Sierra Mountain Times

Tourist Tax Could Help Grow Economy, Fix Roads

Tuolumne County has two major economic problems. One is the Great Recession. This will hopefully be sorted out, if slowly because California was hit so hard by the housing bubble and collapse and because our state legislature has been so dysfunctional.

The second economic problem is specific to the county itself: we lack businesses that bring money into the county and that can provide the kind of high-value jobs that our young people need to keep them from fleeing the county.

Among the industries that do bring money into the county are the tourism industry, federal and state government, and the lumber industry. The last has been devastated by the closing of the Standard sawmill. We have no control over the level of federal and state government employment. Tourism, with its 2,360 jobs (the number is for 2007 and may be lower today), is perhaps the only such industry that we do have some control.

Tourism has been criticized for having mostly low-value jobs, and this is a legitimate concern.  But it also provides a family-wage living for some and an opportunity for many to own their own business. In a well-balanced economy, the lower-value jobs would serve as stepping-stone jobs for young people while they go to college or gain experience on their way to higher-paying jobs.

The new Economic Development Authority and its director, Larry Cope, have shown considerable energy and may well be able to help develop these higher-paying jobs. But this will be difficult and will take time. We already have a tourism industry based on world-class attractions (Yosemite and the Sierra), and it is far easier to develop an existing industry than to create new ones. Promoting the tourism industry better is one of the few things we can do that is likely to have a relatively quick effect.

To better promote tourism, we need two things: more funding for promotion, and some hard thinking about how to do it better.

Regarding more funding, the Board of Supervisors recently asked county staff to prepare a measure to increase the hotel and motel tax (“tourist tax”) for the June, 2010 ballot. A final vote by the Board is expected in February. A similar measure lost in 2004 by a 55% majority, due largely to an unexpected opposition campaign funded by RV park owners, who objected to the part of the measure that extended the tax to include them.

We have several concerns about the current plan for the tax. Although there is an assertion that a primary motivation for the tax is to recover the costs borne by the county government in providing services to tourists, the county hasn’t provided any estimate of what these costs actually are. And there is a common view that a tourist tax is a wonderful source of revenue to plug present budget gaps because county residents don’t have to pay it and because it is relatively hidden to tourists.  The attitude is, “When we visit other counties, they gouge us. It’s only fair that we gouge them.”  We don’t like hidden taxes that we only find out about when paying the bill, and most tourists don’t much like them either. If they are too high, tourists don’t go home with a positive experience and resolve to come back again next year, and tell their friends about how beautiful Tuolumne County is. Instead, they complain about how they got gouged. The level here is important:  although the current plan is to raise the tax from 8% to 10%, we suggest that it be kept below double-digits, perhaps 9.5 or 9.75%.

The current plan is to continue exempting RV parks. We think this is a big mistake. It’s about politics, not good public policy, and it is cowardly. It also makes no sense if anyone is actually serious about recovering the costs the county pays for tourist services. Perhaps the biggest negative impact that tourists have on the county is the wear and tear they cause on roads. And a major part of the damage to roads caused by tourists results from RVs and trailers. People in the road maintenance industry are aware of a rule of thumb known as the “Fourth Power Law”, which estimates damage to a road based on a vehicle’s weight.  For example, a top-of-the-line RV (say the Wanderlodge Premier XL) can weigh as much as 50,000 lbs, more than 16 times the weight of a 3000-lb Ford Focus. Such an RV would cause an astounding 77,000 times the wear and tear on a road than a Ford Focus driving the same distance.

Elsewhere on this page is a chart that shows the damage to roads caused by various vehicles that tourists drive here. You can see the huge difference between tourists with RVs and those with passenger vehicles.

Because RVs and trailers seem to be a major source of cost to the county from tourists, it makes no sense to exempt RV parks from the tax. We also think that if the tax passes, county residents should insist that the Supervisors designate 75% of the tourist tax raised from the RV parks to road maintenance. Our roads are in terrible shape, and it is time the RV owners start paying for the damage their vehicles cause. 

RV parks do have one legitimate complaint about extending the tax to them. It makes it more difficult for them to compete with RV areas that are part of federal campgrounds. The solution here, though, is to do more to make the RV owners staying in federal campgrounds pay the cost of the damage they cause to state highways and federal roads.

An increased tourist tax will raise the level of money for tourism promotion – current policy allocates 25% of the tax for this. How can this increased funding best be spent? We may need to do things differently. Visitor bureaus were established in the 1980s and developed their way of doing business in an age when people got much of their information from travel agents and walk-in information centers. Now travelers get most of their information from the Internet. This has put rural tourism areas at a major disadvantage compared to urban areas like San Francisco. We will need to think very hard about how to do better tourism promotion in the Internet age. It may involve joint efforts with neighboring counties, efforts to get tourism businesses here to put more information on the Internet, and efforts to better use new Internet technologies that are already common in urban areas.

If Tuolumne County residents agree with our view that RV owners should be taxed and the money spent to repair the damage to the roads they cause, and that serious efforts are needed for better tourism promotion as the quickest way to heal the economy, they should make their views known to their Supervisor.