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Supervisors hear economic analysis as treasurer defends hotel-tax enforcement for airline crews; hearing continued
Summary
City analysts estimated stricter enforcement of the transient-occupancy tax on airline flight crews could raise about $3 million in occupancy taxes but cost roughly $12.5 million in spending and about 95 jobs; Treasurer Jose Cisneros said the office is applying the law as written and the board continued the matter for further study.
Treasurer Jose Cisneros told the Government Audit & Oversight Committee the city is enforcing the transient-occupancy tax (TOT) according to the ordinance and a recent tax-collector regulation, and that the permanent-resident exemption applies only when a guest continuously occupies the same room for 30 days or more. "We are not denying the permanent resident exemption to airlines or anyone else," Cisneros said, adding that the office’s May regulation simply clarified the rule for operators.
An economic-impact report from the Office of Economic Analysis, presented by senior economist Kurt Fuchs and Ted Egan, modeled a scenario in which enforcement causes about 15% of airline flight-crew room nights to shift to competitive hotels outside the city. Under that assumption, the report estimated the city could collect roughly $3,000,000 more in TOT annually while experiencing an annual decline of about $12,500,000 in direct and indirect spending and a loss of roughly 95 jobs across the local economy. The OEA emphasized the figures depended on the 15% market-share shift assumption: "We just wanted to look at this in isolation," the office said, noting the number was a planning assumption rather than a precise forecast.
Airline and hotel-industry representatives warned of real-world consequences. United Airlines and American Airlines officials said the practicalities of crew scheduling, maintenance and contract terms make continuous occupancy in the same room impossible in many cases; United warned it might consider moving crew room blocks outside the city if costs rise. Hotel-industry speakers and taxi and retail witnesses described potential job losses for housekeepers, taxi drivers and service employees that would follow a substantial shift of crew stays.
Public commenters representing hotels, unions and taxi companies urged supervisors to weigh both revenue and employment consequences. Several speakers asked the board to consider whether the treasurer’s interpretation should operate prospectively, raise concerns about retroactive billing for past periods, and urged additional review of which hotel rooms count as residential versus tourist rooms under local conversion ordinances.
Supervisor Elliot O'Pear said the hearing should probe contractual commitments, labor and operational details before any policy change. After questions and public comment, the committee continued the matter to the call of the chair for further analysis and follow-up reports, including additional work requested of OEA on alternative scenarios and further information about airline contracts and likely operational choices.
What happens next: the committee asked OEA for sensitivity analyses and for staff to return with more detailed numbers on likely job impacts and the legal context. No change in tax law occurred at the hearing; any legislative change would require Board action or voter approval.
