San Diego hotel tax heads back to court

The question of whether it is legal to tax hotel guests for the purpose of expanding San Diego's convention center is far from over. On Tuesday, January 7, opponents of the 3 percent tourist tax filed a formal appeal to overturn San Diego Superior Court judge Ronald Prager's decision last March, which effectively cleared the way for hoteliers to tack on the surcharge.

At the crux of the argument is whether the city has the authority to side-step the state constitution in order to impose special taxes, such as the hotel tax, to pay for specific projects...say, for instance, an expansion of the convention center.

"This Court should strictly interpret and uphold citizens’ directives that taxation voter rights are vested in the people, and for the people, no matter how desirous or sensitive we are about the difficulties involved for local governments to raise taxes and find other revenue sources," reads the appeal filed on behalf of local government watchdog Mel Shapiro and San Diegans for Open Government.

"Similarly, although sympathy may lie with City’s effort to obtain an expanded convention center to compete with other markets, provide increased commerce and in turn increase general fund sales tax revenues, the role of this Court in upholding the law should not be deterred in rejecting City’s new special taxes voting scheme."

The most recent debate over the legality of a hotel tax dates back to April 2012. That's when a small group of hotel owners voted in favor of a 2 percent increase. The increase, expected to bring in more than $30 million a year, would be used to expand the convention center in hopes of keeping Comic-Con and other large gatherings in San Diego.

The problem with the vote, however, was that it was weighted according to the size and number of rooms in each hotel, meaning the largest hoteliers had the final say in the matter.

Opponents at the time objected to a weighted vote, arguing that a tax is a tax, and a tax should be approved by a majority vote by all residents, not just a few wealthy hoteliers.

To boost their argument, opponents point to Proposition 218 in the state constitution, which says that, "no local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote.”

Judge Prager dismissed that argument, instead saying that the tax-scheme was set up properly and that the hoteliers were the most affected, thus the ones who should have the final say.

Now, it will be up to appellate court judges to decide.

(corrected 1/8 6:15 a.m.)