A proposed bill in the Oregon Legislative Assembly would extend the ways in which local transient tax dollars can be used by cities and counties. The bill, which is opposed by destination management organizations, attempts to strike a balance between meeting the needs of the tourism industry while responding to the impact that tourists have on communities.
Increasing flexibility for the use of the taxes gathered from facilities such as hotels and short-term rentals could give local governments more money for services heavily impacted by tourists, such as law enforcement. HB 3556 would apply to new or increased transient lodging taxes, and extend the uses of those funds to include public safety and certain costs related to community infrastructure.
The Deschutes County Board of Commissioners hosted a roundtable meeting on March 17 to hear how various local entities feel about bill. Following the meeting, it was clear that local destination management organizations (DMOs) strongly opposed it, while government agencies saw it as a chance to further support tourism-related services, like funding for police, street maintenance and possibly other services.
Deschutes County collects an 8% tax on lodging. The current room tax rate for the City of Bend is 10.4%. Today, cities and counties are allowed to increase their lodging tax rate At this point in time, this bill does not alter how cities or counties address tax rates.
The Oregon legislature established the state lodging tax in 2003, which lets cities and counties gather taxes on rooms occupied by visitors. Both the City of Bend and Deschutes County keep roughly 70% of the funds generated by local lodging taxes, while their respective DMOs, Visit Bend and Visit Central Oregon, get nearly 30%.
While local DMOs largely spend their tax revenue on marketing the destinations to potential visitors, the local governments spend it on tourism-related services. According to Bend Mayor Melanie Kebler, the approximately $9 million the City received last year goes to the General Fund, which Kebler said is then mostly spent on police and fire, and some street maintenance.
“In Bend, we benefit from tourism and associated lodging tax revenue, but we definitely also feel impacts to our city services and infrastructure from visitors, too,” Kebler told the Source Weekly. “HB 3556 is a starting point on the conversation about adding some flexibility to restrictions in lodging tax law, and we had a great conversation with the County and our destination management organizations this week about how to move that conversation forward.”
According to Kebler, the City consistently gets feedback from residents about making sure tourists are paying their fair share for City services and infrastructure. The Bend City Council plans to discuss its support of the bill further at its March 19 meeting.
Scott Larson, president of Visit Central Oregon, opposes the bill, worrying that it could potentially divert funds away from DMOs like Visit Central Oregon.
“What that looks like is a significant funding reduction for some of your city tourism boards or DMOs would cease to exist in that scenario, and our ability as the regional entity to support tourism in those smaller communities would be greatly reduced, if not completely disappear,” Larson told the Source Weekly.
According to a Deschutes County draft budget for its transient room taxes, the majority of the money it receives goes toward the Deschutes County Sheriff’s Office.
The language in the bill, which includes the use of funds on community infrastructure, is a point of concern for Larson. According to letters in support of the bill, HB 3556 would likely allow communities more discretion to identify what infrastructure uses the funds could go toward.
“It opens Pandora’s box to be funded for, effectively, anything. There is no longer a requirement to spend that money on tourism, management, marketing, promotion services, etc.,” Larson said. “It really would be pretty catastrophic for tourism in Central Oregon.”
A hearing on the bill with the House Committee on Emergency Management, General Government, and Veterans is scheduled for March 20.
This article appears in The Source Weekly March 13, 2025.
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Visit Central Oregon doesn”t need any more money. Central Oregon doesn’t need Visit Central Oregon. The mob of tourists will find their way here, to all the vacation rentals that take away needed housing, without any help.
Perhaps we could use tourism dollars to take some of the burden off locals getting squeezed out? Wild thought, I know.