Tourists may soon pay double or triple in lodging taxes in 7 Colorado counties

By Jason Blevins | The Colorado Sun

Chaffee, Custer, Eagle, Gilpin, Routt, Ouray and Park counties hope voters will approve increased lodging taxes — allowed under new legislation — to pay for budget shortfalls

As revenue flowing into local governments ebbs, more communities are looking to visitors to pay bills. 

At least seven counties will ask voters this November to double or triple the local lodging tax outside cities and towns to pay for roads, police, housing and early child care. These are the first counties to deploy a law passed this year — Senate Bill 1247 — that allows voters to raise county lodging taxes to 6%, up from 2%, to pay for infrastructure, conservation, emergency services and sustainable tourism policies. 

Commissioners in Chaffee, Custer, Gilpin, Routt and Park counties have recently finalized plans for November ballot questions seeking voter approval to triple the local lodging tax to 6%. Eagle County voters will decide whether to double the lodging tax to 4% and Ouray County voters will weigh a first-ever lodging tax of 6%.

The diversity of the counties pursuing the lodging tax increases — with commissioners who are both Democratic and Republican — “reflects an urgent need to fund critical services that benefit both locals and visitors,” said Colorado Sen. Dylan Roberts, a Democrat from Frisco who sponsored Senate Bill 1247. 

“Our bipartisan work at the legislature to give more flexibility to lodging tax revenue allows every county to focus on their individual needs from housing and child care for their workforce to supporting law enforcement and wildfire mitigation — all of which are necessary for thriving communities where working families can live and tourists can enjoy,” he said in an email to The Colorado Sun. 

Another piece of Roberts’ legislation when he was a state representative in 2022 — House Bill 1117 — expanded uses for lodging taxes beyond tourism marketing, allowing voters to direct taxes collected from hotels and short-term rentals toward housing and child care. The law requires that at least 10% of lodging taxes continue to support tourism marketing. From 2002 to 2022, voters in 29 Colorado counties had directed lodging taxes toward luring more tourists. 

In the last few years, more money in Colorado tourist towns is spent on mitigating the impacts of tourism versus marketing. House Bill 117 required that at least 10% of lodging taxes remain in tourism promotion.

Kelly Flenniken, the executive director of Colorado Counties Inc., said revenue coming into counties from nearly every state and federal source is shrinking while demand for services is growing. Lodging tax is one of the few tools a county can use to make up for declining revenues, she said.

It’s important to note, Flenniken said, that these tax bumps mostly are for hotels and short-term rentals in unincorporated areas. Cities and towns, especially in resort communities, have spent decades fine-tuning lodging taxes to mitigate the impacts of visitors. Counties only started using lodging taxes for housing, child care and recreational infrastructure in 2022 and now can use funds for things like roads and public safety.

“This allows each county to address its unique needs,” she said. “Different counties have different electorates and different priorities and what works in one county might not work in another. But I think people will be watching these first counties and paying attention to how this goes.”

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