Transient Lodging Tax in Oregon
Understanding Travel Oregon Funding
In 2003, HB 2267 established Travel Oregon as a semi-independent state agency and created a state transient lodging tax, at a rate of 1% to provide funds for Oregon’s tourism programs. HB 4146 (2016) increased the transient lodging tax rate from 1% to 1.8% for July 1, 2016-July 1, 2020. On July 1, 2020, the rate decreased to 1.5%. ORS 320.335 authorizes the Department of Revenue to collect and retain up to 2% of tax collected and remitted (net of a 5% fee retained by the transient lodging tax collector) for administrative expenses. The Department of Revenue reports taxes remitted and processed monthly by region and distributes the balance to the Oregon Tourism Commission monthly.
In addition to the transient lodging tax, OTC also receives revenues from the Governor’s Conference on Tourism attendee registration and sponsorship fees, various agency workshop registration fees, interest income, grants and the Welcome Center Brochure program.
How we spend the funds
Starting with the 2017-19 biennium, ORS 284.131, as modified by HB 4146 (2016), says that the Oregon Tourism Commmission must use transient lodging tax moneys as follows:
- At least 65% must be used to fund state tourism programs. HB 4146 (2016) removes the provisions that funds can only be used for marketing programs.
- 10% must be used for a competitive grant program which may include tourism-related facilities and tourism-generating events, including sporting events.
- 20% must be used to implement a Regional Cooperative Tourism Program (RCTP) using a regional allocation formula that distributes revenue to regions in proportion to the amount of lodging tax revenues collected in each region. To provide some predictability to the regional entities designated to develop and execute plans for use of state lodging tax dollars, OTC determines RCTP awards based on prior calendar year transient lodging tax receipts and disburses the state lodging tax upon approval of the regional plans, usually in July of the following fiscal year.
Lodging tax facts
- State lodging tax is largely paid by out-of-state visitors. In 2014, visitors from out-of-state accounted for 76 percent of overnight spending (64 percent out-of-state, with 12 percent international) Dean Runyan 2016
- In 2003, legislators passed the Oregon Tourism Investment Proposal. Before that time, Oregon ranked 47th in the nation for state tourism marketing budgets. Currently, Oregon ranks 23rd nationally.
- Before the passage of HB 4146, Oregon ranked 9th out of 13 western states in overall budget, behind California, Hawaii, Arizona, Alaska, Colorado, Nevada, Montana and Utah.
- Since the passage of the Oregon Tourism Investment Proposal in 2003, Travel Oregon has been able to compete more effectively for visitor dollars, resulting in incredibly positive impacts for the state. Since 2003: State and local taxes are up 89% (from $246 million to $466 million); Direct employment is up 25% (from 84,500 jobs to 105,500); Employee earnings are up 65% (from $1.7 billion to $2.8 billion); Visitor spending is up 66% (from $6.5 billion to $10.8 billion)
- In 2004, a Longwoods Ad Accountability study showed that Oregon was running one of the most effective ad campaigns in the country generating $169 in visitor spending for every $1 invested; in 2008 the return increased to $193 for every $1 invested, with the most recent study showing our advertising generated $237 in visitor spending for every $1 invested.
- Travel and tourism is a vital economic driver and job creator for Oregon. In 2016, the positive impact of travel and tourism reached an all-time record: travelers injected $11.3 billion into the state’s economy, directly employing more than 109,000 Oregonians. (Dean Runyan Associates, Oregon Travel Impacts Study, 2016).
- The travel industry generates $507 million in state and local tax revenue for Oregon in 2016.
- According to an independent report by Dean Runyan, Oregon had an estimated 28.4 million overnight visitors in 2016 (pg. 16):
- In a report from the state’s employment department, issued in January 2016:
“Oregon’s job growth over the last year has been really strong. Payroll employment rose by 59,600 jobs, or 3.4 percent, between January 2015 and January 2016. During this period, the industries seeing the fastest growth and adding the most jobs were professional and business services (+11,000 jobs, 4.9 percent), health care and social assistance (+8,800 jobs, 4.0 percent), leisure and hospitality (+8,700 jobs, 4.6 percent), and construction (+4,100 jobs, 5.0 percent).”