State’s HB456 raises transient room tax, creates mitigation grant; counties must adjust spending buckets

Selena Sinclair, executive director of the Utah Tourism Industry Association, told the Emery County Travel Bureau on May 13 that House Bill 456 makes multiple changes to how counties collect and spend transient room tax (TRT) revenue. The measure raises the statewide TRT, narrows allowable uses at the county level and creates a new Outdoor Recreation Mitigation Grant aimed at reimbursing visitor‑related emergency and safety costs.

Sinclair said the bill increases the statewide transient room tax by 0.75 percentage points, a change the Utah State Tax Commission will implement automatically on July 1, 2025. She said counties additionally may adopt a 0.25 percentage‑point local option increase, bringing some counties’ county TRT ceiling to 4.5% if they pass a local resolution.

The legislation also separates three spending “buckets” officials commonly use for TRT revenue. Sinclair said establishing/promoting, promoting and projects are now explicitly independent categories, with a new, narrower definition of “establishing and promoting” and an express move of “destination development” toward the infrastructure/project side. “This is a new definition for us,” she said, adding counties will need to re‑evaluate whether activities now qualify under the revised categories.

Sinclair described changes to projects and allowable capital uses: trails and transit/parking were added as allowable project categories for all counties, and airports may qualify only if the county owns the airport. Mitigation — previously limited to fourth through sixth class counties — was expanded so any county can use project dollars for mitigation, but Sinclair said the law narrows mitigation to five specific expense types and removes prior carve‑outs such as a base year exemption.

A portion of the statewide increase will be dedicated to longer‑term capital projects and visitor management; Sinclair said roughly 0.25 of the statewide increase will fund the newly created Outdoor Recreation Mitigation Grant, administered by the Division of Outdoor Recreation and distributed by a mitigation board including representatives from the Utah Association of Counties, the Utah Sheriffs Association, EMS directors and the tourism industry. She said the grant will reimburse eligible counties for visitor‑related emergency costs — search and rescue and EMS expenses — and for visitor safety costs such as road repair and solid waste disposal. Counties that wish to apply for the competitive mitigation grant must generate less than $10 million annually in TRT and adopt the full 4.5% county option to be eligible.

Sinclair also told the board the bill changes reporting: TRT and TRCCA reporting will be folded into the counties’ annual financial report, which the state auditor will receive and publish on the Utah Public Finance website. A companion measure (Senate Bill 261) will allow the legislative fiscal analyst to review county reporting and brief interim committees. Sinclair said the auditor’s office is developing the merged report and that counties will have a year to adjust to the new filing process.

Board members asked whether TRCCA revenue (the restaurant/retail collection) counted toward the new spending breakdowns; Sinclair said TRCCA remains unchanged by this bill and does not count toward the new establishing/promoting calculations. She urged counties to assess where their programs fit in the clarified definitions and said staff and state resources are available to help with specific cases. “It’s over 1,000 lines of code — it takes a lot to digest,” she said.

The county’s staff and commissioners will consider whether to adopt the 4.5% local option — a move Sinclair and several board members said would make the county eligible for mitigation grant reimbursement and better support search‑and‑rescue and emergency medical services costs tied to visitation. The board did not take formal action on adopting the local option during the meeting; staff said they expect the commission to address the local‑option resolution in the coming weeks.