Could Yolo raise taxes on Airbnb stays to help close deficit? County may ask voters
Yolo County officials may ask voters to approve a higher tax on short-term rentals and hotel stays in unincorporated areas as the county faces a major budget deficit.
County supervisors voted Tuesday to introduce and waive the first reading of a measure that would increase taxes on short-term stays in unincorporated Yolo County.
The supervisors previously directed staff to research raising the transient occupancy tax rate in an effort to close a multi-million-dollar budget gap. Transient occupancy taxes are paid per night for stays under 30 days. Staff reported Yolo County’s 8% rate is lower than the 12% charged by jurisdictions including West Sacramento, Davis and unincorporated Sacramento County.
Staff estimate that the increase could generate about $250,000 in annual revenue, a modest figure compared to an estimated $35 million budget deficit.
“I mean, we’re looking for all of the money, but this is only $250,000 a year, so it’s not that much,” board chair Sheila Allen said. “But happy to have that.”
Allen, who represents north and east Davis, said she worried asking voters to approve this tax increase could make them less likely to support another tax measure later, especially if they do not realize they are unlikely to pay a transient occupancy tax themselves. The county may eventually consider measures such as a sales tax increase to generate more ongoing revenue, which would raise significantly more money than the current proposal. Voters could oppose a larger ballot measure because they already approved this smaller one, she said.
“I am concerned about voter confusion and fatigue,” Allen said.
There are 10 properties in the county whose visitors would be affected by the tax increase, according to a staff report.
Changing the tax rate requires voter approval. The increase needs a simple majority to pass and must be voted on countywide, even though cities are exempt, said Alexander Tengolics, director of strategic operations for the county Administrator’s Office. The county has about one month to pass a measure resolution to qualify for the November ballot. County staff plan to bring a final resolution to the Board of Supervisors next week.
Four of the properties identified by county staff are short-term vacation rentals, Tengolics said. The remaining properties are hotels. Short-term rentals such as Airbnb are required to register with the county, but some may not be registered and would also be affected by the increase.
Staff shared proposed language for the ballot measure, which must include certain information and remain under a state-mandated word count. The draft language states the tax would be paid only by short-term rental guests and the revenue would be used “to fund local programs and services – such as maintaining health and human services program levels, enhancing public safety, and supporting emergency preparedness.”
