Democrats propose hotel tax hike to help towns

With state aid to towns stagnant at best for the near future, a panel of 46 Democratic state lawmakers proposed Wednesday to increase the hotel tax in the state from 12 to 15 percent and give the revenue to cash-strapped towns.

The estimated $20 million in annual revenue the tax increase would generate would help fund regional initiatives and fill gaps in town budgets.

Rep. J. Brendan Sharkey, chairman of the Municipal Opportunities and Regional Efficiencies panel created by House Democratic leadership, said cities and towns can save money through regional cooperation, but they don’t have the money to get the programs established.

But why should hotels put up the money, an industry spokesman said Wednesday.

“The hotel industry is dying. Very few people are looking to spend money on traveling. I am perplexed at why they would pick on hotels to fund their regionalism initiative. If it’s good enough to launch then they should pay for it,” said Bill Malitsky, a lobbyist for the Connecticut Lodging Association.

If the state does increase the hotel tax, hotel occupancy rates will decline, said Marshall R. Collins, a lobbyist for 15 different local Chambers of Commerce around the state.

“People don’t have to come to Connecticut. People will shop around. Hotels here are competing to host conventions. This just adds to why they will go elsewhere,” he said.

House Minority Leader Lawrence F. Cafero also criticized the proposal.

“Are you kidding me? Every industry we know is losing money. So to increase a tax defies logic to me,” he said.

But the panel and Jim Finley, executive director of the Council of Municipalities, defend the 15 percent tax rate.

“It is competitive to surrounding states. We have to find additional revenue at the local level. The property tax is not enough and this is a fair increase,” Finley said.

The panel also recommended extending the temporary increase to the real estate conveyance tax, scheduled to expire in July, for another $35 million in revenue, and eliminating several mandates imposed on towns. Among them: requirements that town boards post their minutes and agendas online, that towns pay for storage of the belongings of evicted tenants, and that schools develop in-house suspension programs.

Finley said repeal of the mandates targeted by the panel will save towns millions of dollars, but he was not happy that one mandate didn’t make the list: the requirement that towns pay newspapers to run legal advertisements.

“I guess those full-page ads the Connecticut [Daily] Newspaper Association has been running against this paid off,” he said.