LA voters reject a measure to raise the hotel bed tax ahead of the Olympics
Los Angeles voters gave the thumbs up to a measure that would raise the city’s hotel bed tax ahead of the 2028 Olympics, while extending the tax to short-term rentals booked through companies like Airbnb and Expedia.
Votes were still being counted Wednesday, but preliminary results from Tuesday’s primary showed Measure TT falling short of the majority needed to pass. If approved, Measure TT would increase the hotel room tax rate from 14% to 16% until the end of 2028, and remain at 15% thereafter.
With more visitors expected for the 2027 Super Bowl and the 2028 Summer Olympics, city officials have indicated that the passage of the TC will generate $44 million annually in 2028 and $22 million annually thereafter.
“The Olympics is an opportunity to add jet fuel to our tourist community,” said Council Member Tim McOsker earlier this year, when the council voted to put the measure on the ballot.
Business groups said the tax hike would have a negative impact on the hotel industry, which is already reeling from a lack of demand and the threat of rising minimum wages.
Central City Assn. president and CEO Nella McOsker, daughter of a council member, opposed the move on behalf of the LA association.
“At a time when you’re seeing this drop in demand and the loss of tax revenue every year is up to $20 million, it seems like the wrong time to put more burdens on that shrinking base,” he told The Times in May.
In a related matter, voters appeared poised to approve a separate ballot measure that would require online travel companies and other intermediaries to pay the city’s hotel tax based on the market rate they charge customers, not the discounted rate they pay for a room.
There were more “yes” votes than “no” votes for Measure TC in the initial returns. If approved, the measure would raise $5 million annually for sidewalk and street maintenance, parks and other necessary amenities, according to city estimates.
City officials sought to portray the move as closing a loophole that gave travel companies such as Hotels.com and Trivago a reduced bed tax rate.
Voters also favored Measure CB by a wide margin in early returns. It would require marijuana businesses operating without a business license to pay the same tax on gross receipts as legal businesses, including 10% on marijuana sales, 5% on medical marijuana sales and 2% on manufacturing, cultivation or other sales.
In order to operate legally, cannabis businesses must be licensed by the state and city and follow a list of regulations depending on whether they sell, grow, produce, test or deliver marijuana.
City officials have said that they are not interested in collecting this tax from unlicensed businesses, which would be difficult, and using it as a tool to pursue them in court.
City Hall supporters, including Council Member Katy Yaroslavsky, called the vote a “loophole” for reform that would allow the city to take delinquent businesses to court to pay taxes and shut down.
Officials at legal cannabis retailers have long argued that their tax burden is too high, allowing illegal businesses to get by by selling the product for less. Some oppose the move, however, saying it makes businesses illegal and would give the city a reason to keep them around.
