Tourism taxes will have to be raised to run the Salt Palace once it is expanded into a convention center capable of attracting business from throughout the nation, Salt Lake County commissioners believe.
But hotel industry officials strongly object to the proposed tax increase, which would add an extra 1 percent in charges to their customers. Fewer people would stay in the hotels in Utah, they said Friday."Get a job on the front desk for a week and you'll hear it," said Julie Peck, director of the Utah Hotel and Motel Association. "In some parts of southern Utah, people have said `Your taxes are too high. We won't pay it.' And they've gotten back in their cars and driven away."
Newly elected county commissioners Randy Horiuchi and Jim Bradley - who officially take the oath of office Monday - and longtime Commissioner Mike Stewart made their tax-hike proposal Friday at a meeting of all parties that have an interest in the expansion of the convention facility.
Because any tax plan must be approved by state lawmakers, the group hopes to reach a compromise they can unitedly bring to the Legislature when it begins its annual session Jan. 14. The group is scheduled to meet again Jan. 11 to continue hammering out an agreement.
The plan to turn the Salt Palace into a large convention center began when Larry H. Miller, owner of the Utah Jazz and Salt Lake Golden Eagles professional sports teams, decided to build a larger arena in which to house his teams. That arena is scheduled for completion next fall.
Commissioners believe hotels will benefit from the added business a large convention center would attract. They want to make the tax optional for each of the state's 29 counties.
But Bob Valentine, director of the Salt Lake Valley Hotel Association, said the tax may help the industry as a whole, but it will hurt each individual hotel owner. "Occupancy rates will go down," he said.
The county's plan also includes a 1 percent increase in restaurant taxes statewide. Restaurant industry officials said they will support that tax if 60 percent of the money generated will go to state tourism officials to be used for advertising.
County commissioners also believe a newly passed tax on auto rentals will generate about $1.2 million to be used to run the Salt Palace.
All together, the county believes it needs $4 million a year to operate the facility once it is expanded. Lobbyists for the hotel industry could pose a major threat to any plans unless a compromise is reached.
But the $4 million is only to be used to operate the facility. First, the county wants $40 million up front to pay for the first phase of the renovation. Gov. Norm Bangerter already has included $15 toward that project in his proposed budget. The county is willing to pay $15 million, and Salt Lake City is willing to do the same.
But the city's portion comes with a catch. Salt Lake officials no longer want to pay the roughly $300,000 the city has been paying annually to support fine arts. Under a 3-year-old agreement, the county, city and state each pay about $300,000 annually to support fine arts.
County officials say fine arts funding has nothing to do with Salt Palace renovation, and they said the state likely will quit paying its share if the city withdraws its money.
"The fine arts will close, literally," Stewart said.
Former county commissioners had proposed a $62 million expansion. But Horiuchi and Bradley decided to cut that estimate by postponing a decision on the future of the arena. Bradley said the county could choose among several options for the arena, including destroying it, continuing to use it or converting it into some other facility.
"We don't know what to do with it," Bradley said. "We're not prepared to choose one of those options right now."
To operate the Salt Palace once it has been expanded into a large convention center, Salt Lake County commissioners want to:
- Raise restaurant taxes by 1 percent, generating $1.6 million
- Raise hotel taxes by 1 percent, generating $1.2 million
- Use $1.2 million from a new tax on auto rentals