NH House committee weighs proposal for local hotel room fee

Sponsor says funds would be used for capital improvements, tourism promotion

Should New Hampshire municipalities be allowed to add a $2-a-day occupancy fee on hotel rooms to be used for capital projects or to promote tourism?

Representatives of municipalities say yes. Representatives of hotels say no.

Rep. Susan Almy, D-Lebanon, introduced the amendment to House Bill 1609 on Tuesday to the House Ways and Means Committee to, in her words, “give something for the hubs to use.”

Hubs are municipalities, usually cities, that attract people in the surrounding area who don’t pay local taxes, but consume local services paid for by local taxpayers. In Lebanon’ case, testified both Almy and the city’s mayor, Sue Prentiss, the city’s population triples in the daytime, people drawn in by the Dartmouth-Hitchcock Medical Center, those working for high-tech companies and those using social services.

HB 1609 would have originally tacked the local surcharge on to the state’s rooms and meals tax, to be collected by the Department of Revenue Administration. Almy’s amendment would leave the state out of it, making it a separate local fee that would cover hotels, public lodging houses, tourists cabins and tourist trailer parks, exempting rooms that cost less than $40 a night. The municipality would be able to set aside 10 percent of the fee to administer collection.

Voters would get a say on whether to impose the fee.

Lebanon, like most cities, has struggled to come up with the money to fund infrastructure improvements, testified Prentiss. The cost to address a recent sewer system failure forced the city to limit the number of businesses and residents that can build in the city, she said.

Almy added “tourism support” to capital expenditures to get the support of cities like Portsmouth, which also testified for the bill.

Some 13 communities in Vermont use such a local option, as do some in Massachusetts, said Barbara Reid, government finance advisor of the NH Municipal Association, who expected only a handful of hub cities in New Hampshire to pass such an ordinance.

But invoking those neighboring states doesn’t always work to convince Granite State lawmakers

Rep. Marc Abear, R-Meredith, said Reid had “raised the specter of Vermont” and then went on to compare compared Vermont’s growth rate since the 1960s unfavorably to New Hampshire’s own, blaming it on the Green Mountain State’s tax structure.

An income tax or a sales tax is one thing, but “I don’t think a local occupancy tax is going to drive anyone away,” said Reid.

The NH Lodging and Restaurant Association opposed the bill on principle.

“We are fundamentally against the idea that municipalities tax commerce that the state already taxes,” said Henry Veilleux, the association’s lobbyist.

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