‘Jet fuel’: LA City Council approves ballot measure to raise hotel tax during Olympics
Los Angeles leaders, beset by budget problems, see a way to increase the city’s tax revenue due to Olympic-sized tourism.
The City Council approved a June ballot measure that would temporarily raise the hotel tax.
The 2028 Olympic Games create an opportunity, said Council Member Tim McOsker, “to add jet fuel to our tourism community.”
A ballot measure advanced Tuesday proposes a temporary 2% increase in the city’s 14% short-term lodging tax — commonly called the bed or hotel tax — down to a permanent post-Games increase of 1% starting in 2029.
“Two [percent] it’s an important jump, but it’s the jump that the Olympics are about,” McOsker said.
A 2% short-term increase would bring in $44 million a year in revenue, while a 1% increase would bring in half of that after 2028, according to City Administrator Matt Szabo. The money will be used for general city services such as emergency services, parks and street maintenance, according to a draft ballot measure.
The proposal comes after a campaign to raise the minimum wage for hotel workers to $30 later and ahead of a June vote that could leave voters exhausted amid the city’s budget woes.
Critics argued that the hotel industry was already experiencing little change in wages and low demand, and any tax increase would send guests to competing hotels in nearby cities.
“At a time when you’re seeing this decline in demand and the loss of tax revenue each year reaching $20 million, it seems like the wrong time to put additional burdens on that dwindling base,” said Nella McOsker, president and CEO of the city advocacy group LA Central City Assn., told The Times.
A temporary 2% option was one of several proposals; Councilman McOsker (father of Nella McOsker) initially supported a temporary 4 percent increase and a permanent 2 percent increase that would have made LA the highest hotel tax in the country.
The council also rejected, narrowly, a 2% increase proposed by Councilwoman Eunisses Hernandez by a 7-8 vote.
Councilwoman Monica Rodriguez voted against the measure, saying the council did not do its duty to reduce spending elsewhere before putting the tax on the ballot.
“You can’t ask people to pay more money when you haven’t even done the work to recover the costs you passed,” said Rodriguez.
Also approved at Tuesday’s meeting was a ballot measure that, if passed in June, would close a tax loophole for illegal marijuana businesses and open them up to public collection.
“Knowing that we can take you to court is a very powerful hammer. If you owe us money, it’s usually more expensive to pay,” said Matt Crawford, an analyst for the city’s Office of Finance, during a hearing in late January.
Council members were reluctant to believe that the R70 million tax increase in its first year was real, especially when it was collected from undocumented businesses that are difficult to track. But the focus, said Council Member Bob Blumenfield, is to shut down illegal businesses, not tax them.
“They didn’t get it [Al Capone] for being a bandit. They found him for tax evasion,” Blumenfield said in January.
The hotel tax and illegal marijuana tax measures will be on the ballot June 2, when Los Angeles voters will re-elect a mayor, city attorney and city administrator, and fill eight of 15 City Council seats and several seats on the LA Unified Board of Education.
The June 2 election is the first. Other races will continue in November.
