Last week, the citizens of District 4 received a social media post from Alderman Nick Palumbo that the city will be considering a measure to raise hotel/motel taxes to be on par with other cities across our state from 6% to 8%.
The perk and purpose, he touted, was in order to garnish more guest taxes to be used specifically to gain a complex bike trail network throughout the city and extending the Tybee Island. We were encouraged to send our support for this resolution to be raised for vote in the council meeting that same day, June 11.
A group of concerned citizens decided to research. This is what we found:
1. The process is accelerated out of the public eye without the clear, broad involvement of the Savannah hotel industry.
2. The decision has to raise to the State Assembly under a retired paragraph of the General Assembly guidelines (OCGA 48-13-51(a)(3.2). We understand that this the maximum city tax permitted by the State of Georgia. The resolution must be adopted by City Council, translated to a Local Act that must be passed by the General Assembly, and then signed by the Governor (O.C.G.A 48-13-51(b)). Most of the funds must be used by tourism-related items, but 12.5% of these taxes can be used as city unrestricted funds for pet projects like the bike trail network.
3. The chart used to persuade and compare Savannah to other market competitor cities had several mistakes that presented an argument in favor of raising the tax. The most obvious errors were the data that said that Charleston had a 17% tax on hotels plus a $2.00 per night city tax. In fact, Charleston sits at 14% plus a $2.18 city tax, making their tax less than Savannah currently. Also, there was blatant omission of Hilton Head Island, Saint Augustine, and growing Jekyll Island.
Additionally, they placed Savannah rates next to actually incomparable markets like New Orleans, New York City, and also Atlanta.
Based on these reasons and in the name of fiscal responsibility, our group of Savannah citizens and several leaders in the hotel industry soundly reject this City Council resolution to increase the hotel tax for the following clear reasons:
1. This is a critical time to not be selling bike paths in exchange for immediate futures. Savannah’s economic recovery depends on the ability of local businesses to attract visitors and employ staffs. Raising taxes on honored guests in our ‘Hostess City’ is not compatible with those goals in the competitive coastal tourism market.
2. This is a critical time to be trimming away city expenses in every area of operation, not to gather more taxes to maintain and expand expensive projects from the pockets of those we depend on the most for cash flow.
3. The aggregate tax of guests in our city is actually 13% plus $1 per night to city plus $5 per room per night state infrastructure fee. This proposal of increasing the city hotel tax from 6 to 8% would bring the total tax to 15% plus $1 per night to the city plus $5 per room per night state fee.
4. One of our key sister competitors, Hilton Head, has an aggregate tax of 11% state, local, and hospitality tax. Jekyll Island has 12% plus the $5 state fee per night. Charleston, SC is also significantly less at 14% plus only a $2.18 per night city destination fee. Saint Augustine, FL is 9.5% aggregate tax on hotel rooms. Going to the new tax rate would make our hotel occupancy taxes HIGHER THAN NEW YORK CITY, Charleston, New Orleans, Charleston, and Charlotte.
5. Keeping our taxes competitive with other area tourist cities encourages additional tourism and all-around spending here that our city critically needs at this time. Our honored guests will spend and also sleep in Savannah, when we remain competitive, instead of deciding to limit their visit to a day trip.“The Savannah Freedom Exchange”