A bill sponsored by Southwest Colorado lawmakers allowing counties to ask voters to increase taxes on short-term rentals is on its way to the desk of Gov. Jared Polis. La Plata County commissioners may act quickly, and ask voters to increase the lodgers tax as soon as this November.
The bipartisan bill, which cleared the Legislature on April 11, would allow voters to increase the lodgers tax rate, currently capped at 2%, up to 6% if county commissioners opted to put such a question on the ballot. It also expanded the allowable uses of lodgers tax revenue to include public infrastructure and emergency response.
Sen. Cleave Simpson, an Alamosa Republican representing Senate District 6, and Rep. Katie Stewart, a Durango Democrat representing House District 59, were both co-prime sponsors of the bill in their respective chambers.
La Plata County Commissioner Matt Salka approached both lawmakers about legislation and made the proposal a foundational issue of his own bid for reelection last November. He testified before the Senate committee in favor of the bill.
As the county budget has begun to ache under the strain of lower property tax rates and disproportionate increasing inflationary costs, officials have begun looking elsewhere to supplement lost revenue.
Lodgers taxes are in essence a sales tax levied upon vacation rentals, hotel rooms and other overnight stays less than 30 days. Also known as the tax locals don’t pay, they are often a more popular revenue-raising mechanism than standard sales or property taxes.
Commissioner Marsha Porter-Norton, who testified before the house committee in favor of the bill, told lawmakers, “Counties need more tools in the tool kit.”
“This really is a common-sense measure that gives counties the flexibility they need to support critical local services while maintaining voter oversight,” Simpson said when he introduced the bill in committee last month.
Although counties’ abilities to collect lodgers taxes have been restrained by a 2% cap set in 1987, municipalities are not subject to the same restrictions (the city of Durango collects a 5.25% lodgers tax). That confounded Salka, the former mayor of Bayfield.
“Why the heck are cities allowed to increase their lodging tax to X amount of percentage, where we're just stuck at the 2%?” Salka wondered during his first term.
The bill had the backing of both Colorado Counties Incorporated and Counties & Commissioners Acting Together, both lobbying groups. It was opposed by lobbyists and individuals representing vacation rental owners.
Salka and Stewart hail the bill as a win for local residents, who may now have the opportunity to tax visitors who use services in the area.
“Many counties, especially rural and tourism-dependent ones, struggle to fund essential services that visitors relay on,” Stewart told the House Committee on Transportation, Housing & Local Government on March 4. “This bill provides a toll to generate revenue locally from those who use local infrastructure and services the most without increasing costs for residents in places that are already expensive for the workers who make our tourism hot spots thrive.”
Salka said he expects Polis to sign the bill shortly, and said he plans to push for a ballot questions to raise the county’s lodgers tax – potentially as soon as this November.
“We’ll be asking the voters – that’s my goal,” he said. “I need to sit down with the other two commissioners, but yes, we will be having discussions on bringing this to the ballot.”
The current 2% tax generates about $1 million annually. In November, voters overwhelmingly supported a measure to reallocate 70% of that revenue away from tourism marketing and toward affordable housing and child care. If voters were to approve a 6% tax, that could bring in an additional $2 million.
“This could do a lot of good,” Salka said. “Housing, child care, first responders – your fire, your police, your sheriffs – and then road infrastructure too. If it’s 6%, $3 million can do a lot of good.”
rschafir@durangoherald.com
