Happening late in the evening of March 31, some hoped against hope that it was just an elaborate April Fools’ Day prank.
But the literally last-minute inclusion of a whopping $5-per-night hotel/motel tax in the governor’s transportation bill was no joke. It quickly caused a statewide shock wave throughout Georgia’s tourism industry, from Clarksville to Thomasville.
Called by some the largest tax increase in Georgia history, the late-night passage of the epic $1 billion bill by the legislature was reason enough for debate even without the hotel tax.
The bill adds a net increase of about 7 cents on each gallon of gas, and leaves the door open to local/regional sales tax increases, aka TSPLOST, to fund transportation at the county level.
For those in the tourism business, however, the real kicker was the shocking $5-per-night surcharge, which local experts say will inevitably have an effect on tourist spending in Savannah and convention bookings statewide.
Intended to raise at least $150 million for road and bridge maintenance, the tax came courtesy of the conference committee burning the midnight oil to negotiate a version of the bill that could get enough votes in both the Senate and House to ensure passage of what Gov. Nathan Deal hopes to be his signature achievement.
“I got a call about
8:30 p.m. from someone I knew who was in the committee room telling me about this tax that had all of a sudden been added out of nowhere,” said Michael Owens, the president and CEO of the local Tourism Leadership Council.
“Within minutes all hell broke loose,” he said. “My first reaction was, this was some type of ploy, that it couldn’t be real. I didn’t go to sleep that night.”
That late in the game, most members who voted “yes” simply wanted to be satisfied with the final dollar amount, not necessarily where the money was coming from.
People in Savannah’s tourism industry watched TV coverage with jaws agape as the bill inexorably moved to final passage just before midnight.
Owens said that while watching the live debate, he saw one member ask how the committee thought this might affect Georgia hotels bordering states that wouldn’t be burdened with this tax.
“A member from the committee answered him by saying, ‘Honestly, we didn’t look into that,’” said Owens. “I dropped my iPad.”
For Owens, the surprise creation of the tax is “really very concerning. The sheer nature in which it was done is largely why it got such a visceral reaction — and not just from us.”
Owens said he supports increasing funding for long-overdue transportation maintenance, but feels the hotel/motel tax — which goes into effect July 1 and would apply to convention business already booked and budgeted — is simply too high and not nearly enough thought went into it.
“I understand politics, but this tax is scaring the heck out of everybody. Particularly smaller properties throughout the state, they are really worried,” he said. “Everyone shares a sense of anger that nobody was talked to about this.”
Thus began a full-court press of frantic lobbying to get the governor to send the bill back to committee to strip the hotel/motel tax before the legislature adjourned.
“We sent out a call to action at about 9:30 the next morning in a last-ditch effort,” Owens says. “Not that we thought the governor would veto the bill, but maybe he could send it back to committee. There was time to do that at one point.”
At the local level, Owens predicted that “by and large we will probably do OK. We will lose some convention business, but 80 percent of our hotel stays are leisure travel, not convention. So we’ll make it through. But not everybody is Savannah.”
(Of note is that the new hotel/motel tax will not apply to vacation rentals or Airbnb usage.)
For now, Owens and the Tourism Leadership Council have their sights set on lobbying the legislature to strip the tax when it convenes next year.
“I guess part of the message we want to send is, ‘What’s the next industry to be targeted like this? This could happen to you,’” he said.
A lobbyist in Atlanta, who asked to remain anonymous, reports that perhaps the most significant single development is that the window is now open for counties to bring transportation sales taxes to a referendum — such as the Transportation Special Purpose Local Option Sales Tax measures that failed in 2012 in most parts of the state, including Coastal Georgia — and in part is why the governor was so anxious to raise so much new revenue.
The law now allows for those local sales taxes to be fractional rather than rounded to the penny — i.e., less than 1 percent.
The lobbyist said that while the new 26-cents-per gallon excise tax — estimated to raise $60 million per penny — might sound high, keep in mind that the 4 percent state gas sales tax is going away, along with local sales taxes over the first $3 a gallon.
With the current total gas tax at 19.5 cents a gallon, the tax hike amounts to about a 7-cent-per-gallon net increase.
Many progressive-leaning folks are incensed that the bill eliminates the electric-vehicle tax credit and the fuel-tax exemption for school and transit buses — the latter meaning that the Savannah/Chatham County Public School District now faces a $200,000 annual hit, and Chatham Area Transit about $100,000.
However, on the bright side, the bill approved a $75 million bond issue to fund public transit.