Room tax law passes

Impact on visitors association unclear

By ANNEMARIE SCHUETZ
Posted 3/24/21

MONTICELLO, NY — Rent out a stay in your covered wagon or second home and you can expect the tax colletor to come calling. 

The room tax law has passed. Not only does it outline who …

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Room tax law passes

Impact on visitors association unclear

Posted

MONTICELLO, NY — Rent out a stay in your covered wagon or second home and you can expect the tax colletor to come calling. 

The room tax law has passed. Not only does it outline who will be charged tax and who won’t, but it enshrines in law the flexibility to give money to tourism groups outside of the visitors association.

Or not, of course. Where the room tax money goes after it arrives at the county coffers has not been specified.

The final vote, capping months of discussion, happened last Thursday at the full Sullivan County Legislature meeting.

At stake is more than a million dollars per year in room tax funds, which could increase, assuming all the available money is collected and the visitors keep visiting.

For those who have ignored the room tax debate, the money is paid by visitors to the county. It’s collected at Airbnb-branded short-term rentals and at hotels (when they’re open) and is supposed to be paid by all short-term rentals. 

This past year, the county undertook a renovation of the room tax law, increasing the $100 fee for non-registration and fine-tuning the definition of what does and does not qualify for the tax. When you visit here in your RV, you do not need to pay this tax. If you’re camping at a campground or in a friend’s yard in a tent, you don’t need to  pay this tax. Letting your friend couch-surf for free? No tax. But your treehouse, rented out? Yes. Your second home, rented to someone else? Yes. Your Home Depot shed, rented out? Yes. (Keep in mind that if you try that, you’ll have other problems.) 

It also did its best to remove gender-specific language relating to the county treasurer. (Perhaps the law has not fully embraced “they” as a gender-neutral pronoun.) 

The old law only fined landlords or owners who failed to register $100. The new one will charge $1,000 per violation. How that would be found out is not detailed, although Ken Walter, in public comment, expressed concern that it relies on neighbors reporting violations.

Failure to file tax on time is subject to a five percent penalty. A 25 percent cap was removed. 

The amended law encompasses changes to the allocation of room tax dollars. Some unspecified amount will still go to the Sullivan County Visitors Association (SCVA), but what happens to the rest may change. Instead of automatically shifting to the SCVA for use by them in county tourism, whoever receives those funds seems to be acting as a granting agency, providing funds for other tourism-related projects. That could still be the SCVA, or it could be somebody else. 

So here is the process: 

As before, room taxes are collected and deposited in the general fund. From there, per state law, 85 percent is given to a not-for-profit corporation for the promotion of tourism. The change is in how many corporations would receive funds and what happens afterward. (The state doesn’t specify.)

The county keeps 15 percent for administration of the room tax. Under the new law, it can also keep interest and penalties that arise from late payments to pay for managing those costs.

At the executive committee meeting on March 19, legislator Nadia Rajsz asked whether there should be one not-for-profit corporation overseeing the funds or more than one. (This is the often-debated “s” as in “corporation” vs “corporations.” In the text of the law, it’s in parentheses.) She supported one recipient.

“The ‘s’ means that the legislature has a choice of giving money to one or more corporations every year,” county attorney Michael McGuire added later in the meeting.

Several years ago, the legislature considered a bond fund to pay for other tourism projects, Joe Perrello said. “This could turn into a slush fund.” He recommended keeping it under the visitors association. “They would vet the applicants, and then it would come to the legislature for final approval.” 

“The tax dollars that go through the governing body are under the purview of... the legislature,” said George Conklin. “We do not have any other case where a vendor is in charge of taxpayer dollars.” 

Does this add an extra layer of bureaucracy? Should tourism professionals deal with it? 

Alan Sorensen advocated for a committee to vet proposals, with criteria to guide them; that group would include representatives from the SCVA, other county stakeholders and “I would hope we’d put a lot of weight into those recommendations.”

Rajsz suggested Sullivan Renaissance.

Later, in the full legislative meeting, Sorensen added that there had been a discussion about a capital improvement fund and an independent body overseeing tourism grants. “We’re looking at CFA guidelines [consolidated funding applications] that parks and recreation has” as a model, he said. 

The law passed the full legislature 5-3 with Rajsz, Luis Alvarez, and Perrello opposed and Ira Steingart abstaining.

Later, in public comment, Bruce Ferguson raised questions about the proposed scenic byway project, which might qualify for some of those room tax funds. “I’m concerned about using Sullivan County dollars to support an organization that supports six towns in Sullivan County” and towns in Delaware and Orange. He added that “a grant project is scalable: You can expand it in good years and pull back in bad. It’s much harder to say to an organization that is now depending on the county, ‘Oh, gee, we know you are using that money for salaries and rent... but we’re going to cut that.’”

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