California Councilman Proposes Raising Hotel Tax for Charity

October 9, 2007

Hotel taxes are often viewed as taxes on out-of-towners—a way of raising more money for government services without having to pay for them. Many cities dedicate some or all of the money for new sports stadiums, convention centers, or tourism-promoting activities, and oversight is lax because the taxes aren’t paid by voting constituents.

Coronado, California is one such city, but Councilman Frank Tierney wants to go one step further: he wants to raise the city’s hotel tax from 8 percent to 11 percent, and send the $3.4 million each year to a charitable non-profit, the local Sharp hospital (one of four in the region). The City Attorney objects:

Giving public funds to the foundation, which is not accountable to voters, would violate the state constitution, [City Attorney Morgan] Foley said. The initiative also does not make provisions to terminate the tax in case the hospital unexpectedly closes, he said.

We all know politicians like to use tax money to fund their favorite government projects. Tierney (who, incidentally, is running for mayor) evidently wants to start using tax money to fund his favorite private projects, a trend that would be very problematic. If Coronado residents believe that the local hospital should be subsidized, they should consider raising taxes on themselves, and constantly reviewing the payments to prevent waste. Exporting the burden to out-of-towners and making it a dedicated stream of revenue undermines transparency and risks waste and corruption.


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