Six of nine Colorado counties that sought lodging-tax increases in last week’s election passed the measures, indicating that while residents in tourist-draw areas remain largely OK with asking visitors to pay more for services, some voters see limits to that request.
The elections came about after county leaders, particularly those from resort and destination areas, asked legislators during this year’s session to boost from 2% to 6% the maximum size of lodging taxes they can levy in unincorporated areas. House Bill 1247 also expanded possible uses of the tax revenue, adding public safety and public infrastructure to a menu that previously included childcare, workforce housing and tourism marketing.
The county leaders who sought the change — many of whom then turned around and asked voters to double or triple the size of their lodging tax — argued that increasing numbers of visitors require more services and should be asked to help pay for them. Leaders from Chaffee and Routt counties, for example, said road-repair costs have escalated as more out-of-towners drive over them, and Park County leaders said short-term rentals make up a growing percentage of calls to which the sheriff’s office responds.
Some lodging-tax hike initiatives were contentious
While several of the requests were largely unopposed, tourism-sector leaders in some areas pushed back on the lodging-tax-hike requests — tax increases that normally find more acceptance than hikes in sales or property taxes that impact every-day residents.
A swath of Chaffee County hotel operators warned that the increasing tax bills that tourists faced could make them less competitive for business than other parts of the state or Rocky Mountain West, especially as tourism is starting to slow nationally. And some Eagle County sector leaders warned that higher lodging tax bills could discourage visitors from eating out or shopping as much while they are in town.
Both opposition campaigns appeared to impact the election results. Chaffee County residents rejected boosting lodging taxes from 1.9% to 5.9% by a margin of 58% to 42%. And while Eagle County voters appear to have passed a doubling of their current 2% lodging tax, it was only by a slim margin of 50.5% to 49.5%.
More tourism, more popularity of lodging-tax requests
Across the other seven counties that sought lodging tax hikes — all of which asked voters to triple the current 2% tax on stays in hotels, short-term rentals, RV parks and other accommodations to 6% —support for the measures seemed to rise in proportion to the percentage of the economy that is tied to tourism.
The biggest passing margin of the night, for example, came in tiny Hinsdale County, where an overwhelming percentage of tax revenues are tied to summer visitation to Lake City and the surrounding forest land. Residents there backed the lodging tax with 76.5% of the vote.
Ouray County voters approved a 6% lodging tax with 57% of the vote. Routt County, home to Steamboat Springs, sent the tax hike to victory with 56% of the vote. Gilpin County, whose economy is heavily dependent on gamblers hitting the casinos in Black Hawk and Central City — and whose county-funded jail also gets a disproportionate share of its inmates from out-of-town visitors — gave 55% approval to the tax hike.
Maybe the one exception to the trend was Park County, which functions in some ways as a bedroom community to the Denver area, though its outdoor spaces also generate tourism. Voters there backed a 6% lodging tax with 63.5% of their ballots, partly driven by a plea from local public-safety officials.
More battles coming over local-government taxation
“This is community-focused and sustainable,” Routt County Commissioner Sonja Macys said in a news release when commissioners voted to put the tax hike on the ballot and dedicate 90% of new revenues to public infrastructure and public safety. “Our rural communities are feeling the strain of increased visitation, and this lodging tax gives us a tool to reinvest in the infrastructure and services that support both residents and visitors.”
In addition to Chaffee County, lodging-tax increases failed in Custer and Lincoln Counties, areas in which tourism makes up a smaller percentage of the local economy. Custer County voters rejected the measures by a 2-to-1 margin, and 60.5% of Lincoln County voters sent the proposed tax hike there to defeat.
Eastern Plains-based Lincoln County derives a lot of its gross domestic product from agriculture, though the town of Limon features a cluster of hotels right off Interstate 70 that cater to cross-country travelers. And while Custer County draws visitors to historic towns like Silver Cliff and Westcliffe, it also has a significant agricultural industry.
The passage of HB 1247 and subsequent elections may be just a prelude to larger discussions in the upcoming legislative session about how local governments can raise new revenues to fund affordable-housing initiatives. Many counties and towns across Colorado face budget crunches as the economy begins to slow and some sources of federal money dry up, and some local officials would like to have the ability to create new fees and taxes that will bolster their revenue bases.