Deschutes County leaders back state bill to allow local flexibility for tourism taxes, with caveats

Deschutes County commissioners, city leaders, tourism managers and local business representatives met March 17 for a roundtable on House Bill 3556, legislation that would let local governments use transient lodging (hotel) tax revenue for “tourism-impacted services,” including public safety and community infrastructure.

The discussion matters because Deschutes County and the City of Bend rely heavily on transient room tax (TRT) revenue to fund police, fire and other services and because local officials said they want clarity that any change would apply to future tax increments rather than retroactively reassign existing revenue streams.

Doug Riggs, who described himself as working on the issue for several years, introduced the bill as a discussion starter and noted a legislative hearing was scheduled for Thursday. “There is a bill that has been introduced, which I think all of you have seen — House Bill 3556,” he said, summarizing the League of Oregon Cities’ effort to create flexibility in how tourism-related revenue may be used.

Deschutes County District Attorney Steve Gunnels told the group roughly 10% of referrals to the DA’s office involve visitors, mostly DUI-related cases, and urged consideration of public safety needs. “We’re struggling…with budget keeping up with the needs of the office,” he said, linking prosecutorial workload to visitor-related incidents.

Robert Tintill, Deschutes County chief financial officer, presented the county’s TRT allocations and recent totals: the county collects about $12 million a year in TRT, of which roughly $9 million is available to county operations and $3 million goes to Visit Central Oregon for marketing. He described how the first 6% of the tax is split (about 20% to Visit Central Oregon and about 80% for general county operations) and explained the county currently spends roughly $3.6 million of TRT on sheriff’s office public-safety costs, plus debt service and Fair & Expo capital support.

Visit Central Oregon leaders and tourism boards urged caution about diverting marketing dollars. Scott (Visit Central Oregon) and Mackenzie Ballard (Oregon Destination Association) warned that marketing supports high-value, out-of-state visitation and that reducing promotion could hurt long-term demand. “It takes them well over two decades to recover, to get back to that level…they went to zero for a while,” one tourism representative said referring to a case study of cutting marketing.

Business leaders, including a representative of the Oregon Restaurant & Lodging Association, said they share public-safety and infrastructure concerns but opposed creating new local taxes now. The industry argued general economic headwinds and lower discretionary household spending make adding taxes risky and urged state-level solutions or partnerships instead.

City of Bend officials said TRT funds are a major general-fund input for municipal services; Bend reported roughly $14 million in TRT revenue, with a share used for Visit Bend and the remainder going to the city general fund, where about 85% of general-fund spending is police and fire. Bend and county leaders repeatedly asked for statutory language that would limit changes to future increments rather than re-allocating existing, long-standing tax splits.

Several speakers stressed wildfire and smoke as a growing threat to tourism revenue. Visit and lodging representatives described measurable visitation declines in smoky summers and said marketing dollars are also used for visitor communication and wildfire-related messaging.

By the end of the meeting the Deschutes County commissioners said the county had “officially taken a position of support” for HB 3556 as a starting point for discussion but emphasized that support was contingent on clarifying language that would apply to future increments or new taxes — not to taxes enacted prior to February 2003 that carry different statutory splits and local discretion.

County staff and local governments recommended continued coordination between cities, Visit Central Oregon and business groups as the bill moves through committee. Some participants urged amending the bill to explicitly protect existing tourism-promotion allocations and to define allowable “tourism-impacted services” so tourism marketing is not unintentionally reduced.

The bill was scheduled for a state hearing later that week; local leaders said they would monitor amendments and consider coordinated testimony or a joint letter to the legislature.

For now, the meeting produced a policy position and a list of clarifications local officials want in the bill language, rather than a legislative text amendment or vote recorded in the minutes.