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11:56 AM Sat, Oct. 20th

Council cuts bed tax hike proposal by half

PRESCOTT - Facing a protest from a half-dozen local hotels and motels, the Prescott City Council opted this week for a compromise in its bid to increase "bed taxes."

By a 4-3 vote Tuesday, the council set a special election for Nov. 6 to decide whether the city's tax on hotels and motels should increase from the current 2 percent to 3 percent - one-half of the increase that the city originally considered.

When the council first discussed the matter at last week's study session, everyone involved seemed to support the Prescott Area Lodging Association-endorsed proposal to increase the bed tax from the current 2 percent to 4 percent.

In the meantime, however, a number of hotel and motel representatives apparently contacted individual council members to voice their opposition.

Councilman Bob Bell reported that he had talked with opponents during the past week, which led him to conclude that "perhaps asking to double (the bed tax) was too much."

As a compromise, Bell suggested asking voters to increase the bed tax to 3 percent instead.

But PALA representative Tilden "Skip" Drinkard, general manager of the Hassayampa Inn, voiced opposition to the change.

Reiterating that PALA represents about 70 percent of Prescott's hotel and motels, Drinkard said the association's members debated the issue at a recent meeting and ultimately voted overwhelmingly in favor of taking the 2-percent increase to Prescott voters.

PALA membership saw the increase as a way "to raise good money" for enhanced tourism promotion, Drinkard said.

He added that it was "unfortunate ... that at the last moment this is being derailed."

The Prescott Chamber of Commerce also endorsed the 4-percent bed tax option. Chamber Director David Maurer told the council that he had no time to notify the chamber membership when he heard about the

3-percent compromise Tuesday morning.

Even so, Maurer said, "Rather than get into a civil war between hospitality groups, I think the 3-percent compromise, while it doesn't get us as much revenue as 4 percent, it does (increase the current revenue)."

Marlin Kuykendall, representing Antelope Hills Inn Motel, one of the hotels against the 4-percent option, maintained that doubling the bed tax would put a disproportionate burden on the hotel and motel industry.

"We're not the only businesses that benefit from tourism," Kuykendall told the council. "But we're the only ones who collect and remit for tourism."

A memo to the city stated that five other hotels opposed the increase to

4 percent as well.

Among the reasons for the opposition: the increase would put the tax rate for Prescott hotels and motels as much as 2 percent higher than Prescott Valley, Flagstaff, and Sedona.

"We will not have a fair competition when our rate will be hiked up to 12.325 percent (including state and local sales tax), and Prescott Valley remains at 10.985 percent," the memo stated.

Council members Bell, Bob Roecker, Mary Ann Suttles and Steve Blair voted for the compromise to take the 3-percent bed tax to the voters in November, while Mayor Rowle Simmons and council members Jim Lamerson and Robert Luzius voted against the compromise measure.

The city's 2-percent bed tax currently generates about $440,000, which goes to tourism promotion and parks and recreation improvements. City officials estimate that increasing the tax to 3 percent would raise the revenue total by about $220,000.

Contact the reporter at cbarks@prescottaz.com