Hotel association disputes city's right to raise lodging tax

Sunday, September 16, 2012 | 4:01 p.m. CDT

COLUMBIA — The city of Columbia does not have the authority to raise its lodging tax to pay for a new terminal at Columbia Regional Airport, the Missouri Hotel and Lodging Association has argued in a letter to the City Council.

The letter disputed a report that City Manager Mike Matthes issued to the City Council on Sept. 4, which argued that a 1999 state statute gives charter cities such as Columbia the authority to raise hotel taxes without state permission. Charter cities and counties have more freedom from the state government to establish their own rules and regulations.


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City officials hope to raise the lodging tax from 4 to 7 percent of gross receipts from guests' rental payments.

The association's letter said that the statute only applies to cities in charter counties. Under that interpretation, Columbia would be excluded because Boone County is not a charter county.

Gail Myer, president of the association and author of the letter, said the statute was only meant to apply to Independence. He pointed out that Independence is named at the top of the statute.

"They cite a statute that doesn't apply to Columbia," Myer said of the city's report.

The 1999 statute allows "a charter city with a population of more than 100,000 located in a charter county" to enact taxes of 5 to 7 percent on hotels, motels, bed-and-breakfasts and inns, with voter approval.

Matthes' report cited a different clause that says the statute does not "limit the power of a constitutional charter city in a non-charter county from imposing a business license tax on hotels."

The report acknowledged that the legality behind a lodging tax increase without state approval is murky. "The proliferation of special legislation authorizing cities to impose hotel taxes casts some doubt on the issue," the report stated.

Columbia first imposed a tax on its hotels in 1980, setting it at 2 percent. In 1999,  voters approved a proposal to raise the tax to its current level of 4 percent.

The association's letter argued that a new airport terminal would be an infrastructure development, not a tourism development. The statute requires that proceeds from a lodging tax be used for the promotion of tourism.

"It would be no different from using hotel taxes to widen roads," Myer said.

Myer also disagreed with the report's conclusion that the city could levy a license fee on each occupied hotel room, similar to Kansas City's $1.50 fee. After Kansas City instituted that fee, state legislators restricted other cities from following the example because it "wasn't being applied as it was intended," Myer said.

Earlier this year, the Missouri House of Representatives failed to pass a bill that would have given Columbia specific authority to increase its hotel tax by 3 percent. After learning of the bill's failure at the July 2 council meeting, Mayor Bob McDavid requested a report on whether the city could raise the tax without authorization from the state government.

McDavid and other city leaders want to build a new terminal to create room for the extra passengers that new flights between Columbia and Orlando International Airport will bring starting in November.

Rep. Chris Kelly, D-Columbia, who co-sponsored the bill, was unsure whether Columbia could raise the tax without state authorization.

"They both have legitimate points of view," Kelly said.

Kelly expressed doubt that a ballot to raise the tax could even be passed without support from the lodging industry. He said that city officials were speaking with industry leaders to come up with a solution.

After Matthes released his report, the Columbia Hospitality Association, which represents 22 Columbia hotels, motels, and bed-and-breakfasts, expressed concern that a tax increase would hurt local development. It argued that Columbia's low lodging taxes help draw conferences and festivals such as the True/False Film Fest and Roots 'N' Blues 'N' BBQ Festival.

Myer said that a 10 percent increase in the hotel tax has been shown to lead to a 3 percent decrease in occupancy rates. But he doesn't think that hotel taxes are always a bad thing.

"If it's actually spent to bring new visits to the community, it can have a good effect," Myer said.

Supervising editor is Scott Swafford.

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Norm Benedict September 17, 2012 | 1:36 p.m.


Thanks for putting together this article. Any chance of this (or an updated version) appearing in the linear paper tomorrow?

Norm Benedict
Norman-Robert Communications

(Report Comment)
Joy Mayer September 17, 2012 | 5:00 p.m.

Hi, Norm. I checked with our print desk, and it looks like this should run in print tomorrow morning. Thanks for checking.

Joy Mayer
Columbia Missourian

(Report Comment)

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