A Grand Compromise: Tourism Lobby And Grand County Work Together On Hotel Tax Reform

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Rural counties in Utah with national parks have to pay for services like solid waste management, roads and law enforcement for millions of visitors, but they rarely have the tax base to afford it. That’s becoming a problem as more people visit Utah, so the state legislature stepped in to help.

Right now, counties in Utah can spend about half of the revenue they collect from the Transient Room Tax to pay for those services. They have to spend the other half on advertising their county to tourists.

That split isn’t working in some places, according to Rep. Carl Albrecht, R-Richfield.

“Grand County and Moab have been hugely impacted by tourism,” he said. “The visitor experience is suffering due to the lack of proper infrastructure to accommodate traffic.”

Albrecht passed a bill in the state legislature that would allow rural counties with a national park or recreation area to spend around 60% of their hotel tax fund on services and only 40% on tourism promotion, so long as they collect more revenue from the tax than they did in fiscal year 2019.

It also allows counties to work with state auditors to ensure hotels and overnight rental owners are paying their taxes.

Commissioners from Beaver, Kane, Garfield and Wayne counties all spoke in favor of the bill, along with groups like the Utah Association of Counties. It passed virtually unopposed, but Albrecht said getting to a version that could pass the legislature wasn’t as easy as it looked.

“The heavy lift was the negotiation with the tourism folks,” he said. “There were times when I felt like locking everybody in the room and not letting them out until they reached an agreement.”

Chris Baird helped negotiate the bill on behalf of Grand County. He’s the county commission administrator and handles the county’s finances. He said the bill isn’t perfect, but it will eventually allow him to move about $600,000 per year from promotion to mitigation.

“That’s really just a fraction of our needs,” he said. “But it’s a negotiation and a compromise with the Utah Tourism Industry Association, Utah Hotel and Lodging and Moab Chamber of Commerce.”

Branching Out From Tourism
The bill also includes a special provision for Grand County that will allow it to spend a portion of the tax money earmarked for promotion on economic development. Baird said it’s a great opportunity for Grand County to try to attract remote workers and businesses to stabilize its economy.

“There’s a lot of downsides to having just a single, mono-economy,” he said. “We saw that when COVID was at its worst. If you have nothing else to fall back on, you get high unemployment rates.”

Baird said the change could allow Grand County to spend as much as $800,000 per year on economic diversification. Last year, the county created an economic diversification committee to help direct the county’s spending decisions, and it broadened the scope of its travel council to include economic development.

But the county only has five years to prove it will work. There’s a sunset clause in the bill that Baird said was added at the behest of the tourism industry.

“The idea is that we have five years to prove it’s effective and not going to impact the visitor economy,” he said. “If we can show that, we can probably get it reauthorized.”

The bill will take effect this summer if the governor signs it into law. 

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