Senate OKs first-substitute bill to help fund Salt Palace expansion; debate centers on tax shifts and county impacts

The Utah Senate on Feb. 22 approved first substitute Senate Bill 211, a measure designed to help finance an expansion of the Salt Palace convention center by allowing counties to use a mix of existing and new tourism-related taxes to back bonds for convention facilities.

Sponsor Senator Wadobs said the measure would permit counties that elect to do so to impose a 1% innkeepers (transient room) tax and would return the car-rental tax to point-of-sale distribution for up to five years, reallocating certain innkeepers taxes to fund Salt Palace expansion and related county projects. "Salt Lake County brought this bill to me and wanted to do it for Salt Lake County, and we tried to restrict it to Salt Lake County for the purpose of not offending anyone else," Wadobs said. She added the bill includes a safeguard that "you have to spend no more than 60% on any one project." (See passage and vote details below.)

Why it matters

Proponents say the bill helps the county secure financing for a large convention project that is expected to draw major events, including outdoor retailers' conventions, and spreads the cost among users of related services. Opponents said the proposal shifts significant tourism-related revenue streams and could reduce revenue available to other counties that rely on car-rental or innkeepers taxes to support local tourism promotion and facilities.

Key debate points

- Scope and eligibility: An amendment (amendment 1, offered under Senator Hager's name and described by Senator Hilliard) sought to remove a restriction limiting the program to counties of the first class and to allow any county to use the mechanism for convention centers. The amendment also removed a requirement that funds be used only for new construction. Supporters said the change would give other counties the same option; the sponsor said she would not oppose other counties using the mechanism but stressed Salt Lake County's particular needs.

- Taxes affected: Senators questioned whether "charges for accommodations and services" referred only to hotel charges; the sponsor confirmed it was limited to the transient room tax. Senator Thomas and others raised concerns about proposed changes to rental-vehicle tax distribution, saying many rental cars are picked up at Salt Lake International Airport but that their economic benefits are distributed across neighboring counties.

- Local revenue impact: Senator Eastman and Senator Thomas cited an estimated $243,000 impact on Davis County promotion funding. Opponents warned that moving car-rental revenue could harm counties without major airport hubs and could undercut newly formed local convention and visitors bureaus.

Votes and procedural steps

- The amendment to reinstate prior language on rental-car revenue distribution failed on a roll call that recorded 11 aye and 14 nay votes. The motion was advanced to a roll-call final vote.

- First substitute SB 211 passed on a roll-call vote, receiving 16 yay votes and 8 nay votes, with 5 senators absent. The bill was moved to the third-reading calendar.

Quotes

"This is the way that they all participate," Senator Wadobs said in defense of providing counties the option to impose the innkeepers tax.

"I feel uncomfortable supporting the motion to amend because I haven't been able to talk with any of the hoteliers in the rest of the state," Senator Stevenson said when objecting to the amendment expanding eligibility.

What happens next

Senator Wadobs warned there could be additional amendments on third reading, particularly concerning the 60/40 split between two Salt Lake County projects. The bill moves to third reading for final consideration and potential further amendment.

Vote tally (as reported on the floor)

First substitute SB 211: 16 yay, 8 nay, 5 absent (moved to third-reading calendar).