At a recent collaborative meeting of Mariposa County lodging owners and managers, the following reasons for speaking out against the proposed increase in Transient Occupancy Tax (bed tax) were expressed.

• Measure K is a job-killing tax increase that will hurt every local business that depends directly or indirectly on tourist spending.
• And that hurt will be widely felt throughout the community. According to a May 2014 study commissioned by the California Travel & Tourism Commission (CTTC), Mariposa County is #1 in the state in the percentage of travel-related jobs at 54.8%, ahead of #2 Mono at 49.7% and over 12 times more than the state average of 4.5%. Tourism is indeed the lifeblood of Mariposa County.
• The government might be able to give itself a raise by raising taxes, but the rest of us need to live within a budget. And because vacations have budgets too, the $1.4 million going to this tax increase will reduce what tourists are able to spend in local shops and restaurants.
• In fact, the same CTTC study found that nearly two-thirds (64.8%) of total visitor spending in Mariposa County is for goods and services other than accommodations.
• While an increase from 10% to 11.25% might seem trivial, that $2.50 (for a 2-night stay in a $100 room off season, for example) will lower the rankings Mariposa County properties receive on travel websites, and that can make the difference between tourists choosing to stay here, or choosing a lower-cost room in Madera or Merced counties instead.
• Group business in the “off” and “shoulder” seasons (October to May) is even more sensitive to pricing, which will make filling rooms during this critical period that much more difficult.
• If this tax increase passes, lodging operators could be forced to reduce room rates just to remain competitive. This will further burden our primary industry here, which is also facing increased costs for utilities, maintenance services and labor.
• And because rooms book well in advance (up to 2 years with some contracts), the lodging industry will need to absorb the increase for any existing room rate commitments.
• There is nothing wrong with raising the Transient Occupancy Tax (TOT), but increasing the rate is the wrong way to do it.
• In fact, the County’s TOT receipts have already grown steadily over the years, and will continue to do so in the future without a rate increase.
• The right way to raise TOT is to support the tourism industry’s efforts to expand into what is now the off and shoulder seasons so that the local private sector (businesses and employees alike) also benefit.
• The high unemployment Mariposa County experiences in the off and shoulder seasons is why the Yosemite/Mariposa County Tourism Bureau is partnering with the Economic Development Corporation to grow group event and meeting business, including through the addition of conference facilities in the town of Mariposa.
• Efforts by the Tourism Bureau and its lodging partners to promote the destination and grow the industry have helped increase the County’s TOT receipts over the past decade by nearly 50% from $7.8 million to $11.6 million.
• TOT and sales tax receipts from tourist spending currently contribute over half of the County’s discretionary general fund year after year.
• Because lodging property owners and workers are members of the community, the Tourism Bureau was willing to support an increase in TOT as part of a win/win arrangement. But the Board of Supervisors refused to formally consider the Bureau’s proposal.
• The County Administrative Officer also ignored the needs of the lodging industry when he made his initial proposal to the Board.
• The part of the Bureau’s win/win proposal that the Board of Supervisors did like was a willingness by the Bureau to no longer receive any funding from TOT. And in anticipation of that, the Board already decided during the August budget hearings to begin cutting the Bureau’s funding.
• The funding cut is especially short-sighted given the increased competition for vacationing tourists based on more destinations statewide implementing Tourism Business Improvement Districts (TBIDs). This means that just maintaining the current level of occupancy in local hotels will require even more marketing effort by the Tourism Bureau.
• But a higher TOT rate will also make it more difficult to increase the local TBID, which will likely be needed to make up for the loss in Tourism Bureau funding.
• The combination of a proposed tax increase on the lodging industry and funding cuts to its destination marketing organization adds insult and irony to injury, because TOT in Mariposa County was originally intended to promote tourism.
• So if this TOT increase passes, the lodging industry could suffer a double-hit: higher taxes with less investment. It’s pain with no gain.
• In effect, tourism is the goose laying the golden eggs here, and County government seems to want the goose to lay more eggs while they cut its feed! Every rancher and farmer knows, and even most city folks can understand, why that can never work.
• The California Travel & Tourism Commission is also considering tripling its assessment on lodging, which would inflict a third hit on the local industry.
• Indeed, with the work about to begin on repairing the Ferguson Rockslide (a 2-3 year project), and the inevitable disruption that will have on local tourism, this is the absolute worst time to raise taxes.
• There were options available to the Board of Supervisors to minimize the negative impact on local lodging businesses, but they chose to reject every single one of those, including devoting a portion to invest in growing the tourism industry, imposing the increase only during the vacation season, waiving it for groups holding conferences, or letting it end at some point in the future.
• Attempting to justify this increase based on TOT rates in San Francisco or Los Angeles is deceptive. Our destination is Yosemite, and a TOT of 11.25% would be the highest of Mariposa’s neighboring counties (Tuolumne, Madera and Merced), where competition for lodging near Yosemite is fiercest.
• Mariposa County government does not have a revenue problem, it has a spending problem.
• The County spends $2,389 per resident with 21 employees per thousand residents, according a study the County commissioned. That compares with Tuolumne County at $901 per resident and Madera County at $1,157 per resident, both of which have only half as many county employees per thousand residents.
• At the very same meeting the Board of Supervisors first formally considered increasing the TOT rate, it also accepted a report recommending an across-the-board 10% pay raise for current County employees. Then just one month later, the CAO brought another recommendation for an average raise of 9% for County department heads.
• The justification for such generous pay raises was a seriously flawed study that the County commissioned (and paid for). But the study completely ignored Mariposa County’s relatively low Cost of Living Index (COLI).
• When COLI is considered (as it always is in legitimate compensation studies), Mariposa County’s public employees are actually being overpaid by about 10% on average!
• A more objective study by the Bureau of Labor Statistics seemed to support this same conclusion when it revealed that the average weekly wage in Mariposa County in 2013 was $497 for the private sector and $790 for local government employees.
• Even worse is that the higher tax rate will put downward pressure on the already-low wages of hospitality workers, and could potentially increase the extent and duration of layoffs during the traditional off season.
• Remarkable! Local government employees already make, on average, 59% more than their private sector neighbors (and that doesn’t even consider generous public sector benefits), and the Board of Supervisors is giving serious consideration to giving out huge pay raises!
• Don’t believe it? Check it out: Supervisor Bibby, who initiated the idea of an increase in the TOT rate, has already stated publicly that she “doesn’t know how this [the supposed underpayment] will be rectified especially if the T.O.T. is not increased.” (17 June 2013 Board of Supervisors Minutes)
• Compensation for county employees (which also includes benefits) is pertinent because the root cause of the County’s financial problems is the over $50 million in unfunded liabilities for retirement benefits.
• In his Recommended Budget for Fiscal Year 2014-15, the County Administrative Officer recognized this reality by noting: “Your Board should be reminded that because of this program and the ultimate goal of reducing the unfunded liability additional funds are being channeled to CalPERS [the California Public Employee Retirement System] which would otherwise be available for other County functions.”
• Despite all the talk about using the increased TOT funds for such “other County functions” (for example, to repair roads, improve basic services and otherwise benefit County residents), the CAO had a different recommendation: “Therefore, the County Administrative Office recommends that if additional funds become available [guess how!] they be used to replenish the designation for unfunded pension obligations. Funds were withdrawn from this account to balance previous’ budgets and to help finance the new fire stations.” (Recommended Budget for Fiscal Year 2014-15)
• The public sector seems to believe that it’s perfectly acceptable to rob Peter to pay Paul, and they’re trying it again with this proposal to increase the taxes on the private sector.
• Of course, this is not the first time the Board of Supervisors has increased TOT. Increases in the rate also occurred in 1967 (from the original 4% to 5%), in 1974 (to 6%), in 1986 (to 7%), in 1990 (to 9%) and in 1996 to its current level of 10%.
• The nearly $13 million the County now receives from tourism (TOT and sales taxes) has made it possible for the Board of Supervisors to avoid making the tough spending adjustments other counties and cities (which also face unfunded liabilities for public employee retirement benefits) have had to make.
• According to the CTTC study, Mariposa County is #2 in the percentage of visitor-generated tax receipts at 93.2%, just slightly behind #1 Mono at 95.4% and over four times the state average of 23.4%. And Mariposa County is #1 in the percentage of sales tax receipts that are visitor-generated at 61.1%, ahead of #2 Mono at 59.2%, with the state average being 7.5%.
• There is no doubt that Mariposa County already gets ample funding from taxing our local tourism industry. It just isn’t fair to ask for more.
• But for government, raising taxes seems to be easier, just as it was with the $80 County Services Area fee for fire-fighting equipment and the $115 State Responsibility Area fee for fire prevention.
• Why not raise revenue instead by supporting economic development and diversification initiatives like other communities do? Just a little investment could grow the private sector, creating jobs and generating more public sector revenue from other sources, not just TOT.
• Increasing taxes should be the last resort for government, not the easy way out.
• And whenever government gets more money, the money inevitably gets spent whether the expenditures make sense or not. In other words, the cost of governing always seems to rise to the amount the government gets.
• People cannot manage their financial affairs this way, and neither should government.
• So before asking the private sector to contribute even more money to the County’s budget, the residents of Mariposa County should insist that the Board of Supervisors make the case for why this increase is, in fact, their last resort.
• Send the Supervisors a message and reject this tax increase for what it is: a job-killing burden on every local business that depends in whole or in part on tourist spending.

Gary Francisco,
Midpines