Syracuse, NY — Officials in Syracuse City Hall and the New York State Capitol could be taking action that will make hotel rooms in the city a few dollars more expensive.
The Common Council’s Monday meeting agenda includes a resolution in support of proposed state legislation that would allow the city to impose a 2% lodging tax in an effort to generate more revenue.
The bill, introduced in Albany by state Sen. Rachel May and Assemblyman William Magnarelli at the request of Mayor Ben Walsh, would generate an estimated $1.5 million to $1.75 million per year, city officials said. If approved by the state Legislature, Gov. Kathy Hochul would have to sign the bill into law.
But for state lawmakers to approve the measure, they need the Common Council’s blessing. Councilors will hold a Tax and Finance Committee meeting at 11 am today to discuss the proposal.
Walsh said last summer that he was considering asking for a room occupancy tax from the state Legislature as a tool to help close the city’s $30 million structural budget deficit. The city is using a combination of reserve funds and American Rescue Plan Act money to close the gap between revenues and expenses in its past several budgets, including the one in place for 2024-25.
Part of the inspiration for trying to secure a room occupancy tax came from the Onondaga County towns of Dewitt and Skaneateles, which both successfully lobbied the state Legislature and the governor last year to get their own lodging taxes established on top of the 7% rate charged by the county. DeWitt’s tax is 2% while Skaneateles has a 5% rate.
For a room priced at $150 per night, a 2% Syracuse tax would add $3 to the $10.50 charged for the county tax.
“That’s to make sure that as we’re encouraging visitors to come here, we can make sure we’re funding critical things like public safety, like infrastructure,” Walsh said last month during his quarterly community briefing.
The plan has critics who say a tax could hurt the local tourism industry.
Danny Liedka, president of Visit Syracuse, the area’s tourism promotion agency, said the proposal’s timing comes at an unstable time for the local lodging industry. Two major hotels, the Sheraton Hotel by Syracuse University and the Crowne Plaza on the edge of downtown, are going to convert into residential buildings. That’s removing 477 hotel beds from the city, creating a shortage that will drive prices higher, Liedka said.
“The rates in the city are going to go up, and you put this on top of it, it certainly could have a negative effect,” Liedka said. “It’s kind of a double-whammy.”
Liedka said the city’s convention business stands to lose the most from a tax. Buyers booking large amounts of rooms see the differences from one place to next. Buffalo, Albany and Rochester – Syracuse’s biggest competitors for regional conventions – have bed tax rates that are already below the county’s rate.
The city’s desire to generate new revenue streams to help close budget gaps is understandable, Liedka said, but he warned officials to be careful that they don’t undermine the sales tax revenue generated by hotel guests when they dine and shop in the city.
On the other side, Syracuse Auditor Alexander Marion is encouraging the council to approve the measure.
“This proposal will not be a panacea for the city’s fiscal challenges, but it is an important step that puts us on the right path to sustainability,” he said in a letter sent to councilors Wednesday.
Marion said hotel guests use city services when they visit but don’t share the burden with property taxpayers in supporting them. He also noted that major hotels opened in Syracuse already benefit from property tax breaks, and it’s likely that future projects will ask for them, too.
“Enacting a room occupancy tax now ensures future property tax-exempt hotels are contributing to the essential city services they will use,” he said.
Another supporter of the tax is the CNY Solidarity Coalition, a progressive political advocacy group. The organization is encouraging its members to attend today’s committee meeting or to write to councilors. They referenced the recently adopted city budget, which includes a 2% property tax rate increase, as a motivator for getting a hotel tax done.
“The Common Council just raised property taxes on low-income Syracuse homeowners, but has yet to act on a resolution supporting a room occupancy tax — which would be paid by people who don’t live in Syracuse, but tourists who visit, consume free public services, and then leave,” the coalition wrote in its latest newsletter.
City reporter Jeremy Boyer can be reached at [email protected](315) 657-5673, Twitter or Facebook.
