EVEREST June, 2013 - California Department of Boating and ...

Orange County Coastal Regional Sediment Management Plan
Assembly will typically add funding if needed. In Delaware, the typical state and local cost share
is 50/50. However the one percent TOT dedicated to nourishment (which in Delaware, unlike
most states, is levied by the state) can be used as part of the local share (Pratt, 2006; King,
2006). This tax raises an estimated $1.7 million per year.
Texas appropriates a portion of the sales taxes generated by sporting goods to support parks
and recreation. Since 1993, a portion of the sales tax revenue generated by sporting goods has
been statutorily allocated to fund state park operations, capital, and local park grants. Prior to
that, state and local parks were each allocated a one penny per pack tax on cigarettes, which
probably set the precedent for providing equal allocations to state and local parks. The Sporting
Goods Sales Tax allocation was introduced because the cigarette tax proved to be a declining
revenue source that bore no relationship to the mission of providing state park services. Beach
equipment is not specifically listed among the revenue generating categories (State of Texas,
2008).
3.8.3 Local Funding Sources
Transient Occupancy Taxes
As discussed in Section 3.4 of this report, TOTs provide a substantial source of revenue for
local governments. Since beach tourism is often a primary draw for overnight visitors, there is a
logic in dedicating some of the TOTs to shore protection. As shown in Table 3.13, TOTs at
coastal cities in Orange County vary from 9 percent to 12 percent with most beach cities
collecting 10 percent. Ten percent is typical for many cities in California. However, many larger
coastal cities such as Los Angeles, Santa Barbara, and San Diego, charge 12 or 13 percent and
San Francisco recently raised its TOT from 14 to 16 percent.
Consequently, it is not unreasonable to consider raising the TOT rates in line with other coastal
cities. The cities of Encinitas and Solana Beach have already increased TOTs from 10 percent
to 12 percent and used the proceeds to create a fund to finance beach restoration, including
their share of the RBSPII.
TOTs can generate substantial funds for beach nourishment and are generally a politically
feasible way to accomplish this goal. An example estimate of the revenue increases created by
a one percent increase in TOTs is provide below for the City of San Clemente. County wide,
beach visitors provide about $25 million in TOTs per year for Orange County and it is
reasonable to assume that some of these revenues might be used for shoreline protection.
Although tax increases are unpopular, particularly in today’s political climate, when put on the
ballot, TOTs are generally easier to pass than other taxes. This is because the TOTs are
mostly levied on people who come from out of town, and voters are less opposed when
someone else pays. Also, since TOTs are levied on tourist dollars and beaches generate
tourism, there is a direct link between the tax and beach restoration. It should be noted that an
increase in TOT can also lower hotel revenues due to the higher hotel costs.
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