Consideration of a meals tax has gained most of the attention this budget cycle, but Fairfax County supervisors also are looking at increasing the transient-occupancy tax paid on hotel stays.
If adopted next month, the increase from 4% to 6% on stays of less than 30 days will raise an additional $13 million in the coming fiscal year, said Phil Hagen, director of the county’s Department of Management and Budget.
He was speaking in advance of a Tuesday (April 22) budget hearing.
Under longstanding policy, half the revenues from the transient-occupancy tax are reserved for tourism-promotion efforts through Visit Fairfax. Hagen said that share of additional funds from a tax-rate increase would be held in reserve for to-be-determined tourism efforts.
Springfield District Supervisor Pat Herrity voiced complaints that the tourism industry had not requested a tax-rate increase, and concerns about how the tax revenue would be allocated.
“We’ve had no conversation with [the] industry,” Herrity said. “We don’t know how we’re going to spend the money. Before we impose a tax, we ought to know where the money goes.”
Board Chair Jeff McKay said assertions that leaders of the hospitality and tourism realm hadn’t been involved were untrue.
“I have taken the time to meet with the industry,” McKay said.
One of those who had met with McKay was Eric Terry, president of the Virginia Restaurant, Lodging and Travel Association.
Speaking at the April 22 meeting, Terry voiced concern about higher taxes, but said Visit Fairfax “does a very good job” leveraging lodging-tax dollars to promote county tourism.
Terry said Virginia’s hotel-industry revenue is off 10% to 15% year-over-year, owing to multiple factors, and “it’s much more pronounced up here.”
The April 22 meeting marked the return of Herrity, who had been away for more than a month recuperating from heart surgery. At the meeting, Dranesville Supervisor Jimmy Bierman blasted his Springfield colleague for grandstanding on the tax issue.
Though less direct, McKay in responding to Herrity said a blanket “no” to considering additional taxes was not the way to go.
The lodging tax is paid by visitors, McKay said, and part of the revenue will directly benefit the local hospitality industry.
“They could use the help,” he said.
Another issue raised by Terry: Hotel operators will be required to pay credit-card fees averaging more than 3% on the additional taxes, but are not slated to receive any rebate from the county government to cover those costs.
He asked for consideration of a fix to that before supervisors make final decisions at their Tuesday, May 6 budget-markup session.
Those using hotel and motel rooms in Fairfax County also pay a 3% tax for regional transportation initiatives. That surcharge does not apply to rentals in the towns of Herndon, Vienna and Clifton, according to the county’s Department of Tax Administration.
