A proposal in Harrisburg to nearly double Pennsylvania's state hotel tax is akin to putting a sign on the interstates saying come for the day, not for a stay, according to a Lehigh Valley tourism promoter.
The idea surfaced Tuesday in the state House of Representatives to fill state government's $2.2 billion projected budget deficit, The Associated Press reports.
It could get a final vote in the chamber Wednesday as lawmakers scrounge for cash to break the three-month stalemate surrounding the budget approved for the fiscal year that began July 1, according to the AP.
The idea blindsided tourism and hotel advocacy groups, the AP reports: It emerged rapidly Tuesday from closed-door budget negotiations after a tide of opposition drowned one days-old proposal -- a tax on commercial warehousing -- and House GOP leaders last week blocked a new tax on Marcellus Shale natural gas production.
Floor debate and votes were possible Wednesday after the House and Senate recessed. Democratic Gov. Tom Wolf isn't saying whether he supports it, and says he still prefers the Marcellus Shale tax, according to the AP.
The proposal calls for raising the state's hotel tax to 11 percent from 6 percent. That's on top of local hotel taxes, and would give Philadelphia and Pittsburgh the nation's two highest combined state-and-city hotel taxes, according to the AP.
Lehigh and Northampton counties apply a 4 percent tax on hotel stays on top of the state rate, meaning the state proposal is to tack on 15 percent to the bottom line for getting a room locally. The levy on hotel guests is to be used for promoting tourism and community development initiatives.
"I think it puts our entire industry at risk, especially here in the Lehigh Valley," said Michael Stershic, president of Discover Lehigh Valley. "Statewide it puts us at a competitive disadvantage.
"It would increase the hotel tax by 83 percent and make us probably one of the highest if not the highest state hotel taxes in the country, and at the same time we're at the bottom in the amount of dollars that the state spends on marketing."
The effects of that disparity in marketing are already being felt, according to Stershic: "Pennsylvania has lost 16 percent market share over the last five years and much of it's been to New York State."
Many visitors to the Lehigh Valley come from a distance of 90 minutes to two hours away, he said.
"What it is effectively is doing is saying, 'We don't want you to stay overnight. You can come as a day-tripper,'" Stershic said. "We'll be losing substantial amounts of hotel taxes."
Top House Democrats and Republicans said they were working to secure enough support to pass the hike, according to the AP:
The revenue from the hotel tax increase is a relatively small piece -- an estimated $165 million in a year -- of an overall revenue package negotiated in secret by Wolf's office and top lawmakers. But it is of prime importance because it is one of the few revenue sources that can be counted on every year.
"This is a major component of it," said House Majority Leader Dave Reed, R-Indiana. "I would say this is the component that's been holding up the budget process for some time now."
The tax provision would be tucked into hundreds of pages of budget-related legislation that remain largely under wraps and awaiting action.
The proposed package is the latest stage of discussions since lawmakers on June 30 overwhelmingly approved a $32 billion budget bill, about a 3 percent increase, without any agreement on how to fully fund it.
It wouldn't just affect visitors either, Stershic said, as "Pennsylvanians are one of the largest single markets for Pennsylvania" hotels.
Stershic said Lehigh Valley hotels, inns and B&Bs have been reaching out to lawmakers to oppose the proposal, as has the state tourism association.
"I know they're hearing from us loud and clear that this is not the way to go," he said. "Whether they pay attention is a whole different issue.
"It's a pricing issue. There's a comparison to nearby markets that you need to be paying attention to and if you could visit New York or New Jersey and pay under a 10 percent hotel tax and you'd have to come to Pennsylvania and you're now talking about 15 to 20 percent, there's a substantial difference."
Kurt Bresswein may be reached at kbresswein@lehighvalleylive.com. Follow him on Twitter @KurtBresswein. Find lehighvalleylive.com on Facebook.