The Commerce Committee had a rousing debate over HB 2161 this week. It allows municipalities and counties to create multiple quasi-governmental taxing authorities (called marketing authorities) across the state.
The concept behind 2161 is that local governments can designate a specific geographic area to be within the marketing authority with the consent from 67% of the lodging establishments within the boundaries. Hotels and other lodging establishments inside the marketing authority would agree to add a bed tax (or in some cases an additional bed tax) to the per night room rate. Proceeds from the new tax from the multiple marketing authorities across the state would be sent to the Department of Revenue, who would process the new tax funds, and, in turn, return the bed tax money to the local governments who would funnel the money to the Board of Directors for the marketing authority and the local tourism bureau to be used for advertising the area. I am against this bill for multiple reasons:
- I don’t think the state should abdicate taxing authority to quasi-governmental authorities because they are not accountable to the taxpayers.
- This is a tax on consumers, but consumers will get no direct benefit (unless they want a housekeeping or wait staff job in the future).
- This bill creates more bureaucracy locally and at the state level. Proponents say this won’t cost the state any money. I disagree. It will enable creation of an unknown number of new taxing districts with different tax rates which all send funds to DOR for processing. DOR funnels the money back to local governments and to the local tourism bureaus to be used for advertising. That process is not free. It will obviously require significant personal time, new procedures, database augmentation for the new taxes, and more.￼
During the pandemic, there have been multiple news stories about states (like Arizona) and countries (like Italy and Spain) that have lost significant revenue during the pandemic because they have historically relied upon tourism and fees levied on tourists as primary sources of income. ￼The travel and tourism industry — along with conventions and air travel — have been hard hit by COVID. Conventions, concerts, music festivals and other big events have been canceled. Besides canceled events, people aren’t traveling for multiple reasons: they are sick; a family member or friend is sick or has died of COVID; they’re afraid they or family members will become sick or die; they’re afraid to be in enclosed, non-social-distancing spaces, including airplanes, trains or abuses; they’re afraid to spend the night in a motel room or go in public restroom; ￼they don’t trust the government to keep them safe (obviously a good reason with 400,000+ dead); or they are at high risk for COVID and don’t go anywhere.
Also … let’s not forget the biggest reasons why tourists and conventioneers might choose to go elsewhere. Arizona has a habit of creating negative press for itself. For example:
- Arizona has bungled the pandemic. Arizona has been a COVID hot spot for weeks and has been intermittently worst in the nation multiple times in the past year.
- Since the Jan. 6 US Capitol Insurrection, Arizona is also known as the home of the infamous organic-food-loving Q Shaman and multiple insurrectionist elected officials.
- The Arizona Legislature continues to waste time on inappropriate and radical legislation such as Rep. Walt Blackman’s “homicide by abortion” bill (HB2650) and Rep. Shawnna Bolick’s HB2720 which creates layers of unnecessary bureaucracy, has voter privacy concerns, and hands the presidential election decision to the Arizona Legislature. (What could go wrong?)
- Jon Stewart of the Daily Show dubbed Arizona is the “Meth Lab of Democracy”. This references the founding fathers’ idea that the states would be “laboratories for a democracy” and would test new ideas. If enough states adopted those novel ideas, the federal government would adopt them for all states. As the Meth Lab of Democracy, Arizona is known for our racist, sexist, homophobic, anti-science laws.
Not a good look.
All of the slick ads about cowboys, sunsets, warm weather, and the Grand Canyon will not overcome our bad reputation. The goal of the marketing authorities is to bolster the tourism industry and subsequently the state’s economy. Arizona has a lot of self-inflicted marketing wounds that we have to overcome before people are going to come here post Covid.
The tourism industry needs to rethink itself for the post Covid world. Travel, tourism, conventions and air travel will not be the same as they were before. The sooner we realize that and start innovating and planning for it, the better off we will be. We should cast aside￼￼ the old paradigms.
If you are on RTS, vote “no” on HB2161, HB2650, and HB2720. Let’s focus on helping Arizona’s survive the pandemic physically and financially. That should be our first priority in the legislature.
UPDATE: HB2161 died in the House (28-32) but was brought up for reconsideration and passed (38-20) with many Dems switching votes. It was never heard in committee in the Senate. Neither HB2650 nor HB2720 got any traction. As of April 28, all three of these bills are likely dead.
Photo: Arizona House members stand to watch a country music tourism video of cowboys, sunsets and the Grand Canyon.