CHARLESTON, W.Va. -- Hotel-motel tax collections are plunging in some localities because of unanticipated uses of exemptions allowed under the law, legislators were advised Monday.
Legislation allowing localities to impose occupancy taxes on hotel and motel rooms was enacted in 1975, with a maximum rate of 3 percent of the room charge. In 2005, the law was amended to allow a tax rate of up to 6 percent.
While the revenue has been a boon to cities, allowing them to construct and maintain civic centers, auditoriums, parks and other tourist attractions, some localities are seeing a sharp drop in hotel-motel tax collections because of two exemptions in the law:
Now, energy companies are taking advantage of the 30-day exception for lodging for employees working on drilling sites in the northern half of the state.
Some municipalities affected by the Marcellus Shale drilling boom are seeing hotel-motel tax collections dropping by nearly 50 percent, she said.
"That's where the cities are having an issue, and having a reduction in their revenue," Dooley told a Finance legislative interim committee.
She cited the town of Pleasant Valley, Marion County, which saw its hotel-motel tax collections drop from $11,000 to $6,000 in six months, because the three motels in town are filled largely with energy company employees.