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Finance Committee Approves Raising Hotel Tax To 15 Percent

CHRISTOPHER KEATING

April 06, 2010

Despite complaints that it would backfire by hurting tourism, a new regional hotel tax designed to funnel money to cash-strapped cities and towns made it through the legislature's finance committee Monday.

The Democratic-controlled committee voted 40-15 in favor of raising the state's hotel tax to 15 percent, up from 12 percent. The extra 3 percent would go to specific regions: a third of the money to the city or town where the hotel is located, and two-thirds to that area's regional planning organization.

The plan would generate about $19 million a year at a time when state funding to municipalities has flattened because of the weak economy. The Connecticut Conference of Municipalities has supported the hotel tax as a way to help local governments, which currently generate a large portion of their revenue from property taxes.

But Sen. Andrew Roraback, a Republican who represents 15 towns in the state's northwest corner, said the tax would backfire in a difficult economy.

"There's been one goose that has been laying any golden eggs in Litchfield County, and that is our tourism industry," Roraback said. "The goose has managed to stay alive. It hasn't been thriving. This may end up putting a noose around the goose's neck."

The region would clearly lose money "if we scare people off from spending the night," Roraback said.

But state Rep. Cameron Staples, a New Haven Democrat who co-chairs the committee, countered that the extra tax would not make Connecticut "non-competitive," saying the hotel rates are already higher in New York and Boston.

Rep. Christopher Caruso agreed that the impact on tourists would be relatively muted.

"We only have one hotel, frankly, but the overall regional tax should help Bridgeport when people come to Connecticut," said Caruso, a Democrat from that city. "Every state has hotel taxes that are about the same as we are. It's one thing if we were the only state to do it. Everybody speaks about regionalism — but without the funding to make it succeed."

Republicans weren't buying those explanations.

"I am concerned with our hotel industry and how decimated it has been throughout this economic crisis," said Rep. Vincent J. Candelora, the ranking House Republican on the finance committee. The bill, he said, "is trying to provide rate relief on the backs of our hotels."

As an alternative, the legislature's budget-writing committee should cut state spending instead of having the finance committee raise taxes, Candelora said.

"We are targeting a business that is very price sensitive that has been hit hard by this recession," said Sen. Toni Boucher, a Wilton Republican. "They have a particular challenge in these times."

But Rep. Russ Morin, the former Democratic mayor of Wethersfield, said he has advocated for the regional hotel tax for the past four years, saying it has been pushed by mayors and first selectmen across the state.

"A 3 percent tax is probably not going to deter folks who are traveling," Morin said. "That has never once deterred me from traveling to a location that I want to travel to. I am not buying that argument."

In other matters, the committee voted 55-0 on a bipartisan basis to de-authorize $412 million in bond projects that had been approved by legislature and not yet approved by the State Bond Commission. The move was designed to show the Wall Street bond-rating agencies the state is serious about staying below the bonding cap that is based on the size of the state budget.