Legislation that would allow counties to ask voters for an increase in lodging taxes is moving ahead at the State Capitol.
HB 25-1247 cleared the House of Representatives Monday. The bill would increase the
maximum allowable lodging tax that counties could collect at properties outside of incorporated or statutory cities and towns to five percent.
“Counties are in desperate need of ways to diversify our revenue streams,” Shane Atkinson,
Larimer County’s legislative coordinator, told members of the Transportation, Housing, and
Local Government Committee during a hearing last week. “Quite simply, we need more tools in the tool box.”
Atkinson argued that Larimer County has experienced a 25% loss of revenue since 2021. “Cuts to our vital services are clearly on the horizon,” he said. “The cliff has the potential to be even more steep if the state faces a significant economic downturn or recession.”
Marsha Porter-Norton, a county commissioner in southwest Colorado’s La Plata County, said during committee deliberations on the bill that the problem of county fiscal stress is statewide in scope. She framed the measure as one that would give counties a tool to address imperatives that are made more urgent by tourist visits.
“Over 30% of our economy is tourism,” Porter-Norton said. “It is difficult to keep up with all the amenities, basic services, and things visitors desire and need.”
The bill, as drafted, would have authorized revenue generated under it to be used for “public
infrastructure maintenance or improvements,” “preservation of natural landscapes and wildlife habits, and promotion of sustainable tourism practices,” “cultural and historical preservation through restoration and maintenance of historical sites, museums, and cultural institutions,” and “enhancing public safety measures by funding local law enforcement, fire departments, and emergency medical services.”
An amendment adopted with no debate during the full House of Representatives’ initial
consideration of HB 25–1247 eliminated all but the first and last of those proposed allowable uses.
“It adds some good stuff” to the uses of lodging tax revenue originally mandated in 1987, said Rep. Karen McCormick, D-Longmont, a sponsor of the bill.
Current law authorizes county lodging taxes only up to 2%. The funds can be used only for
advertising and marketing of local tourism, childcare and housing for the local tourism-related workforce, and projects that are aimed at “facilitating and enhancing visitor experiences,” Legislative Counsel staff said in a fiscal note attached to the introduced version of the measure.
Several tourism industry representatives attacked the bill during the committee hearing. Piep van Heuven, a lobbyist for Colorado Ski Country USA, argued it would likely result in a tax burden that may drive away skiers. “This is a tough time to tax tourism,” she asserted.
“With due respect to county needs, the sky is not the limit” on how much tourists will pay for vacation lodging.”
Colorado’s tourism industry looks to be in strong condition. A report prepared for the state’s
Tourism Office and released in August showed that travel spending was up by nearly 4% in
2023.
The state’s skiing industry also appears to be in relatively stable shape. The National Ski Areas Association reported last year that, during the 2023-2024 season, the number of visitors to the Centennial State who came to hit the slopes was down by about 800,000 from the previous year, but that dip followed two record-setting years.
Of the state’s 64 counties, 35 now levy a lodging tax and 31 do so at the maximum rate allowed by current law. Colorado law does not limit cities and towns to a maximum lodging tax rate.
County lodging taxes do not apply in cities and towns that assess a lodging tax of their own. In Estes Park, where the local special marketing district — Visit Estes Park — benefits from such tax revenues, no change would be expected. Neither the District’s nor the Town’s finances would be impacted if HB 25-1247 becomes law.
The General Assembly lacks the power to directly increase county lodging taxes. Under the
1992 Taxpayer Bill of Rights voters must approve any such increases.
The bill now moves to the state Senate.