental and county budgets if something happens that causes visitors to slow down significantly or stop visiting. Funds I am concerned about the consistency of
Nyland said he had never spoken to anyone in the community who supported raising taxes.
Dustin Fransen, general manager of Moab Property Management, said his company has already received complaints from visitors about the tax rate. He expects more gains if the rate hike is approved.
He also said it could encourage businesses not to report their businesses as lodging rentals. If that happens, the county could lose the funds it currently receives, which could put law-abiding businesses at a disadvantage.
“I often get calls from potential customers asking me not to charge tax because xyz, which I use regularly, does not charge tax,” Franssen said. “When we tell them it is illegal, they take the next step and try to get another company to help them avoid taxes. The problem is exacerbated because the profits are much higher than those of illegal companies.”
