The Baker County Board of Commissioners is proposing to increase the rate of the county lodging tax, which also applies in Baker City, Halfway, Sumpter and Unity, from 7% to 9%.

The rate hasn’t changed since the current lodging tax ordinance was passed in 2006.

Commissioners voted 3-0 on Feb. 21 to move ahead with amending the ordinance to increase the tax rate.

The county will schedule public hearings on the matter.

Commissioners went against the recommendation from an advisory board, the transient lodging tax committee, which wants to keep the tax rate at 7%.

Some local lodging owners also expressed concern about the potential effects of a rate hike.

The lodging tax is not paid by motels and other businesses, but by their guests, as a percentage of the rental rate.

Driven by an increase in the number of visitors and by inflation-prompted increases in rental charges, the county’s lodging tax revenue reached record highs the past two fiscal years.

Collections totaled about $860,000 in the fiscal year that ended June 30, 2023, topping the previous record of $715,000 the previous fiscal year.

Based on figures from the first quarter, the current fiscal year is on pace to set another record.

Increasing the rate from 7% to 9% would boost annual revenue by an estimated $250,000.

About 60% of the total is paid by guests at lodging establishments in Baker City.

The tax applies to motels and hotels, RV parks, bed and breakfasts, vacation rental homes and campgrounds.

The ordinance requires that 70% of the money be spent for tourism marketing and 25% for economic development. The county can keep up to 5% of the revenue to oversee tax collections. The county uses money for, among other things, hiring a tourism marketing director, Jessica Hobson, operation of the visitors center by the Baker County Chamber of Commerce, and hiring economic development director Bryan Tweit.

Commissioner Bruce Nichols said during the Feb. 21 meeting that if lodging owners believe a higher tax rate is harming their businesses, after a year or two of it being in effect, commissioners could consider reducing it.

However, both Nichols and Commission Chairman Shane Alderson said they don’t believe an increase from 7% to 9% — an additional $4 per night for a $200 motel room — would have a significant effect on occupancy.

“I have been in a lot of rooms in a lot of different parts of the world and never one time did I look to see what the lodging tax was,” Alderson said. “It says it’s this much money plus tax.”

Soham Gavankar, general manager at the Sunridge Inn, the county’s largest motel, said he worries that increasing the lodging tax could convince some potential guests to go elsewhere.

“It is not good for us as a business and for our guests as well,” Gavankar said.

Nichols, though, pointed out that Baker County’s current rate of 7% is lower than in adjacent counties and cities, and that even with the proposed increase to 9% the rate would still be lower than in some nearby cities and counties.

Jason Stone, who with his wife, Heather, own La Dolce Vita, a Baker City company that manages 31 local vacation rental homes, said he thinks it makes sense to increase the tax rate to 9%.

“I think we need to stay current with what surrounding areas are doing and right now we’re one to two percent under,” Stone said. “We talk to a lot of guests and I’ve never heard anybody complain about the transient room tax that they have to pay, because it’s passed along to the guests that stay and I think they’re just used to seeing a lot more than that.”

Carrie Folkman, who with her husband, Chris, owns Mountain View RV Park in Baker City, said the rate increase “could potentially make us less competitive in the market.”

Folkman, who is the former chair of the lodging tax committee, said revenue from the lodging tax has “brought a lot of awareness and tourism to our area, it’s helped out special events that have needed a boost through their grant program.”

But Folkman said she’s leery about commissioners increasing the tax rate without a “very strong plan as to why you need to increase the tax, where’s the money going to get spent? I’m not a proponent of ever increasing a tax just to increase a tax.”

Tax increase proposed last year

Peter Johnson, president of the Anthony Lakes Outdoor Recreation Association, which owns Anthony Lakes Mountain Resort and manages Quail Ridge Golf Course in Baker City and several Forest Service campgrounds, suggested last summer that the county boost the lodging tax to 9%.

Like Nichols, Johnson cited the current tax rates in other cities and counties.

The lodging tax in Ontario is 10%, and in John Day it is 9.5%. In La Grande the tax is 9% (6% city tax, 3% Union County tax). In Enterprise the tax is 8%, combining a 3% city tax and 5% Wallowa County tax.

“The surrounding counties are greater than (Baker County’s 7%) and if you talk to anyone, other than a lodging business, they think it’s great because it’s not a tax on Baker County citizens, it’s a tax on tourists that come through and that happens all over the state, all over all over the nation,” Nichols said during the commission’s Feb. 21 meeting. “They are not going to drive down the road another fifty miles just because a tax increased two percent or something like that. I disagree with the people in the lodging industry that it is going to hurt their businesses. I don’t think it will. They’ll get a few complaints, as we will, but if you’re not getting any complaints, you’re not high enough.”

Nichols said he believes the county, with lodging tax revenue having reached record highs the past two years, should try to continue that trend, with a goal of bolstering the marketing campaigns to bring even more visitors.

“If we’re trying to operate the county off of tourism, we’ve got to keep pace,” Nichols said.

Alderson and commissioner Christina Witham also said the county should use lodging tax revenue for other purposes, such as upgrades to county parks, that could bring more visitors who pay the lodging tax.

“It’s supposed to go to tourism marketing and tourism facilities,” Witham said.