QuickTake:

A bill in the Legislature would free more lodging taxes so cities and counties can pay for basic needs such as infrastructure. But tourism industry leaders warn the move would weaken the state’s ability to draw visitors.

A proposal in the Oregon Legislature has stirred a debate about how much control local government agencies should have in using transient lodging taxes to pay for services like public safety and roads.

At issue is the state’s transient lodging tax, which guests pay during stays at hotels and motels. The revenue is used for tourism, marketing and economic development to encourage visitors.

House Bill 4148 would give cities and counties more control over a greater share of their local lodging revenue, effectively doubling what they can access for government services that aid tourists and residents alike.

The change would give cash-starved cities and counties the ability to tap into a broader slice of lodging taxes amid unpredictable federal funding, limited state dollars and caps on property tax growth. But tourism officials warn the bill would inject uncertainty into a longstanding system that Oregon communities rely upon to lure visitors, build attractions and promote a core part of the state’s economic engine.

The bill would allow, but not require, localities to allocate a smaller percentage of the money raised by local lodging taxes for tourism. State law currently calls for agencies to earmark at least 70% of the money raised by the tax to tourism-related activities; the law would allow local governments to drop that to 40%.

If the bill passes, up to 60% of the revenue cities and counties receive from the taxes could go toward other local services instead of tourism purposes. The current limit is 30%. The change would also apply to unspent reserves that local agencies have collected. 

Supporters say the flexibility would allow local government agencies to shore up services that are under strain from tourism, such as roads and emergency services.

“Imagine the city of Salem or Eugene quadrupling in size for a weekend,” Sen. Suzanne Weber, R-Tillamook, and a chief sponsor of the bill, said in a hearing Monday, Feb. 9. “How would they handle it? Those questions are a fun thought exercise — but (a) hyperbolic one — for most people. Not for us. These are real questions that we ask ourselves on the coast every single day from March to October.”

The House Committee on Revenue heard testimony on the proposal Monday, but took no action on the bill. 

House Bill 4148 comes as cities and counties, including Lane County, are scrounging for revenue to cover budget gaps for services like beds in homeless shelters and public safety. 

The bill would affect local transient tax revenues, not the 1.5% state transient lodge tax that funds state tourism programs. Local transient lodging tax revenues vary among jurisdictions. Before the state’s tax was put in place in 2003, local cities and counties could spend lodging taxes as they desired. Lane County and cities within the county received $20.7 million in local tourism taxes in 2024, according to an economic report. That figure includes lodging taxes.

Local government officials across Oregon, including in Lane County, support the measure. Lane County Commissioner Laurie Trieger told lawmakers the bill strikes a “responsible balance” between support for tourism marketing and providing the means for local government agencies to pay for services. 

“House Bill 4148 updates outdated restrictions and helps local governments address the real costs tourism uniquely creates in our local communities,” she said. “Tourism is a vital economic driver, particularly in Lane County, but today, when visitors rely on police, fire, emergency services and roads, Oregonians are often left picking up the tab. This is a tax fairness issue, not a tourism issue.”

Lane County isn’t alone. Justin Low, a lobbyist for the Association of Oregon Counties, said over 60% of the state’s counties have faced budget cuts in the last year. The bill’s passage would “protect jobs and better position local governments to not only improve lives, but save lives of both visitors and residents,” Low said.

Opposition from tourism agencies, business community 

The proposal drew sharp criticism from businesses and officials who work with the state’s tourism economy.

Opposition came from Travel Lane County, a nonprofit that works with communities in the region to market the region with the lodging taxes. Natalie Inouye, the organization’s executive vice president, told lawmakers that communities use the lodging taxes in ways that include arts and cultural services, facilities and destination marketing to draw visitors. Those activities, in turn, bring economic benefits like increased visitor spending and visits to restaurants during slower winter months.

“Introducing additional spending flexibility creates pressure to redirect these funds away from visitor-generated purposes,” Inouye said, adding that the bill creates the risk of reducing tourism.

Samara Phelps, president and chief executive officer of Travel Lane County, told Lookout Eugene-Springfield the transient lodging tax is “not a general revenue source.”

“It is a purpose-built economic development tool,” Phelps said in an email. “Visitors generate the tax when they stay overnight, and the system only works when that revenue is reinvested in the experiences and assets that attract visitors in the first place, such as events, arts and cultural services, destination marketing and facilities.”

Kelly Johnson, executive director of the Arts and Business Alliance of Eugene, gave an example, pointing to the Lunar New Year celebration last week at the Eugene First Friday ArtWalk downtown.

“That didn’t happen by accident,” Johnson said. “That happened because Eugene has intentionally invested transient lodging tax dollars in arts and culture. When arts and culture are happening, our downtown is busier, small businesses see more customers and visitors have a reason to come and return.”

Like the alliance, chambers of commerce across Oregon, including Eugene, Springfield and Florence, also are opposed.

“We acknowledge the real financial challenges facing cities and counties and support ongoing discussions about sustainable funding solutions for essential services,” Brittany Quick-Warner, president and chief executive officer of the Eugene Area Chamber of Commerce, wrote to lawmakers. “However, HB 4148 shifts resources away from a proven economic development strategy rather than creating new solutions.”

Coastal communities divided 

The issue also has caught the attention of leaders in coastal communities like Florence, where tourism is a major economic driver.

In Florence, tourism supports more than 50% of local jobs, with the “economic buffers” larger urban and suburban communities have, the Florence Area Chamber of Commerce told lawmakers.

“HB 4148 would significantly weaken the very funding structure that has allowed communities like ours to succeed,” Bettina Hannigan, president and chief executive officer of the Florence chamber, wrote. Diverting lodging tax revenue “away from tourism promotion undermines a proven economic development tool and places disproportionate risk on rural communities that depend on visitor-driven revenue to remain viable. Tourism promotion is not discretionary spending — it is economic infrastructure.”

However, other officials along the Oregon Coast say tourism puts increased demands on infrastructure and public safety needs.

Ben Botkin covers politics and policy in Lane County. He has worked as a journalist since 2003, most recently at the Oregon Capital Chronicle, where he covered justice, health and human services and documented regional efforts to combat fentanyl addiction. Botkin has worked in statehouses in Idaho, Nevada, Oklahoma and, of course, Oregon. When he's not working, you'll find him road tripping across the West, hiking or surfing along the Oregon Coast.