The Sacramento City Council has placed Measure N on the ballot. Measure N, if approved, amends the Sacramento City Code relating to the use of transient occupancy tax receipts.
The measure’s effect on existing law
The City of Sacramento has a “transient occupancy tax,” which is commonly also known as a “hotel tax,” “bed tax,” or “TOT.” It is a tax paid by persons staying less than 31 consecutive days at hotels, motels, inns, short-term rentals, and similar establishments.
Although imposed at a single rate of 12%, the TOT is a combination of special taxes (10%) and a general tax (2%). The revenues from the 2% general tax are placed in the City’s general fund to be used for any governmental purpose. However, under the current Sacramento City Code the majority of the remaining 10% special taxes must be used exclusively for “public assembly and convention halls,” “public off-street parking facilities and other site improvements related thereto; lands, easements, and rights-of-way; and other works, property or structures, necessary or convenient for public assembly and convention halls.” Those limitations were first enacted in 1964 and have remained unchanged since.
Measure N would expand the described eligible uses of the TOT special taxes. In addition to the uses described above, TOT revenues could be used for “[e]conomic development projects to create local jobs;” “visitor-serving facilities that promote tourism, economic development, and other activities that bolster the local economy;” and “theatre and arts venues.”
Operation of the measure
The proposed measure would amend Sacramento City Code section 3.28.180, which currently sets forth allowable uses of the TOT special tax revenues. It would add a new subsection to establish as an allowable use “[e]conomic development projects to create local jobs;” and it would amend another subsection to establish as allowable uses “visitor-serving facilities that promote tourism, economic development, and other activities that bolster the local economy” (including, but not limited to, convention halls and centers); and “theatre and arts venues.”
The measure would also add a clause that expressly states that spending pursuant to section 3.28.180 is subject to independent annual audits and full public disclosure as part of the city’s annual external audit.
Source: City Attorney's Impartial Analysis of Measure N