Pennsylvania localities discuss use of hotel tax earnings

HARRISBURG – Pennsylvania counties took in about $144 million from hotel taxes in 2012, but where that money goes largely depends on where it was collected. Allegheny County – Pittsburgh – collected more than $29 million in hotel taxes in 2012, coming from its 7 percent local tax on hotel rooms. A majority of those dollars went to pay debt service to the David L. Lawrence Convention Center, while some went to promotional agencies, including VisitPittsburgh, according to state data.

Across the state in Montgomery County, the county’s 2 percent tax earned $3.7 million. The county held onto $27,000 of it, and the rest went to the county’s tourism promotional agency, where the money could be used for anything promoting tourism.

Pennsylvania’s local hotel tax laws are piecemeal, the result of county-specific legislation passed since the late 1970s.

Counties can only raise the local tax with state permission and can generally spend it on things related to “promotion.”

This concerns the tourism industry, which said the money should be targeted toward the agencies that launch campaigns to draw visitors. But for counties, using the money for local projects is a way to continue promoting their respective areas. Some said, though, there’s a better way, and they’re willing to let the private sector have a say in how Pennsylvania is advertised to travelers at large.

House Tourism and Recreation Chairman Jerry Stern, R-Martinsburg, said the practice of counties and regions marketing themselves individually – and not pushing Pennsylvania as a whole – doesn’t sell the state as successfully as its neighbors. Who hasn’t heard “I Love New York,” “Virginia is For Lovers” or more recently, “Stronger than the Storm”?

Pennsylvania may lack such a slogan, but it still does OK in getting people to spend their money here: Overall, travelers generate $3.6 billion in tax revenue throughout Pennsylvania.

Stern said that getting the private sector to help would increase the bottom line even more, especially as state funding dedicated to tourism is down to about $3 million.

“We haven’t had a unified marketing system. I believe it’s hurt the commonwealth, and it’s hurt our tax base,” Stern said. “I think if you market Pennsylvania properly and do that through a public-private partnership, that makes sense.”

He envisions incentivizing the private sector to invest in advertising Pennsylvania and rewarding businesses with $15 million in tax credits in a dollar-for-dollar exchange. A newly created board would sign off on statewide promotion. Doing so would limit reliance on hotel taxes and keep the money targeted toward tourism, he said.