Volleyball on the Beach Seaside, Oregon by Calogera Mia is licensed under CC BY-NC 2.0 via Flickr.
Oregon Cities Clash With Travel Industry Over Whether Tourism Taxes Should Pay for Wear and Tear on Your Favorite Destinations
Hotel and travel marketing groups oppose a House bill that would let public dollars earmarked for tourism promotion be diverted to pay for increased burdens on public safety and roads.
By James Neff
June 14, 2025
Every summer, more than 2 million tourists stream into Seaside, as relentless and predictable as the tides. They spend mountains of money, for sure, but they also wear out the streets, stress emergency medical services and water rescue, and leave behind several thousand tons of trash.
Seaside Mayor Steve Wright doesn’t have the money to pay for all the costs imposed by tourists, but he sees a solution—the millions in lodging tax dollars the visitors generate. Problem is, he can’t touch most of that money to fix potholes or hire more cops.
That’s because Oregon law requires that 70% of the lodging tax revenues must be spent directly on promoting tourism—even though his city is already awash in visitors. “We’re getting too much of that money to spend,” Wright says.
So he banks much of the restricted money rather than spend it on marketing. “There’s a certain point where we’d keep throwing money away,” he says. To date, Seaside has banked $11 million.
Seaside’s quandary—too many tourists, too few unrestricted tax dollars—plays out across Oregon in cities as different as Sutherlin, in Douglas County, and Bend, where residents are split on whether the benefits of tourism outweigh its costs.
Reacting to these pressures, state lawmakers are pushing House Bill 3962, which would allow officials to spend more of the lodging tax not just on promotion, but on “tourism-impacted services”—police, fire, EMS, roads.
The Oregon Restaurant and Lodging Association, one of the state’s most influential trade groups, opposes the bill, suggesting, among other arguments, that city officials are to blame. “Lodging taxes at the state and local level are intended to be used to promote tourism and build economic development in their communities,” Greg Astley, an ORLA director, told lawmakers in a statement. “Local governments come to Salem every year and try to take these dollars away from their intended purpose.”
Meanwhile, Astley wrote, the association’s hotel members on the coast “suffer for lack of customers for most of the year because local governments fail to make tourism promotion in the shoulder seasons a priority.” (Wright disagrees and says Seaside advertises in the offseason in Spokane and Yakima, Wash., and Salt Lake City. He adds: “It would be absurd to think we’d do anything to harm our No. 1 industry.”)
Mayor Steve Wright of Seaside (Courtesy Steve Wright)
Also opposing the bill are the state’s seven regional destination management organizations, essentially marketing co-ops that benefit from the status quo. They are largely funded by Travel Oregon, the semi-independent state tourism agency that distributes $45 million a year generated by the statewide lodging tax. Travel Oregon was the subject of a recent Oregon Journalism Project investigation into problems at the agency.
The disagreements among residents, lawmakers and Oregon tourism interests are part of a national conversation about “overtourism” and who controls the spending of tourism taxes.
So far this year, 33 state legislatures have introduced more than 500 bills that would reallocate tax revenues or constrain the industry, according to Todd Montgomery, an Oregon State University-Cascades professor who directs its Sustainable Tourism Lab in Bend.
“It reflects that the status quo isn’t working for a lot of people, across many stakeholders,” Montgomery says. “Constituents are rising up and wanting change.”
State Rep. Cyrus Javadi (R-Tillamook) co-sponsored HB 3962, which would give cities more freedom in how they spend the public monies. “The industry refers to it as ‘their money,’” Javadi says, naming ORLA and the regional destination management organizations. He and co-sponsors Rep. Jules Walters (D-West Linn) and Sen. Suzanne Weber (R-Tillamook) want to change that.
The industry’s possessive attitude dates back to 2003, when Oregon’s unemployment rate was the highest in the nation. Hotel industry leaders and lawmakers created a statewide lodging tax of 1%. The money would be used to market Oregon’s natural wonders and tourism to boost the faltering economy.
Tourism has grown and now makes up about 10% of the state’s economy, generates an estimated $241 million in state and local lodging taxes, and accounts for an estimated 120,000 jobs across the state.
In order to get its support for the tax in 2003, the hotel-motel industry insisted that 70% of any “transient lodging taxes” had to be spent on promoting tourist destinations, and that those funds were to be handled by Travel Oregon, with much of it distributed to seven regional marketing cooperatives, now known as destination management organizations (“A Nice Place to Visit,” OJP, May 25).
But there is growing concern in Oregon about overtourism, says Montgomery, whose center conducts polls that explore how people feel about tourism in their communities.
Montgomery says HB 3962 “is a response to residents saying, ‘You know what, the costs exceed the benefits, and we need to rebalance, and we need you to do something differently because what's happening now is not necessarily working for us.’”
Supporters of HB 3962 include the mayors of North Bend, Albany, Enterprise and McMinnville, and the commissioners of Union and Hood River counties and others.
Jerry Gillham, the city manager of Sutherlin, just east of Interstate 5 in Douglas County, said his city benefits from marketing by Travel Southern Oregon, his regional DMO. But the visitors take a toll and he supports HB 3962.
The city’s annual midsummer Blackberry Festival Car Show & Cruise draws thousands of visitors, thanks to savvy promotion. That gathering brings a crowd of auto enthusiasts—and their wallets.
But: “They take over the park, damage the underground sprinkler system, there’s piles of trash afterward, police overtime,” he said, all of it unavoidable.
Unlike Seaside, Sutherlin, a city of 8,652, is not a regional tourist destination and money is tight. Gillham says he sought to get lodging tax dollars to address the aftermath of such high traffic.
In a meeting with officials at Travel Southern Oregon, Gillham’s staffer was told Sutherlin wasn’t allowed to do that. It would violate Oregon law.
If the city used the money that way, “they would go back five, 10 years and audit how we had spent it,” Gillham said. If HB 3962 passes, he wouldn’t have that problem.
ORLA has sued the cities of Bend (in 2017) and Albany (2023) over spending not allowed by the lodging tax law. Courts found in its favor in the Bend lawsuit in 2021; the Albany case drags on.
As a state agency, Travel Oregon is not allowed to publicly take a position on legislation. According to Rep. Javadi, it has “been supportive of the regional DMOs behind the scenes. They are not neutral [on the bill]. They and the DMOs across the state—they assert they are better at spending the money.”
Another change he and other lawmakers have in mind, besides loosening how lodging tax monies may be spent, is adjusting the lopsided hotel-interest makeup of Travel Oregon’s nine-member board of commissioners, who are appointed by the governor.
By law, the lodging industry gets five seats on the board, three go to other tourism interests, and one member represents the public at large.
“We need to change the law on that,” Javadi says. “There is a lot of interest to come back at this in the short session. Bring Travel Oregon and the regional DMOs back in the tent”—meaning subject their budgets to legislative approval like any other state agency—“and ensure there is no misuse of money.”
Meanwhile, as for the amended HB 3962, it moved out of committee June 12 and to the House floor, where it is almost certain to pass, several lawmakers say. The bill would change the split of lodging tax revenue from 70-30, which mandates that the lion’s share has to be spent on marketing tourism, to a 40-60 split, giving cities more flexibility to spend on police, infrastructure or other tourism-impacted services.
The governor has not taken a public position on the legislation, and whether the Senate will vote on the measure before the session ends June 29 remains to be seen.
James Neff can be reached at jneff@oregonjournalismproject.org.