The idea of a lodging tax for Hudson B&Bs and hotels is not, on its face, a terrible one.
In theory, such a tax would raise funds for the City of Hudson via visitors from afar, rather than citizens locally. And (again, in theory) it would not be likely to keep people from coming to Hudson, since most tourists either expect such a charge, or else won’t realize that it’s going to be tacked onto their bill until they are here, and it is too late to back out.
But if you are hoping a lodging tax will actually lower your taxes, don’t get your hopes up.
Why? Simple: There’s zero reason to have an iota of confidence that any new City revenue—whether from lodging, or restaurants, or parking meters, or the discovery of a strongbox full of antique gold bullion unearthed from the muck of the South Bay—will be used to pass savings onto taxpayers.
On the contrary: New income for City government almost always results in new and greater spending, rather than lower taxes. The political temptation to spend invariably outweighs the fortitude to tighten the belt.
So at best, revenues from lodgers might be used to slow down the rate of property tax growth. And even that seems like wishful thinking, based on past experience.
Hudson’s past is prologue, and reason for cynicism. Over the past 15 years, Hudson’s tax base has significantly strengthened. As previously reported in depth here in 2010, both the number of taxable properties has increased, and overall assessments have increased as well. Normally, that ought to mean that taxes could be reduced over time, or at least held steady.
But instead, local property taxes have steadily risen. Local politicians have consistently viewed a greater ability to raise revenue as an opportunity to spend more lavishly.
According to the the New York State Comptroller’s office, between 1980 and 2010, the City of Hudson’s revenue per person living locally has gone up over 373%. Sounds good, right? Yes—until you realize that the City’s spending per capita has gone up at a higher rate, of 464%. In short, new spending has outpaced new revenue by some 91%.
And, absent any safeguards built into the lodging legislation, there is no cause to assume that this new source of cash would be any different.
Moreover, the actual amounts projected sound rather low: Reportedly, only $1 million would be collected over the first six years. If that sounds like a lot to anyone, bear in mind that’s only $166,666 per year. And the City’s total budget is nearly $10 million.
So the new lodging tax would contribute less than 1.7% of the annual budget over the next six years, even if it remains unchanged (which it won’t. It will almost surely keep going up).
On the other hand, it does not appear that a lodging tax will do any harm. The most likely opponents, B&B and hotel and guest house owners, appear to support it. So if it’s no skin off their back, probably no one else will consider it even a cosmetic problem. Just don’t hold your breath thinking less than $200,000 a year is going to make a visible difference on your tax bill—a good half of which derives from separate budgets for the County or Hudson School Budget, anyway.
Those seeking at least a little relief might explore ways to ensure that any new lodging revenues are applied after the budget is set, not before; but that would not likely do much good in encouraging fiscal discipline, as leaders would tacitly base their projections on lodging tax windfalls from previous years, anyway.
As written here five years ago on the general subject of local government spending:
A more likely scenario is that future budgets will continue to rise, as leaders use the increased assessments to increase spending... [T]he focus of those seeking tax reform and fairness should remain on (A) securing reasonable, balanced, justifiable assessments for all property owners, both small and large; and (B) encouraging City leaders to be disciplined in its annual budgeting process and spending habits.